CONSTRUCTION LOAN AGREEMENT
BETWEEN
PIZZA INN, INC., A MISSOURI CORPORATION
AND
WELLS FARGO BANK TEXAS, NATIONAL ASSOCIATION
EXECUTED AS OF DECEMBER 28, 2000
Page 28
TABLE OF CONTENTS
Page
ARTICLE 1. DEFINITIONS 1
1.1 DEFINED TERMS 1
1.2 EXHIBITS INCORPORATED 2
ARTICLE 2. LOAN 3
2.1 LOAN 3
2.2 LOAN DOCUMENTS 3
2.3 EFFECTIVE DATE 3
2.4 LOAN CONVERSION 3
2.5 MATURITY DATE 3
2.6 CREDIT FOR PRINCIPAL PAYMENTS 3
2.7 APPRAISAL REQUIREMENT 3
2.8 FULL REPAYMENT AND RELEASE OF LIEN 3
ARTICLE 3. DISBURSEMENT 4
3.1 CONDITIONS PRECEDENT 4
3.2 ACCOUNT, PLEDGE AND ASSIGNMENT, AND DISBURSEMENT AUTHORIZATION 4
3.3 BORROWER'S FUNDS ACCOUNT, PLEDGE AND ASSIGNMENT 4
3.4 LOAN DISBURSEMENTS 4
ARTICLE 4. CONSTRUCTION 4
4.1 COMMENCEMENT OF CONSTRUCTION 4
4.2 COMPLETION OF CONSTRUCTION 5
4.3 COMMENCEMENT AND COMPLETION 5
4.4 COMMENCEMENT AND COMPLETION OF OFFSITE IMPROVEMENTS 5
4.5 FORCE MAJEURE 5
4.6 CONSTRUCTION AGREEMENT 5
4.7 ARCHITECT'S AGREEMENT 5
4.8 PLANS AND SPECIFICATIONS. 5
4.9 CONTRACTOR/CONSTRUCTION INFORMATION 5
4.10 PROHIBITED CONTRACTS 6
4.11 LIENS AND NOTICES 6
4.12 CONSTRUCTION RESPONSIBILITIES 6
4.13 ASSESSMENTS AND COMMUNITY FACILITIES DISTRICTS 6
4.14 DELAY 6
4.15 INSPECTIONS 6
4.16 SURVEYS 6
ARTICLE 5. INSURANCE 7
5.1 TITLE INSURANCE 7
5.2 PROPERTY INSURANCE 7
5.3 FLOOD HAZARD INSURANCE 7
5.4 LIABILITY INSURANCE 7
5.5 GENERAL 8
ARTICLE 6. REPRESENTATIONS AND WARRANTIES 7
6.1 AUTHORITY/ENFORCEABILITY 7
6.2 BINDING OBLIGATIONS 7
6.3 FORMATION AND ORGANIZATIONAL DOCUMENTS 7
6.4 NO VIOLATION 7
6.5 COMPLIANCE WITH LAWS 7
6.6 LITIGATION 7
6.7 FINANCIAL CONDITION 7
6.8 NO MATERIAL ADVERSE CHANGE 8
6.9 LOAN PROCEEDS AND ADEQUACY 8
6.10 ACCURACY 8
6.11 TAX LIABILITY 8
6.12 UTILITIES 8
6.13 COMPLIANCE 8
6.14 AMERICANS WITH DISABILITIES ACT COMPLIANCE 8
6.15 BUSINESS LOAN 8
ARTICLE 7. HAZARDOUS MATERIALS 8
7.1 SPECIAL REPRESENTATIONS AND WARRANTIES 8
7.2 HAZARDOUS MATERIALS COVENANTS 9
7.3 INSPECTION BY LENDER 9
7.4 HAZARDOUS MATERIALS INDEMNITY 9
ARTICLE 8. SET ASIDE LETTERS 9
8.1 SET ASIDE LETTERS 9
ARTICLE 9. COVENANTS OF BORROWER 10
9.1 EXPENSES 10
9.2 ERISA COMPLIANCE 10
9.3 LEASING 10
9.4 APPROVAL OF LEASES 10
9.5 INTENTIONALLY OMITTED. 10
9.6 SUBDIVISION MAPS 10
9.7 OPINION OF LEGAL COUNSEL 10
9.8 FURTHER ASSURANCES 10
9.9 ASSIGNMENT 11
9.10 MANAGEMENT OF PROPERTY 11
ARTICLE 10. REPORTING COVENANTS 11
10.1 FINANCIAL INFORMATION 11
10.2 BOOKS AND RECORDS 11
ARTICLE 11. DEFAULTS AND REMEDIES 11
11.1 DEFAULT 11
11.2 ACCELERATION UPON DEFAULT; REMEDIES 12
11.3 DISBURSEMENTS TO THIRD PARTIES 12
11.4 LENDER'S COMPLETION OF CONSTRUCTION 12
11.5 LENDER'S CESSATION OF CONSTRUCTION 12
11.6 REPAYMENT OF FUNDS ADVANCED 12
11.7 RIGHTS CUMULATIVE, NO WAIVER 12
ARTICLE 12. MISCELLANEOUS PROVISIONS 13
12.1 INDEMNITY 13
12.2 FORM OF DOCUMENTS 13
12.3 NO THIRD PARTIES BENEFITED 13
12.4 NOTICES 13
12.5 ATTORNEY-IN-FACT 13
12.6 ACTIONS 13
12.7 RIGHT OF CONTEST 13
12.8 RELATIONSHIP OF PARTIES 13
12.9 DELAY OUTSIDE LENDER'S CONTROL 13
12.10 ATTORNEYS' FEES AND EXPENSES; ENFORCEMENT 14
12.11 IMMEDIATELY AVAILABLE FUNDS 14
12.12 LENDER'S CONSENT 14
12.13 LOAN SALES AND PARTICIPATIONS; DISCLOSURE OF INFORMATION 14
12.14 INTENTIONALLY OMITTED. 14
12.15 SIGNS 14
12.16 LENDER'S AGENTS 14
12.17 TAX SERVICE 14
12.18 WAIVER OF RIGHT TO TRIAL BY JURY 14
12.19 SEVERABILITY 15
12.20 HEIRS, SUCCESSORS AND ASSIGNS 15
12.21 TIME 15
12.22 HEADINGS 15
12.23 GOVERNING LAW 15
12.24 INTEREST PROVISIONS. 15
12.25 JOINT AND SEVERAL LIABILITY 16
12.26 COUNTERPARTS 16
12.27 INTEGRATION; INTERPRETATION 16
12.28 ARBITRATION. 16
EXHIBIT A - DESCRIPTION OF PROPERTY 19
EXHIBIT B - DOCUMENTS 20
EXHIBIT C - FINANCIAL REQUIREMENT ANALYSIS 21
EXHIBIT D - DISBURSEMENT PLAN 22
EXHIBIT E - AFFIDAVIT OF COMMENCEMENT 25
EXHIBIT F - AFFIDAVIT OF COMPLETION 27
CONSTRUCTION LOAN AGREEMENT
THIS CONSTRUCTION LOAN AGREEMENT ("Agreement") is executed as of December 28,
2000, by and between PIZZA INN, INC., a Missouri corporation ("Borrower") and
WELLS FARGO BANK TEXAS, NATIONAL ASSOCIATION ("Lender").
R E C I T A L S
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A. Borrower owns or will own certain real property described in Exhibit A
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hereto ("Property").
B. Borrower proposes to construct on the Property certain improvements
consisting of: an office/warehouse facility together with all appurtenances,
fixtures, and tenant improvements now or hereafter located on the Property
("Improvements"). The Improvements shall be constructed in accordance with
plans and specifications which Borrower has heretofore, or will hereafter
deliver to Lender, as amended in order to comply with the terms and conditions
of this Agreement ("Plans and Specifications"). Borrower has requested from
Lender a loan for the purpose of such construction.
NOW, THEREFORE, Borrower and Lender agree as follows:
ARTICLE 1. DEFINITIONS
1.1 DEFINED TERMS. The following capitalized terms generally used in this
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Agreement shall have the meanings defined or referenced below. Certain other
capitalized terms used only in specific sections of this Agreement are defined
in such sections.
"Account" - means an account with Lender, in the name of Borrower or Borrower's
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designee into which Loan proceeds will be deposited.
"ADA" - means the Americans with Disabilities Act, 42 U.S.C. 12101, et. seq.
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as now or hereafter amended or modified.
"Affidavit of Commencement" - shall have the meaning ascribed to such term in
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Section 4.1.
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"Affidavit of Completion" - shall have the meaning ascribed to such term in
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Section 4.2.
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"Agreement" - shall have the meaning ascribed to such term in the preamble
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hereto.
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"Architect" - means Alliance Architects, Inc.
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"Architect's Agreement" - means that certain agreement by and between Borrower
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and Architect.
"Bankruptcy Code" - means the Bankruptcy Reform Act of 1978 (11 USC 101-1330)
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as now or hereafter amended or recodified.
"Bonded Work" - shall have the meaning ascribed to such term in Section 8.1.
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"Borrower" - means PIZZA INN, INC., a Missouri corporation.
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"Borrower's Funds" - means all funds of Borrower deposited with Lender pursuant
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to the terms and conditions of this Agreement.
"Borrower's Funds Account" - means the account with Lender into which all funds
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deposited with Lender pursuant to this Agreement shall be placed.
"Business Day" - means a day of the week (but not a Saturday, Sunday or holiday)
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on which the offices of Lender are open to the public for carrying on
substantially all of Lender's business functions. Unless specifically
referenced in this Agreement as a Business Day, all references to "days" shall
be to calendar days.
"Completion Date" - means November 1, 2001, the date by which construction of
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the Improvements must be complete.
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"Construction Agreement" - means an agreement to construct the Improvements now
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or hereafter executed between Borrower and Contractor.
"Construction Loan" - the Loan made for the purpose of the acquisition and
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construction of the Property and maturing on January 1, 2002 unless the Loan
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Conversion occurs.
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"Contractor" - means Bob Moore Construction.
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"Deed of Trust" - means that certain Construction Deed of Trust with Absolute
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Assignment of Leases and Rents, Security Agreement and Fixture Filing of even
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date herewith executed by Borrower, as Grantor, for the benefit of Lender, as
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Beneficiary, as hereafter amended, supplemented, replaced or modified.
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"Default" - shall have the meaning ascribed to such term in Section 11.1.
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"Effective Date" - means the date that the Loan Documents are unconditionally
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executed and delivered by Borrower and Lender.
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"Guarantor" - has the meaning specified in the Master Loan Agreement.
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"Hazardous Materials" - shall have the meaning ascribed to such term in Section
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7.1(a).
"Hazardous Materials Claims" - shall have the meaning ascribed to such term in
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Section 7.1(c).
"Hazardous Materials Laws" - shall have the meaning ascribed to such term in
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Section 7.1(b).
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"Improvements" - shall have the meaning ascribed to such term in Recital B.
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"Indebtedness" - means all principal, interest and other charges payable by
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Borrower to Lender pursuant to the Note and all other sums which may become
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payable by Borrower to Lender pursuant to the Master Loan Agreement and the
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other Loan Documents.
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"Lender" - means WELLS FARGO BANK TEXAS, NATIONAL ASSOCIATION.
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"Loan" - means the principal sum that Lender agrees to lend and Borrower agrees
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to borrow pursuant to the terms and conditions of this Agreement: Eight Million
One Hundred Twenty-Five Thousand and No/100 Dollars ($8,125,000.00).
"Loan Conversion" - The conversion of the Loan from the Construction Loan to the
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Mini-Perm Loan all in accordance with the provisions of Section 2.4 hereof. The
effective date of the Loan Conversion shall be the first (1st) day of the
calendar month following the satisfaction of the Loan Conversion requirements
set forth in Section 2.4, which effective date shall not be later than January
1, 2002.
"Loan Documents" - means those documents, as hereafter amended, supplemented,
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replaced or modified, properly executed and in recordable form, if necessary,
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listed in Exhibit B as Loan Documents.
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"Loan-to-Value Percentage" - shall have the meaning ascribed to such term in
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Section 2.7.
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"Master Loan Agreement" - means the Second Amended and Restated Loan Agreement
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dated as of March 31, 2000 between Borrower and Lender, as amended by First
Amendment to the Second Amended and Restated Loan Agreement dated of even date
herewith.
"Maturity Date" - has the meaning specified in Section 2.5.
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"Maximum Lawful Rate" - shall have the meaning ascribed to such term in Section
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12.24(b).
"Mini-Perm Loan" - to the extent Loan Conversion occurs, the Loan, as so
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converted and scheduled to mature December 28, 2007.
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"Note" - means that certain Promissory Note of even date herewith, in the
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original principal amount of the Loan, executed by Borrower and payable to the
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order of Lender, as hereafter amended, supplemented, replaced or modified.
"Obligee" - shall have the meaning ascribed to such term in Section 8.1.
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"Participant" - shall have the meaning ascribed to such term in Section 12.13.
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"Plans and Specifications" - shall have the meaning ascribed to such term in
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Recital B.
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"Property" - shall have the meaning ascribed to such term in Recital A.
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"Secured Obligations" - shall have the meaning ascribed to such term in the Deed
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of Trust.
"Set Aside Letter" - shall have the meaning ascribed to such term in Section
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8.1.
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"Subdivision Map" - shall have the meaning ascribed to such term in Section 9.7.
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"Surety" - shall have the meaning ascribed to such term in Section 8.1.
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"Title Company" means Republic Title of Texas, Inc., as agent for Commonwealth
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Land Title Insurance Company.
"Title Policy" - means the standard Texas promulgated form of Mortgagee Policy
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of Title Insurance as issued by the Title Company.
1.2 EXHIBITS INCORPORATED. Exhibits A, B, C, D, E and F, all attached
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hereto, are hereby incorporated into this Agreement.
ARTICLE 2. LOAN
2.1 LOAN. By and subject to the terms of this Agreement, Lender agrees to
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lend to Borrower and Borrower agrees to borrow from Lender the principal sum of
Eight Million One Hundred Twenty-Five Thousand and No/100 Dollars
($8,125,000.00), said sum to be evidenced by the Note of even date herewith.
The Note shall be secured, in part, by the Deed of Trust, of even date herewith,
encumbering certain real property and improvements as legally defined therein.
Amounts disbursed to or on behalf of Borrower pursuant to the Note shall be used
to finance the acquisition and construction of the Property and Improvements and
for such other purposes and uses as may be permitted under this Agreement and
the other Loan Documents.
2.2 LOAN DOCUMENTS. Borrower shall deliver to Lender concurrently with this
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Agreement each of the documents, properly executed and in recordable form, as
applicable, described in Exhibit B as Loan Documents.
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2.3 EFFECTIVE DATE. The date of the Loan Documents is for reference
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purposes only. The Effective Date of the parties' obligations under this
Agreement and the other Loan Documents shall be the date that such Loan
Documents are unconditionally executed and delivered by Borrower and Lender, and
Borrower's and Lender's rights and obligations under the Loan Documents shall
not be effective until the Effective Date.
2.4 LOAN CONVERSION. The Construction Loan may be converted into the
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Mini-Perm Loan upon written request of Borrower given to Lender not less than
thirty (30) days before the anticipated date for the Loan Conversion, and upon
satisfaction of the following:
(a) Completion of all construction work contemplated by the Plans and
Specifications and the Budget to the satisfaction of Lender, together with
Borrower's provision to Lender of a certificate of substantial completion in a
form acceptable to Lender and certified by Borrower and Borrower's architect;
(b) Evidence satisfactory to Lender, reflecting the full payment of, and
executed lien waivers from, all contractors, subcontractors and others with
respect to the construction of the Improvements.
(c) Borrower's provision to Lender with an as-built survey for the Property
in a form satisfactory to Lender in all respects and not indicating any matters
not shown in any previous survey provided to Lender which are reasonably
objectionable to Lender;
(d) No Default or any event, circumstance or action which, with the giving
of notice, passage of time or failure to cure would give rise to a Default, has
occurred and is then existing;
(e) Lender shall have received a down-date endorsement pursuant to
Procedural Rule P-9b(4), and other endorsements amending the mechanic's and
materialmen's lien coverage and, if applicable, deleting the pending
disbursements clause pursuant to Procedural Rule P-8b(2), and, if applicable, a
Form T38 Endorsement pursuant to Procedural Rule P-9b(3) to the Title Policy in
form and content satisfactory to Lender.
Loan Conversion shall occur or be deemed to have occurred on the 1st day of the
calendar month which follows Borrower's satisfaction of the foregoing conditions
precedent to Loan Conversion, as determined by Lender. To the extent Loan
Conversion has not occurred by January 1, 2002, then Borrower shall not
thereafter be eligible for Loan Conversion.
2.5 MATURITY DATE. The Maturity Date of the Loan means (a) at all times
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prior to Loan Conversion, January 1, 2002, and (b) if Loan Conversion occurs on
or before January 1, 2002, then December 28, 2007; subject to the right of
acceleration provided herein and elsewhere in the Loan Documents, at which time
all sums due and owing under this Agreement and the other Loan Documents shall
be repaid in full. All payments due to Lender under this Agreement, whether at
the Maturity Date or otherwise, shall be paid in immediately available funds.
2.6 CREDIT FOR PRINCIPAL PAYMENTS. Any payment made upon the outstanding
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principal balance of the Loan shall be credited as of the Business Day received,
provided such payment is received by Lender no later than 11:00 a.m. (Pacific
Standard Time or Pacific Daylight Time, as applicable) and constitutes
immediately available funds. Any principal payment received after said time or
which does not constitute immediately available funds shall be credited upon
such funds having become unconditionally and immediately available to Lender.
2.7 APPRAISAL REQUIREMENT. Lender shall have received a written appraisal
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prepared in conformance with the requirements of the Comptroller of the Currency
confirming to the satisfaction of Lender that the Loan amount as a percentage of
the fair market value of the Property and Improvements (after adjustment for
senior liens and regular and special taxes and assessments) does not exceed
seventy-five percent (75%) ("Loan-to-Value Percentage"); provided, however, in
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the event such fair market value is not adequate to meet the required
Loan-to-Value Percentage, then Borrower shall, within thirty (30) days after
written demand from Lender, pay down the outstanding principal balance of the
Loan such that said required Loan-to-Value Percentage may be met.
2.8 FULL REPAYMENT AND RELEASE OF LIEN. Upon receipt of all sums owing and
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outstanding under the Loan Documents, Lender shall issue a full release of lien
covering the Property and Improvements from the lien of the Deed of Trust;
provided, however, that all of the following conditions shall be satisfied at
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the time of, and with respect to, such release of lien: (a) Lender shall have
received all escrow, closing and recording costs, the costs of preparing and
delivering such release of lien and any sums then due and payable under the Loan
Documents; and (b) Lender shall have received a written release satisfactory to
Lender of any set aside letter, letter of credit or other form of undertaking
which Lender has issued to any surety, governmental agency or any other party in
connection with the Loan and/or the Property and Improvements. Lender's
obligation to make further disbursements under the Loan shall terminate as to
any portion of the Loan undisbursed as of the date of issuance of such full
release of lien, and any commitment of Lender to lend any undisbursed portion of
the Loan shall be canceled.
ARTICLE 3. DISBURSEMENT
3.1 CONDITIONS PRECEDENT. Lender's obligation to make any disbursements or
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take any other action under the Loan Documents shall be subject at all times to
satisfaction of each of the following conditions precedent:
(a) There shall exist no Default, as defined in this Agreement, or Default
as defined in any of the other Loan Documents, or event, omission or failure of
condition which would constitute a Default after notice or lapse of time, or
both; and
(b) Any undisbursed Loan funds together with all sums, if any, to be
provided by Borrower as shown in Exhibit C shall be at all times equal to or
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greater than the amount which Lender from time to time determines necessary to:
(i) pay, through completion, all costs of development and construction of the
Property and Improvements in accordance with the Loan Documents; (ii) pay all
sums which may accrue under the Loan Documents prior to repayment of the Loan;
and (iii) enable Borrower to perform and satisfy all of the covenants of
Borrower contained in the Loan Documents. If Lender determines at any time that
the undisbursed Loan funds are insufficient for said purposes, Borrower shall
deposit the amount of such deficiency in the Borrower's Funds Account within
seven (7) days of Lender's written demand; and
(c) Lender shall have received all Loan Documents, other documents,
instruments, policies, and forms of evidence or other materials requested by
Lender under the terms of this Agreement or any of the other Loan Documents; and
(d) As a condition to the initial advance hereunder, Lender shall have
received and approved in form and substance satisfactory to Lender: (i) a soils
report for the Property and Improvements; (ii) an environmental questionnaire
and environmental site assessment with respect to the presence, if any, of
Hazardous Materials on the Property and Improvements; (iii) two sets of the
Plans and Specifications, certified as complete by the Architect, together with
evidence of all necessary or appropriate approvals of governmental agencies;
(iv) copies of all agreements which are material to completion of the
Improvements; (v) copies of all building permits and similar permits, licenses,
approvals, development agreements and other authorizations of governmental
agencies required in connection with the development of the Property and
Improvements; and (vi) copies of any initial study, negative declaration,
mitigated negative declaration, environmental impact report, notice of
determination or notice of exemption prepared, adopted, certified or filed by or
with any governmental agency in connection with the Property and Improvements.
3.2 ACCOUNT, PLEDGE AND ASSIGNMENT, AND DISBURSEMENT AUTHORIZATION. The
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proceeds of the Loan and Borrower's Funds, when qualified for disbursement,
shall be deposited into the Account or otherwise disbursed to or for the benefit
or account of Borrower under the terms of this Agreement. Disbursements
hereunder may be made by Lender upon the written request of any person who has
been authorized by Borrower to request such disbursements until such time as
written notice of Borrower's revocation of such authority is received by Lender
at the address shown in Exhibit D. As additional security for Borrower's
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performance under the Loan Documents, Borrower hereby irrevocably pledges and
assigns to Lender all monies at any time deposited in the Account.
3.3 BORROWER'S FUNDS ACCOUNT, PLEDGE AND ASSIGNMENT. Except as otherwise
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provided in this Agreement, all of the Borrower's Funds which are deposited with
Lender by Borrower as shown in Exhibit C, or any other provision of the Loan
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Documents, shall be placed in the Borrower's Funds Account with, and controlled
by, Lender for disbursement under this Agreement. As additional security for
Borrower's performance under the Loan Documents, Borrower hereby irrevocably
pledges and assigns to Lender all monies at any time deposited in the Borrower's
Funds Account.
3.4 LOAN DISBURSEMENTS. Subject to the conditions set forth in Section 3.1,
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the proceeds of the Loan and Borrower's Funds shall be disbursed in accordance
with the terms and conditions of Exhibit D. Disbursements made after the
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deposit of Borrower's Funds shall be made first from the Borrower's Funds
Account until depleted. All disbursements shall be held by Borrower in trust
and applied by Borrower solely for the purposes for which the funds have been
disbursed. Lender has no obligation to monitor or determine Borrower's use or
application of the disbursements.
ARTICLE 4. CONSTRUCTION
4.1 COMMENCEMENT OF CONSTRUCTION. Borrower shall commence construction of
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the Improvements without delay after recordation of the Deed of Trust. Within
ten (10) days after the commencement of construction of the Improvements,
Borrower shall execute and cause the Contractor to execute and shall file in
Real Property Records of the county in which the Property is located, an
affidavit ("Affidavit of Commencement"), in the form attached as Exhibit Eor
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otherwise satisfactory to Lender. The date of commencement of the construction
of the Improvements as set forth in such Affidavit of Commencement shall be a
date after the date of the recordation of the Deed of Trust.
4.2 COMPLETION OF CONSTRUCTION. Borrower shall complete construction of the
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Improvements on or before the Completion Date. Within ten (10) days after the
construction of the Improvements has been completed, Borrower shall execute and
file in the Real Property Records of the county in which the Property is
located, an affidavit ("Affidavit of Completion") in the form attached as
Exhibit F or otherwise satisfactory to Lender.
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4.3 COMMENCEMENT AND COMPLETION. Borrower shall commence construction of
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the Improvements without delay after recordation of the Deed of Trust. Borrower
shall complete construction of the Improvements on or before the Completion
Date.
4.4 COMMENCEMENT AND COMPLETION OF OFFSITE IMPROVEMENTS. Borrower shall
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commence construction of any offsite improvements required by any governmental
authority in connection with the construction of the Improvements without delay
and shall complete construction of any such offsite improvements on or before
the Completion Date.
4.5 FORCE MAJEURE. The time within which construction of the Improvements
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must be completed shall be extended for a period of time equal to the period of
any delay directly affecting construction which is caused by fire, earthquake or
other acts of God, strike, lockout, acts of public enemy, riot, insurrection, or
governmental regulation of the sale or transportation of materials, supplies or
labor; provided, however, that Borrower shall furnish Lender with written notice
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satisfactory to Lender evidencing any such delay within ten (10) days from the
occurrence of any such delay. In no event shall the time for completion of the
Improvements be extended beyond the Maturity Date or more than sixty (60) days
beyond the Completion Date.
4.6 CONSTRUCTION AGREEMENT. Borrower and Contractor have entered (or will
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enter) into the Construction Agreement pursuant to the terms and conditions of
which Contractor is to construct the Improvements. Borrower shall require
Contractor to perform in accordance with the terms of the Construction Agreement
in all material respects and shall not materially amend, modify or alter the
responsibilities of Contractor under the Construction Agreement without Lender's
prior written consent. Except for any change orders permitted without Lender's
consent pursuant to the terms hereof, Borrower shall execute, upon Lender's
request, an assignment of Borrower's rights under the Construction Agreement to
Lender as security for Borrower's obligations under this Agreement and the other
Loan Documents and shall cause the Contractor to consent to any such assignment.
4.7 ARCHITECT'S AGREEMENT. Borrower and Architect have entered into the
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Architect's Agreement, pursuant to which Architect is to design the
Improvements. Borrower shall require Architect to perform in accordance with
the terms of the Architect's Agreement and shall not amend, modify or alter the
responsibilities of Architect under the Architect's Agreement without Lender's
prior written consent. Upon Lender's request, Borrower shall execute an
assignment of the Architect's Agreement and the Plans and Specifications to
Lender as additional security for Borrower's performance under this Agreement
and the other Loan Documents and shall cause the Architect to consent to any
such assignment.
4.8 PLANS AND SPECIFICATIONS.
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(a) CHANGES; LENDER CONSENT. Except as otherwise provided in this
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Agreement, Borrower shall not make any changes in the Plans and Specifications
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without Lender's prior written consent if such change: (i) constitutes a
material change in the building material or equipment specifications, or in the
architectural or structural design, value or quality of any of the Improvements;
(ii) would result in an increase of construction costs in excess of $100,000 for
any single change or in excess of $500,000 for all such changes; or (iii) would
affect the structural integrity, quality of building materials, or overall
efficiency of operating systems of the Improvements. Without limiting the
above, Lender agrees that Borrower may make minor changes in the Plans and
Specifications without Lender's prior written consent, provided that such
changes do not violate any of the conditions specified herein. Borrower shall
at all times maintain, for inspection by Lender, a full set of working drawings
of the Improvements.
(b) CHANGES; SUBMISSION REQUIREMENTS. Borrower shall submit any proposed
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change in the Plans and Specifications to Lender at least ten (10) days prior to
the commencement of construction relating to such proposed change whether or not
such change is subject to Lender's consent. Requests for any change which
requires consent shall be accompanied by working drawings and a written
description of the proposed change, submitted on a change order form acceptable
to Lender, signed by Borrower and, if required by Lender, also by the Architect
and the Contractor. At its option, Lender may require Borrower to provide: (i)
evidence satisfactory to Lender of the cost and time necessary to complete the
proposed change; (ii) a deposit in the amount of any increased costs into
Borrower's Funds Account; and (iii) a complete set of "as built" Plans and
Specifications for the completed Improvements.
(c) CONSENT PROCESS. Borrower acknowledges that Lender's review of any
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changes and required consent may result in delays in construction and hereby
consents to any such delays.
(d) FINAL PLANS AND SPECIFICATIONS. Upon completion of the Improvements,
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Borrower shall deliver to Lender within ten (10) days a set of final Plans and
Specifications.
4.9 CONTRACTOR/CONSTRUCTION INFORMATION. Within ten (10) days of Lender's
------------------------------------
written request, Borrower shall deliver to Lender from time to time in a form
acceptable to Lender: (a) a list detailing the name, address and phone number
of each contractor, subcontractor and material supplier to be employed or used
for construction of the Improvements together with the dollar amount, including
changes, if any, of each contract and subcontract, and the portion thereof, if
any, paid through the date of such list; (b) copies of each contract and
subcontract identified in such list, including any changes thereto; (c) a cost
breakdown of the projected total cost of constructing the Improvements, and that
portion, if any, of each cost item which has been incurred; and (d) a
construction progress schedule detailing the progress of construction and the
projected sequencing and completion time for uncompleted work, all as of the
date of such schedule.
Borrower agrees that Lender may disapprove any contractor, subcontractor or
material supplier which, in Lender's good faith determination, is deemed
financially or otherwise unqualified; provided, however, that the absence of any
-------- -------
such disapproval shall not constitute a warranty or representation of
qualification by Lender. Lender may contact any such contractor, subcontractor
or material supplier to discuss the course of construction.
4.10 PROHIBITED CONTRACTS. Without Lender's prior written consent, Borrower
--------------------
shall not contract for any materials, furnishings, equipment, fixtures or other
parts or components of the Improvements, if any third party shall retain any
ownership interest (other than lien rights created by operation of law) in such
items after their delivery to the Property and Improvements. Borrower shall
have five (5) days to effect the removal of any such retained interest.
4.11 LIENS AND NOTICES. Subject to the provisions of Section 4.11, if a
-------------------
lien affidavit is recorded or a notice of claim for unpaid work, materials or
specially fabricated items or a notice of a contractual retainage claim is given
to the Borrower or Contractor which affects the Property or Improvements,
Borrower shall, within twenty (20) calendar days of such recording or receipt of
such notice or within ten (10) calendar days of Lender's written demand,
whichever occurs first: (a) pay and discharge the lien claim; (b) effect the
release thereof by recording or delivering to Lender a surety bond in sufficient
form and amount; or (c) provide Lender with other assurances which Lender deems,
in its reasonable discretion, to be satisfactory for the payment of such lien
claim and for the full and continuous protection of Lender from the effect of
such lien claim.
4.12 CONSTRUCTION RESPONSIBILITIES. Borrower shall cause Contractor to
------------------------------
construct the Improvements in a workmanlike manner substantially according to
the Plans and Specifications and the recommendations of any soils or engineering
report approved by Lender. Borrower shall comply in all material respects with
all applicable laws, ordinances, rules, regulations, building restrictions,
recorded covenants and restrictions, and requirements of all regulatory
authorities having jurisdiction over the Property or Improvements. Borrower
shall be solely responsible for all aspects of Borrower's business and conduct
in connection with the Property and Improvements, including, without limitation,
for the quality and suitability of the Plans and Specifications and their
compliance with all governmental requirements, the supervision of the work of
construction, the qualifications, financial condition and performance of all
architects, engineers, contractors, material suppliers, consultants and property
managers, and the accuracy of all applications for payment and the proper
application of all disbursements. Lender is not obligated to supervise, inspect
or inform Borrower or any third party of any aspect of the construction of the
Improvements or any other matter referred to above.
4.13 ASSESSMENTS AND COMMUNITY FACILITIES DISTRICTS. Without Lender's prior
----------------------------------------------
written consent, Borrower shall not cause to become effective or otherwise
consent to the formation of any assessment district or community facilities
district which includes all or any part of the Property and Improvements
pursuant to: (a) contractual agreements among property owners and/or other
governmental or quasi-governmental agencies or political subdivisions or
districts, or other entity providing such community facilities; or (b) any
state, county or municipal ordinance, law, regulation or statute. Nor shall
Borrower cause or otherwise consent to the levying of special taxes or
assessments against the Property and Improvements by any such assessment
district or community facilities district.
4.14 DELAY. Borrower shall promptly notify Lender in writing of any event
-----
causing substantial delay or interruption of construction, or the timely
completion of construction. The notice shall specify the particular work
delayed, and the cause and period of each delay.
4.15 INSPECTIONS. Upon reasonable prior notice to Borrower, Lender shall
-----------
have the right to enter upon the Property at all reasonable times to inspect the
Improvements and the construction work to verify information disclosed or
required pursuant to this Agreement. Any inspection or review of the
Improvements by Lender is solely to determine whether Borrower is properly
discharging its obligations to Lender and may not be relied upon by Borrower or
by any third party as a representation or warranty of compliance with this
Agreement or any other agreement. Lender owes no duty of care to Borrower or
any third party to protect against, or to inform Borrower or any third party of,
any negligent, faulty, inadequate or defective design or construction of the
Improvements as determined by Lender.
4.16 SURVEYS. Upon Lender's written request, Borrower shall promptly
-------
deliver to Lender: (a) upon completion of the foundations of the Improvements,
a survey showing the location of the Improvements on the Property and confirming
that the Improvements are located entirely within the Property and do not
encroach upon any easement, or breach or violate any governmental requirement;
and (b) upon completion of the Improvements, an as-built survey acceptable to a
title insurer for purposes of issuing a standard Texas promulgated form of
mortgagee policy of title insurance. All such surveys shall be performed and
certified by a licensed engineer or surveyor acceptable to the insurer and shall
be in accordance with a Category 1A, Condition I survey pursuant to the most
recent edition of the Manual of Practice for Land Surveying in the State of
Texas, published by the Texas Society of Professional Surveyors or in accordance
with the ALTA/ACSM Minimum Standard Detail Requirements and Classifications for
ALTA/ACSM Land Title Surveys (1992) for an urban business district survey class.
ARTICLE 5. INSURANCE
Borrower shall, while any obligation of Borrower or any Guarantor under any Loan
Document remains outstanding, maintain at Borrower's sole expense, with licensed
insurers approved by Lender, the following policies of insurance in form and
substance satisfactory to Lender:
5.1 TITLE INSURANCE. A Mortgagee Title Policy, together with any
----------------
endorsements which Lender may require, insuring Lender, in the principal amount
--
of the Loan, of the validity and the priority of the lien of the Deed of Trust
upon the Property and Improvements, subject only to matters approved by Lender
in writing and including a Rule P-8(b)(1) exception prior to completion of the
Improvements. During the term of the Loan, Borrower shall deliver to Lender,
within five (5) days of Lender's written request, such other endorsements to the
Title Policy as Lender may require.
5.2 PROPERTY INSURANCE. A Builders Risk Completed Value Hazard Insurance
-------------------
policy, including, without limitation, such endorsements as Lender may require,
insuring Lender against damage to the Property and Improvements in an amount
acceptable to Lender. Lender shall be named on the policy under a Lender's Loss
Payable Endorsement and Standard Mortgage Clause Endorsement (in forms
acceptable to Lender).
5.3 FLOOD HAZARD INSURANCE. A policy of flood insurance, as required by
------------------------
applicable governmental regulations.
5.4 LIABILITY INSURANCE. A policy of comprehensive general liability
--------------------
insurance with limits as required by Lender, insuring against liability for
injury and/or death to any person and/or damage to any property occurring on the
Property and/or in the Improvements from any cause whatsoever.
5.5 GENERAL. Borrower shall provide to Lender the originals of all required
-------
insurance policies, or other evidence of insurance acceptable to Lender. All
insurance policies shall provide that the insurance shall not be cancelable or
materially changed without ten (10) days prior written notice to Lender. Lender
shall be named under a Lender's Loss Payable Endorsement and Standard Mortgage
Clause Endorsement (in forms acceptable to Lender) on all insurance policies
which Borrower actually maintains with respect to the Property and Improvements.
Borrower shall provide to Lender evidence of any other insurance Lender may deem
necessary at any time during the Loan.
ARTICLE 6. REPRESENTATIONS AND WARRANTIES
As a material inducement to Lender's entry into this Agreement, Borrower
represents and warrants to Lender as of the Effective Date and continuing
thereafter that:
6.1 AUTHORITY/ENFORCEABILITY. Borrower is in compliance with all laws and
------------------------
regulations applicable to its organization, existence and transaction of
business and has all necessary rights and powers to own, develop and operate the
Property and Improvements as contemplated by the Loan Documents, the failure of
which would or could reasonably be expected to have a material adverse affect on
the Property or Borrower's business.
6.2 BINDING OBLIGATIONS. Borrower is authorized to execute, deliver and
--------------------
perform its obligations under the Loan Documents, and such obligations shall be
valid and binding obligations of Borrower.
6.3 FORMATION AND ORGANIZATIONAL DOCUMENTS. Borrower has delivered to
-----------------------------------------
Lender all formation and organizational documents of Borrower, of the partners,
joint venturers or members of Borrower, if any, and of all guarantors of the
Loan, if any, and all such formation and organizational documents remain in full
force and effect and have not been amended or modified since they were delivered
to Lender. Borrower shall immediately provide Lender with copies of any
amendments or modifications of the formation or organizational documents.
6.4 NO VIOLATION. Borrower's execution, delivery, and performance under the
------------
Loan Documents do not: (a) require any consent or approval not heretofore
obtained under any partnership agreement, operating agreement, articles of
incorporation, bylaws or other document; (b) violate any governmental
requirement applicable to the Property and Improvements or any other statute,
law, regulation or ordinance or any order or ruling of any court or governmental
entity; (c) conflict with, or constitute a breach or default or permit the
acceleration of obligations under any agreement, contract, lease, or other
document by which the Borrower is or the Property and Improvements are bound or
regulated; or (d) violate any statute, law, regulation or ordinance, or any
order of any court or governmental entity.
6.5 COMPLIANCE WITH LAWS. Borrower has, and at all times shall have
----------------------
obtained, (a) all permits, licenses, exemptions, and approvals necessary to
construct, occupy, operate and market the Property and Improvements, and shall
maintain compliance with all governmental requirements applicable to the
Property and Improvements and (b) all other applicable statutes, laws,
regulations and ordinances necessary for the transaction of its business, the
failure of which would or could reasonably be expected to have a material
adverse affect on the Property or Borrower's business.
6.6 LITIGATION. Except as disclosed to Lender in writing, Borrower has no
----------
knowledge of any claims, actions, suits, or proceedings pending, or threatened,
against Borrower or affecting the Property or Improvements that would, if
adversely determined, have a material adverse affect on the Property or
Borrower's ability to pay and perform its obligations herein.
6.7 FINANCIAL CONDITION. All financial statements and information
--------------------
heretofore and hereafter delivered to Lender by Borrower, including, without
-
limitation, information relating to the financial condition of Borrower, the
Property, the Improvements, the partners, joint venturers or members of
Borrower, and/or any Guarantor, fairly and accurately represent the financial
condition of the subject thereof and have been prepared (except as noted
therein) in accordance with generally accepted accounting principles
consistently applied as of the respective dates thereof. Borrower acknowledges
and agrees that Lender may request and obtain additional information from third
parties regarding any of the above, including, without limitation, credit
reports.
6.8 NO MATERIAL ADVERSE CHANGE. There has been no material adverse change
----------------------------
in the financial condition of Borrower and/or Guarantor since the dates of the
latest financial statements furnished to Lender and, except as otherwise
disclosed to Lender in writing, Borrower has not entered into any material
transaction which is not disclosed in such financial statements.
6.9 LOAN PROCEEDS AND ADEQUACY. The undisbursed Loan proceeds, together
-----------------------------
with Borrower's Funds and all other sums, if any, to be provided by Borrower as
shown in Exhibit C, are sufficient to construct the Improvements in accordance
---------
with the terms and conditions of this Agreement.
6.10 ACCURACY. All reports, documents, instruments, information and forms
--------
of evidence delivered by Borrower to Lender concerning the Loan or security for
the Loan or required by the Loan Documents are accurate, correct and
sufficiently complete to give Lender true and accurate knowledge of their
subject matter, and do not contain any misrepresentation or omission.
6.11 TAX LIABILITY. Borrower has filed all required federal, state, county
--------------
and municipal tax returns and has paid all taxes and assessments owed and
payable, and Borrower has no knowledge of any basis for any additional payment
with respect to any such taxes and assessments.
6.12 UTILITIES. All utility services, including, without limitation, gas,
---------
water, sewage, electrical and telephone, necessary for the development and
occupancy of the Property and Improvements are available at or within the
boundaries of the Property, or Borrower has taken all steps necessary to assure
that all such services will be available upon completion of the Improvements.
6.13 COMPLIANCE. Borrower shall comply in all material respects with all
----------
governmental requirements for the development of the Property and construction
of the Improvements and will conform to and comply in all material respects with
all governmental requirements and the Plans and Specifications.
6.14 AMERICANS WITH DISABILITIES ACT COMPLIANCE. The Improvements shall be
-------------------------------------------
constructed and completed, and thereafter maintained, in strict accordance and
full compliance with all of the requirements of the Americans with Disabilities
Act, of July 26, 1990, Pub. L. No. 101-336, 104 Stat. 327, 42 U.S.C. 12101,
et. seq., and with 23 Tex. Rev. Civ. Stat. Ann., art. 9102 ("Texas Architectural
Barriers Act"), as each may be amended from time to time. Borrower shall be
responsible for all ADA and Texas Architectural Barriers Act compliance costs.
6.15 BUSINESS LOAN. The Loan is a business loan transaction in the stated
--------------
amount solely for the purpose of carrying on the business of Borrower and none
of the proceeds of the Loan will be used for the personal, family or
agricultural purposes of the Borrower.
ARTICLE 7. HAZARDOUS MATERIALS
7.1 SPECIAL REPRESENTATIONS AND WARRANTIES. Without in any way limiting the
--------------------------------------
other representations and warranties set forth in this Agreement, and after
reasonable investigation and inquiry but subject to the findings in the
environmental reports provided to Lender, Borrower hereby specially represents
and warrants to the best of Borrower's knowledge as of the date of this
Agreement as follows:
(a) HAZARDOUS MATERIALS. The Property and Improvements are not and have not
-------------------
been a site for the use, generation, manufacture, storage, treatment, release,
threatened release, discharge, disposal, transportation or presence of any oil,
flammable explosives, asbestos, urea formaldehyde insulation, radioactive
materials, hazardous wastes, toxic or contaminated substances or similar
materials, including, without limitation, any substances which are "hazardous
substances," "hazardous wastes," "hazardous materials," "toxic substances,"
"wastes," "regulated substances," "industrial solid wastes," or "pollutants"
under the Hazardous Materials Laws, as described below, and/or other applicable
environmental laws, ordinances and regulations (collectively, the "Hazardous
Materials"). "Hazardous Materials" shall not include commercially reasonable
amounts of such materials used in the ordinary course of operation of the
Property which are used and stored in accordance with all applicable Hazardous
Materials Laws.
(b) HAZARDOUS MATERIALS LAWS. The Property and Improvements are in
--------------------------
compliance with all laws, ordinances and regulations relating to Hazardous
Materials ("Hazardous Materials Laws"), including, without limitation: the
Clean Air Act, as amended, 42 U.S.C. Section 7401 et seq.; the Federal Water
-- ---
Pollution Control Act, as amended, 33 U.S.C. Section 1251 et seq.; the Resource
-- ---
Conservation and Recovery Act of 1976, as amended, 42 U.S.C. Section 6901 et
--
seq.; the Comprehensive Environment Response, Compensation and Liability Act of
1980, as amended (including the Superfund Amendments and Reauthorization Act of
1986, "CERCLA"), 42 U.S.C. Section 9601 et seq.; the Toxic Substances Control
-- ---
Act, as amended, 15 U.S.C. Section 2601 et seq.; the Occupational Safety and
-- ---
Health Act, as amended, 29 U.S.C. Section 651, the Emergency Planning and
Community Right-to-Know Act of 1986, 42 U.S.C. Section 11001 et seq.; the Mine
-- ---
Safety and Health Act of 1977, as amended, 30 U.S.C. Section 801 et seq.; the
-- ---
Safe Drinking Water Act, as amended, 42 U.S.C. Section 300f et seq.; and all
-- ---
comparable state and local laws, laws of other jurisdictions or orders and
regulations (including, without limitation, the Texas Water Code, the Texas
Health & Safety Code and the Texas Solid Waste Disposal Act).
(c) HAZARDOUS MATERIALS CLAIMS. There are no claims or actions ("Hazardous
---------------------------
Materials Claims") pending or threatened against Borrower, the Property or
Improvements by any governmental entity or agency or by any other person or
entity relating to Hazardous Materials or pursuant to the Hazardous Materials
Laws.
7.2 HAZARDOUS MATERIALS COVENANTS. Borrower agrees as follows:
-------------------------------
(a) NO HAZARDOUS ACTIVITIES. Borrower shall not cause or permit the
-------------------------
Property or Improvements to be used as a site for the use, generation,
manufacture, storage, treatment, release, discharge, disposal, transportation or
presence of any Hazardous Materials.
(b) COMPLIANCE. Borrower shall comply and cause the Property and
----------
Improvements to comply with all Hazardous Materials Laws.
--
(c) NOTICES. Borrower shall immediately notify Lender in writing of: (i)
-------
the discovery of any Hazardous Materials on, under or about the Property and
Improvements; (ii) any knowledge by Borrower that the Property and Improvements
do not comply with any Hazardous Materials Laws; and (iii) any Hazardous
Materials Claims.
(d) REMEDIAL ACTION. In response to the presence of any Hazardous Materials
---------------
on, under or about the Property or Improvements, Borrower shall immediately
take, at Borrower's sole expense, all remedial action required by any Hazardous
Materials Laws or any judgment, consent decree, settlement or compromise in
respect to any Hazardous Materials Claims.
7.3 INSPECTION BY LENDER. Upon reasonable prior notice to Borrower, Lender,
--------------------
its employees and agents, may from time to time (whether before or after the
commencement of a nonjudicial or judicial foreclosure proceeding) enter and
inspect the Property and Improvements for the purpose of determining the
existence, location, nature and magnitude of any past or present release or
threatened release of any Hazardous Materials into, onto, beneath or from the
Property and Improvements.
7.4 HAZARDOUS MATERIALS INDEMNITY. BORROWER HEREBY AGREES TO DEFEND,
-------------------------------
INDEMNIFY AND HOLD HARMLESS LENDER, ITS DIRECTORS, OFFICERS, EMPLOYEES, AGENTS,
SUCCESSORS AND ASSIGNS FROM AND AGAINST ANY AND ALL LOSSES, DAMAGES,
LIABILITIES, CLAIMS, ACTIONS, JUDGMENTS, COURT COSTS AND LEGAL OR OTHER EXPENSES
(INCLUDING, WITHOUT LIMITATION, ATTORNEYS' FEES AND EXPENSES) WHICH LENDER MAY
INCUR AS A DIRECT OR INDIRECT CONSEQUENCE OF THE USE, GENERATION, MANUFACTURE,
STORAGE, DISPOSAL, THREATENED DISPOSAL, TRANSPORTATION OR PRESENCE OF HAZARDOUS
MATERIALS IN, ON, UNDER OR ABOUT THE PROPERTY OR IMPROVEMENTS. BORROWER SHALL
IMMEDIATELY PAY TO LENDER UPON DEMAND ANY AMOUNTS OWING UNDER THIS INDEMNITY,
TOGETHER WITH INTEREST FROM THE DATE THE INDEBTEDNESS ARISES UNTIL PAID AT THE
RATE OF INTEREST APPLICABLE TO THE PRINCIPAL BALANCE OF THE NOTE. BORROWER'S
DUTY AND OBLIGATIONS TO DEFEND, INDEMNIFY AND HOLD HARMLESS LENDER SHALL
SURVIVE: (I) THE CANCELLATION OF THE NOTE AND THE RELEASE OR PARTIAL RELEASE OF
THE DEED OF TRUST; (II) ANY JUDICIAL OR NON-JUDICIAL FORECLOSURE UNDER THE DEED
OF TRUST, OR TRANSFER OF THE PROPERTY IN LIEU THEREOF; AND (III) THE
SATISFACTION OF ALL OF BORROWER'S OBLIGATIONS UNDER THE LOAN DOCUMENTS. THE
FOREGOING INDEMNIFICATION OBLIGATION AND OTHER OBLIGATIONS OF BORROWER CONTAINED
IN THIS SECTION 7.2 SHALL NOT BE APPLICABLE TO NOR SHALL BORROWER BE RESPONSIBLE
FOR THE PRESENCE OF HAZARDOUS MATERIALS OR VIOLATION OF ANY HAZARDOUS MATERIALS
LAWS FIRST OCCURRING AFTER ANY FORECLOSURE, DEED IN LIEU OF FORECLOSURE,
LENDER'S APPOINTMENT OF A RECEIVER OR ANY OTHER ACTION WHICH RESULTS IN THE
DISPOSSESSION OF BORROWER FROM THE PROPERTY PURSUANT TO THE LOAN DOCUMENTS.
ARTICLE 8. SET ASIDE LETTERS
8.1 SET ASIDE LETTERS. If, at Borrower's request, Lender issues any letter
------------------
or letters ("Set Aside Letter") to any governmental agency ("Obligee") or
bonding company ("Surety") whereby Lender agrees to allocate Loan proceeds for
the construction of off-site, common area, or other improvements required by any
governmental agency or for which bonds may be required ("Bonded Work") in
connection with the development of the Property, Borrower represents, warrants,
covenants and agrees as follows:
(a) The sum which Borrower requests Lender to allocate for the Bonded Work
shall be sufficient to pay for the construction and completion cost of the
Bonded Work in accordance with any agreement between Borrower and Obligee and a
copy of such agreement shall be furnished to Lender by Borrower prior to and as
a condition precedent to the issuance by Lender of any Set Aside Letter;
(b) Lender is irrevocably and unconditionally authorized to disburse to the
Obligee or Surety all or any portion of said allocated Loan proceeds upon a
demand of such Surety or Obligee made in accordance with the terms and
conditions of the Set Aside Letter;
(c) Any disbursements or payments which Lender makes or may be obligated to
make under any Set Aside Letter, whether made directly to the Surety, Obligee,
or to others for completion of all or part of the Bonded Work, shall be deemed a
disbursement under this Agreement to or for the benefit or account of Borrower;
(d) BORROWER SHALL DEFEND, INDEMNIFY AND HOLD HARMLESS LENDER FROM ANY
CLAIM, DEMAND, CAUSE OF ACTION, DAMAGE, LOSS OR LIABILITY, INCLUDING, WITHOUT
LIMITATION, ANY COURT COSTS AND ATTORNEYS' FEES AND EXPENSES, WHICH LENDER MAY
SUFFER OR INCUR AS A DIRECT OR INDIRECT CONSEQUENCE OF ITS ISSUANCE OF OR
COMPLIANCE WITH ANY REQUESTED SET ASIDE LETTER. BORROWER SHALL PAY ANY
INDEBTEDNESS ARISING UNDER THIS INDEMNITY TO LENDER IMMEDIATELY UPON DEMAND OF
LENDER. BORROWER'S DUTY TO DEFEND, INDEMNIFY AND HOLD HARMLESS LENDER HEREUNDER
SHALL SURVIVE THE RELEASE AND CANCELLATION OF THE NOTE AND THE FULL OR PARTIAL
RELEASE OF THE DEED OF TRUST OR OTHER LOAN DOCUMENTS;
(e) Lender shall have no obligation to release any collateral or security
under the Loan Documents unless and until Lender has received a full and final
written release of its obligations under each Set Aside Letter; and
ARTICLE 9. COVENANTS OF BORROWER
9.1 EXPENSES. Borrower shall immediately pay Lender upon demand all costs
--------
and expenses incurred by Lender in connection with: (a) the preparation of this
Agreement, all other Loan Documents contemplated hereby; (b) the administration
of this Agreement, the other Loan Documents and for the term of the Loan; and
(c) the enforcement or satisfaction by Lender of any of Borrower's obligations
under this Agreement, the other Loan Documents. For all purposes of this
Agreement, Lender's costs and expenses shall include, without limitation, all
appraisal fees, cost engineering and inspection fees, reasonable legal fees and
expenses, accounting fees, environmental consultant fees, auditor fees, and the
cost to Lender of any title insurance premiums, title surveys, release and
notary fees. Borrower recognizes and agrees that formal written appraisals of
the Property and Improvements by a licensed independent appraiser may be
required by Lender's internal procedures and/or federal regulatory reporting
requirements on an annual and/or specialized basis and that Lender may, at its
option, require inspection of the Property and Improvements by an independent
supervising architect and/or cost engineering specialist: (i) prior to each
advance; (ii) at least once each month during the course of construction even
though no disbursement is to be made for that month; (iii) upon completion of
the Improvements; and (iv) at least semi-annually thereafter. If any of the
services described above are provided by an employee of Lender, Lender's costs
and expenses for such services shall be calculated in accordance with Lender's
standard charge for such services.
9.2 ERISA COMPLIANCE. Borrower shall at all times comply with the
-----------------
provisions of ERISA with respect to any retirement or other employee benefit
-
plan to which it is a party as employer.
9.3 LEASING. Borrower shall use commercially reasonable efforts to maintain
-------
all leasable space in the Property leased at no less than fair market rental
rates.
9.4 APPROVAL OF LEASES. All leases of all or any material part of the
--------------------
Property and Improvements shall: (a) be upon terms and with tenants approved by
Lender prior to Borrower's execution of any such lease; and (b) include
estoppel, subordination, attornment and mortgagee protection provisions
satisfactory to Lender. All standard lease forms and any material deviation
from any form, shall be approved by Lender prior to execution of any lease using
such form.
9.5 INTENTIONALLY OMITTED.
9.6 SUBDIVISION MAPS. Except for the final plat previously submitted to,
-----------------
and approved by, Lender, prior to recording any final map, plat, parcel map, lot
line adjustment or other subdivision map of any kind covering any portion of the
Property (collectively, "Subdivision Map"), Borrower shall submit such
Subdivision Map to Lender for Lender's review and approval, which approval shall
not be unreasonably withheld. Within ten (10) Business Days after Lender's
receipt of such Subdivision Map, Lender shall provide Borrower written notice if
Lender disapproves of said Subdivision Map. Lender shall be deemed to have
approved the Subdivision Map if such notice is not provided to Borrower. Within
five (5) Business Days after Lender's request, Borrower shall execute,
acknowledge and deliver to Lender such amendments to the Loan Documents as
Lender may reasonably require to reflect the change in the legal description of
the Property resulting from the recordation of any Subdivision Map. In
connection with and promptly after the recordation of any amendment or other
modification to the Deed of Trust recorded in connection with such amendments,
Borrower shall deliver to Lender, at Borrower's sole expense, a title
endorsement to the Title Policy in form and substance satisfactory to Lender
insuring the continued first priority lien of the Deed of Trust. Subject to the
execution and delivery by Borrower of any documents required under this Section,
Lender shall, if required by applicable law, sign any Subdivision Map approved,
or deemed to be approved, by Lender pursuant to this Section.
9.7 OPINION OF LEGAL COUNSEL. At closing, Borrower shall provide, at
---------------------------
Borrower's expense, an opinion of legal counsel in form and content satisfactory
to Lender and its counsel.
9.8 FURTHER ASSURANCES. Upon Lender's request and at Borrower's sole cost
-------------------
and expense, Borrower shall execute, acknowledge and deliver any other
instruments and perform any other acts necessary, desirable or proper, as
determined by Lender, to carry out the purposes of this Agreement and the other
Loan Documents or to perfect and preserve any liens created by the Loan
Documents.
9.9 ASSIGNMENT. Without the prior written consent of Lender, Borrower shall
----------
not assign Borrower's interest under any of the Loan Documents, or in any monies
due or to become due thereunder, and any assignment without such consent shall
be void. In this regard, Borrower acknowledges that Lender would not make this
Loan except in reliance on Borrower's expertise, reputation, prior experience in
developing and constructing commercial real property, Lender's knowledge of
Borrower, and Lender's understanding that this Agreement is more in the nature
of an agreement involving personal services than a standard loan where Lender
would rely on security which already exists.
9.10 MANAGEMENT OF PROPERTY. Other than the Development Agreement with
------------------------
Billingsly Development Corporation previously submitted to Lender, without the
prior written consent of Lender, Borrower shall not enter into any agreement
providing for the management, leasing or operation of the Property or
Improvements.
ARTICLE 10. REPORTING COVENANTS
10.1 FINANCIAL INFORMATION. Borrower shall deliver to Lender, all such
----------------------
financial information and reports as are required to be delivered pursuant to
the Master Loan Agreement.
10.2 BOOKS AND RECORDS. Borrower shall maintain or cause to be maintained
-------------------
complete books of account and other records for the Property and Improvements
and for disbursement and use of the proceeds of the Loan and Borrower's Funds,
and the same shall be available for inspection and copying by Lender upon
reasonable prior notice.
ARTICLE 11. DEFAULTS AND REMEDIES
11.1 DEFAULT. The occurrence of any one or more of the following shall
-------
constitute an event of default ("Default") under this Agreement and the other
Loan Documents:
(a) MONETARY. (i) Borrower's failure to pay when due any principal,
--------
interest or fees, or any part thereof under the Note, and such failure continues
for one (1) Business Day after notice thereof by Lender; or (ii) Borrower's
failure to pay any other sums payable under the Note or any of the other Loan
Documents or Borrower's failure to deposit any Borrower's Funds as and when
required under this Agreement and any such failure continues for five (5)
Business Days after notice thereof; or
(b) PERFORMANCE OF AGREEMENT OBLIGATIONS. Borrower's failure to perform any
------------------------------------
obligation in addition to those in Section 11.1(a) above under this Agreement or
the Loan Documents and such failure continues for a period of twenty-five days
after notice thereof to Borrower by Lender, provided that if cure cannot be
completed in such period so long as cure is being diligently prosecuted, the
cure period shall be extended to a maximum of no more than ninety (90) days
following the occurrence of the default; or
(c) DEFAULT UNDER MASTER LOAN AGREEMENT. The occurrence of an "Event of
---------------------------------------
Default" as defined in the Master Loan Agreement; or
(d) CONSTRUCTION; USE. (i) There is any material deviation in the work of
------------------
construction from the Plans and Specifications or governmental requirements or
the appearance or use of defective workmanship or materials in constructing the
Improvements, and Borrower fails to remedy the same to Lender's satisfaction
within ten (10) days of Lender's written demand to do so; or (ii) there is a
cessation of construction of the Improvements prior to completion for a
continuous period of more than fifteen (15) days (except as caused by an event
of force majeure for which a longer delay may be permitted under Article 4); or
(iii) the construction, sale or leasing of any of the Improvements in accordance
with the Loan Documents is prohibited, enjoined or delayed for a continuous
period of more than thirty (30) days; or (iv) utilities or other public services
necessary for the full occupancy and utilization of the Property and
Improvements are curtailed for a continuous period of more than thirty (30)
days; or
(e) LIENS, ATTACHMENT; CONDEMNATION. (i) The recording of any lien
---------------------------------
affidavit against the Property or Improvements or the giving to Borrower of any
notice of unpaid claims for work, material or specially fabricated items or of a
contractual retainage claim relating to the Property or Improvements and the
continuance of such lien claim or notice without discharge, satisfaction or
provision for payment being made by Borrower in a manner satisfactory to Lender
within twenty (20) days after such recording or receipt by Borrower of such
notice or within ten (10) calendar days of Lender's written demand to cure same,
whichever occurs first; or (ii) the condemnation, seizure or appropriation of,
or occurrence of an uninsured casualty with respect to any material portion of
the Property or Improvements; or (iii) the sequestration or attachment of, or
any levy or execution upon any of the Property or Improvements, any other
collateral provided by Borrower under any of the Loan Documents, any monies in
the Account or in the Borrower's Funds Account, or any substantial portion of
the other assets of Borrower, which sequestration, attachment, levy or execution
is not released, expunged or dismissed prior to the earlier of forty-five (45)
days or the sale of the assets affected thereby; or
(f) REPRESENTATIONS AND WARRANTIES. (i) The failure of any representation
--------------------------------
or warranty of Borrower in any of the Loan Documents and the continuation of
such failure for more than ten (10) days after written notice to Borrower from
Lender requesting that Borrower cure such failure; or (ii) any material adverse
change in the financial condition of Borrower or any other person or entity in
any manner obligated to Lender under the Loan Documents from the financial
condition represented to Lender as of the Effective Date, the failure of which
would or could reasonably be expected to have a material adverse affect on the
Property or Borrower's business; or
(g) VOLUNTARY BANKRUPTCY; INSOLVENCY; DISSOLUTION. (i) The filing of a
------------------------------------------------
petition by Borrower for relief under the Bankruptcy Code, or under any other
present or future state or federal law regarding bankruptcy, reorganization or
other debtor relief law; (ii) the filing of any pleading or an answer by
Borrower in any involuntary proceeding under the Bankruptcy Code or other debtor
relief law which admits the jurisdiction of the court or the petition's material
allegations regarding Borrower's insolvency; (iii) a general assignment by
Borrower for the benefit of creditors; or (iv) Borrower applying for, or the
appointment of, a receiver, trustee, custodian or liquidator of Borrower or any
of its property; or
(h) INVOLUNTARY BANKRUPTCY. The failure of Borrower to effect a full
-----------------------
dismissal of any involuntary petition under the Bankruptcy Code or under any
other debtor relief law that is filed against Borrower or in any way restrains
or limits Borrower or Lender regarding the Loan, the Property or the
Improvements, prior to the earlier of the entry of any court order granting
relief sought in such involuntary petition, or forty-five (45) days after the
date of filing of such involuntary petition; or
(i) LOSS OF PRIORITY. The failure at any time of the Deed of Trust to be a
-----------------
valid first lien upon the Property and Improvements or any portion thereof,
other than as a result of any release or partial release of the Deed of Trust
with respect to all or any portion of the Property and Improvements pursuant to
the terms and conditions of this Agreement; or
(j) HAZARDOUS MATERIALS. The discovery of any significant Hazardous
--------------------
Materials in, on or about the Property or Improvements subsequent to the
Effective Date. Any such Hazardous Materials shall be "significant" for this
purpose if said Hazardous Materials, in Lender's sole discretion, have a
materially adverse impact on the value of the Property and Improvements; or
Notwithstanding the foregoing, the occurrence of an Event of Default described
in Section 11.1(e)(ii) by reason of a condemnation shall not automatically cause
-------------------
a default under the Master Loan Agreement so long as either the Loan is fully
paid to Lender or, if Lender shall agree in its sole discretion, the Property is
restored to a condition of sufficient use and value to serve as security for the
Loan.
11.2 ACCELERATION UPON DEFAULT; REMEDIES. Upon the occurrence and during
--------------------------------------
continuance of any Default specified in this Article 11, Lender may, at its sole
option, declare all sums owing to Lender under the Note, this Agreement and the
other Loan Documents immediately due and payable. Upon such acceleration,
Lender may, in addition to all other remedies permitted under this Agreement and
the other Loan Documents and at law or equity, apply any sums in the Account and
Borrower's Funds Account to the sums owing under the Loan Documents and any and
all obligations of Lender to fund further disbursements under the Loan shall
terminate.
11.3 DISBURSEMENTS TO THIRD PARTIES. Upon the occurrence and during
---------------------------------
continuance of a Default occasioned by Borrower's failure to pay money to a
third party as required by this Agreement, Lender may but shall not be obligated
to make such payment from the Loan proceeds, Borrower's Funds, or other funds of
Lender. If such payment is made from proceeds of the Loan or from Borrower's
Funds, Borrower shall immediately deposit with Lender, upon written demand, an
amount equal to such payment. If such payment is made from funds of Lender,
Borrower shall immediately repay such funds upon written demand of Lender. In
either case, the Default with respect to which any such payment has been made by
Lender shall not be deemed cured until such deposit or repayment (as the case
may be) has been made by Borrower to Lender.
11.4 LENDER'S COMPLETION OF CONSTRUCTION. Upon the occurrence and during
--------------------------------------
continuance of a Default, Lender may, upon five (5) days prior written notice to
Borrower, and with or without legal process, take possession of the Property and
Improvements, remove Borrower and all agents, employees and contractors of
Borrower from the Property and Improvements, complete the work of construction
and market, operate and sell or lease the Property and/or Improvements. For
this purpose, Borrower irrevocably appoints Lender as its attorney-in-fact,
which agency is coupled with an interest. As attorney-in-fact, Lender may, in
Borrower's name, take or omit to take any action Lender may deem appropriate,
including, without limitation, exercising Borrower's rights under the Loan
Documents and all contracts concerning the Property and/or Improvements.
11.5 LENDER'S CESSATION OF CONSTRUCTION. If Lender determines at any time
------------------------------------
that the Improvements are not being constructed in accordance with the Plans and
Specifications and all governmental requirements in all material respects,
Lender may immediately cause all construction to cease on any of the
Improvements affected by the condition of nonconformance. Borrower shall
thereafter not allow any construction work, other than corrective work, to be
performed on any of the Improvements affected by the condition of nonconformance
until such time as Lender notifies Borrower in writing that the nonconforming
condition has been corrected.
11.6 REPAYMENT OF FUNDS ADVANCED. Any funds expended by Lender in the
------------------------------
exercise of its rights or remedies under this Agreement and the other Loan
Documents shall be payable to Lender upon demand, together with interest at the
rate applicable to the principal balance of the Note from the date the funds
were expended.
11.7 RIGHTS CUMULATIVE, NO WAIVER. All Lender's rights and remedies
-------------------------------
provided in this Agreement and the other Loan Documents, together with those
granted by law or at equity, are cumulative and may be exercised by Lender at
any time. Lender's exercise of any right or remedy shall not constitute a cure
of any Default unless all sums then due and payable to Lender under the Loan
Documents are repaid and Borrower has cured all other Defaults. No waiver shall
be implied from any failure of Lender to take, or any delay by Lender in taking,
action concerning any Default or failure of condition under the Loan Documents,
or from any previous waiver of any similar or unrelated Default or failure of
condition. Any waiver or approval under any of the Loan Documents must be in
writing and shall be limited to its specific terms.
ARTICLE 12. MISCELLANEOUS PROVISIONS
12.1 INDEMNITY. BORROWER HEREBY AGREES TO DEFEND, INDEMNIFY AND HOLD
---------
HARMLESS LENDER, ITS DIRECTORS, OFFICERS, EMPLOYEES, AGENTS, SUCCESSORS AND
ASSIGNS FROM AND AGAINST ANY AND ALL LOSSES, DAMAGES, LIABILITIES, CLAIMS,
ACTIONS, JUDGMENTS, COURT COSTS AND LEGAL OR OTHER EXPENSES (INCLUDING, WITHOUT
LIMITATION, REASONABLE ATTORNEYS' FEES AND EXPENSES) WHICH LENDER MAY INCUR AS A
DIRECT OR INDIRECT CONSEQUENCE OF: (A) THE PURPOSE TO WHICH BORROWER APPLIES
THE LOAN PROCEEDS; (B) THE FAILURE OF BORROWER TO PERFORM ANY OBLIGATIONS AS AND
WHEN REQUIRED BY THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS AFTER
EXPIRATION OF APPLICABLE CURE PERIODS; (C) ANY FAILURE AT ANY TIME OF ANY OF
BORROWER'S REPRESENTATIONS OR WARRANTIES TO BE TRUE AND CORRECT IN ANY MATERIAL
RESPECT; OR (D) ANY ACT OR OMISSION BY BORROWER, CONSTITUENT PARTNER OR MEMBER
OF BORROWER, ANY CONTRACTOR, SUBCONTRACTOR OR MATERIAL SUPPLIER, ENGINEER,
ARCHITECT OR OTHER PERSON OR ENTITY WITH RESPECT TO ANY OF THE PROPERTY OR
IMPROVEMENTS. BORROWER SHALL IMMEDIATELY PAY TO LENDER UPON DEMAND ANY AMOUNTS
OWING UNDER THIS INDEMNITY, TOGETHER WITH INTEREST FROM THE DATE THE
INDEBTEDNESS ARISES UNTIL PAID AT THE RATE OF INTEREST APPLICABLE TO THE
PRINCIPAL BALANCE OF THE NOTE. BORROWER'S DUTY AND OBLIGATIONS TO DEFEND,
INDEMNIFY AND HOLD HARMLESS LENDER SHALL SURVIVE CANCELLATION OF THE NOTE AND
THE RELEASE OR PARTIAL RELEASE OF THE DEED OF TRUST. The foregoing
indemnification obligation shall not apply to any matter first occurring after
any foreclosure, deed in lieu of foreclosure, Lender's appointment of a receiver
or any other action which results in the dispossession of Borrower from the
Property pursuant to the Loan Documents.
12.2 FORM OF DOCUMENTS. The form and substance of all documents,
-------------------
instruments, and forms of evidence to be delivered to Lender under the terms of
-
this Agreement and any of the other Loan Documents shall be subject to Lender's
approval and shall not be modified, superseded or terminated in any respect
without Lender's prior written approval.
12.3 NO THIRD PARTIES BENEFITED. No person other than Lender and Borrower
----------------------------
and their permitted successors and assigns shall have any right of action under
any of the Loan Documents.
12.4 NOTICES. All notices, demands, or other communications under this
-------
Agreement and the other Loan Documents shall be in writing and shall be
delivered to the appropriate party at the address set forth on the signature
page of this Agreement and as specified in Exhibit D (subject to change from
---------
time to time by written notice to all other parties to this Agreement). All
communications shall be deemed served upon delivery of same, or if mailed, upon
the first to occur of receipt or the expiration of three (3) days after the
deposit in the United States Postal Service mail, postage prepaid and addressed
to the address of Borrower or Lender at the address specified; provided,
--------
however, that non-receipt of any communication as the result of any change of
address of which the sending party was not notified or as the result of a
refusal to accept delivery shall be deemed receipt of such communication.
12.5 ATTORNEY-IN-FACT. Borrower hereby irrevocably appoints and authorizes
----------------
Lender, as Borrower's attorney-in-fact, which agency is coupled with an
interest, to execute and/or record in Lender's or Borrower's name any notices,
instruments or documents that Lender deems appropriate to protect Lender's
interest under any of the Loan Documents.
12.6 ACTIONS. Upon and during the continuance of a Default, Borrower agrees
-------
that Lender, in exercising the rights, duties or liabilities of Lender or
Borrower under the Loan Documents, may commence, appear in or defend any action
or proceeding purporting to affect the Property, the Improvements, or the Loan
Documents and Borrower shall immediately reimburse Lender upon demand for all
such expenses so incurred or paid by Lender, including, without limitation,
reasonable attorneys' fees and expenses and court costs.
12.7 RIGHT OF CONTEST. Borrower may contest in good faith any claim, tax,
------------------
demand, levy or assessment by any person other than Lender which would
constitute a Default if: (a) Borrower pursues the contest diligently, in a
manner which Lender determines is not prejudicial to Lender, and does not impair
the rights of Lender under any of the Loan Documents; and (b) Borrower deposits
with Lender any funds or other forms of assurance which Lender in good faith
determines from time to time appropriate to protect Lender from the consequences
of the contest being unsuccessful. Borrower's compliance with this Section
shall operate to prevent such claim, demand, levy or assessment from becoming a
Default.
12.8 RELATIONSHIP OF PARTIES. The relationship of Borrower and Lender under
-----------------------
the Loan Documents is, and shall at all times remain, solely that of borrower
and lender, and Lender neither undertakes nor assumes any responsibility or duty
to Borrower or to any third party with respect to the Property or Improvements,
except as expressly provided in this Agreement and the other Loan Documents.
12.9 DELAY OUTSIDE LENDER'S CONTROL. Lender shall not be liable in any way
-------------------------------
to Borrower or any third party for Lender's failure to perform or delay in
performing under the Loan Documents (and Lender may suspend or terminate all or
any portion of Lender's obligations under the Loan Documents) if such failure to
perform or delay in performing results directly or indirectly from, or is based
upon, the action, inaction, or purported action, of any governmental or local
authority, or because of war, rebellion, insurrection, strike, lock-out, boycott
or blockade (whether presently in effect, announced or in the sole judgment of
Lender deemed probable), or from any Act of God or other cause or event beyond
Lender's control.
12.10 ATTORNEYS' FEES AND EXPENSES; ENFORCEMENT. If any attorney is engaged
-----------------------------------------
by Lender to enforce or defend any provision of this Agreement, any of the other
Loan Documents, or as a consequence of any Default under the Loan Documents,
with or without the filing of any legal action or proceeding, Borrower shall
immediately pay to Lender, upon demand, the amount of all reasonable attorneys'
fees and expenses and all 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 balance of the Note as specified
therein.
12.11 IMMEDIATELY AVAILABLE FUNDS. Unless otherwise expressly provided for
----------------------------
in this Agreement, all amounts payable by Borrower to Lender shall be payable
only in United States currency, immediately available funds.
12.12 LENDER'S CONSENT. Wherever in this Agreement there is a requirement
-----------------
for Lender's consent and/or a document to be provided or an action taken "to the
satisfaction of Lender", it is understood by such phrase that Lender shall
exercise its consent, right or judgment in a reasonable manner given the
specific facts and circumstance applicable at the time.
12.13 LOAN SALES AND PARTICIPATIONS; DISCLOSURE OF INFORMATION. Borrower
-----------------------------------------------------------
agrees that Lender may elect, at any time, to sell, assign or grant
participations in all or any portion of its rights and obligations under the
Loan Documents, and that any such sale, assignment or participation may be to
one or more financial institutions, private investors, and/or other entities, at
Lender's sole discretion ("Participant"). Borrower further agrees that Lender
may disseminate to any such actual or potential purchaser(s), assignee(s) or
participant(s) all documents and information (including, without limitation, all
financial information) which has been or is hereafter provided to or known to
Lender with respect to: (a) the Property and Improvements and their operation;
(b) any party connected with the Loan (including, without limitation, the
Borrower; and/or (c) any lending relationship other than the Loan which Lender
may have with any party connected with the Loan. In the event of any such sale,
assignment or participation, Lender and the parties to such transaction shall
share in the rights and obligations of Lender as set forth in the Loan Documents
only as and to the extent they agree among themselves. In connection with any
such sale, assignment or participation, Borrower further agrees that the Loan
Documents shall be sufficient evidence of the obligations of Borrower to each
purchaser, assignee, or participant. The indemnity obligations of Borrower
under the Loan Documents shall also apply with respect to any purchaser,
assignee or participant.
(a) SALE OF PARTICIPATIONS. Notwithstanding any other provision of this
------------------------
Agreement to the contrary, Lender shall not sell, transfer, or assign the Loan
or the Loan Documents, nor grant any participations therein, to any entity other
than a subsidiary, parent or affiliate of Lender.
(b) SALE OF PARTICIPATIONS. Notwithstanding any other provision of this
------------------------
Agreement to the contrary, Lender shall not sell, transfer, assign or grant
participations in the Loan or the Loan Documents unless Lender remains the
principal or "lead" lender therefor.
12.14 INTENTIONALLY OMITTED.
12.15 SIGNS. At Lender's cost, Lender may place on the Property at a
-----
location designated by Borrower or Contractor, in compliance with deed
restrictions, reasonable signs standard to construction loan transactions
stating that construction financing is being provided by Lender and any other
lenders or participants in the Loan.
12.16 LENDER'S AGENTS. Lender may designate an agent or independent
----------------
contractor to exercise any of Lender's rights under this Agreement and any of
the other Loan Documents. Any reference to Lender in any of the Loan Documents
shall include Lender's agents, employees or independent contractors. Borrower
shall pay the costs of such agent or independent contractor either directly to
such person or to Lender in reimbursement of such costs, as applicable.
12.17 TAX SERVICE. Lender is authorized to secure, at Borrower's expense, a
-----------
tax service contract with a third party vendor which shall provide tax
information on the Property and Improvements satisfactory to Lender.
12.18 WAIVER OF RIGHT TO TRIAL BY JURY. EACH PARTY TO THIS AGREEMENT HEREBY
--------------------------------
EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR
CAUSE OF ACTION (A) ARISING UNDER THE LOAN DOCUMENTS, INCLUDING, WITHOUT
LIMITATION, ANY PRESENT OR FUTURE MODIFICATION THEREOF OR (B) IN ANY WAY
CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR
ANY OF THEM WITH RESPECT TO THE LOAN DOCUMENTS (AS NOW OR HEREAFTER MODIFIED) OR
ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION
HEREWITH, OR THE TRANSACTIONS RELATED HERETO OR THERETO, IN EACH CASE WHETHER
SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION IS NOW EXISTING OR HEREAFTER
ARISING, AND WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE; AND EACH PARTY
HEREBY AGREES AND CONSENTS THAT ANY PARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL
COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE
CONSENT OF THE PARTIES HERETO TO THE WAIVER OF ANY RIGHT THEY MIGHT OTHERWISE
HAVE TO TRIAL BY JURY.
12.19 SEVERABILITY. If any provision or obligation under this Agreement and
------------
the other Loan Documents shall be determined by a court of competent
jurisdiction to be invalid, illegal or unenforceable, that provision shall be
deemed severed from the Loan Documents and the validity, legality and
enforceability of the remaining provisions or obligations shall remain in full
force as though the invalid, illegal, or unenforceable provision had never been
a part of the Loan Documents, provided, however, that if the rate of interest or
-------- -------
any other amount payable under the Note or this Agreement or any other Loan
Document, or the right of collectibility therefor, are declared to be or become
invalid, illegal or unenforceable, Lender's obligations to make advances under
the Loan Documents shall not be enforceable by Borrower.
12.20 HEIRS, SUCCESSORS AND ASSIGNS. Except as otherwise expressly provided
-----------------------------
under the terms and conditions of this Agreement, the terms of the Loan
Documents shall bind and inure to the benefit of the heirs, successors and
assigns of the parties.
12.21 TIME. Time is of the essence of each and every term of this
----
Agreement.
12.22 HEADINGS. All article, section or other headings appearing in this
--------
Agreement and any of the other Loan Documents are for convenience of reference
only and shall be disregarded in construing this Agreement and any of the other
Loan Documents.
12.23 GOVERNING LAW. This Agreement shall be governed by, and construed and
-------------
enforced in accordance with the laws of the State of Texas, except to the extent
preempted by federal laws. Borrower and all persons and entities in any manner
obligated to Lender under the Loan Documents consent to the jurisdiction of any
federal or state court within the State of Texas having proper venue and also
consent to service of process by any means authorized by Texas or federal law.
12.24 INTEREST PROVISIONS.
--------------------
(a) Savings Clause. It is expressly stipulated and agreed to be the intent
---------------
of Borrower and Lender at all times to comply strictly with the applicable Texas
law governing the maximum rate or amount of interest payable on the Note or the
Related Indebtedness (or applicable United States federal law to the extent that
it permits Lender to contract for, charge, take, reserve or receive a greater
amount of interest than under Texas law). If the applicable law is ever
judicially interpreted so as to render usurious any amount (i) contracted for,
charged, taken, reserved or received pursuant to the Note, any of the other Loan
Documents or any other communication or writing by or between Borrower and
Lender related to the transaction or transactions that are the subject matter of
the Loan Documents, (ii) contracted for, charged or received by reason of
Lender's exercise of the option to accelerate the maturity of the Note and/or
the Related Indebtedness, or (iii) Borrower will have paid or Lender will have
received by reason of any voluntary prepayment by Borrower of the Note and/or
the Related Indebtedness, then it is Borrower's and Lender's express intent that
all amounts charged in excess of the Maximum Lawful Rate shall be automatically
canceled, ab initio, and all amounts in excess of the Maximum Lawful Rate
----------
theretofore collected by Lender shall be credited on the principal balance of
the Note and/or the Related Indebtedness (or, if the Note and all Related
Indebtedness have been or would thereby be paid in full, refunded to Borrower),
and the provisions of the Note and the other Loan Documents immediately be
deemed reformed and the amounts thereafter collectible hereunder and thereunder
reduced, without the necessity of the execution of any new document, so as to
comply with the applicable law, but so as to permit the recovery of the fullest
amount otherwise called for hereunder and thereunder; provided, however, if the
Note has been paid in full before the end of the stated term of the Note, then
Borrower and Lender agree that Lender shall, with reasonable promptness after
Lender discovers or is advised by Borrower that interest was received in an
amount in excess of the Maximum Lawful Rate, either refund such excess interest
to Borrower and/or credit such excess interest against the Note and/or any
Related Indebtedness then owing by Borrower to Lender. Borrower hereby agrees
that as a condition precedent to any claim seeking usury penalties against
Lender, Borrower will provide written notice to Lender, advising Lender in
reasonable detail of the nature and amount of the violation, and Lender shall
have sixty (60) days after receipt of such notice in which to correct such usury
violation, if any, by either refunding such excess interest to Borrower or
crediting such excess interest against the Note and/or the Related Indebtedness
then owing by Borrower to Lender. All sums contracted for, charged or received
by Lender for the use, forbearance or detention of any debt evidenced by the
Note and/or the Related Indebtedness shall, to the extent permitted by
applicable law, be amortized or spread, using the actuarial method, throughout
the stated term of the Note and/or the Related Indebtedness (including any and
all renewal and extension periods) until payment in full so that the rate or
amount of interest on account of the Note and/or the Related Indebtedness does
not exceed the Maximum Lawful Rate from time to time in effect and applicable to
the Note and/or the Related Indebtedness for so long as debt is outstanding. In
no event shall the provisions of Chapter 346 of the Texas Finance Code (which
regulates certain revolving credit loan accounts and revolving triparty
accounts) apply to the Note and/or the Related Indebtedness. Notwithstanding
anything to the contrary contained herein or in any of the other Loan Documents,
it is not the intention of Lender to accelerate the maturity of any interest
that has not accrued at the time of such acceleration or to collect unearned
interest at the time of such acceleration.
(b) Definitions. As used herein, the term "Maximum Lawful Rate" shall mean
----------- -------------------
the maximum lawful rate of interest which may be contracted for, charged, taken,
received or reserved by Lender in accordance with the applicable laws of the
State of Texas (or applicable United States federal law to the extent that it
permits Lender to contract for, charge, take, receive or reserve a greater
amount of interest than under Texas law), taking into account all Charges (as
herein defined) made in connection with the transaction evidenced by the Note
and the other Loan Documents. As used herein, the term "Charges" shall mean all
-------
fees, charges and/or any other things of value, if any, contracted for, charged,
received, taken or reserved by Lender in connection with the transactions
relating to the Note and the other Loan Documents, which are treated as interest
under applicable law. As used herein, the term "Related Indebtedness" shall
--------------------
mean any and all debt paid or payable by Borrower to Lender pursuant to the Loan
Documents or any other communication or writing by or between Borrower and
Lender related to the transaction or transactions that are the subject matter of
the Loan Documents, except such debt which has been paid or is payable by
Borrower to Lender under the Note.
(c) Ceiling Election. To the extent that Lender is relying on Chapter 303
-----------------
of the Texas Finance Code to determine the Maximum Lawful Rate payable on the
Note and/or the Related Indebtedness, Lender will utilize the weekly ceiling
from time to time in effect as provided in such Chapter 303, as amended. To the
extent United States federal law permits Lender to contract for, charge, take,
receive or reserve a greater amount of interest than under Texas law, Lender
will rely on United States federal law instead of such Chapter 303 for the
purpose of determining the Maximum Lawful Rate. Additionally, to the extent
permitted by applicable law now or hereafter in effect, Lender may, at its
option and from time to time, utilize any other method of establishing the
Maximum Lawful Rate under such Chapter 303 or under other applicable law by
giving notice, if required, to Borrower as provided by applicable law now or
hereafter in effect.
12.25 JOINT AND SEVERAL LIABILITY. The liability of all persons and
------------------------------
entities obligated in any manner under this Agreement and any of the Loan
Documents shall be joint and several.
12.26 COUNTERPARTS. To facilitate execution, this instrument may be
------------
executed in as many counterparts as may be convenient or required. It shall not
be necessary that the signature of, or on behalf of, each party, or that the
signature of all persons required to bind any party, appear on each counterpart.
All counterparts shall collectively constitute a single instrument. It shall
not be necessary in making proof of this instrument to produce or account for
more than a single counterpart containing the respective signatures of, or on
behalf of, each of the parties hereto. Any signature page to any counterpart
may be detached from such counterpart without impairing the legal effect of the
signatures thereon and thereafter attached to another counterpart identical
thereto except having attached to it additional signature pages.
12.27 INTEGRATION; INTERPRETATION. THIS LOAN AGREEMENT AND THE OTHER LOAN
----------------------------
DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE
PARTIES. THIS INSTRUMENT MAY BE AMENDED ONLY BY AN INSTRUMENT IN WRITING
EXECUTED BY THE PARTIES HERETO. ANY REFERENCE IN ANY OF THE LOAN DOCUMENTS TO
THE PROPERTY OR IMPROVEMENTS SHALL INCLUDE ALL OR ANY PART OF THE PROPERTY OR
IMPROVEMENTS. ANY REFERENCE TO THE LOAN DOCUMENTS INCLUDES ANY AMENDMENTS,
RENEWALS OR EXTENSIONS NOW OR HEREAFTER APPROVED BY LENDER IN WRITING.
12.28 ARBITRATION.
-----------
(a) ARBITRATION. Upon the demand of any party, any dispute shall be
-----------
resolved by binding arbitration (except as set forth in Paragraph 12.28(e)
below) in accordance with the terms of this Agreement. A "Dispute" shall mean
any action, dispute, claim or controversy of any kind, whether in contract or
tort, statutory or common law, legal or equitable, now existing or hereafter
arising under or in connection with, or in any way pertaining to, this Agreement
and each other document, contract and instrument required hereby or now or
hereafter delivered to Lender in connection herewith, or any past, present or
future extensions of credit and other activities, transactions or obligations of
any kind related directly or indirectly to any of the foregoing documents,
including without limitation, any of the foregoing arising in connection with
the exercise of any self-help, ancillary or other remedies pursuant to any of
the foregoing documents. Any party may by summary proceedings bring an action in
court to compel arbitration of a Dispute. Any party who fails or refuses to
submit to arbitration following a lawful demand by any other party shall bear
all costs and expenses incurred by such other party in compelling arbitration of
any Dispute.
(b) GOVERNING RULES. Arbitration proceedings shall be administered by the
----------------
American Arbitration Association ("AAA") or such other administrator as the
parties shall mutually agree upon in accordance with the AAA Commercial
Arbitration Rules. All Disputes submitted to arbitration shall be resolved in
accordance with the Federal Arbitration Act (Title 9 of the United States Code),
notwithstanding any conflicting choice of law provision in any of the foregoing
documents. The arbitration shall be conducted in Dallas, Texas. If there is any
inconsistency between the terms hereof and any such rules, the terms and
procedures set forth herein shall control. All statutes of limitation
applicable to any Dispute shall apply to any arbitration proceeding. All
discovery activities shall be expressly limited to matters directly relevant to
the Dispute being arbitrated. Judgment upon any award rendered in an arbitration
may be entered in any court having jurisdiction; provided however, that nothing
contained herein shall be deemed to be a waiver by any party that is a bank of
the protections afforded to it under Section 91 of Title 12 of the United States
Code or any similar applicable state law.
(c) NO WAIVER; PROVISIONAL REMEDIES, SELF-HELP AND FORECLOSURE. No
----------------------------------------------------------------
provision hereof shall limit the right of any party to exercise self-help
remedies such as setoff, foreclosure against or sale of any real or personal
property collateral or security, or to obtain provisional or ancillary remedies,
including without limitation, injunctive relief, sequestration, attachment,
garnishment or the appointment of a receiver from a court of competent
jurisdiction before, after or during the pendency of any arbitration or other
proceeding. The exercise of any such remedy shall not waive the right of any
party to compel arbitration hereunder.
(d) ARBITRATOR QUALIFICATIONS AND POWERS; AWARDS. Arbitrators must be
------------------------------------------------
active members of the Texas State Bar with expertise in the substantive law
applicable to the subject matter of the Dispute. Arbitrators are empowered to
resolve Disputes by summary rulings in response to motions filed prior to the
final arbitration hearing. Arbitrators (i) shall resolve all Disputes in
accordance with the substantive law of the State of Texas, (ii) may grant any
remedy or relief that a court of the State of Texas could order or grant within
the scope hereof and such ancillary relief as is necessary to make effective any
award, and (iii) shall have the power to award recovery of all costs and fees,
to impose sanctions and to take such other actions as they deem necessary to the
same extent a judge could pursuant to the Federal Rules of Civil Procedure, the
Texas Rules of Civil Procedure or other applicable law. Any Dispute in which
the amount in controversy is $5,000,000 or less shall be decided by a single
arbitrator who shall not render an award of greater than $5,000,000 (including
damages, costs, fees and expenses). By submission to a single arbitrator, each
party expressly waives any right or claim to recover more than $5,000,000. Any
Dispute in which the amount in controversy exceeds $5,000,000 shall be decided
by majority vote of a panel of three arbitrators; provided however, that all
three arbitrators must actively participate in all hearings and deliberations.
(e) JUDICIAL REVIEW. Notwithstanding anything herein to the contrary, in
----------------
any arbitration in which the amount in controversy exceeds $25,000,000, the
arbitrators shall be required to make specific, written findings of fact and
conclusions of law. In such arbitrations (i) the arbitrators shall not have the
power to make any award which is not supported by substantial evidence or which
is based on legal error, (ii) an award shall not be binding upon the parties
unless the findings of fact are supported by substantial evidence and the
conclusions of law are not erroneous under the substantive law of the State of
Texas, and (iii) the parties shall have in addition to the grounds referred to
in the Federal Arbitration Act for vacating, modifying or correcting an award
the right to judicial review of (1) whether the findings of fact rendered by the
arbitrators are supported by substantial evidence, and (2) whether the
conclusions of law are erroneous under the substantive law of the State of
Texas. Judgment confirming an award in such a proceeding may be entered only if
a court determines the award is supported by substantial evidence and not based
on legal error under the substantive law of the State of Texas.
(f) MISCELLANEOUS. To the maximum extent practicable, the AAA, the
-------------
arbitrators and the parties shall take all action required to conclude any
arbitration proceeding within 180 days of the filing of the Dispute with the
AAA. No arbitrator or other party to an arbitration proceeding may disclose the
existence, content or results thereof, except for disclosures of information by
a party required in the ordinary course of its business, by applicable law or
regulation, or to the extent necessary to exercise any judicial review rights
set forth herein. If more than one agreement for arbitration by or between the
parties potentially applies to a Dispute, the arbitration provision most
directly related to the foregoing documents or the subject matter of the Dispute
shall control. If any provision of this Agreement shall be held to be prohibited
by or invalid under applicable law, such provision shall be ineffective only to
the extent of such prohibition or invalidity, without invalidating the remainder
of such provision or any remaining provisions of this Agreement. This
arbitration provision shall survive termination, amendment or expiration of any
of the foregoing documents or any relationship between the parties.
IN WITNESS WHEREOF, Borrower and Lender have executed this Agreement as of the
date appearing on the first page of this Agreement.
"LENDER"
WELLS FARGO BANK TEXAS,
NATIONAL ASSOCIATION
By:/s/ Austin D. Nettle
Name: Austin D. Nettle
Title: Vice President
Lender's Address:
WELLS FARGO BANK TEXAS,
NATIONAL ASSOCIATION
1445 Ross Avenue
Dallas, TX 75265
Attention: Austin Nettle
"BORROWER"
PIZZA INN, INC.,
a Missouri corporation
By:/s/Ronald. W. Parker
Name: Ronald W. Parker
Title:President
Borrower's Address:
-------------------
5050 Quorum, Suite 500
Dallas, TX 75240
NOTICE OF INDEMNIFICATION:
- ---------------------------
BORROWER HEREBY ACKNOWLEDGES AND AGREES THAT THIS AGREEMENT CONTAINS CERTAIN
INDEMNIFICATION PROVISIONS PURSUANT TO SECTIONS 7.4, 8.1(D) AND 12.1 HEREOF.
Attention: Ronald Parker
EXHIBIT A - DESCRIPTION OF PROPERTY
Exhibit A to CONSTRUCTION LOAN AGREEMENT between PIZZA, INN, INC., a Missouri
- ----------
corporation, as "Borrower", and WELLS FARGO BANK TEXAS, NATIONAL ASSOCIATION, as
- --
"Lender", dated as of December 28, 2000.
All that certain real property located in the County of Denton, State of Texas,
described as follows:
BEING a 10.983 acre tract of land situated in the T.A. West Survey, Abstract No.
1344 and being part of a 135.0201 acre tract of land recorded in Volume 2548,
Page 775 Deed Records of Denton County, Texas and being more particularly
described by metes and bounds as follows:
COMMENCING at a point for the northwest corner of aforementioned 135.0201 acre
tract at the south line of Plano Parkway (a 100 foot Right-of-Way);
THENCE along the south line of Plano Parkway and a curve to the right for a
central angle of 29 degrees 23 minutes 46 seconds, a radius of 950.00 feet and a
chord bearing of South 75 degrees 44 minutes 17 seconds East, 482.08 feet;
THENCE along said curve to the right and the south line of Plano Parkway for an
arc distance of 487.41 feet to a inch iron rod found for the point of
beginning;
THENCE along the south line of Plano Parkway and a curve to the right for a
central angle of 10 degrees 45 minutes 50 seconds, a radius of 950.00 feet and a
chord bearing of South 55 degrees 39 minutes 29 seconds East, 178.21 feet;
THENCE along said curve to the right of the south line of Plano Parkway for an
arc distance of 178.47 feet to a inch iron rod set for a reverse curve to the
left with a central angle of 15 degrees 22 minutes 41 seconds a radius of
1050.00 feet and a chord bearing of South 57 degrees 57 minutes 56 seconds East,
280.97 feet;
THENCE along said curve to the left and the south line of Plano Parkway for an
arc distance of 281.82 feet to a inch iron rod set for corner;
THENCE South 00 degrees 23 minutes 40 seconds East, a distance of 931.31 feet to
a inch iron rod set for corner;
THENCE South 89 degrees 22 minutes 46 seconds West, a distance of 450.00 feet to
a inch iron rod set for corner;
THENCE North 00 degrees 23 minutes 40 seconds West, a distance of 1067.26 feet
to a inch iron rod found for corner;
THENCE North 28 degrees 57 minutes 36 seconds East, a distance of 135.43 feet to
the POINT OF BEGINNING and CONTAINING 10.983 acres of land.
EXHIBIT B - DOCUMENTS
Exhibit B to CONSTRUCTION LOAN AGREEMENT between PIZZA INN, INC., a Missouri
- ----------
corporation, as "Borrower", and WELLS FARGO BANK TEXAS, NATIONAL ASSOCIATION, as
- ---
"Lender", dated as of December 28, 2000 ("Agreement").
1. Loan Documents. The documents listed below, numbered 1.1 through 1.8,
---------------
inclusive, and amendments, modifications and supplements thereto which have
received the prior written consent of Lender, together with any documents
executed in the future that are approved by Lender and that recite that they are
"Loan Documents" for purposes of this Agreement are collectively referred to
herein as the Loan Documents.
1.1 This Agreement.
1.2 The Promissory Note of even date herewith in the original principal
amount of the Loan made by Borrower payable to the order of Lender.
1.3 The Construction Deed of Trust with Absolute Assignment of Leases and
Rents, Security Agreement and Fixture Filing of even date herewith executed by
Borrower, as Grantor, to Danny Oliver, as Trustee, for the benefit of Lender, as
Beneficiary.
1.4 State of Texas Uniform Commercial Code - Financing Statement - Form
UCC-1 executed by Borrower as Debtor and Lender as Secured Party.
1.5 Corporate Borrowing Resolution of even date herewith.
1.6 Assignment of Construction Agreements of even date herewith executed by
Borrower and Contractor in favor of Lender:
1.7 Assignment of Architectural Agreements and Plans and Specifications of
even date herewith executed by Borrower, Architect and Engineer in favor of
Lender.
1.8 Assignment of Development Agreement.
EXHIBIT C - FINANCIAL REQUIREMENT ANALYSIS
Exhibit C to CONSTRUCTION LOAN AGREEMENT between PIZZA INN, INC., a Missouri
- ----------
corporation, as "Borrower", and WELLS FARGO BANK TEXAS, NATIONAL ASSOCIATION, as
- ---
"Lender", dated as of December 28, 2000.
The Financial Requirement Analysis set forth herein represents an analysis of
the total costs necessary in Borrower's estimation to perform Borrower's
obligations under the Loan Documents. Column A, "Total Costs", sets forth
Borrower's representation of the maximum costs for each Item specified in Column
A. Column B, "Costs Paid By Borrower", sets forth Borrower's representation of
costs that Borrower has paid or has caused to be paid from other sources of
funds for each Item specified in Column B. Column C, "Costs To Be Paid By
Borrower", sets forth Borrower's representation of costs that Borrower will pay
or will cause to be paid from other sources of funds for each Item specified in
Column C. Column D, "Disbursement Budget", sets forth the portion of the Loan
and Borrower's Funds which has been allocated for each Item specified in Column
D and will be disbursed pursuant to the terms, covenants, conditions and
provisions of Exhibit D of this Agreement and the Loan Documents. Unless
----------
specified otherwise, all reference to Columns or Items in this Agreement refer
to Columns or Items in this Exhibit C.
----------
BORROWER (A) TOTAL (B) COSTS PAID (C) COSTS TO BE (D) DISBURSEMENT
COSTS BY BORROWER PAID BY BORROWER BUDGET (A) (B)
1. . . . Land Costs $ 1,872,392 $ 1,872,392 0 $ 0
2. . . . Construction Costs Of Improvements 8,217,685 0 $ 92,685 $8,125,000
3. . . . Tenant Improvement ($/square foot) 0 0 0 $ 0
4. . . . Site Work Costs 467,492 0 467,492 $ 0
5. . . . Offsite Costs 0 0 0 $ 0
6. . . . Architect & Engineering 256,200 112,700 143,500 $ 0
7. . . . Government Fees
(permits, bonds, etc.) 30,034 0 30,034 $ 0
8. . . . Operating costs 0 0 0 $ 0
during construction (job
supervision, utilities, etc.)
9. . . . Contingency (% of #'s 2-5) 188,000 0 188,000 $ 0
10 . . . Other:
a. Landscaping 200,000 0 200,000 $ 0
b. 0 0 0 $ 0
c. 0 0 0 $ 0
11 . . . TOTAL HARD COSTS (Lines 2 - 10) $ 9,359,411 $ 112,700 $ 1,121,711 $8,125,000
12 . . . Interest during Loan (mo) 388,194 0 388,194 $ 0
13 . . . Taxes during Loan 30,392 0 30,392 $ 0
14 . . . Insurance During Loan 0 0 0 $ 0
15 . . . Lender Loan Fee 0 0 0 $ 0
16 . . . Permanent Loan Fee 0 0 0 $ 0
17 . . . Title\Recording\Escrow 0 0 0 $ 0
18 . . . Legal Fees 5,000 0 5,000 $ 0
19 . . . Promotion & Advertising 5,000 0 5,000 $ 0
20 . . . Commission Expense 0 0 0 $ 0
21 . . . Organization Expenses (Developer Overhead) 267,456 38,000 229,456 $ 0
22 . . . Contingency (Soft Costs) 0 0 0 $ 0
23 . . . Other:
a. 0 0 0 $ 0
b. 0 0 0 $ 0
24 . . . TOTAL SOFT COSTS (Lines 12 -23) $ 696,042 $ 38,000 $ 658,042 $ 0
25 . . . CUMULATIVE TOTALS (Lines 1, 11, 24) $ 11,927,845 $ 2,023,092 $ 1,779,753 $8,125,000
EXHIBIT D - DISBURSEMENT PLAN
Exhibit D to CONSTRUCTION LOAN AGREEMENT between PIZZA INN, INC., a Missouri
- ----------
corporation, as "Borrower", and WELLS FARGO BANK TEXAS, NATIONAL ASSOCIATION, as
- ---
"Lender", dated as of December 28, 2000.
Timing of Disbursement. Unless another provision of this Agreement specifies
- ------------------------
otherwise, on or about the tenth (10th) day of each month, or at such other
times as Lender may approve or determine more appropriate, Borrower shall submit
to:
1. Wells Fargo Bank, National Association
Disbursement and Operations Center
2120 East Park Place, Suite 100
El Segundo, CA 90245
Attention: DISBURSEMENT REPRESENTATIVE HERE
Wells Fargo Bank, National Association
Disbursement and Operations Center
2120 East Park Place, Suite 100
El Segundo, CA 90245
Attention: DISBURSEMENT REPRESENTATIVE HERE
a written itemized statement, signed by Borrower ("Application for Payment")
setting forth:
1.1 a description of the work performed, material supplied and/or costs
incurred or due for which disbursement is requested with respect to any line
item ("Item") shown in Column D ("Disbursement Budget") of the Financial
Requirement Analysis attached as Exhibit C to this Agreement; and
----------
1.2 the total amount incurred, expended and/or due for each requested Item
less prior disbursements.
1.3 Each Application for Payment by Borrower shall constitute a
representation and warranty by Borrower that Borrower is in compliance with all
the conditions precedent to a disbursement specified in this Agreement.
2. Lender's Right to Condition Disbursements. Lender shall have the right
-------------------------------------------
to condition any disbursement upon Lender's receipt and approval of the
following:
2.1 the Application for Payment and an itemized requisition for payment of
Item 2 shown in the Disbursement Budget ("Hard Costs");
2.2 bills, invoices, documents of title, vouchers, statements, payroll
records, receipts and any other documents evidencing the total amount expended,
incurred or due for any requested Items;
2.3 evidence of Borrower's use of a lien release, joint check and voucher
system acceptable to Lender for payments or disbursements to any contractor,
subcontractor, materialman, supplier or lien claimant;
2.4 architect's, inspector's and/or engineer's periodic certifications of
the construction that has been completed and its conformance to the Plans and
Specifications and governmental requirements based upon any such architect's,
inspector's and/or engineer's periodic physical inspections of the Property and
Improvements;
2.5 waivers and releases of any mechanics' lien, equitable lien claim or
other lien claim rights;
2.6 evidence of Borrower's compliance with the provisions of the Articles
and Sections of this Agreement entitled CONSTRUCTION and
------------
AUTHORITY/ENFORCEABILITY;
-
2.7 a written release executed by any surety to whom Lender has issued or
will issue a set-aside letter and/or any public entity or agency which is a
beneficiary under any instrument of credit or standby letter of credit which
Lender has issued or will issue with respect to the Loan;
2.8 valid, recorded Affidavit of Commencement and Affidavit of Completion
for the Improvements or any portions of the Improvements for which an Affidavit
of Commencement and Affidavit of Completion may be recorded under applicable law
and within the applicable time as herein provided;
2.9 Certificate of Substantial Completion from the Architect and Engineer,
if any, prior to the final retention disbursement of Hard Costs, as applicable;
2.10 any other document, requirement, evidence or information that Lender
may request under any provision of the Loan Documents;
2.11 evidence that any goods, materials, supplies, fixtures or other work in
process for which disbursement is requested have been incorporated into the
Improvements.
2.12 in the event any Application for Payment includes the cost of materials
stored at a location other than the Property ("Offsite Materials"), such
Application for Payment shall include each of the following: (a) evidence that
the Offsite Materials have been purchased by Borrower, have been segregated from
other materials in the facility and have been appropriately marked to indicate
Borrower's ownership thereof and Lender's security interest therein; and (b)
evidence that the Offsite Materials are insured as required by this Agreement;
and (c) at Lender's request, a security agreement, financing statement and/or
subordination agreement in form and substance satisfactory to Lender executed by
the supplier of the Offsite Materials, and/or such other persons as Lender
determines may have an interest in or claim to the Offsite Materials, together
with such other additional documentation and evidence as Lender may reasonably
require to assure itself that it has a perfected first priority lien on the
Offsite Materials.
2.13 in the event that any Application for Payment includes the cost of
materials stored on the Property ("Onsite Materials"), such Application for
Payment shall include each of the following: (a) evidence that the Onsite
Materials have been purchased by Borrower; (b) evidence that the Onsite
Materials are insured as required hereunder; and (c) evidence that the Onsite
Materials are stored in an area on the Property for which adequate security is
provided against theft and vandalism.
2.14 Lender shall have received a Down-Date Endorsement or other title
report dated within five (5) days of the requested disbursement from the Title
Company showing no state of facts objectionable to Lender (including, without
limitation, a showing that title to the Property is vested in Borrower and that
no claim for mechanics' or materialmen's liens has been filed against the
Property or Improvements).
Borrower acknowledges that this approval process may result in disbursement
delays and Borrower hereby consents to all such delays.
3. Periodic Disbursement of Construction Costs. As construction progresses,
-------------------------------------------
the Disbursement Budget shall be periodically disbursed into the Account or to
or for the benefit or account of the Borrower for the Construction Costs up to
ninety percent (90%) of the maximum amount allocated for such Item less prior
disbursements. The remaining ten percent (10%) ("Retention") shall be disbursed
into the Account or to or for the benefit or account of the Borrower upon the
later to occur of (i) thirty (30) days after the filing of the Affidavit of
Completion herein contemplated if same is filed within ten (10) days after
completion of construction of the Improvements in accordance with the Plans and
Specifications and governmental requirements, or (ii) if such Affidavit of
Completion is not filed within ten (10) days after completion of construction of
the Improvements in accordance with the Plans and Specifications and
governmental requirements, then upon the date that such Affidavit of Completion
has been filed and Lender has received the following endorsements to the Title
Policy in form and content satisfactory to Lender: a Down-Date Endorsement
pursuant to Procedural Rule P-9b(4) and other endorsements amending the
mechanic's and materialmen's lien coverage and, if applicable, deleting the
pending disbursements clause pursuant to Procedural Rule P-8b(2).
EXHIBIT E - AFFIDAVIT OF COMMENCEMENT
Exhibit E to CONSTRUCTION LOAN AGREEMENT between PIZZA INN, INC., a Missouri
- ----------
corporation, as "Borrower", and WELLS FARGO BANK TEXAS, NATIONAL ASSOCIATION, as
- ---
"Lender", dated as of ____________, 2000.
BEFORE ME, the undersigned authority, on this day personally appeared
___________________________________, the _________________________________ of
PIZZA INN, INC., a Missouri corporation ("Owner") and
_____________________________________, the
________________________________________ of _______________________________
("Contractor"), known to me to be the persons (collectively, "Affiants") whose
names are subscribed below, and who, being by me first duly sworn, did each on
his or her oath state as follows:
2. Owner. The name and address of Owner are:
-----
Pizza Inn, Inc.
5050 Quorum, Suite 500
Dallas, Texas 75240
- ---------------------
4. Contractor. The name and address of Contractor are:
----------
5. Original Contractors. The name and address of each original contractor
---------------------
(other than Contractor) with Owner, presently known, after diligent inquiry, to
the Affiants, Owner or Contractor, that is furnishing, or will furnish, labor,
service, or materials (including specifically fabricated materials), for the
construction of the Improvements, and the nature of such labor, service or
materials (including specifically fabricated materials), are as stated on
Exhibit "B" attached hereto and incorporated herein by reference for all
------
purposes.
-
6. Property. Owner is the owner of the real property (the "Land") situated
--------
in Denton County, Texas, more particularly described as follows:
See Exhibit "A" attached hereto and incorporated herein by reference for all
------------
purposes.
7. Commencement Date. Work, as contemplated by Texas Property Code
------------------ ----- -------- ----
53.124(c)(4), on the Improvements actually commenced on _______________, 20__ at
approximately ___________ o'clock __.m.
8. Improvements. The improvements ("Improvements"), which are being, or
------------
will be, constructed on the Land are generally described as single-family
detached residences, constructed on the lot(s) or parcel(s) constituting all or
a portion of the Land.
9. Affidavit. This Affidavit of Commencement has been jointly made by Owner
---------
and Contractor by and through an authorized representative of each, the same
being the Affiants, and may be recorded by any person with the County Clerk of
the county in which the Land is located, whereupon it shall be deemed to have
been jointly filed by Owner and Contractor.
DATED this ____ day of _____________, 2000.
AFFIANTS:
- --------
Print Name: ,
who is an authorized representative of Owner
Print Name: ,
who is an authorized representative of Contractor
STATE OF TEXAS
COUNTY OF
SUBSCRIBED AND SWORN BEFORE ME by ________________________________ on this the
_____ day of ______________, 2000.
[S E A L]
My Commission Expires: Notary Public - State of Texas
Printed Name of Notary Public
STATE OF TEXAS
COUNTY OF
SUBSCRIBED AND SWORN BEFORE ME by ________________________________ on this the
_____ day of ______________, 2000.
[S E A L]
My Commission Expires: Notary Public - State of Texas
Printed Name of Notary Public
EXHIBIT F - AFFIDAVIT OF COMPLETION
Exhibit F to CONSTRUCTION LOAN AGREEMENT between PIZZA INN, INC., a Missouri
- ----------
corporation, as "Borrower", and WELLS FARGO BANK TEXAS, NATIONAL ASSOCIATION, as
- ---
"Lender", dated as of ____________, 2000.
BEFORE ME, the undersigned authority, on this day personally appeared
_____________________________________ ____________________________ ("Affiant"),
the ________________________ of PIZZA INN, INC. ("Owner"), known to me to be the
person whose name is subscribed below, and who, being by me first duly sworn,
did on his oath state as follows:
1. Owner. The name and address of Owner are:
-----
Pizza Inn, Inc.
5050 Quorum, Suite 500
Dallas, Texas 75240
- ---------------------
2. Contractor. The name and address of Contractor are:
----------
3. Improvements. Certain improvements ("Improvements") were furnished
------------
under an original contract ("Contract") between Owner and Contractor, which
Improvements are generally described on Exhibit "B" attached hereto and
------------
incorporated herein by reference for all purposes.
4. Real Property. Owner is the owner of the real property ("Real
--------------
Property") situated in Denton County, Texas, on which the Improvements were
-
constructed and are located, which Real Property is more particularly described
as follows:
See Exhibit "A" attached hereto and incorporated herein by reference for all
------------
purposes.
5. Completion. The Improvements under the Contract between Owner and
----------
Contractor have been completed within the meaning of Texas Property Code
----- -------- ----
53.106(e), and the date of such completion was _________________, 19__ ("Date of
Completion").
6. Affiant. The Affiant is an authorized representative of Owner and has
-------
been duly authorized to execute this Affidavit of Completion and cause it to be
recorded with the County Clerk of the county in which the Real Property is
situated.
NOTICE: A CLAIMANT MAY NOT HAVE A LIEN ON RETAINED FUNDS UNLESS THE CLAIMANT
FILES THE AFFIDAVIT CLAIMING A LIEN NOT LATER THAN THE 30TH DAY AFTER THE DATE
OF COMPLETION.
DATED as of the _____ day of __________________, 2000.
AFFIANT:
- -------
Print Name: ,
who is an authorized representative of Owner
STATE OF TEXAS
COUNTY OF
SUBSCRIBED AND SWORN BEFORE ME by ________________________________ on this the
_____ day of ______________, 2000.
[S E A L]
My Commission Expires: Notary Public - State of Texas
Printed Name of Notary Public
DALLAS_1\3422749\1
01/15/2001 - 4814-129
DALLAS_1\3422749\1
01/15/2001 - 4814-129