Exhibit 10.23
SECOND AMENDMENT TO LOAN AGREEMENT
This SECOND AMENDMENT TO LOAN AGREEMENT (this "Amendment")
is made and entered into to be effective as of December 18, 2001
(the "Amendment Date"), by and among STRATUS PROPERTIES INC., a
Delaware corporation ("Stratus"), STRATUS PROPERTIES OPERATING
CO., L.P., a Delaware limited partnership, CIRCLE C LAND CORP., a
Texas corporation, and AUSTIN 290 PROPERTIES, INC., a Texas
corporation (herein individually and collectively referred to as
the "Borrower"), and COMERICA BANK-TEXAS, a state banking
association (herein referred to as the "Bank").
W I T N E S S E T H:
WHEREAS, Borrower, as Maker, executed that certain
Promissory Note dated December 16, 1999, in the original
principal amount of $20,000,000 U.S., in favor of and payable to
the order of Bank, as Payee, which Promissory Note has been
amended (including, without limitation, a reduction in the stated
principal amount of such Promissory Note to $5,000,000.00 U.S.
and the addition of a limited revolving feature) pursuant to an
Amendment to Promissory Note dated as of December 27, 2000 (the
"First Amendment") and a Second Amendment to Promissory Note
(the "Second Amendment") of even date herewith executed by
Borrower and Bank (together, as amended, the "$5,000,000.00
Note"), which $5,000,000.00 Note evidences a loan (hereafter
referred to as the "$5,000,000.00 Loan") made by Bank to Borrower
in connection with and pursuant to that certain Loan Agreement
dated December 16, 1999, executed by and among Borrower and Bank,
as amended by the Amendment to Loan Agreement dated December 27,
2000, and as further amended by this Second Amendment to Loan
Agreement (the "Loan Agreement"); and
WHEREAS, Borrower, as Maker, executed that certain Revolving
Credit Note dated December 16, 1999, in the original principal
amount of $10,000,000.00 U.S., in favor of and payable to the
order of Bank, as Payee, which Revolving Credit Note has been
amended (including, without limitation, an increase as of the
date hereof in the stated principal amount of such Revolving
Credit Note to $25,000,000.00 U.S.) pursuant to that certain
Amendment to Revolving Credit Note dated as of December 27, 2000,
and the Second Amendment to the Revolving Credit Note of even
date herewith executed by Borrower and Bank (together, as
amended, the "Revolving Credit Note"), which Revolving Credit
Note evidences a loan (the "Revolving Credit Loan") made by Bank
to Borrower in connection with and pursuant to the Loan Agreement
(the Revolving Credit Note and the $5,000,000.00 Note, each as
amended, are hereinafter collectively referred to as the "Notes",
and the Revolving Credit Loan and the $5,000,000.00 Loan are
hereinafter collectively referred to as the "Loans"); and
WHEREAS, the current unpaid principal balance of the
$5,000,000.00 Note as of the date hereof is approximately
$5,000.00 (the "Current Outstanding Principal Balance of the
$5,000,000.00 Note"); and
WHEREAS, the current unpaid principal balance of the
Revolving Credit Note as of the date hereof is approximately
$_____________; and
WHEREAS, the $5,000,000.00 Note and the Revolving Credit
Note are cross-defaulted and cross-collateralized, and are
secured by, among other things and without limitation, the deeds
of trust, assignments and other items referenced in Section 5.1
of each of the Notes, and further described in the Loan
Agreement, as said deeds of trust have been amended pursuant to
that prior Modification Agreement dated as of December 27, 2000,
and further modified by the Second Modification Agreement of even
date herewith executed by Borrower and Bank (collectively, as
amended, the "Lien Instruments" or the "Security Instruments");
and
WHEREAS, Borrower hereby acknowledges that (i) Borrower is
obligated to Bank under the Notes, the Loan Agreement, the Lien
Instruments and the other Loan Documents (as such term is defined
in the Loan Agreement), (ii) Borrower has no defense, offset or
counterclaim with respect to the sums owed to Bank under the
Notes, the Loan Agreement, the Lien Instruments and the other
Loan Documents, or with respect to any covenant in the Notes, the
Loan Agreement, this Amendment, the Lien Instruments or any of
the other Loan Documents, and (iii) Bank, as of the date hereof,
has fully performed all obligations to Borrower which Bank may
have had or has on and as of the date hereof; and
WHEREAS, Borrower and Bank desire to enter into this
Amendment in order to modify and amend certain of the terms and
provisions of the Loan Agreement as set forth herein.
NOW, THEREFORE, in consideration of the foregoing premises
and the mutual covenants and agreements contained herein, and for
other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Borrower and Bank
hereby agree as follows:
1. Recitals. The recitals set forth above are true, accurate
and correct, and are incorporated herein by this reference.
2. Capitalized Terms. Any capitalized terms not defined herein
shall have the meaning ascribed to them in the Loan Agreement, as
previously modified.
3. Modification of Loan Agreement. Borrower and Bank hereby
agree to modify the Loan Agreement as follows:
3.1 Modification of Defined Terms. The following defined terms,
as set forth in Addendum 1 of the Loan Agreement, as such terms
are used in the Loan Agreement, are hereby amended as follows:
(a) "Agreement": The term "Agreement" is hereby revised to
include this Amendment.
(b) "Deeds of Trust": The term "Deeds of Trust" is hereby
revised to include the Second Modification Agreement of even date
with this Amendment, executed by Borrower and Bank, whereby the
Deeds of Trust were amended as provided therein. The Deeds of
Trust, as amended, shall continue in full force and effect to
secure repayment of the Notes and the obligations of Borrower
under the Loan Agreement and this Amendment and the other Loan
Documents, as modified.
(c) "Loan Documents": The term "Loan Documents" is hereby
revised to include the Loan Agreement (as modified by the first
and second Amendments), the Notes (as modified by the first and
second Amendments to Promissory Note and by the first and second
Amendments to Revolving Credit Note, as described in the recitals
to this Amendment), the Deeds of Trust (as modified by the first
and second Modification Agreements described in subparagraph (b)
above), and all other documents, instruments or agreements
included within the definition of "Loan Documents" as set forth
in the Loan Agreement, as such documents may have been or may
hereafter be amended from time to time.
(d) "Loans": The definition of the term "Loans" is hereby
amended and replaced to read as follows:
"'Loans' shall mean, collectively, the
Revolving Credit Loan and the $5,000,000.00
Loan, and "Loan" shall mean any of them."
(e) "Maximum Loan Amount": The definition of the term "Maximum
Loan Amount" is hereby amended and replaced to read as follows:
"'Maximum Loan Amount' shall hereafter be
defined as: (a) as to the Revolving Credit
Note, the lesser of: (i) thirty-five percent
(35%) of the fair market value of the Primary
Collateral as indicated by (1) newly prepared
and updated Primary Collateral Appraisals
acceptable to Bank effective as of the date
prepared and delivered to Bank (or updates of
the values presented in the Primary
Collateral Appraisals previously delivered to
and accepted by Bank) or (2) recertifications
of the accuracy and values presented in the
Primary Collateral Appraisals delivered to
and accepted by Bank on or about the date
hereof; (b) as to the $5,000,000.00 Note,
such maximum amount as Bank elects to advance
in its sole and absolute discretion; but in
no event shall the total aggregate
outstanding balances under the Notes exceed
$30,000,000.00."
(f) "Notes": The definition of the term "Notes" is hereby
amended and replaced to read as follows:
"'Notes' shall mean, collectively, whether
one or more, the Revolving Credit Note and
the $5,000,000.00 Note, and "Note" shall mean
any of them, executed and delivered by
Borrower payable to the order of Bank,
evidencing the Loans, as the same may be
renewed, extended, modified, increased or
restated from time to time."
3.2 Substitution of Defined Terms. The following defined terms,
as set forth in Addendum 1 of the Loan Agreement, as such terms
are used in the Loan Agreement (as modified hereby), are hereby
amended, substituted and replaced as follows:
(a) "Maximum Legal Rate" The term "Maximum Legal Rate" is
hereby changed to the term "Maximum Lawful Rate" and the
definition of such term is hereby deleted and replaced
to read as follows:
"'Maximum Lawful Rate' shall mean the maximum
lawful rate of interest which may be
contracted for, charged, taken, received or
reserved by Bank in accordance with the
applicable laws of the State of Texas (or
applicable United States federal law to the
extent that it permits Bank to contract for,
charge, take, receive or reserve a greater
amount of interest than under Texas law),
taking into account all Charges (defined as
all fees, charges and/or any other things of
value, if any, contracted for, charged,
received, taken or reserved by Bank in
connection with the transactions relating to
the Notes and the other Loan Documents, which
are treated as interest under applicable law)
made in connection with the transaction
evidenced by the Notes and the other Loan
Documents. To the extent that Bank is
relying on Chapter 303 of the Texas Finance
Code to determine the Maximum Lawful Rate
payable on the Indebtedness, Bank will
utilize the weekly ceiling from time to time
in effect as provided in such Chapter 303.
To the extent United States federal law
permits Bank to contract for, charge, take,
receive or reserve a greater amount of
interest than under Texas law, Bank 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, Bank
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."
(b) "'Person' or 'person' shall mean any individual,
corporation, partnership, joint venture, limited
liability company, association, trust, unincorporated
association, joint stock company, government,
municipality, political subdivision or
agency, or other entity."
(c) "'Revolving Credit Loan Maturity Date' shall mean April 16,
2004, or such earlier date on which the entire unpaid principal
amount of the Revolving Credit Loan becomes due and payable
whether by the lapse of time, acceleration or otherwise;
provided, however, if any such date is not a Business Day, then
the Revolving Credit Loan Maturity Date shall be the next
succeeding Business Day."
(d) "'Revolving Credit Loan Maximum Amount' shall mean Twenty-
Five Million Dollars ($25,000,000.00)."
(e) "'Revolving Credit Note' shall mean the Revolving Credit
Note dated December 16, 1999, made by Borrower payable to the
order of the Bank, as amended by that certain Amendment to
Revolving Credit Note dated December 27, 2000, and as further
amended by the Second Amendment to Revolving Credit Note of even
date herewith by and between Borrower and Bank, as the same may
be renewed, extended, modified, increased or restated from time
to time."
(f) The term "Revolving Specific Advance Loan" is hereby deleted
and replaced to read "$5,000,000.00 Loan" throughout the Loan
Agreement (as modified hereby), any reference to "Specific
Advance" throughout the Loan Agreement is hereby deleted in its
entirety, and the definition of "Revolving Specific Advance Loan"
is hereby deleted and replaced with the following "$5,000,000.00
Loan" definition:
"'$5,000,000.00 Loan' shall mean the Loan
made, or to be made, by Bank to or for the
credit of Borrower in multiple Advances,
including the initial advance which Borrower
and Bank acknowledge has already been
advanced by Bank to Borrower, of which
approximately $5,000.00 currently remains
outstanding as of the date hereof (the
"Current Outstanding Principal Balance of the
$5,000,000.00 Loan"), which Advances together
shall not exceed at any one time the
$5,000,000.00 Loan Maximum Amount, pursuant
to this Agreement, the $5,000,000.00 Note,
and the Loan Terms, Conditions and Procedures
Addendum."
(g) The term "Revolving Specific Advance Loan Maturity Date" is
hereby deleted and replaced to read "$5,000,000.00 Loan Maturity
Date" throughout the Loan Agreement (as modified hereby), and the
definition of "Revolving Specific Advance Loan Maturity Date" is
hereby substituted and replaced with the following "$5,000,000.00
Loan Maturity Date" definition:
"'$5,000,000.00 Loan Maturity Date' shall
mean April 16, 2004, or such earlier date on
which the entire unpaid principal amount of
the $5,000,000.00 Loan becomes due and
payable whether by the lapse of time,
acceleration or otherwise; provided, however,
if any such date is not a Business Day, then
the $5,000,000.00 Loan Maturity Date shall be
the next succeeding Business Day."
(h) The term "Revolving Specific Advance Note" is hereby deleted
and replaced to read "$5,000,000.00 Note" throughout the Loan
Agreement (as modified hereby), and the definition of "Revolving
Specific Advance Note" is hereby deleted and replaced with the
following "$5,000,000.00 Note" definition:
"'$5,000,000.00 Note' shall mean that certain
Promissory Note dated December 16, 1999, made
by Borrower payable to the order of the Bank,
as amended by that certain Amendment to
Promissory Note dated December 27, 2000, by
and between Borrower and Bank, and as further
amended by the Second Amendment to Promissory
Note dated as of the date hereof, as the same
may be renewed, extended, modified, increased
or restated from time to time."
3.3 Modification of Capital Structure. As permitted under the
terms of the Amendment to Loan Agreement, Borrower shall have the
continuing right to (i) repurchase up to $10,000,000 of the
outstanding common stock of Stratus, and (ii) redeem up to
$10,000,000 of the mandatorily redeemable Series B Preferred
Stock of Stratus initially issued to Oly/Stratus Equities, L.P.
by the issuance of common stock; provided, however, that all
other terms, conditions and restrictions set forth in the Loan
Agreement (including, without limitation, all other terms,
conditions and restrictions set forth in Sections 5.1, 5.7 and
5.8 of the Loan Agreement) shall remain in full force and effect,
except to the extent modified by this Amendment.
3.4 Reaffirmation of Negative Covenants. Borrower hereby
acknowledges and agrees that the Negative Covenants set forth in
Section 5 of the original Loan Agreement are in full force and
effect, are reaffirmed hereby and are set forth below for ease of
reference.
"SECTION 5. NEGATIVE COVENANTS
Each Borrower covenants and agrees that, so long
as Bank is committed to make any Advance under this
Agreement and until all instruments and agreements
evidencing any Loan which is payable on demand or which
conditions Advances upon the Bank's discretion are
fully discharged and terminated and, thereafter, so
long as any Indebtedness remains outstanding, it will
not, and it will not allow any Loan Party within its
control to, without the prior written consent of the
Bank:
5.1 Capital Structure, Business Objects or
Purpose. Purchase, acquire or redeem any of its equity
ownership interests, or enter into any reorganization
or recapitalization or reclassify its equity ownership
interests, or make any material change in its capital
structure or general business objects or purpose.
5.2 Mergers or Dispositions. Change its name,
enter into any merger or consolidation, whether or not
the surviving entity thereunder, or sell, lease,
transfer, relocate or dispose of all, substantially
all, or any material part of its assets (whether in a
single transaction or in a series of transactions),
except as expressly permitted under this Agreement or
the other Loan Documents.
5.3 Guaranties. Guarantee, endorse, or otherwise
become secondarily liable for or upon the obligations
or Debt of others (whether directly or indirectly),
except:
(a) guaranties in favor of and satisfactory
to Bank; and
(b) endorsements for deposit or collection
in the ordinary course of business.
5.4 Debt. Become or remain obligated for any
Debt, except:
(a) Indebtedness and other Debt from time to
time outstanding and owing to Bank;
(b) unsecured trade, utility or non-
extraordinary accounts payable arising in the
ordinary course of business and other unsecured
Debt of Borrowers or the Loan Parties on a
Consolidated basis at any one time not to exceed
$500,000.00;
(c) contingent liabilities of Borrowers on a
consolidated basis at any one time not to exceed
$20,000,000.00;
(d) Debt of a Related Party but only to the
extent of the lesser of seventy-five percent (75%)
of the appraised value of the real estate project
owned by such Related Party or eighty percent
(80%) of the total costs associated with the real
estate project owned by such Related Party;
(e) Debt subordinated to the prior payment
in full of the Indebtedness upon terms and
conditions approved in writing by Bank;
(f) Debt outstanding as of the date hereof
that is shown on the Financial Statements
previously delivered to Bank; and
(g) Debt of Loan Party to any other Loan
Party.
5.5 Encumbrances. Create, incur, assume or
suffer to exist any Lien upon, or create, suffer or
permit to exist any Lien upon any of its property or
assets, whether now owned or hereafter acquired, except
for Permitted Encumbrances.
5.6 Acquisitions. Except as expressly permitted
under this Agreement, purchase or otherwise acquire or
become obligated for the purchase of all or
substantially all of the assets or business interests
of any Person or any shares of stock or other ownership
interests of any Person or in any other manner
effectuate or attempt to effectuate an expansion of
present business by acquisition.
5.7 Dividends. Declare or pay dividends on, or
make any other distribution (whether by reduction of
capital or otherwise) in respect of any shares of its
capital stock or other ownership interests, including
but not limited to dividends payable by Stratus or any
dividends payable solely in stock except (a) dividends
payable by a Subsidiary of a Borrower to a Borrower or
by the Subsidiary of another Loan Party to such other
Loan Party; or (b) the redemption, repurchase or
acquisition of any shares of its capital stock payable
upon an employee's termination pursuant to its employee
stock option, repurchase, or similar plan; provided,
however, that after giving effect to such redemption,
repurchase or acquisition, such Borrower or such other
Loan Party, as applicable, shall be in full compliance
with the terms of this Agreement.
5.8 Investments. Except as otherwise permitted
in Section 2.17 of Addendum 2, make or allow to remain
outstanding any investment (whether such investment
shall be of the character of investment in shares of
stock, evidences of indebtedness or other securities or
otherwise) in, or any loans, advances or extensions of
credit to, any Person, other than:
(a) Each Borrower's current ownership in its
respective Subsidiaries and Related Parties; and
(b) any investment in direct obligations of
the United States of America or any agency
thereof, or in certificates of deposit issued by
Bank, maintained consistent with a Borrower's or
such Subsidiary's business practices prior to the
date hereof; provided, that no such investment
shall mature more than ninety (90) days after the
date when made or the issuance thereof.
5.9 Transactions with Affiliates. Enter into any
transaction with any of their stockholders, officers,
employees, partners or any of their Affiliates or
Related Parties, except subject to the terms hereof,
transactions in the ordinary course of business and on
terms not less favorable than would be usual and
customary in similar transactions between Persons
dealing at arm's length, or transfer any assets to any
Related Party which is not a Borrower hereunder without
Bank's prior consent.
5.10 Defaults on Other Obligations. Fail to
perform, observe or comply duly with any covenant,
agreement or other obligation to be performed, observed
or complied with by any Loan Party, subject to any
grace or cure periods provided therein, which failure
could have a Material Adverse Effect.
5.11 Prepayment of Debt. Prepay (or take any
actions which impose an obligation to prepay), except,
subject to the terms hereof or thereof, Indebtedness.
5.12 Pension Plans. Except in compliance with
this Agreement, enter into, maintain, or make
contribution to, directly or indirectly, any Pension
Plan that is subject to ERISA.
5.13 Subordinate Indebtedness. Subordinate any
indebtedness due to it from any Person to indebtedness
of other creditors of such Person.
5.14 No Further Negative Pledges. Other than the
Holliday Loan (as more fully described below), enter
into or become subject to any agreement (other than
this Agreement or the Loan Documents) (a) prohibiting
the guaranteeing by any Loan Party of any obligations,
(b) prohibiting the creation or assumption of any Lien
upon the properties or assets of any Loan Party,
whether now owned or hereafter acquired or (c)
requiring an obligation to become secured (or further
secured) if another obligation is secured or further
secured.
5.15 No License Restrictions. Permit any
restriction in any license or other agreement that
restricts any Borrower or any other Loan Party from
granting a Lien to Bank upon any of any Borrower's or
such other Loan Party's rights under such license or
agreement.
5.16 Olympus Agreements. Terminate or agree to
any material modification or amendment to any of the
Olympus Agreements without Bank's prior consent."
3.5 Modification and Restatement of Addendum 2 - Loan Terms,
Conditions and Procedures Addendum. Addendum 2 set forth in the
Loan Agreement shall be deleted in its entirety, as previously
modified by the Amendment to Loan Agreement, and the following
Addendum 2 shall be inserted in lieu thereof:
"ADDENDUM 2
LOAN TERMS, CONDITIONS AND PROCEDURES ADDENDUM
SECTION 1. THE LOAN
1.1 Agreements to Lend. Bank hereby agrees to
lend to Borrower up to but not in excess of (i) with
respect to the Revolving Credit Loan, the Revolving
Credit Loan Maximum Amount, (ii) with respect to the
$5,000,000.00 Loan, the $5,000,000.00 Loan Maximum
Amount, and Borrower hereby agrees to borrow such sums
from Bank, all upon and subject to the terms and
provisions of this Agreement, such sums to be evidenced
by, respectively, the Revolving Credit Note and the
$5,000,000.00 Note. Subject to the terms and
provisions of this Agreement, the Notes, and the other
Loan Documents, principal repaid on (i) the Revolving
Credit Loan, and (ii) the $5,000,000.00 Loan may be
reborrowed by Borrower. Borrower's liability for
repayment of the interest on account of the Loans shall
be limited to and calculated with respect to Loans
proceeds actually disbursed to Borrower pursuant to the
terms of this Agreement and the Notes and only from the
date or dates of such disbursements. Bank may, in
Bank's discretion, disburse Loans proceeds by journal
entry to pay interest and financing costs and disburse
Loan proceeds directly to third parties to pay costs or
expenses required to be paid by Borrower pursuant to
this Agreement. Loan proceeds disbursed by Bank by
journal entry to pay interest or financing costs, and
Loan proceeds disbursed directly by Bank to pay costs
or expenses required to be paid by Borrower pursuant to
this Agreement, shall constitute Advances to Borrower.
As more fully set forth in Section 4.21 of the original
Loan Agreement, an Interest Reserve Escrow Account has
been established. As of the date hereof, the balance
in said account is $5,132.00. $1,619,868.00 shall be
held back from funds available under the Revolving
Credit Note for a total Interest Reserve Amount of
$1,625,000.00; provided, however, that the amount held
back from funds available under the Revolving Credit
Note will adjust if there is a change in the balance of
the Interest Reserve Escrow Account in order to meet
the total Interest Reserve Amount.
1.2 Advances.
(a) Any Advance requested by Borrower under
the $5,000,000.00 Loan shall be subject to
Borrower's satisfaction of the terms and
conditions set forth in this Addendum 2 and in
particular shall comply with the use of proceeds
restrictions set forth in Section 2.4 below, all
of which are deemed to apply to any and all
Advances under the $5,000,000.00 Loan unless
otherwise agreed to by Bank. Bank may approve or
disapprove any request for all or any portion of
any Advance under the $5,000,000.00 Loan in its
SOLE AND ABSOLUTE DISCRETION. Bank shall have the
right to impose such terms and conditions as it
elects upon either the Advance under the
$5,000,000.00 Loan or the proposed collateral
securing same.
(b) The proceeds of the Revolving Credit
Loan shall be disbursed to Borrower in one or more
Advances provided all applicable conditions to
Advances set forth in this Agreement have been
satisfied, including, if applicable, Section 2.17
(Additional Land Acquisitions) set forth below.
1.3 Limitation on Advances. Under no
circumstances shall Bank be required to disburse any
proceeds of the Revolving Credit Note that would cause
the outstanding balance thereof at any one time to
exceed the Revolving Credit Loan Maximum Amount nor
shall Bank be required to disburse any proceeds of the
$5,000,000.00 Loan that would cause the outstanding
balance thereof at any one time to exceed the
$5,000,000.00 Loan Maximum Amount or disburse any
proceeds of either of the Loans that would cause the
aggregate outstanding balance of the Loans at any one
time to exceed $30,000,000.00.
1.4 Regulatory Restrictions. Notwithstanding
anything in this Agreement or the other Loan Documents
to the contrary, in no event shall Bank be required to
disburse, nor shall Borrower be entitled to demand that
Bank disburse, all or any portion of any of the Loans
if the amounts of the Loans would, in Bank's sole and
absolute discretion, cause Bank to exceed the lending
limit to a single borrower under any applicable state
or federal law, regulation or ruling. If Bank
determines, in its sole and absolute discretion, at any
time (including after any portion or all of the Loans
have been disbursed) that the transactions evidenced by
this Agreement and the other Loan Documents violates
such lending limit restriction, then Bank shall have
the right to immediately declare the Notes to be due
and payable and shall thereafter have no further
obligations to disburse any further proceeds of the
Loans. In such event, Borrower shall be required to
immediately pay all outstanding Indebtedness under the
Loans and shall have no further rights and privileges
under this Agreement and the other Loan Documents.
1.5 Repayment of and Interest on Loans. The
Indebtedness from time to time outstanding under and
evidenced by the Notes shall bear interest at the
respective rates per annum set forth in the Notes until
the occurrence of an Event of Default and thereafter at
the Default Rate and shall otherwise be repaid in
accordance with the terms of the respective Notes. All
unpaid principal, accrued and unpaid interest and other
amounts owing under the Revolving Credit Note and the
$5,000,000.00 Note shall be due and payable on the
Revolving Credit Loan Maturity Date and the
$5,000,000.00 Loan Maturity Date, respectively.
SECTION 2. ADVANCES, PAYMENTS, RECOVERIES AND
COLLECTIONS
2.1 Advance Procedure. Except as hereinafter
provided, Borrower may request an Advance by submitting
to Bank a Request for Advance by an authorized
representative of Borrower, subject to the following:
(a) each such Request for Advance shall
include, without limitation, the proposed amount
of such Advance and the proposed Disbursement
Date, which date must be a Business Day;
(b) a Request for Advance, once communicated
to Bank, shall not be revocable by Borrower;
(c) each Request for Advance, once
communicated to Bank, shall constitute a
representation, warranty and certification by
Borrower as of the date thereof that:
(i) both before and after the making of
such Advance, all of the Loan Documents are
and shall be valid, binding and enforceable
against each Loan Party, as applicable;
(ii) all terms and conditions precedent
to the making of such Advance have been
satisfied, and shall remain satisfied through
the date of such Advance;
(iii) the making of such Advance
will not cause (A) the aggregate principal
amount of all Advances on the $5,000,000.00
Note to exceed the original principal amount
of the $5,000,000.00 Note, (B) the aggregate
principal amount outstanding on the Revolving
Credit Note to exceed the Revolving Credit
Loan Maximum Amount or (C) the aggregate
principal amount outstanding on both the
$5,000,000.00 Note and Revolving Credit Note
to exceed $30,000,000.00;
(iv) no Default or Event of Default
shall have occurred or be in existence, and
none will exist or arise upon the making of
such Advance;
(v) the representations and warranties
contained in this Agreement, and the other
Loan Documents are true and correct in all
material respects and shall be true and
correct in all material respects as of the
making of such Advance; and
(vi) the Advance will not violate the
terms or conditions of any contract,
indenture, agreement or other borrowing of
any Loan Party.
Bank may elect (but without any obligation to do so) to
make an Advance upon the telephonic or facsimile
request of Borrower, provided that Borrower have first
executed and delivered to Bank a Telephone Notice
Authorization. If any such Advance based upon a
telephonic or facsimile request is made by Borrower,
Bank may require Borrower to confirm said telephonic or
facsimile request in writing by delivering to Bank, on
or before 11:00 a.m. (Dallas, Texas time) on the next
Business Day following the Disbursement Date of such
Advance, a duly executed written Request for Advance,
and all other provisions of this Section 2.1 shall be
applicable with respect to such Advance. In addition,
Borrower may authorize the Bank to automatically make
Advances pursuant to such other written agreements as
may be entered into by Bank and Borrower. Except as
set forth in this Agreement, all Advances are to be
made by direct deposit into the Special Account.
2.2 Voluntary Prepayment. Borrower may prepay
all or part of the outstanding balance under the
$5,000,000.00 Note and/or the Revolving Credit Note
(subject to the provisions of Section 3.6(g) of the
Revolving Credit Note regarding a prepayment prior to
the expiration of the applicable LIBOR Interest Period)
at any time, without premium or penalty or prejudice to
the right of Borrower to reborrow sums of the Loans
under the terms of this Agreement, subject to the terms
and conditions of the Loan Documents.
2.3 Revolving Credit Loan Maximum Amount and
$5,000,000.00 Loan Maximum Amount and Reduction of
Indebtedness. Notwithstanding anything contained in
this Agreement to the contrary, the aggregate principal
amount of the Revolving Credit Loan at any time
outstanding shall not exceed the Revolving Credit Loan
Maximum Amount, and the aggregate principal amount of
the $5,000,000.00 Loan outstanding at any time shall
not exceed the $5,000,000.00 Loan Maximum Amount. If
said limitation is exceeded at anytime, Borrower shall
immediately, without demand by Bank, pay to Bank an
amount not less than such excess, or, if Bank, in its
sole discretion, shall so agree, Borrower shall provide
Bank cash collateral in an amount not less than such
excess, and Borrower hereby pledges and grants to Bank
a security interest in such cash collateral so provided
to Bank.
2.4 Use of Proceeds of Loans. The use of
proceeds advanced under the $5,000,000.00 Loan shall be
subject to Bank's sole and absolute discretion as set
forth above in Section 1.2. The proceeds of the
Revolving Credit Loan shall be used to fund equity
contributions for development ventures of Borrower, for
pre-development costs, such as earnest money deposits,
and property improvements in connection with the Land
and other working capital needs of Borrower, including
corporate and project general, administrative and
operating costs, pursuit costs, entitlement costs,
taxes, business endeavors associated with the
development of commercial and residential real
properties.
2.5 Non-Application of Chapter 346 of Texas
Finance Code. The provisions of Chapter 346 of the
Texas Finance Code are specifically declared by the
parties not to be applicable to any of the Loan
Documents or the transactions contemplated thereby.
2.6 Place of Advances. All Advances are to be
made at the office of Bank, or at such other place as
Bank may designate.
2.7 Bank's Books and Records. The amount and
date of each Advance hereunder, the amount from time to
time outstanding under the Notes, the interest rate in
respect of the Loans, and the amount and date of any
repayment hereunder or under the Notes, shall be noted
on Bank's books and records, which shall be conclusive
evidence thereof, absent manifest error; provided,
however, any failure by Bank to make any such notation,
or any error in any such notation, shall not relieve
Borrower of its obligations to pay to Bank all amounts
owing to Bank under or pursuant to the Loan Documents,
in each case, when due in accordance with the terms
hereof or thereof.
2.8 Payments on Non-Business Day. In the event
that any payment of any principal, interest, fees or
any other amounts payable by Borrower under or pursuant
to any Loan Document shall become due on any day which
is not a Business Day, such due date shall be extended
to the next succeeding Business Day, and, to the extent
applicable, interest shall continue to accrue and be
payable at the interest rate set forth in the
applicable Note for and during any such extension.
2.9 Payment Procedures. Unless otherwise
expressly provided in a Loan Document, all sums payable
by Borrower to Bank under or pursuant to any Loan
Document, whether principal, interest, or otherwise,
shall be paid, when due, directly to Bank at the office
of Bank identified on the signature page of this
Agreement, or at such other office of Bank as Bank may
designate in writing to Borrower from time to time, in
immediately available United States funds, and without
setoff, deduction or counterclaim. Bank may, in its
discretion, charge any and all deposit or other
accounts (including, without limitation, any account
evidenced by a certificate of deposit or time deposit)
of any Borrower maintained with Bank for all or any
part of any Indebtedness which is not paid when due and
payable; provided, however, that such authorization
shall not affect any Borrower's obligations to pay all
Indebtedness, when due, whether or not any such account
balances maintained by such Borrower with Bank are
insufficient to pay any amounts then due.
2.10 Maximum Interest Rate. It is expressly
stipulated and agreed to be the intent of Borrower and
Bank at all times to comply strictly with the
applicable Texas law governing the maximum rate or
amount of interest payable on the Indebtedness (or
applicable United States federal law to the extent that
it permits Bank 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 Bank related to any of the Indebtedness,
(ii) contracted for, charged or received by reason of
Bank's exercise of the option to accelerate the
maturity of the Note and/or any other portion of the
Indebtedness, or (iii) Borrower will have paid or Bank
will have received by reason of any voluntary
prepayment by Borrower of the Note and/or any of the
other Indebtedness, then it is Borrower's and Bank'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 Bank shall
be credited on the principal balance of the Note and/or
any of the other Indebtedness evidenced by the Loan
Documents (or, if the Note and all other Indebtedness
evidenced by the Loan Documents 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 Bank agree that Bank shall, with
reasonable promptness after Bank 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 any other Indebtedness
then owing by Borrower to Bank. Borrower hereby agrees
that as a condition precedent to any claim seeking
usury penalties against Bank, Borrower will provide
written notice to Bank, advising Bank in reasonable
detail of the nature and amount of the violation, and
Bank 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 other Indebtedness then owing by Borrower
to Bank. All sums contracted for, charged or received
by Bank for the use, forbearance or detention of any of
the Indebtedness, including any portion of the debt
evidenced by the Note 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 other 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 other Indebtedness does not exceed the
Maximum Lawful Rate from time to time in effect and
applicable to the Note and/or the other Indebtedness
for so long as any Indebtedness 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 any of the other Indebtedness.
Notwithstanding anything to the contrary contained
herein or in any of the other Loan Documents, it is not
the intention of Bank 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.
2.11 Receipt of Payments by Bank. Any payment by
Borrower of any of the Indebtedness made by mail will
be deemed tendered and received by Bank only upon
actual receipt thereof by Bank at the address
designated for such payment, whether or not Bank has
authorized payment by mail or in any other manner, and
such payment shall not be deemed to have been made in a
timely manner unless actually received by Bank on or
before the date due for such payment, time being of the
essence. Borrower expressly assumes all risks of loss
or liability resulting from non-delivery or delay of
delivery of any item of payment transmitted by mail or
in any other manner. Acceptance by Bank of any payment
in an amount less than the amount then due shall be
deemed an acceptance on account only, and any failure
to pay the entire amount then due shall constitute and
continue to be an Event of Default hereunder. Bank
shall be entitled to exercise any and all rights and
remedies conferred upon and otherwise available to Bank
under any Loan Document upon the occurrence and during
the continuance of any such Event of Default. Borrower
further agrees that after the occurrence and during the
continuance of any Default Bank shall have the
continuing exclusive right to apply and to reapply any
and all payments received by Bank at any time or times,
whether as voluntary payments, proceeds from any
Mortgaged Property, offsets, or otherwise, against the
Indebtedness evidenced by the Loan Documents in such
order and in such manner as Bank may, in its sole
discretion, deem advisable, notwithstanding any entry
by Bank upon any of its books and records. Borrower
hereby expressly agrees that, to the extent that Bank
receives any payment or benefit of or otherwise upon
any of the Indebtedness, and such payment or benefit,
or any part thereof, is subsequently invalidated,
declared to be fraudulent or preferential, set aside,
or required to be repaid to a trustee, receiver, or any
other Person under any bankruptcy act, state or federal
law, common law, equitable cause or otherwise, then to
the extent of such payment or benefit, the
Indebtedness, or part thereof, intended to be satisfied
shall be revived and continued in full force and effect
as if such payment or benefit had not been made or
received by Bank, and, further, any such repayment by
Bank shall be added to and be deemed to be additional
Indebtedness.
2.12 Security. Payment and performance of the
Indebtedness evidenced by the Loan Documents shall be
secured by Liens on the assets, other collateral and
properties of Borrower as Bank may require from time to
time.
2.13 Conditions Precedent to the Loans and Initial
Advance. The obligation of the Bank to make each
Advance under either Loan shall be subject to the
satisfaction of all of conditions precedent set forth
in this Section. In the event that any condition
precedent is not so satisfied but Bank elects to make
an Advance on either Loan notwithstanding the same,
such election shall not constitute a waiver of such
condition and the condition shall be satisfied prior to
any subsequent Advance.
(a) All of the Loan Documents shall be in
full force and effect and binding and enforceable
obligations of Borrower and, to the extent that it
is a party thereto or otherwise bound thereby, of
each other Person who may be a party thereto or
bound thereby.
(b) All actions, proceedings, instruments
and documents required to carry out the borrowings
and transactions contemplated by this Agreement or
any other Loan Document or incidental thereto, and
all other related legal matters, shall have been
satisfactory to and approved by legal counsel for
Bank, and said counsel shall have been furnished
with such certified copies of actions and
proceedings and such other instruments and
documents as they shall have requested.
(c) Each Borrower shall have performed and
complied with all agreements and conditions
contained in the Loan Documents applicable to it
and which are then in effect.
(d) Borrower shall have delivered, or caused
to have been delivered, to Bank or done or caused
to have been done, to Bank's satisfaction each and
every of the following items:
(1) This Agreement (together with all
addenda, schedules, exhibits, certificates,
opinions, financial statements and other
documents to be delivered pursuant hereto)
and any and all amendments thereto, the
Notes, the Deeds of Trust and all other Loan
Documents and Lien Instruments and any and
all amendments thereto duly executed,
acknowledged (if required) and delivered by
Borrower and any Person who is a party
thereto.
(2) (i) Copies of resolutions of the
board of directors, partners or members or
managers, as applicable, of each Loan Party
evidencing approval of the modification of
the borrowing arrangement hereunder and the
transactions contemplated by the modified
Loan Documents, and authorizing the
execution, delivery and performance by each
Loan Party of each modified Loan Document to
which it is a party or by which it is
otherwise bound, which resolutions shall have
been certified by a duly authorized officer,
partner or other representative, as
applicable, of each Loan Party as of the date
of this Agreement and as of the date of any
amendments as being complete, accurate and in
full force and effect; (ii) incumbency
certifications of a duly authorized officer,
partner or other representative, as
applicable, of each Loan Party, in each case,
identifying those individuals who are
authorized to execute the modified Loan
Documents and any amendments thereto for and
on behalf of such Person(s), respectively,
and to otherwise act for and on behalf of
such Person(s); (iii) certified copies of
each of such Person(s)' articles of
incorporation and bylaws, partnership
agreement, certificate of limited
partnership, articles of organization,
regulations or operating agreement, as
applicable, and all amendments thereto; and
(iv) certificates of existence, good standing
and authority to do business, as applicable,
certified substantially contemporaneously
with the date of this Agreement, from the
state or other jurisdiction of each of such
Person(s)' organization and from every other
state or jurisdiction in which such Person is
required, under applicable law, to be
qualified to do business.
(3) Proof that appropriate security
agreements, financing statements, mortgages,
deeds of trust, collateral and such
additional documents or certificates as may
be required by Bank and/or contemplated under
the terms of any and every modified Loan
Document, and such other documents or
agreements of security and appropriate
assurances of validity, perfection and
priority of Lien as Bank may request shall
have been executed and delivered by the
appropriate Persons and recorded or filed in
such jurisdictions and such other steps shall
have been taken as necessary to perfect,
subject only to Permitted Encumbrances, the
Liens granted thereby.
(4) An opinion of Borrower's legal
counsel, dated as of the date hereof, as to
enforceability and authority issues and
covering such other matters as are required
by Bank and which are otherwise reasonably
satisfactory in form and substance to Bank.
(5) Evidence of insurance coverage as
required by this Agreement and the Deeds of
Trust.
(6) The Title Company's commitment to
issue such endorsements as may be required by
Bank in connection with all modifications to
the Deeds of Trust.
(7) Updated Primary Collateral
Appraisals.
(8) Current Financial Statements of
Borrower.
(e) Bank shall have received payment of the
modification and extension fee set forth below.
(f) Bank shall have received such other
instruments, documents and evidence (not
inconsistent with the terms hereof) as Bank may
reasonably request in connection with the
modification of the Loans hereunder, and all such
instruments, documents and evidence shall be
satisfactory in form and substance to Bank.
2.14 Conditions to Subsequent Advances. Bank has
no obligation to make any subsequent Advance under the
$5,000,000.00 Loan unless it elects in its sole and
absolute discretion to do so. In addition, Bank has no
obligation to make any subsequent advance on the
Revolving Credit Loan unless the following conditions
precedent are satisfied on or before the Disbursement
Date for such Advance:
(a) At Bank's request, Borrower shall
furnish to Bank an endorsement to the Title
Policies (or if an endorsement is not available, a
letter from the Title Company) showing "nothing
further" of record affecting the Primary
Collateral from the date of recording of the Deeds
of Trust, except such matters as Bank specifically
approves.
(b) All Loan Documents shall be in full
force and effect and binding and enforceable
obligations of each Loan Party.
(c) Each of the representations and
warranties of each Loan Party under any Loan
Document shall be true and correct in all material
respects.
(d) No Default or Event of Default shall
have occurred and be continuing; there shall exist
no Material Adverse Effect; and no provision of
law, any order of any Governmental Authority, or
any regulation, rule or interpretation thereof,
shall have had any material adverse effect on the
validity or enforceability of any Loan Document.
(e) Upon making any Advance on the Revolving
Credit Loan then requested, the amount outstanding
on the Revolving Credit Loan shall not exceed the
Revolving Credit Loan Amount.
(f) Upon making any Advance on the
$5,000,000.00 Loan then requested, the amount
outstanding on the $5,000,000.00 Loan shall not
exceed the $5,000,000.00 Maximum Loan Amount.
2.15 Advance Not A Waiver. No Advance of the
proceeds of either of the Loans shall constitute a
waiver of any of the conditions of Bank's obligation to
make further Advances, nor, in the event Borrower is
unable to satisfy any such condition, shall any such
Advance have the effect of precluding Bank from
thereafter declaring such inability to be an Event of
Default.
2.16 Advance Not An Approval. Bank shall have no
obligation to make any Advance or part thereof during
the existence of any Default or Event of Default, but
shall have the right and option so to do; provided that
if Bank elects to make any such Advance, no such
Advance shall be deemed to be either a waiver of the
right to demand payment of the Loans, or any part
thereof, or an obligation to make any other Advance.
2.17 Additional Land Acquisitions. Subject to the
satisfaction of all conditions precedent to Advances on
the Revolving Credit Loan, Bank hereby agrees to make
one or more Advances on the Revolving Credit Loan,
which Advances shall reduce the amount available to
Borrower under the Revolving Credit Loan, in an amount
not to exceed, without prior Bank approval, (i)
$3,000,000.00 at any one time, or (ii) $10,000,000.00
in the aggregate, for the purpose of the acquisition of
fee title to real property, provided that Borrower (i)
provides Bank with information about such real property
as Bank may reasonably request, (ii) executes and
delivers to Bank a separate note for each acquisition
and a deed of trust, substantially in the form of the
Deeds of Trust, granting to Bank a deed of trust first
lien on such real property, which note and the real
property covered by the deed of trust will be cross-
defaulted and cross-collateralized with the Notes and
the Primary Collateral and Other Collateral (iii)
causes the Title Company to provide Bank with a Title
Policy insuring such deed of trust as a first lien on
such real property and containing only such exceptions
to title acceptable to Bank, and in an amount and
otherwise on terms and conditions satisfactory to Bank,
and (iv) executes and delivers to Bank its proposed
disposition plan of such real property which must be
reasonably satisfactory to Bank. Any and all real
estate assets acquired in whole or part with Advances
made under this Section are sometimes referred to as
'Section 2.17 Assets.' Notwithstanding anything in
this Agreement to the contrary, such Section 2.17
Assets shall, for purposes of this Agreement, be deemed
to be included as 'Other Collateral'; provided,
however, that such Section 2.17 Assets may be
designated as part of the 'Primary Collateral' by
obtaining an appraisal, an environmental audit and
other documents that may be required by Bank to
classify such Section 2.17 Assets as 'Primary
Collateral.' Advances under the Revolving Credit Loan
for other than the acquisitions of Section 2.17 Assets
are not subject to the terms and provisions of this
Section 2.17.
2.18 Mandatory Prepayments. Borrower shall
immediately pay to Bank for application to the
Revolving Credit Loan in accordance with the terms of
this Agreement and in accordance with the Release
Provisions set forth in Addendum 3, unless otherwise
agreed by Bank in writing, the following sums: (i) one-
hundred percent (100%) of the net proceeds received by
or on behalf of any Borrower from the sale of all or
any portion of the Mortgaged Property or upon the
taking of all or any portion of the Mortgaged Property
by condemnation; provided that, if such sale is to a
Related Party, the mandatory prepayment shall be in an
amount equal to the greater of fifty percent (50%) of
the gross sales price or fifty percent (50%) of the
corresponding Partial Release Price, as more fully set
forth in Addendum 3, of such portion of the Mortgaged
Property, (ii) one-hundred percent (100%) of the net
proceeds of MUD Reimbursables, (iii) one-hundred
percent (100%) of the net proceeds received upon the
sale of any Section 2.17 Asset, (iv) and one-hundred
percent (100%) of the distributions received by any
Borrower from any Partnership or any Future Partnership
upon the sale by such Related Party of any real
property interest ("Partnership Distributions").
2.19 Application of Payments. So long as no Event
of Default exists, all payments received from Borrower
(including, without limitation, the application of net
proceeds received from MUD Reimburseables, the
application of net proceeds from the sale of Section
2.17 Assets, the application of net proceeds from the
sale of Primary Collateral or Other Collateral or
Partnership Distributions, the application of net
proceeds from the conveyance of Primary Collateral or
Other Collateral to a Related Party, and release price
proceeds from any other source) shall be applied as
follows:
(a) First, such proceeds shall be applied to
pay interest current on the Revolving Credit Note
and to withhold an amount necessary to pay
interest current at month end (and to establish or
replenish the Interest Reserve Escrow Account);
(b) Second, such proceeds shall be applied
to pay any other sums (other than principal) then
due and payable under the Revolving Credit Loan;
(c) Third, such proceeds shall be applied to
pay the outstanding principal balance then due
under the Revolving Credit Note; and
(d) Fourth, any remaining proceeds after
application as above set forth shall be
distributed to Borrower at its discretion.
All payments received from Borrower on the
$5,000,000.00 Note will be applied thereto in
accordance with the terms and provisions of the
$5,000,000.00 Note.
3.6 Modification and Restatement of Addendum 3 - Release
Provisions. Addendum 3 attached to the Loan Agreement is hereby
deleted in its entirety, and the following Addendum 3 is inserted
in lieu thereof:
"ADDENDUM 3
RELEASE PROVISIONS
(Terms used with initial capital letters in this
Addendum 3 that are not specifically defined in this
Agreement shall have the meanings ascribed to them in
the Deeds of Trust.)
The Partial Release Price for Primary Collateral
shall be as follows: The payment to Bank of a
Partial Release Price equal to one hundred percent
(100%) of the Net Proceeds (i.e., all proceeds
less only reasonable closing costs, surveying
costs, title insurance premiums, attorneys' fees
and a broker's commission not to exceed six
percent (6.0%) with aggregate deductions not to
exceed eight percent(8%) of the sales price),
which Net Proceeds shall in no event be less than
eighty-five percent (85%) of the appraised value
(using year one undiscounted unit prices)
(hereinafter referred to as "Appraised Value") of
the Primary Collateral being released. See
Addendum 3-1(a)-(c) attached hereto for the
schedule of Appraised Value, which Addendum 3-1(a)-
(c) shall replace and supersede the prior
Addendum 3-1(a)-(c) attached to the Loan Agreement
dated December 16, 1999.
The Partial Release Price for Other Collateral
shall be as follows: The payment to Bank of a
Partial Release Price equal to one hundred percent
(100%) of the Net Proceeds (i.e., all proceeds
less only reasonable closing costs, surveying
costs, title insurance premiums, attorneys' fees
and a broker's commission not to exceed six
percent (6%) with aggregate deductions not to
exceed eight percent (8%) of the sales price),
which Net Proceeds shall in no event be less than
eighty-five percent (85%) of the assigned value
(hereinafter referred to as "Assigned Value")
established by Bank and Borrower for each of the
Lots [or Tracts] of Other Collateral (the "Minimum
Release Prices"). See Addendum 3-2 attached
hereto for the schedule of Assigned Value, which
Addendum 3-2 shall replace and supersede the prior
Addendum 3-2 attached to the Loan Agreement dated
December 16, 1999.
The foregoing notwithstanding, the Partial Release
Price for Primary Collateral or Other Collateral
for sale to a Related Party shall be as follows:
The payment of a Partial Release Price equal to
one hundred percent (100%) of all cash proceeds
received by Borrower, which cash proceeds shall in
no event be less than the greater of (i) fifty
percent (50%) of the Appraised Value for Primary
Collateral or fifty percent (50%) of the Assigned
Value for Other Collateral, as applicable, of the
Primary Collateral or Other Collateral being
released; or (ii) fifty percent (50%) of the gross
sales price paid by the Related Party. The gross
sales price (i.e., cash proceeds and all other
considerations) for the sale to the Related Party
will not be less than eighty-five percent (85%) of
the applicable Appraised Value or Assigned Value.
The foregoing notwithstanding, no release price will be
required for the release of either Primary Collateral
or Other Collateral from the lien of the Deeds of Trust
in the event such Primary Collateral or Other
Collateral is the subject of additional project
financing by Bank pursuant to a separate loan between
any Loan Party and Bank, and only so long as (i) in
connection with such loan, Bank has a first priority
lien and security interest in such Primary Collateral
or Other Collateral securing repayment of such loan,
(ii) such Loan Party owns 100% of the Primary
Collateral or Other Collateral which is the subject of
such separate loan, and any and all equity in the
project is funded solely by Borrower without any
third-parties having any ownership or equity interest
therein, (iii) such loan is cross-defaulted and cross-
collateralized with the Loans to the extent required by
Bank; and (iv) any ownership interest of Borrower in a
Related Party into which Primary Collateral or Other
Collateral has been transferred will be assigned to
Bank as security for the Indebtedness, and Borrower
agrees to execute and deliver to Bank an assignment of
partnership interest in such form and content as Bank
may require. If the Land sought to be released as
provided above is Primary Collateral, then such Primary
Collateral shall be removed from the borrowing base
(i.e., such Primary Collateral shall be removed from
the loan-to-value calculations for purposes of
determining the Maximum Loan Amount allowed hereunder).
Except as modified hereby, all of the release
provisions (including, without limitation, the
provisions requiring payment of a release price) as set
forth in the Loan Agreement will continue to apply with
respect to any release of Primary Collateral or Other
Collateral.
Notwithstanding anything contained herein to the
contrary, the location and configuration of the lot or
lots, or tract or tracts, requested to be released
(herein called "Lot" or "Lots" or "Tract" or "Tracts")
shall be reasonably satisfactory to Bank and no Partial
Release shall result in any remaining Lot [or Tract]
being without access to a public street. Any and all
Partial Releases shall be in accordance with the
following procedures:
(a) Borrower's request for a Partial Release
shall be given to Bank and accompanied by (i) the
legal description of the Lot or Lots [or Tract] to
be released, together with a draft closing
statement prepared for the proposed sale; (ii)
information necessary to process the request for
Partial Release, including whether the property to
be released is Primary Collateral or Other
Collateral and whether it is being sold to a
Related Party; (iii) any appraisal reconciliation
of value information as may be required by Bank,
together with a reimbursement of the cost of same,
which cost shall not exceed $750.00; and (iv) the
name and address of the title company, if any, to
whose attention the Partial Release Instrument (as
hereinafter defined) should be directed, numbers
that should be referenced (order number, loan
number, etc.) and the date when such Partial
Release is to be made. Borrower shall also
specify the name and address of the prospective
purchaser and the intended use of the Lot [or
Tract] to be released and shall supply such other
documents and information concerning such Partial
Release as Bank may reasonably request.
(b) Within five (5) days after receipt of
such request, and in accordance with and pursuant
to the terms and conditions of this Addendum 3 and
the other applicable provisions of this Agreement,
Bank shall execute an instrument effecting such
Partial Release ("Partial Release Instrument") and
deliver same to the title company so specified;
provided that all costs and expenses of Bank
associated with such Partial Release (including,
but not limited to, reasonable legal fees) shall
be paid by Borrower. Borrower shall also obtain
all title insurance endorsements reasonably
required by Bank in connection with such Partial
Release.
(c) The execution and delivery of such
Partial Release Instrument shall not affect any of
Borrower's obligations under the Loan Documents,
except that the payment of the Partial Release
Price must be actually received by Bank.
Regardless of the time such Partial Release is
executed, delivered and recorded, the payment made
by Borrower to Bank in respect to such Partial
Release shall be credited against the Indebtedness
in accordance with the terms of this Agreement
only upon receipt by Bank of the Partial Release
Price. The Partial Release Instrument shall be
delivered, in escrow, by Bank to the title company
so designated, to be held, released, delivered and
recorded in accordance with Bank's escrow
instructions, which shall require payment, in
cash, of the Partial Release Price to Bank prior
to delivery and recordation of the Partial Release
Instrument.
3.7 Letters of Credit. On Borrower's behalf, Bank has issued
two (2) letters of credit in the aggregate amount of
$2,587,576.00 and has correspondingly reduced the amount
available under the Revolving Credit Note by such amount.
Borrower's obligations under the issued letters of credit and any
subsequent letters of credit (collectively, the "Letters of
Credit") are as follows:
A. Conditions to Letters of Credit. Subject to the terms and
conditions set forth below, Borrower may, prior to the maturity
date of the Revolving Credit Note, request Bank to issue one or
more Letters of Credit under and as part of the Revolving Credit
Loan, provided that the following conditions are satisfied:
(1) such Letter of Credit and any amounts to be disbursed or
advanced under such Letter of Credit shall be used only for the
same purposes as allowed for Advances under the Revolving Credit
Loan, as set forth in Section 2.4 of Addendum 2 of the Loan
Agreement;
(2) after taking into account any such Letter of Credit, the sum
of (i) the then existing LC Obligations (as defined below), plus
(ii) the then outstanding principal balance of the Revolving
Credit Loan, does not (and shall at no time) exceed the Revolving
Credit Loan Maximum Amount. Accordingly, the amount of all LC
Obligations, if any, shall be applied against the amount of
Advances available to Borrower under the Revolving Credit Loan;
(3) the expiration date of such Letter of Credit is not more
than six (6) months after the maturity date of the Revolving
Credit Note;
(4) such Letter of Credit shall be classified as a "Standby"
Letter of Credit in accordance with applicable laws and
regulations applicable to Bank and in accordance with the Bank's
customary practices at such times for reporting to regulatory
authorities;
(5) the issuance of such Letter of Credit will be in compliance
with all applicable governmental restrictions, policies, and
guidelines and will not subject Bank to any cost which is not
reimbursable by Borrower under the Loan Documents;
(6) the form and terms of such Letter of Credit must be
acceptable to Bank in its sole discretion;
(7) all other conditions in this Amendment to the issuance of
such Letter of Credit shall have been satisfied;
(8) immediately before and after the issuance of such Letter of
Credit, no Event of Default shall have occurred and be
continuing, and no event shall have occurred which, with the
passage of time or notice, could constitute an Event of Default;
and
(9) the representations and warranties of Borrower contained in
the Loan Agreement (as modified hereby) and the other Loan
Documents shall be true and correct on and as of the date of
issuance of such Letter of Credit.
Bank will honor any such request by Borrower for the
issuance of a Letter of Credit if the foregoing conditions
(1) through (9) (collectively, the "LC Conditions") have
been met as of the date of issuance of such Letter of
Credit. Bank may choose to honor any such request for any
other Letter of Credit but has no obligation to do so and
may refuse to issue any other requested Letter of Credit for
any reason which Bank in its sole discretion deems relevant.
For purposes hereof, (i) the term "LC Obligations"
means, at the time in question, the sum of all Matured LC
Obligations plus the maximum amounts which Bank might then
or thereafter be called upon to advance under all Letters of
Credit then outstanding, and (ii) the term "Matured LC
Obligations" means all amounts paid by Bank on drafts or
demands for payment drawn or made under as purported to be
under any Letter of Credit, and all other amounts due and
owing to Bank under any application by Borrower for any
Letter of Credit to be issued by Bank (a "LC Application"),
to the extent the same have not been repaid to Bank (with
the proceeds of an Advance or otherwise).
B. Requesting Letters of Credit. Borrower must make
written application for any Letter of Credit at least five (5)
business days before the date on which Borrower desires for Bank to
issue such Letter of Credit. By making any such written application,
Borrower shall be deemed to have represented and warranted that
the LC Conditions will be met as of the date of issuance of such
Letter of Credit. Two (2) business days after the LC Conditions
have been met (or if Bank otherwise desires to issue such Letter
of Credit), Bank will issue such Letter of Credit at Bank's
office in Dallas, Texas. If any provisions of any LC Application
conflict with any provisions of this Amendment, the provisions of
this Amendment shall govern and control.
C. Reimbursement and Participations.
(1) Reimbursement by Borrower. Each Matured LC Obligation
shall constitute an Advance under the Revolving Credit Loan. To
the extent the same has not been repaid to Bank (with the proceeds
of an Advance under the Revolving Credit Loan or otherwise),
Borrower promises to pay to Bank, or to Bank's order, on demand,
(i) the full amount of each Matured LC Obligation, whether such
obligation accrues before or after the maturity date of the
Revolving Credit Note, together with (ii) interest thereon at a
rate per annum equal to the Applicable Rate for the Base Rate
Balance (as such terms are defined in the Revolving Credit Note)
until repaid in full; provided that after the maturity date of
the Revolving Credit Note or following a default or an Event of
Default under the Loan Agreement or the other Loan Documents,
such interest shall accrue at the Default Rate (as such term is
defined in the Revolving Credit Note).
(2) Letter of Credit Advances. If the beneficiary of any Letter
of Credit makes a draft or other demand for payment thereunder,
then Borrower may, during the interval between the making thereof
and the honoring thereof by Bank, request Bank to make an Advance
under the Revolving Credit Loan to Borrower in the amount of such
draft or demand, which Advance shall be made concurrently with
Bank's payment of such draft or demand and shall be immediately
used by Bank to repay the amount of the resulting Matured LC
Obligation. Such a request by Borrower shall be made in
compliance with all of the provisions hereof.
D. Letter of Credit Fees. In consideration of Bank's issuance
of any Letter of Credit, Borrower agrees to pay to Bank a letter
of credit issuance fee at a rate equal to two percent (2.0%) per
annum. Each such fee will be calculated based on the term and
face amount of such Letter of Credit and the above applicable
rate and will be payable upon issuance. In no event shall the
issuance fee be less than $500.00 for any Letter of Credit.
E. No Duty to Inquire.
(1) Drafts and Demands. Bank is authorized and instructed to
accept and pay drafts and demands for payment under any Letter of
Credit without requiring, and without responsibility for, any
determination as to the existence of any event giving rise to
said draft, either at the time of acceptance of payment or
thereafter. Bank is under no duty to determine the proper
identity of anyone presenting such a draft or making such a
demand (whether by tested telex or otherwise) as the officer,
representative or agent of any beneficiary under any Letter of
Credit, and payment by Bank to any such beneficiary when
requested by any such purported officer, representative or agent
is hereby authorized and approved. Borrower agrees to hold Bank
harmless and indemnified against any liability or claim in
connection with or arising out of the subject matter of this
section, WHICH INDEMNITY SHALL APPLY WHETHER OR NOT ANY SUCH
LIABILITY OR CLAIM IS IN ANY WAY OR TO ANY EXTENT OWED, IN WHOLE
OR IN PART, UNDER ANY CLAIM OR THEORY OF STRICT LIABILITY, OR ARE
CAUSED, IN WHOLE OR IN PART, BY ANY NEGLIGENT ACT OR OMISSION OF
ANY KIND BY BANK, provided only that Bank shall not be entitled
to indemnification for that portion, if any, of any liability or
claim which is proximately caused by its own individual gross
negligence or willful misconduct, as determined in a final
judgment.
(2) Extension of Letter of Credit Maturity. If the maturity of
any Letter of Credit is extended by its terms or by Law or
governmental action, if any extension of the maturity or time for
presentation of drafts or any other modification of the terms of
any Letter of Credit is made at the request of Borrower, or if
the amount of any Letter of Credit is increased at the request of
Borrower, this Amendment shall be binding upon Borrower with
respect to such Letter of Credit as so extended, increased or
otherwise modified, with respect to drafts and property covered
thereby, and with respect to any action taken by Bank, or Bank's
correspondents in accordance with such extension, increase or
other modification.
(3) Transferees of Letters of Credit. If any Letter of Credit
provides that it is transferable, Bank shall have no duty to
determine the proper identity of anyone appearing as transferee
of such Letter of Credit, nor shall Bank be charged with
responsibility of any nature or character for the validity or
correctness of any transfer or successive transfers, and payment
by Bank to any purported transferee or transferees as determined
by Bank is hereby authorized and approved, and Borrower further
agrees to hold Bank harmless and indemnified against any
liability or claim in connection with or arising out of the
foregoing, WHICH INDEMNITY SHALL APPLY WHETHER OR NOT ANY SUCH
LIABILITY OR CLAIM IS IN ANY WAY OR TO ANY EXTENT OWED, IN WHOLE
OR IN PART, UNDER ANY CLAIM OR THEORY OF STRICT LIABILITY, OR ARE
CAUSED, IN WHOLE OR IN PART, BY ANY NEGLIGENT ACT OR OMISSION OF
ANY KIND BY BANK, provided only that Bank shall not be entitled
to indemnification for that portion, if any, of any liability or
claim which is proximately caused by its own individual gross
negligence or willful misconduct, as determined in a final
judgment.
F. LC Collateral.
(1) Acceleration of LC Obligations. On the maturity date
of the Revolving Credit Note, or if the Loans or either of them becomes
immediately due and payable pursuant to the Loan Documents, then,
unless Bank otherwise specifically elects to the contrary, all LC
Obligations shall become immediately due and payable without
regard to whether or not actual drawings or payments on the
Letters of Credit have occurred, and Borrower shall be obligated
to pay to Bank immediately an amount equal to the aggregate LC
Obligations which are then outstanding. All amounts so paid
shall first be applied to Matured LC Obligations and the
remainder will be held by Bank as security for the remaining LC
Obligations (all such amounts held as security for LC Obligations
being herein collectively called "LC Collateral") until such LC
Obligations become Matured LC Obligations, at which time such LC
Collateral shall be applied to such Matured LC Obligations.
(2) Investment of LC Collateral. Pending application thereof,
all LC Collateral shall be invested by Bank in such investments
as Bank may elect. All interest on such investments shall be
reinvested or applied to Matured LC Obligations. When all
indebtedness evidenced by the Notes and all LC Obligations have
been satisfied in full, all Letters of Credit have expired or
been terminated, and all of Borrower's reimbursement obligations
in connection therewith have been satisfied in full, Bank shall
release any remaining LC Collateral. Borrower hereby assigns and
grants to Bank a continuing security interest in all LC
Collateral, all investments purchased with such LC Collateral,
and all proceeds thereof to secure its Matured LC Obligations and
its obligations under this Amendment, the Loan Agreement, the
Notes and the other Loan Documents. Borrower further agrees that
Bank shall have all of the rights and remedies of a secured party
under the Uniform Commercial Code as adopted in the State of
Texas with respect to such security interest and that an Event of
Default under the Loan Agreement (as modified hereby) shall
constitute a default for purposes of such security interest.
(3) Payment of LC Collateral. When Borrower is required to
provide LC Collateral for any reason and fails to do so on the
day when required, Bank may without notice to Borrower provide
such LC Collateral (whether by transfers from other accounts
maintained with Bank or otherwise) using any available funds of
Borrower.
4. Payment of Fees.
(a) At such time as Borrower requests an Advance under the
$5,000,000.00 Note, Borrower shall remit to Bank cash funds equal
to 0.5% of the amount of the Advance requested and shall pay a
0.5% fee in connection with each Advance thereafter funded under
the $5,000,000.00 Note, which sum shall be in payment of and
further consideration for the funding of each such Advance.
(b) Contemporaneously with the execution and delivery of this
Amendment, Borrower shall remit to Bank (i) cash funds in the
amount of $68,750.00, which sum shall be in payment of and as
additional consideration for the modification of the Revolving
Credit Loan , and for the extension of the maturity date of the
Revolving Credit Loan as set forth herein.
(c) Bank's obligation to make any further Advances under the
Revolving Credit Note are and shall be subject to and further
conditioned upon payment of the foregoing fees.
5. Holliday Loan. In connection with the Amendment to Loan
Agreement entered into December 27, 2000, Bank consented to an
unsecured loan from Holliday Fenoglio Fowler, L.P., a Texas
limited partnership ("Holliday") to Stratus Properties, Inc.
("Stratus") in a principal amount not to exceed $10,000,000.00
(the "Holliday Loan") upon certain terms and conditions.
Borrower hereby represents and warrants that the following terms,
covenants and restrictions have been satisfied and complied with
at all times to date and shall continue to be satisfied and
complied with throughout the term of the Holliday Loan until the
Loans have been repaid in full and all other obligations of
Borrower under the Loan Documents have been fully satisfied: (i)
neither the stated principal amount of the Holliday Loan, nor the
outstanding principal balance of the Holliday Loan, shall at any
time exceed $10,000,000; (ii) the proceeds of the Holliday Loan
shall be used only for general corporate purposes of Stratus,
including the use of such proceeds for the purpose of
repurchasing the common stock of Stratus; (iii) the Holliday Loan
is not and shall at no time be secured by any of the real
property or other collateral securing the Loans or otherwise be
secured by any Liens in contravention of any terms or provisions
in the Loan Agreement (including, without limitation, Section 5.5
thereof), as modified hereby, or any of the other Loan Documents;
(iv) Bank's rights to receive, use and apply any and all proceeds
and other amounts as set forth in Sections 2.18 and 2.19 of
Addendum 2 and elsewhere in the Loan Agreement (as modified
hereby) shall continue in full force and effect and shall not be
affected in any manner by the Holliday Loan, and Holliday (and
any subsequent holder of the Holliday Loan) shall have no rights
to the receipt of any such proceeds, and Borrower shall not
utilize any of such proceeds for repayment of or application to
any of the indebtedness evidenced by the Holliday Loan; (v)
without the prior written approval of Bank, no proceeds of the
Loans shall be used by Borrower to repay any principal or other
amounts then outstanding under the Holliday Loan, except that
proceeds of the Revolving Credit Loan may be used by Borrower for
the repayment of ordinary interest then due and payable under the
Holliday Loan so long as no Event of Default exists and is
continuing under the Loan Agreement (as modified hereby) or the
other Loan Documents; (vi) without Bank's written consent,
Stratus and Borrower shall not prepay any principal portion of
the indebtedness under the Holliday Loan during the first
eighteen (18) months of the term of the Holliday Loan; and (vii)
the promissory note, loan agreement and other loan documents (if
any) executed in connection with the Holliday Loan shall be on
terms consistent with the foregoing and otherwise on terms
reasonably acceptable to Bank, and shall not, without Bank's
written consent, be amended or modified in any manner that (a)
conflicts with any of the foregoing terms, covenants and
restrictions, (b) increases the principal amount of the Holliday
Loan to more than $10,000,000.00, or (c) would cause a default or
an event of default under the Loan Agreement (as modified hereby)
or any of the other Loan Documents. Bank previously consented to
Holliday assigning its interest in the Holliday Loan to American
Select Portfolio Inc., a Minnesota corporation, on the condition
that the foregoing terms are complied with. Borrower shall
promptly provide Bank with a copy of any notice of default
received by Stratus or Borrower from Holliday (or the then holder
of the Holliday Loan) or delivered by Stratus or Borrower to
Holliday (or the then holder of the Holliday Loan), in connection
with the Holliday Loan. Any failure of Borrower or the Holliday
Loan to comply with any of the foregoing conditions, covenants
and restrictions set forth in items (i) through (vii) above shall
be an Event of Default under the Loan Agreement (as modified
hereby) and the other Loan Documents. Any default or event of
default under the Holliday Loan which continues beyond any
applicable grace or cure period thereunder shall also constitute
an Event of Default under the Loan Agreement (as amended hereby)
and the other Loan Documents.
6. Title Insurance. Contemporaneously with the execution and
delivery hereof, the Borrower shall cause the Title Company to
issue with respect to the mortgagee title policy previously
issued to Bank in connection with the Loans (the "Title Policy"),
the standard Texas Form T-38 Endorsement pursuant to Rule P-9B(3)
of the Basic Manual of Rules, Rates and Forms for the Writing of
Title Insurance in the State of Texas (the "Title Manual"), and
the Standard Texas Form T-33 Endorsement pursuant to Rule P-9B(6)
of the Title Manual, all acceptable to Bank, confirming that the
Title Policy has not been reduced or terminated by virtue of the
terms and provisions of this Amendment and the other Loan
Modification Documents (as defined below).
7. Acknowledgment by Borrower. Except as otherwise specified
herein, the terms and provisions hereof shall in no manner
impair, limit, restrict or otherwise affect the obligations of
Borrower or any third party to Bank, as evidenced by the Loan
Documents. Borrower hereby acknowledges, agrees and represents
that (i) Borrower is indebted to Bank pursuant to the terms of
the Notes as modified; (ii) the liens, security interests and
assignments created and evidenced by the Security Instruments
are, respectively, valid and subsisting liens, security interests
and assignments of the respective dignity and priority recited in
the Security Instruments; (iii) there are no claims or offsets
against, or defenses or counterclaims to, the terms or provisions
of the Security Instruments or the other Loan Documents, and the
other obligations created or evidenced by the Security
Instruments or the other Loan Documents; (iv) Borrower has no
claims, offsets, defenses or counterclaims arising from any of
Bank's acts or omissions with respect to the Mortgaged Property,
the Security Instruments or the other Loan Documents or Bank's
performance under the Security Instruments or the other Loan
Documents or with respect to the Mortgaged Property; (v) the
representations and warranties of Borrower contained in the Loan
Agreement, the Security Instruments and the other Loan Documents
are and remain true and correct as of the date hereof; and (vi)
Bank is not in default and no event has occurred which, with the
passage of time, giving of notice, or both, would constitute a
default by Bank of Bank's obligations under the terms and
provisions of the Loan Documents.
8. No Waiver of Remedies. Except as may be expressly set forth
herein, nothing contained in this Amendment shall prejudice, act
as, or be deemed to be a waiver of any right or remedy available
to Bank by reason of the occurrence or existence of any fact,
circumstance or event constituting a default under the Notes or
the other Loan Documents.
9. Effectiveness of the Security Instruments. Except as
expressly modified by the terms and provisions of this Second
Amendment to Loan Agreement and by the prior Amendment to Loan
Agreement, the Amendment to Promissory Note, and the Second
Amendment to Promissory Note referenced above, and the Amendment
to Revolving Credit Note and the Second Amendment to Revolving
Credit Note referenced above, and the Modification Agreement and
the Second Modification Agreement referenced above (collectively,
the "Loan Modification Documents"), each of the terms and
provisions of the Loan Agreement, the Notes, the Security
Instruments and the other Loan Documents are hereby ratified and
shall remain in full force and effect; provided, however, that
any reference in any of the Security Instruments to the Loans,
the amounts constituting the Loans, any defined terms, or to any
of the other Security Instruments shall be deemed, from and after
the date hereof, to refer to the Loans, the amounts constituting
the Loans, defined terms and to the Notes, the Loan Agreement,
the Lien Instruments and such other Loan Documents, as modified
by the Loan Modification Documents.
10. Costs and Expenses. Contemporaneously with the execution
and delivery hereof, Borrower shall pay, or cause to be paid, all
costs and expenses incident to the preparation, execution and
recordation of the Loan Modification Documents and the
consummation of the transaction contemplated hereby, including,
but not limited to, recording fees, title insurance policy or
endorsement premiums or other charges of the Title Company, and
reasonable fees and expenses of legal counsel to Bank.
11. Additional Documentation. From time to time, Borrower shall
execute or procure and deliver to Bank such other and further
documents and instruments evidencing, securing or pertaining to
the Loans or the Loan Documents as shall be reasonably requested
by Bank so as to evidence or effect the terms and provisions
hereof. Upon Bank's request, Borrower shall cause to be
delivered to Bank an opinion of counsel, satisfactory to Bank as
to form, substance and rendering attorney, opining to (i) the
validity and enforceability of this Amendment and the other Loan
Modification Documents and the terms and provisions hereof and
thereof, and any other agreement executed in connection with the
transaction contemplated hereby; (ii) the authority of Borrower,
and any constituents of Borrower, to execute, deliver and perform
its or their respective obligations under the Loan Documents, as
modified by the Loan Modification Documents; and (iii) such other
matters as reasonably requested by Bank.
12. Severability. If any clause or provision of this Amendment
is or should ever be held to be illegal, invalid or unenforceable
under any present or future law applicable to the terms hereof,
then and in that event, it is the intention of the parties hereto
that the remainder of this Amendment shall not be affected
thereby, and that in lieu of each such clause or provision of
this Amendment that is illegal, invalid or unenforceable, such
clause or provision shall be judicially construed and interpreted
to be as similar in substance and content to such illegal,
invalid or unenforceable clause or provision, as the context
thereof would reasonably suggest, so as to thereafter be legal,
valid and enforceable
13. Borrower's Reaffirmation. Borrower hereby reaffirms all of
its obligations under the Notes (as amended), the Loan Agreement
(as amended hereby), the Lien Instruments (as amended) and the
other Loan Documents, and acknowledges that it has no claims,
offsets or defenses with respect to the payment of sums due under
the Notes (as amended), the Loan Agreement (as amended hereby),
the Lien Instruments (as amended) or the other Loan Documents.
14. Continuing Effect; Ratification. Except as expressly
amended and modified by this Amendment, the Loan Agreement shall
remain unchanged and in full force and effect. The Loan
Agreement, as modified by this Amendment, and all documents,
assignments, transfers, liens and security rights pertaining to
it, are hereby ratified, reaffirmed and confirmed in all respects
as valid, subsisting and continuing in full force and effect.
The Loan Agreement and this Amendment shall together comprise the
Loan Agreement with respect to the Loans.
15. No Waiver. The execution and delivery of this Amendment
shall in no way be deemed to be a waiver by Bank of any default
or potential default by Borrower under the Loan Agreement or the
other Loan Documents or of any rights, powers or remedies of Bank
under the Loan Agreement or the other Loan Documents, and shall
in no way limit, impair or prejudice Bank from exercising any
past, present or future right, power or remedy available to it
under the Loan Agreement and the other Loan Documents.
16. No Novation. It is the intent of the parties that this
Amendment shall not constitute a novation and shall in no way
limit, diminish, impair or adversely affect the lien priority of
the Lien Instruments. All of the liens and security interests
securing the Loans, including, without limitation, the liens and
security interests created by the Lien Instruments, are hereby
ratified, reinstated, renewed, confirmed and extended to secure
the Loans and the Notes as modified.
17. Binding Effect. This Amendment shall be binding upon and
shall inure to the benefit of Borrower and Bank, and their
respective successors and assigns.
18. Governing Law. This Amendment shall be construed in
accordance with and governed by the laws of the State of Texas.
19. Counterpart Execution. This Amendment may be executed in
any number of counterparts, each of which shall be deemed an
original, but together shall constitute one and the same
instrument.
20. Notice of Final Agreement. This Amendment is the entire
agreement between the parties with respect to modifications of
documents provided for herein and supersedes all prior
conflicting or inconsistent agreements, consents and
understandings relating to such subject matter.
THE NOTES, THE LOAN AGREEMENT, THIS AMENDMENT, THE LIEN
INSTRUMENTS 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 PARTIES.
[SIGNATURE PAGES FOLLOW]
IN WITNESS WHEREOF, Borrower and Bank have executed this
Amendment to be effective as of the Amendment Date.
BORROWER:
STRATUS PROPERTIES INC.,
a Delaware corporation
By: /s/ William H. Armstrong, III
-----------------------------
Name: William H. Armstrong, III
Title: Chairman of the Board, President
and Chief Executive Officer
STRATUS PROPERTIES OPERATING CO.,
L.P.,
a Delaware limited partnership
By: STRS L.L.C.,
a Delaware limited liability company,
General Partner
By: Stratus Properties Inc.,
a Delaware corporation,
Sole Member
By: /s/ William H. Armstrong, III
---------------------------
Name:William H. Armstrong, III
Title:Chairman of the Board,
President
and Chief Executive Officer
CIRCLE C LAND CORP.,
a Texas corporation
By: /s/William H. Armstrong, III
--------------------------------
Name: William H. Armstrong, III
Title: President
AUSTIN 290 PROPERTIES, INC.,
a Texas corporation
By: /s/William H. Armstrong, III
--------------------------------
Name: William H. Armstrong, III
Title: President
BANK:
COMERICA BANK-TEXAS,
a state banking association
By:
Name:
Title: