Exhibit 10.15
CONSTRUCTION LOAN AGREEMENT
This CONSTRUCTION LOAN AGREEMENT ("Agreement") is made and
entered into as of the 24th day of February, 2000, by and between
STRATUS 7000 WEST JOINT VENTURE, a Texas joint venture
("Borrower"), whose address is 98 San Jacinto Boulevard,
Suite 220, Austin, Texas 78701, and COMERICA BANK-TEXAS, a state
banking association ("Lender"), whose address is 1601 Elm Street,
2nd Floor, Dallas, Texas 75201, Attn: National Real Estate
Services.
ARTICLE I
DEFINITION OF TERMS
I.1 Definitions. As used in this Agreement, the following
terms shall have the respective meanings indicated below:
Advance: A disbursement by Lender, whether by journal
entry, deposit to Borrower's account, check to third party or
otherwise of any of the proceeds of the Loan, any insurance
proceeds or Borrower's Deposit.
Affidavit of Commencement: As defined in Section 5.13
hereof.
Affidavit of Completion: As defined in Section 5.14 hereof.
Agreement: This Loan Agreement, as the same may from time
to time be amended or supplemented.
Allocations: The line items set forth in the Budget for
which Advances of Loan proceeds will be made.
Borrower's Deposit: Such cash amounts as Lender may deem
necessary for Borrower to deposit with it in accordance with the
provisions of Section 3.4 of this Agreement.
Budget: The budget which is set forth on Exhibit B attached
hereto and incorporated herein by reference.
Commitment Fee: The sum of $38,500.00 to be paid by
Borrower to Lender pursuant to the applicable provisions of this
Agreement.
Completion Date: September 30, 2000, for completion of the
shell portion of the office building.
Construction Contract: Collectively, all contracts and
agreements entered into between Borrower and Contractor
pertaining to the development, construction and completion of the
Phase II Improvements, which Construction Contract shall provide
a guaranteed maximum cost for construction of the Phase II
Improvements.
Contractor: Zapalac/Reed Construction Company, L.C.,
together with any other person or entity with whom Borrower
contracts for the development, construction and completion of the
Phase II Improvements or any portion thereof.
Deed of Trust: The Amended and Restated Deed of Trust dated
April 9, 1999, and recorded under Document No. 1999009453 of the
Official Records of Travis County, as modified by the
Modification Agreement dated August 16, 1999, recorded under
Document No. 1999093007 of the Official Records of Travis County,
Texas, and as further amended by the Second Amended and Restated
Deed of Trust dated of even date herewith, pursuant to which
Borrower has mortgaged the Land to secure both the Phase I Note
and this Note.
Design Professional: Susman Tisdale Gayle, together with any
other person or entity with whom Borrower contracts for the
providing of planning, design, architectural, engineering or
other similar services relating to the Phase II Improvements, if
any.
Design Services Contract: Collectively, all contracts and
agreements entered into between Borrower and each Design
Professional pertaining to the design, development and
construction of the Phase II Improvements, if any.
Disposition: Any sale, lease (except as expressly permitted
pursuant to the Loan Documents), exchange, assignment,
conveyance, transfer, trade, or other disposition of all or any
portion of the Mortgaged Property (or any interest therein) or
all or any part, directly or indirectly, of the beneficial
ownership interest in Borrower (if Borrower is a corporation,
partnership, general partnership, limited partnership, joint
venture, trust, or other type of business association or legal
entity); provided, however, a sale of the publicly traded stock
of Stratus Properties Inc. shall not constitute a Disposition
under the terms of this Agreement; and, further provided,
notwithstanding anything to the contrary contained herein or in
any of the other Loan Documents, Oly Lantana, L.P., a joint
venturer of Borrower ("Oly Lantana") may, after written notice to
but without the requirement of Lender's consent, transfer all or
any portion of its joint venture interest in Borrower or all or
any portion of its interest in any constituent entity of Oly
Lantana to any entity or individual that is now or is in the
future an affiliate or partner in Hicks Muse Tate and Furst,
Inc., Olympus Real Estate Corporation or Olympus Real Estate Fund
II, LP; PROVIDED, HOWEVER, in no event shall Stratus 7000 West,
Ltd., the other joint venturer of Borrower, and the entities
which comprise Stratus 7000 West, Ltd. (collectively, "Stratus")
(i) be entitled to transfer any interest in Stratus 7000 West,
Ltd. or in any Stratus constituent entity without the prior
written consent of Lender and FURTHER PROVIDED that (ii) Stratus
shall be obligated to, at all times during the term of this Loan,
remain in charge of the day-to-day management of the Borrower;
EXCEPT, HOWEVER, Oly Lantana shall be entitled to exercise its
right to remove Stratus as Operating Partner of Borrower in
accordance with Section 4.1 of the Amended and Restated Joint
Venture Agreement between Oly Lantana and Stratus 7000 West, Ltd.
dated August 16, 1999, PROVIDED: (i) Oly Lantana has first given
written notice to Lender at least five (5) business days in
advance of such removal and the reason for said proposed removal,
together with Oly Lantana's proposed additional collateral, cash
deposit or guaranty of the Loan (the "Proposed Collateral"),
which Proposed Collateral must be satisfactory to Lender in its
sole discretion; and thereafter either (ii) within ten (10)
business days of receipt of Lender's approval of said Proposed
Collateral, has furnished to Lender such Proposed Collateral; or
(iii) within ten (10) business days of receipt of Lender's
disapproval of the Proposed Collateral has paid off the Loan in
full.
Draw Request: a request by Borrower to Lender for an
Advance in such form and containing such information as Lender
may require.
Environmental Law: Any federal, state, or local law,
statute, ordinance, or regulation, whether now or hereafter in
effect, pertaining to health, industrial hygiene, or the
environmental conditions on, under, or about the Mortgaged
Property, including without limitation, the following, as now or
hereafter amended: Comprehensive Environmental Response,
Compensation, and Liability Act of 1980 ("CERCLA"), 42 U.S.C.
& 9601 et seq.; Resource, Conservation and Recovery Act ("RCRA"),
42 U.S.C. & 6901 et seq. as amended by the Superfund Amendments
and Reauthorization Act of 1986 ("SARA"), Pub. L. 99-499, 100
Stat. 1613; the Toxic Substances Control Act, 15 U.S.C. & 2601
et seq.; Emergency Planning and Community Right to Know Act of
1986, 42 U.S.C. & 1101 et seq.; Clean Water Act ("CWA"), 33
U.S.C. & 1251 et seq.; Clean Air Act ("CAA"), 42 U.S.C. & 7401 et
seq.; Federal Water Pollution Control Act ("FWPCA"), 33 U.S.C.
& 1251 et seq.; and any corresponding state laws or ordinances
including but not limited to the Texas Water Code ("TWC")
& 26.001 et seq; Texas Health & Safety Code ("THSC") & 361.001 et
seq.; Texas Solid Waste Disposal Act, Tex. Rev. Civ. Stat. Ann.
art. 4477-7; and regulations, rules, guidelines, or standards
promulgated pursuant to such laws, statutes and regulations, as
such statutes, regulations, rules, guidelines, and standards are
amended from time to time.
Event of Default: Any happening or occurrence described in
Section 7.1 of this Agreement.
Financing Statement: The financing statement or financing
statements (on Standard Form UCC-1 or otherwise) executed and
delivered by Borrower in connection with the Loan Documents.
Governmental Authority: Any and all courts, boards,
agencies, commissions, offices, or authorities of any nature
whatsoever for any governmental unit (federal, state, county,
district, municipal, city or otherwise), whether now or hereafter
in existence.
Governmental Requirements: All statutes, laws, ordinances,
rules, regulations, orders, writs, injunctions or decrees of any
Governmental Authority applicable to Borrower, Guarantor or the
Mortgaged Property.
Guarantor: STRATUS PROPERTIES INC., a Delaware corporation.
Guaranty: That or those instruments of guaranty now or
hereafter in effect from Guarantor to Lender guaranteeing the
repayment of all or any part of the Loan, the satisfaction of, or
continued compliance with, the covenants contained in the Loan
Documents, or both.
Hazardous Substance: Any substance, product, waste, or
other material which is or becomes listed, regulated, or
addressed as being a toxic, hazardous, polluting, or similarly
harmful substance under any Environmental Law, including without
limitation: (i) any substance included within the definition of
"hazardous waste" pursuant to Section 1004 of RCRA; (ii) any
substance included within the definition of "hazardous substance"
pursuant to Section 101 of CERCLA; (iii) any substance included
within (a) the definition of "regulated substance" pursuant to
Section 26.342(11) of TWC; or (b) the definition of "hazardous
substance" pursuant to Section 361.003(11) of THSC;
(iv) asbestos; (v) polychlorinated biphenyls; (vi) petroleum
products; (vii) underground storage tanks, whether empty, filled
or partially filled with any substance; (viii) any radioactive
materials, urea formaldehyde foam insulation or radon; (ix) any
substance included within the definition of "waste" pursuant to
Section 30.003(b) of TWC or "pollutant" pursuant to
Section 26.001(13) of TWC; and (x) any other chemical, material
or substance, the exposure to which is prohibited, limited or
regulated by any Governmental Authority on the basis that such
chemical, material or substance is toxic, hazardous or harmful to
human health or the environment.
Indebtedness: As defined in Section 9.8 hereof.
Initial Advance: The Advance to be made at the time
Borrower satisfies the conditions set forth in Sections 3.1 and
3.2 of this Agreement.
Inspecting Person: Chris Rehkemper of AECC will from time
to time inspect the Phase II Improvements and the development of
Phase II Improvements for the benefit of Lender.
Land: The real property or interest therein described in
Exhibit A attached hereto and incorporated herein by this
reference upon which the Phase I and Phase II Improvements are to
be constructed.
Loan: The loan evidenced by the Note and governed by this
Agreement.
Loan Amount: SEVEN MILLION SEVEN HUNDRED THOUSAND AND
NO/100 DOLLARS ($7,700,000.00).
Loan Documents: The Note, the Deed of Trust, this
Agreement, the Security Agreement, the Financing Statement, the
Guaranty, and any and all other documents now or hereafter
executed by the Borrower, Guarantor, or any other person or party
in connection with the Loan, the indebtedness evidenced by the
Note, or the covenants contained in this Agreement.
Material Adverse Effect: Any material and adverse effect on
(i) the business condition (financial or otherwise), operations,
prospects, results of operations, capitalization, liquidity or
any properties of the Borrower, taken as a whole, (ii) the value
of the Mortgaged Property, (iii) the ability of Borrower or any
Guarantor (or if the Borrower or any Guarantor is a partnership,
joint venture, trust or other type of business association, of
any of the parties comprising Borrower or such Guarantor) to pay
and perform the Indebtedness or any other Obligations, or
(iv) the validity, enforceability or binding effect of any of the
Loan Documents.
Mortgaged Property: Collectively, the Land, the Phase I and
Phase II Improvements, and all other collateral covered by the
Loan Documents.
Note: The promissory note dated as of even date herewith in
the principal sum of the Loan Amount (together with all renewals
and extensions thereof) executed and delivered by Borrower
payable to the order of Lender, evidencing the Loan.
Obligations: Any and all of the covenants, conditions,
warranties, representations, and other obligations (other than to
repay the Indebtedness) made or undertaken by Borrower,
Guarantor, or any other person or party to the Loan Documents to
Lender, the trustee of the Deed of Trust, or others as set forth
in the Loan Documents, and in any deed, lease, sublease, or other
form of conveyance, or any other agreement pursuant to which
Borrower is granted a possessory interest in the Land.
Phase I Improvements: That certain 66,606 square foot
office building, together with all amenities, currently under
construction on the Mortgaged Property, the funds for the said
Phase I Improvements having been advanced to Borrower by Lender
under a prior construction loan agreement dated April 9, 1999
between Lender and Borrower as modified by that certain Second
Amendment to Construction Loan Agreement dated December 31, 1999
(the "Prior Agreement").
Phase I Loan Documents: The Phase I Note, the Deed of
Trust, the Prior Agreement, the security agreement of even date
with the Phase I Note entered into by and between Borrower and
Lender, the financing statements executed by Borrower, as debtor,
dated as of the date of the Phase I Note, that certain guaranty
executed as of December 31, 1999, and delivered by Guarantor, any
and all other documents previously executed or hereafter executed
by the Borrower, Guarantor or any other person or party in
connection with the Phase I Note or the covenants contained in
the Prior Agreement.
Phase I Note: That certain $6,600,000 Promissory Note
dated April 9, 1999, executed by Borrower and payable to Lender,
and secured by the Mortgaged Property.
Phase II Improvements: That certain 66,475 square foot
office building, together with all amenities, to be constructed
on the Mortgaged Property, all as more particularly described in
the Plans and Specifications.
Plans and Specifications: The plans and specifications for
the development and construction of the Mortgaged Property,
prepared by Borrower or the Design Professional and approved by
Lender as required herein, by all applicable Governmental
Authorities, by any party to a purchase or construction contract
with a right of approval, all amendments and modifications
thereof approved in writing by the same, and all other design,
engineering or architectural work, test reports, surveys, shop
drawings, and related items.
Security Agreement: The Security Agreement shall mean all
security agreements, whether contained in the Deed of Trust, a
separate security agreement or otherwise creating a security
interest in all personal property and fixtures of Borrower
(including replacements, substitutions and after-acquired
property) now or hereafter located in or upon the Land or the
Phase I and Phase II Improvements, or used or intended to be used
in the operation thereof, to secure the Loan.
Subordinate Mortgage: Any mortgage, deed of trust, pledge,
lien (statutory, constitutional, or contractual), security
interest, encumbrance or charge, or conditional sale or other
title retention agreement, covering all or any portion of the
Mortgaged Property executed and delivered by Borrower, the lien
of which is subordinate and inferior to the lien of the Deed of
Trust.
Special Account: An account established by Borrower with
Lender (in which Borrower shall at all times maintain a minimum
balance of $1,000.00) into which all Advances made directly to
Borrower will be deposited.
Tenant Leases: All written leases or rental agreements by
which Borrower, as landlord, grants to a tenant a leasehold
interest in a portion of the leasable space within the Mortgaged
Property.
Title Insurance: One or more title insurance commitments,
binders or policies, as Lender may require, issued by the Title
Company, on a coinsurance or reinsurance basis (with direct
access endorsement or rights) if and as required by Lender, in
the maximum amount of the Loan insuring or committing to insure
that the Deed of Trust constitutes a valid lien covering the Land
and the Phase I and Phase II Improvements, subject only to those
exceptions which Lender may approve.
Title Company: The Title Company (and its issuing agent, if
applicable) issuing the Title Insurance, which shall be
acceptable to Lender in its sole and absolute discretion.
ARTICLE II
THE LOAN
II.1 Agreement to Lend. Lender hereby agrees to lend up to
but not in excess of the Loan Amount to Borrower, and Borrower
hereby agrees to borrow such sum from Lender, all upon and
subject to the terms and provisions of this Agreement, such sum
to be evidenced by the Note. No principal amount repaid by
Borrower may be reborrowed by Borrower. Borrower's liability for
repayment of the interest on account of the Loan shall be limited
to and calculated with respect to Loan proceeds actually
disbursed to Borrower pursuant to the terms of this Agreement and
the Note and only from the date or dates of such disbursements.
After notice to Borrower, Lender may, in Lender's sole
discretion, disburse Loan proceeds by journal entry to pay
interest and financing costs and, following an uncured Event of
Default, 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 Lender by journal
entry to pay interest or financing costs, and Loan proceeds
disbursed directly by Lender to pay costs or expenses required to
be paid by Borrower pursuant to this Agreement, shall constitute
Advances to Borrower.
II.2 Prior Loan. As reflected by the Phase I Loan
Documents, Lender and Borrower previously entered into the Prior
Agreement for construction of improvements on the Phase I portion
of the Land, such construction having been commenced on or about
February 11, 1999, for the construction of a two-story office
building similar in scope and design to the Phase II
Improvements. Advances have been made to Borrower by Lender
under the terms of the Prior Agreement, and construction is
ongoing under said Prior Agreement. Borrower and Lender hereby
agree that the Deed of Trust previously recorded in connection
with the Phase I Note and Prior Agreement more fully described
above shall be further modified to reflect that the lien of the
deed of trust shall also secure the indebtedness evidenced by the
Note entered into of even date herewith and the obligations of
this Construction Loan Agreement, all of which was contemplated
as of the original date of the Deed of Trust. Further, Borrower
hereby acknowledges and agrees that no Advances shall be used by
Borrower under this Loan to pay for any development or
construction costs for the Phase I Improvements.
II.3 Advances. The purposes for which Loan proceeds are
allocated and the respective amounts of such Allocations are set
forth in the Budget, which Advances shall be limited to the value
of the work in place as determined by the Inspecting Person.
II.4 Allocations. The Allocations shall be disbursed only
for the purposes set forth in the Budget. Lender shall not be
obligated to make an Advance for an Allocation set forth in the
Budget to the extent that the amount of the Advance for such
Allocation would, when added to all prior Advances for such
Allocation, exceed the total of such Allocation as set forth in
the Budget.
II.5 Limitation on Advances. To the extent that Loan
proceeds disbursed by Lender pursuant to the Allocations are
insufficient to pay all costs required for the acquisition,
development, construction and completion of the Mortgaged
Property, Borrower shall pay such excess costs with funds derived
from sources other than the Loan. Under no circumstances shall
Lender be required to disburse any proceeds of the Loan in excess
of the Loan Amount.
II.6 Reallocations. Lender reserves the right, at its
option, to disburse Loan proceeds allocated to any of the
Allocations for such other purposes or in such different
proportions as Lender may, in its sole discretion, deem necessary
or advisable. Borrower shall not be entitled to require that
Lender reallocate funds among the Allocations.
II.7 Contingency Allocations. Any amount allocated in the
Budget for "contingencies" or other non-specific purposes may, in
the Lender's discretion, be disbursed by Lender to pay future
contingent costs and expenses of maintaining, leasing and
promoting the Mortgaged Property and such other costs or expenses
as Lender shall approve. Under no circumstances shall the
Borrower have the right to require Lender to disburse any amounts
so allocated and Lender may impose such requirements and
conditions as it deems prudent and necessary should it elect to
disburse all or any portion of the amounts so allocated.
II.8 Withholding. Lender may withhold from an Advance or,
on account of subsequently discovered evidence, withhold from a
later Advance under this Agreement or require Borrower to repay
to Lender the whole or any part of any earlier Advance to such
extent as may be necessary to protect the Lender from loss on
account of (i) defective work not remedied or requirements of
this Agreement not performed, (ii) liens filed or reasonable
evidence indicating probable filing of liens which are not
bonded, (iii) failure of Borrower to make payments to the
Contractor for material or labor, except as is permitted by the
Construction Contract, or (iv) a reasonable doubt that the
construction of the Phase I Improvements can be completed for the
balance of the Loan Amount then undisbursed. When all such
grounds are removed, payment shall be made of any amount so
withheld because of them.
II.9 Loan Limitation. It is expressly agreed and understood
that, in accordance with the Budget, to the extent an Advance is
for construction costs of the Phase I Improvements, such Advance,
except for the final payment under the Loan, shall not exceed
ninety percent (90%) of the actual construction costs to which
such Advance relates.
ARTICLE III
ADVANCES
III.1 Conditions to Initial Advance. The obligation of
Lender to make the Initial Advance hereunder is subject to the
prior or simultaneous occurrence of each of the following
conditions:
(a) Lender shall have received from Borrower all of
the Loan Documents duly executed by Borrower and, if
applicable, by Guarantor.
(b) Lender shall have received certified copies of
resolutions of Borrower, if Borrower is a corporation, or a
certified copy of a consent of partners, if Borrower is a
partnership, authorizing execution, delivery and performance
of all of the Loan Documents and authorizing the borrowing
hereunder, along with such certificates of existence,
certificates of good standing and other certificates or
documents as Lender may reasonably require to evidence
Borrower's authority.
(c) Lender shall have received true copies of all
organization documents of Borrower, including all amendments
or supplements thereto, if Borrower is a legal entity other
than a corporation, along with such certificates or other
documents as Lender may reasonably require to evidence
Borrower's authority.
(d) Lender shall have received evidence that the
Mortgaged Property is not located within any designated
flood plain or special flood hazard area; or evidence that
Borrower has applied for and received flood insurance
covering the Mortgaged Property in the amount of the Loan or
the maximum coverage available to Lender.
(e) Lender shall have received evidence of compliance
with all Governmental Requirements.
(f) Lender shall have received a full-size, single
sheet copy of all recorded subdivision or plat maps of the
Land approved (to the extent required by Governmental
Requirements) by all Governmental Authorities, if
applicable, and legible copies of all instruments
representing exceptions to the state of title to the
Mortgaged Property.
(g) Lender shall have received policies of all-risk
builder's risk insurance (non-reporting form) during the
construction of the Phase II Improvements and all-risk
insurance after construction of the Phase II Improvements,
owner's and contractor's liability insurance, workers'
compensation insurance, and such other insurance as Lender
may reasonably require, with standard endorsements attached
naming Lender as the insured mortgagee or additional
insured, whichever is applicable, such policies to be in
form and content and issued by companies reasonably
satisfactory to Lender, with copies, or certificates
thereof, being delivered to Lender.
(h) Lender shall have received the Title Insurance, at
the sole expense of Borrower.
(i) Lender shall have received from Borrower such
other instruments, evidence and certificates as Lender may
reasonably require, including the items indicated below:
(1) Evidence that all the streets furnishing
access to the Mortgaged Property have been dedicated to
public use and installed and accepted by applicable
Governmental Authorities.
(2) A current survey of the Land prepared by a
registered surveyor or engineer and certified to
Lender, Borrower and the Title Company, in form and
substance reasonably acceptable to Lender, showing all
easements, building or setback lines, rights-of-way and
dedications affecting said land and showing no state of
facts objectionable to Lender.
(3) Evidence reasonably satisfactory to Lender
showing the availability of all necessary utilities at
the boundary lines of the Land, including sanitary and
storm sewer facilities, potable water, telephone,
electricity, gas, and municipal services.
(4) Evidence that the current and proposed use of
the Mortgaged Property and the construction of the
Phase II Improvements complies with all Governmental
Requirements.
(5) An opinion of counsel for Borrower, which
counsel shall be satisfactory to Lender, to the effect
that (i) Borrower possesses full power and authority to
own the Mortgaged Property, to construct the Phase II
Improvements and to perform Borrower's obligations
hereunder; (ii) the Loan Documents have been duly
authorized, executed and delivered by Borrower and,
where required, by Guarantor, and constitute the valid
and binding obligations of Borrower and Guarantor, not
subject to any defense based upon usury, capacity of
Borrower or otherwise; (iii) the Loan Documents are
enforceable in accordance with their respective terms,
except as limited by bankruptcy, insolvency and other
laws affecting creditors' rights generally, and except
that certain remedial provisions thereof may be limited
by the laws of the State of Texas; (iv) to the
knowledge of such counsel, there are no actions, suits
or proceedings pending or threatened against or
affecting Borrower, Guarantor or the Mortgaged
Property, or involving the priority, validity or
enforceability of the liens or security interests
arising out of the Loan Documents, at law or in equity,
or before or by any Governmental Authority, except
actions, suits or proceedings fully covered by
insurance or which, if adversely determined, would not
substantially impair the ability of Borrower or
Guarantor to pay when due any amounts which may become
payable in respect to the Loan as represented by the
Note; (v) to the knowledge of such counsel, neither
Borrower nor Guarantor is in default with respect to
any order, writ, injunction, decree or demand of any
court or any Governmental Authority of which such
counsel has knowledge; (vi) to the knowledge of such
counsel, the consummation of the transactions hereby
contemplated and the performance of this Agreement and
the execution and delivery of the Guaranty will not
violate or contravene any provision of any instrument
creating or governing the business operations of
Borrower or Guarantor and will not result in any breach
of, or constitute a default under, any mortgage, deed
of trust, lease, bank loan or credit agreement or other
instrument to which Borrower or any Guarantor is a
party or by which Borrower, Guarantor or the Mortgaged
Property may be bound or affected; and (vii) such other
matters as Lender may reasonably request.
(6) A cost breakdown satisfactory to Lender
showing the total costs, including, but not limited to,
such related nonconstruction items as interest during
construction, commitment, legal, design professional
and real estate agents' fees, plus the amount of the
Land cost and direct construction costs required to be
paid to satisfactorily complete the Phase II
Improvements, free and clear of liens or claims for
liens for material supplied and for labor services
performed.
(7) Original or a copy of each proposed
Construction Contract.
(8) Original or a copy of each fully executed
Design Services Contract.
(9) Waiver of lien or lien subordination
agreement(s) for the prior month's draw request
executed by Contractor and by each contractor, laborer
and suppliers furnishing labor or materials to the
Mortgaged Property, in a form acceptable to Lender,
together with Borrower's affidavit to Lender that all
changes and expenses incurred to date for either the
Phase I Improvements or the Phase II Improvements have
been paid in full.
(10) A copy of the Plans and Specifications for
the Phase II Improvements.
(11) Building permit(s), grading permit(s) and all
other permits required with respect to the construction
of the Phase I or Phase II Improvements.
(12) Evidence that all applicable zoning
ordinances and restrictive covenants affecting the Land
permit the use for which the Phase I and Phase II
Improvements are intended and have been or will be
complied with.
(13) Evidence of payment of required sums for
insurance, taxes, expenses, charges and fees
customarily required or recommended by Lender or any
Governmental Authority, corporation, or person
guaranteeing, insuring or purchasing, committing to
guaranty, insure, purchase or refinance the Loan or any
portion thereof.
(14) A current financial statement of Borrower
certified by a duly authorized representative of
Borrower.
(15) A current financial statement of Guarantor
certified by said Guarantor.
(16) A Guaranty executed by the Guarantor.
(17) A schedule of construction progress for the
Phase II Improvements with the anticipated commencement
and completion dates of each phase of construction and
the anticipated date and amounts of each Advance for
the same.
(18) Copies of all agreements entered into by
Borrower or its operating partner pertaining to the
development, construction and completion of the
Phase II Improvements or pertaining to materials to be
used in connection therewith, together with a schedule
of anticipated dates and amounts of each Advance for
the same.
(19) Environmental site assessment report with
respect to the Mortgaged Property prepared by a firm of
engineers approved by Lender, which report shall be
satisfactory in form and substance to Lender,
certifying that there is no evidence that any Hazardous
Substance have been generated, treated, stored or
disposed of on any of the Mortgaged Property and none
exists on, under or at the Mortgaged Property.
(20) A soils and geological report covering the
Land issued by a laboratory approved by Lender, which
report shall be satisfactory in form and substance to
Lender, and shall include a summary of soils test
borings.
(21) Such other instruments, evidence or
certificates as Lender may reasonably request.
(j) Lender shall have ordered and received, at
Borrower's expense, an appraisal of the Mortgaged Property,
prepared by an appraiser acceptable to Lender and presented
and based upon such standards as may be required by Lender.
(k) Lender shall have received payment of the
Commitment Fee.
III.2 Conditions to Advances. The obligation of Lender
to make each Advance hereunder, including the Initial Advance,
shall be subject to the prior or simultaneous occurrence or
satisfaction of each of the following conditions:
(a) The Loan Documents shall be and remain outstanding
and enforceable in all material respects in accordance with
their terms, all as required hereunder.
(b) Lender shall have received a title report dated
within two (2) days of the requested Advance from the Title
Company showing no state of facts objectionable to Lender,
including, but not limited to, a showing that title to the
Land is vested in Borrower and that no claim for mechanics'
or materialmen's liens has been filed against the Mortgaged
Property.
(c) A monthly construction status report for the
Phase II Improvements shall be prepared and submitted by
Borrower to Lender on or before the tenth (10th) day of each
month, commencing on or before March 10, 2000 and continuing
for each month thereafter.
(d) The representations and warranties made by
Borrower, as contained in this Agreement and in all other
Loan Documents shall be true and correct as of the date of
each Advance; and if requested by Lender, Borrower shall
give to Lender a certificate to that effect.
(e) The covenants made by Borrower to Lender, as
contained in this Agreement and in all other Loan Documents
shall have been fully complied with, except to the extent
such compliance may be limited by the passage of time or the
completion of construction of the Phase I and Phase II
Improvements.
(f) Lender shall have received (i) a fully executed
copy of each Construction Contract or copy thereof (to be
dated after the date of recordation of the Deed of Trust);
and (ii) a report of any changes, replacements,
substitutions, additions or other modification in the list
of contractors, subcontractors and materialmen involved or
expected to be involved in the construction of the Phase II
Improvements.
(g) Except in connection with the Initial Advance,
Lender shall have received from Borrower a Draw Request for
such Advance, completed, executed and sworn to by Borrower
and Contractor, with the Inspecting Person's approval noted
thereon, stating that the requested amount does not exceed
ninety percent (90%) of the then unpaid cost of construction
of the Phase II Improvements since the last certificate
furnished hereunder; that said construction was performed in
accordance with the Plans and Specifications in all material
respects; and that, in the opinion of Borrower, Contractor
and the Design Professional, construction of the Phase II
Improvements can be completed on or before the Completion
Date for an additional cost not in excess of the amount then
available under the Loan. To the extent approved by Lender
and included in the Budget, such expenses will be paid from
the proceeds of the Loan.
(h) Except in connection with the Initial Advance,
Borrower shall have furnished to Lender, from each
contractor, subcontractor and materialman, including
Contractor, an invoice, lien waiver and such other
instruments and documents as Lender may from time to time
specify, in form and content, and containing such
certifications, approvals and other data and information, as
Lender may reasonably require. The invoice, lien waiver and
other documents shall cover and be based upon work actually
completed or materials actually furnished and paid under a
prior application for payment. The lien waiver for the prior
month's draws of each contractor, subcontractor and
materialman shall, if required by Lender, be received by
Lender simultaneously with the making of any Advance
hereunder for the benefit of such contractor, subcontractor
or materialman.
(i) There shall exist no default or breach by any
obligated party (other than Lender) under the Loan
Documents.
(j) The Phase II Improvements shall not have been
materially injured, damaged or destroyed by fire or other
casualty, nor shall any part of the Mortgaged Property be
subject to condemnation proceedings or negotiations for sale
in lieu thereof.
(k) All work typically done at the stage of
construction when the Advance is requested shall have been
done, and all materials, supplies, chattels and fixtures
typically furnished or installed at such stage of
construction shall have been furnished or installed.
(l) All personal property not yet incorporated into
the Phase II Improvements but which is to be paid for out of
such Advance, must then be located upon the Land, secured in
a method acceptable to Lender, and Lender shall have
received evidence thereof, or if stored off-site, must be
stored in a secured area and must be available for
inspection by the Inspecting Person.
(m) Borrower shall have complied with all reasonable
requirements of the Inspecting Person to insure compliance
with the Plans and Specifications and all requirements of
the Governmental Authorities.
(n) Except in connection with the Initial Advance, if
the Phase II Improvements are being built for any party
under a purchase or construction contract, then Lender at
its election may require the approval of such purchaser
before making any additional Advance.
(o) Borrower shall have fully completed (to the extent
applicable), signed, notarized and delivered to Lender the
Draw Request Form.
(p) If any portion of the Phase II Improvements are
being built for a specific lessee, the approval by such
lessee of the construction thereof with respect to the
applicable portion of the Phase II Improvements subject to
such lease shall be obtained and furnished to Lender, upon
request therefor by Lender.
(q) Borrower shall have funded all Borrower equity
requirements indicated on the Budget.
III.3 Advance Not A Waiver. No Advance of the proceeds
of the Loan shall constitute a waiver of any of the conditions of
Lender'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 Lender from thereafter
declaring such inability to be an Event of Default.
III.4 Borrower's Deposit. If at any time Lender shall
in its sole discretion deem that the undisbursed proceeds of the
Loan are insufficient to meet the costs of completing
construction of the Phase II Improvements, plus the costs of
insurance, ad valorem taxes and other normal costs of the
Phase II Improvements, Lender may refuse to make any additional
Advances to Borrower hereunder until Borrower shall have
deposited with Lender sufficient additional funds ("Borrower's
Deposit") to cover the deficiency which Lender deems to exist.
Such Borrower's Deposit will be disbursed by Lender to Borrower
pursuant to the terms and conditions hereof as if they
constituted a portion of the Loan being made hereunder. Borrower
agrees upon fifteen (15) days written demand by Lender to deposit
with Lender such Borrower's Deposit. Lender agrees that the
Borrower's Deposit shall be placed in an interest-bearing
account.
III.5 Advance Not An Approval. The making of any
Advance or part thereof shall not be deemed an approval or
acceptance by Lender of the work theretofore done. Lender shall
have no obligation to make any Advance or part thereof after the
happening of any Event of Default, but shall have the right and
option so to do; provided that if Lender 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 Loan, or any part thereof, or
an obligation to make any other Advance.
III.6 Time and Place of Advances. All Advances are to
be made at the office of Lender, or at such other place as Lender
may designate; and Lender shall require five (5) days prior
notice in writing before the making of any such Advance. Lender
shall not be obligated to undertake any Advance hereunder more
than once in any 30-day period. Except as set forth in this
Agreement, all Advances are to be made by direct deposit into the
Special Account. In the event Borrower shall part with or be in
any manner whatever deprived of Borrower's interests in the Land,
Lender may, at Lender's option but without any obligation to do
so, continue to make Advances under this Agreement, and subject
to all its terms and conditions, to such person or persons as may
succeed to Borrower's title and interest and all sums so
disbursed shall be deemed Advances under this Agreement and
secured by the Deed of Trust and all other liens or security
interests securing the Loan.
III.7 Retainage. An amount equal to ten percent (10%)
of the cost of construction of the Phase II Improvements shall be
retained by Lender and shall be paid over by Lender to Borrower,
provided that no lien claims are then filed against the Mortgaged
Property, when all of the following have occurred to the
satisfaction of Lender:
(a) Lender has received a completion certificate
prepared by the Inspecting Person and executed by Borrower
and the Design Professional stating that the Phase II
Improvements have been completed in accordance with the
Plans and Specifications, together with such other evidence
that no mechanics or materialmen's liens or other
encumbrances have been filed and remain in effect against
the Mortgaged Property which have not been bonded to
Lender's satisfaction and that all offsite utilities and
streets, if any, have been completed to the satisfaction of
Lender and any applicable Governmental Authority;
(b) each applicable Governmental Authority shall have
duly inspected and approved the Phase II Improvements and
issued the appropriate permit, license or certificate to
evidence such approval;
(c) thirty (30) days shall have elapsed from the later
of (i) the date of completion of the Phase II Improvements,
as specified in Texas Property Code &53.106, if the
Affidavit of Completion provided for in this Agreement is
filed within ten (10) days after such date of completion, or
(ii) the date of filing of such Affidavit of Completion if
such Affidavit of Completion is filed ten (10) days or more
after the date of the completion of the Phase II
Improvements as specified in Texas Property Code &53.106;
and
(d) receipt by Lender of evidence satisfactory to
Lender that payment in full has been made for all
obligations incurred in connection with the construction and
completion of all off-site utilities and improvements (if
any) as required by Lender or any Governmental Authority.
III.8 No Third Party Beneficiaries. The benefits of
this Agreement shall not inure to any third party, nor shall this
Agreement be construed to make or render Lender liable to any
materialmen, subcontractors, contractors, laborers or others for
goods and materials supplied or work and labor furnished in
connection with the construction of either the Phase I or Phase
II Improvements or for debts or claims accruing to any such
persons or entities against Borrower. Lender shall not be liable
for the manner in which any Advances under this Agreement may be
applied by Borrower, Contractor and any of Borrower's other
contractors or subcontractors. Notwithstanding anything
contained in the Loan Documents, or any conduct or course of
conduct by the parties hereto, before or after signing the Loan
Documents, this Agreement shall not be construed as creating any
rights, claims or causes of action against Lender, or any of its
officers, directors, agents or employees, in favor of any
contractor, subcontractor, supplier of labor or materials, or any
of their respective creditors, or any other person or entity
other than Borrower. Without limiting the generality of the
foregoing, Advances made to any contractor, subcontractor or
supplier of labor or materials, pursuant to any requests for
Advances, whether or not such request is required to be approved
by Borrower, shall not be deemed a recognition by Lender of a
third-party beneficiary status of any such person or entity.
ARTICLE IV
WARRANTIES AND REPRESENTATIONS
Borrower hereby unconditionally warrants and represents to
Lender, as of the date hereof and at all times during the term of
the Agreement, as follows:
IV.1 Plans and Specifications. The Plans and Specifications
for the Phase II Improvements are satisfactory to Borrower, are
in compliance with all Governmental Requirements and, to the
extent required by Governmental Requirements or any effective
restrictive covenant, have been approved by each Governmental
Authority and/or by the beneficiaries of any such restrictive
covenant affecting the Mortgaged Property.
IV.2 Governmental Requirements. No violation of any
Governmental Requirements exists or will exist with respect to
the Mortgaged Property and neither the Borrower nor the Guarantor
is, nor will either be, in default with respect to any
Governmental Requirements.
IV.3 Utility Services. All utility services of sufficient
size and capacity necessary for the construction of both the
Phase I and Phase II Improvements and the use thereof for their
intended purposes are available at the property line(s) of the
Land for connection to the Phase I or Phase II Improvements,
including potable water, storm and sanitary sewer, gas, electric
and telephone facilities.
IV.4 Access. All roads necessary for the full utilization
of the Phase I and Phase II Improvements for their intended
purposes have been completed and have been dedicated to the
public use and accepted by the appropriate Governmental
Authority.
IV.5 Financial Statements. Each financial statement of
Borrower and Guarantor delivered heretofore, concurrently
herewith or hereafter to Lender was and will be prepared in
conformity with generally accepted accounting principles, or
other good accounting principles approved by Lender in writing,
applied on a basis consistent with that of previous statements
and completely and accurately disclose the financial condition of
Borrower and Guarantor (including all contingent liabilities) as
of the date thereof and for the period covered thereby, and there
has been no material adverse change in either Borrower's or
Guarantor's financial condition subsequent to the date of the
most recent financial statement of Borrower and Guarantor
delivered to Lender.
IV.6 Statements. No certificate, statement, report or other
information delivered heretofore, concurrently herewith or
hereafter by Borrower or Guarantor to Lender in connection
herewith, or in connection with any transaction contemplated
hereby, contains or will contain any untrue statement of a
material fact or fails to state any material fact necessary to
keep the statements contained therein from being misleading, and
same were true, complete and accurate as of the date hereof.
IV.7 Disclaimer of Permanent Financing. Borrower
acknowledges and agrees that Lender has not made any commitments,
either express or implied, to extend the term of the Loan past
its stated maturity date or to provide Borrower with any
permanent financing.
ARTICLE V
COVENANTS OF BORROWER
Borrower hereby unconditionally covenants and agrees with
Lender, until the Loan shall have been paid in full and the lien
of the Deed of Trust shall have been released, as follows:
V.1 Commencement and Completion. Borrower will cause the
construction of the Phase II Improvements to be prosecuted with
diligence and continuity and will complete the same in all
material respects in accordance with the Plans and Specifications
for the Phase II Improvements on or before the Completion Date,
free and clear of liens or claims for liens for material supplied
and for labor services performed in connection with the
construction of the Phase II Improvements.
V.2 No Changes. Borrower will not amend, alter or change
(pursuant to change order, amendment or otherwise) the Plans and
Specifications for the Phase II Improvements unless the same
shall have been approved in advance in writing by Lender, by all
applicable Governmental Authorities, and by each surety under
payment or performance bonds covering the Construction Contract,
if any, or any other contract for construction of all or a
portion of the Phase II Improvements; provided, however, Borrower
shall have the right to approve change orders without Lender's
consent which do not individually exceed $25,000.00, or in the
aggregate exceed $100,000.00.
V.3 Advances. Borrower will receive the Advances and will
hold same as a trust fund for the purpose of paying the cost of
construction of the Phase II Improvements and related
nonconstruction costs related to the Mortgaged Property as
provided for herein. Borrower will apply the same promptly to the
payment of the costs and expenses for which each Advance is made
and will not use any part thereof for any other purpose.
V.4 Lender's Expenses. Borrower will reimburse Lender for
all out-of-pocket expenses of Lender, including reasonable
attorneys' fees, incurred in connection with the preparation,
execution, delivery, administration and performance of the Loan
Documents.
V.5 Surveys. Borrower will furnish Lender at Borrower's
expense (i) a foundation survey and (ii) an as-built survey,
each prepared by a registered engineer or surveyor acceptable to
Lender, showing that the locations of the Phase I and Phase II
Improvements, and certifying that same are entirely within the
property lines of Land, do not encroach upon any easement,
setback or building line or restrictions, are placed in
accordance with the Plans and Specifications, all Governmental
Requirements and all restrictive covenants affecting the Land
and/or Phase I and Phase II Improvements, and showing no state of
facts objectionable to Lender. All surveys shall be in form and
substance and from a registered public surveyor acceptable to
Lender.
V.6 Defects and Variances. Borrower will, upon demand of
Lender and at Borrower's sole expense, correct any structural
defect in the Phase II Improvements or any variance from the
Plans and Specifications for the Phase II Improvements which is
not approved in writing by Lender.
V.7 Estoppel Certificates. Borrower will deliver to
Lender, promptly after request therefor, estoppel certificates or
written statements, duly acknowledged, stating the amount that
has then been advanced to Borrower under this Agreement, the
amount due on the Note, and whether any known offsets or defenses
exist against the Note or any of the other Loan Documents.
V.8 Inspecting Person. Borrower will pay the fees and
expenses of, and cooperate, with the Inspecting Person and will
cause the Design Professional, the Contractor, each contractor
and subcontractor and the employees of each of them to cooperate
with the Inspecting Person and, upon request, will furnish the
Inspecting Person whatever the Inspecting Person may consider
necessary or useful in connection with the performance of the
Inspecting Person's duties. Without limiting the generality of
the foregoing, Borrower shall furnish or cause to be furnished
such items as working details, Plans and Specifications and
details thereof, samples of materials, licenses, permits,
certificates of public authorities, zoning ordinances, building
codes and copies of the contracts between such person and
Borrower (if applicable). Borrower will permit Lender, the
Inspecting Person and their representative to enter the Mortgaged
Property for the purposes of inspecting same and Borrower
specifically agrees that the Inspecting Person's inspection
rights shall cover both the Phase I and Phase II Improvements.
Borrower acknowledges that the duties of the Inspecting Person
run solely to Lender and that the Inspecting Person shall have no
obligations or responsibilities whatsoever to Borrower,
Contractor, the Design Professional, or to any of Borrower's or
Contractor's agents, employees, contractors or subcontractors.
V.9 BROKERS. BORROWER WILL INDEMNIFY LENDER FROM CLAIMS OF
BROKERS ARISING BY REASON OF THE EXECUTION HEREOF OR THE
CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED HEREBY TO THE
EXTENT SUCH BROKER WAS CONTACTED OR HIRED BY BORROWER OR EITHER
OF ITS JOINT VENTURERS.
V.10 Personalty and Fixtures. Borrower will deliver to
Lender, on demand, any contracts, bills of sale, statements,
receipted vouchers or agreements under which Borrower claims
title to any materials, fixtures or articles incorporated in the
Phase II Improvements or subject to the lien of the Deed of Trust
or to the security interest of the Security Agreement.
V.11 Compliance with Governmental Requirements. Borrower
will comply promptly with all Governmental Requirements.
V.12 Compliance with Restrictive Covenants. Borrower will
comply with all restrictive covenants, if any, affecting the
Mortgaged Property. Construction of the Phase I and Phase II
Improvements will be performed in a good and workmanlike manner,
within the perimeter boundaries of the Land and within all
applicable building and setback lines in accordance with all
Governmental Requirements and the Plans and Specifications.
There are, and will be, no structural defects in the Phase I or
Phase II Improvements.
V.13 Affidavit of Commencement. In connection with the
Phase I Improvements, Borrower filed in the appropriate records
of the county in which the Land is situated, an Affidavit of
Commencement ("Affidavit of Commencement"), duly executed by
Borrower and Contractor. The date of commencement of work set
forth in such Affidavit of Commencement was subsequent to the
date the original Deed of Trust was originally recorded.
Borrower represents to Lender that said Affidavit of Commencement
encompassed all work contemplated for both the Phase I and
Phase II Improvements.
V.14 Affidavit of Completion. Borrower, within ten (10)
days after construction of the Phase II Improvements has been
completed, shall file in the appropriate records in the county in
which the Land is situated an Affidavit of Completion ("Affidavit
of Completion") in the form of Exhibit C attached hereto and
incorporated herein by this reference.
V.15 Payment of Expenses. Borrower shall pay or reimburse
to Lender all out-of-pocket costs and expenses relating to the
Mortgaged Property and for which an Advance is made, including
(without limitation), title insurance and examination charges,
survey costs, insurance premiums, filing and recording fees, and
other expenses payable to third parties incurred by Lender in
connection with the consummation of the transactions contemplated
by this Agreement.
V.16 Notices Received. Borrower will promptly deliver to
Lender a true and correct copy of all notices received by
Borrower from any person or entity with respect to Borrower,
Guarantor, the Mortgaged Property, or any or all of them, which
in any way relates to or affects the Loan or the Mortgaged
Property.
V.17 Advertising by Lender. Borrower agrees that during the
term of the Loan, Borrower shall erect and thereafter shall
maintain on the Mortgaged Property one or more advertising signs
furnished by Lender indicating that the financing for the
Mortgaged Property has been furnished by Lender.
V.18 Leases. Borrower will deliver to Lender, upon request
of Lender, executed counterparts of all leases and rental
agreements affecting the Mortgaged Property; and all said leases
will, if requested by Lender, contain a written provision
acceptable to Lender whereby all rights of the tenant in the
lease and the Mortgaged Property are subordinated to the liens
and security interests granted in the Loan Documents.
Furthermore, if requested by Lender, Borrower shall cause to be
executed and delivered to Lender a Non-Disturbance, Attornment
and Subordination Agreement, in form and substance acceptable to
Lender, relating to each such lease and fully executed by Lender,
Borrower and such lessee.
V.19 Approval to Lease Required. Borrower will obtain the
prior written consent of Lender as to any tenant lease ("Lease")
proposed to be entered into by Borrower for space in the Phase II
Improvements and will not thereafter materially modify any Lease
as to the rental rate, term or any credit enhancement issue
without Lender's prior consent. Lender agrees that it will
respond to any request for review of a Lease, or change thereto,
within ten (10) days of receipt of a written request from
Borrower. Borrower agrees to submit to each tenant in connection
with a proposed lease the Lender's required form of
Subordination, Non-Disturbance and Attornment Agreement (the
"SNDA"), substantially in the form attached hereto as Exhibit D.
V.20 Statements and Reports. Borrower agrees to deliver to
Lender, during the term of the Loan and until the Loan has been
fully paid and satisfied, the following statements and reports:
(a) Annual, audited financial statements of Borrower,
each general partner of Borrower and Guarantor within
ninety-five (95) days after the end of each calendar year,
prepared and certified to by Guarantor and, in the case of
Borrower, the chief financial officer of the general partner
of Borrower and further, in the case of Guarantor, cashflow
and contingent liability information shall also be provided
Lender;
(b) Monthly marketing reports with detailed
information as to leasing activities shall be provided
Lender on or before the fifteenth (15th) day of the
following month and monthly construction status reports as
to the progress of construction of the Phase II Improvements
shall be provided Lender on or before the fifteenth (15th)
day of the following month;
(c) Copies of all state and federal tax returns
prepared with respect to Borrower, each Guarantor and the
general partner of Borrower within ten (10) days of such
returns being filed with the Internal Revenue Service or
applicable state authority;
(d) Copies of extension requests or similar documents
with respect to federal or state income tax filings for
Borrower, each Guarantor and the general partner of Borrower
within ten (10) days of such documents being filed with the
Internal Revenue Service or applicable state authority;
(e) Annual operating statements with respect to the
Mortgaged Property within ninety-five (95) days after the
end of each calendar year, prepared in such form and detail
as Lender may require and certified to by the chief
financial officer of the general partner of Borrower;
(f) Monthly operating statements and a rent roll with
respect to the Phase II Improvements, within thirty (30)
days after the end of each calendar month, commencing upon
lease-up of said property, prepared in such form and detail
as Lender may reasonably require and in accordance with
generally accepted accounting principles and certified to by
the chief financial officer of the general partner of
Borrower; and
(g) Such other reports and statements as Lender may
reasonably require from time to time.
ARTICLE VI
ASSIGNMENTS
VI.1 Assignment of Construction Contract. As additional
security for the payment of the Loan, Borrower hereby
collaterally transfers and assigns to Lender all of Borrower's
rights and interest, but not its obligations, in, under and to
each Construction Contract upon the following terms and
conditions:
(a) Borrower represents and warrants that the copy of
each Construction Contract the Borrower has furnished or
will furnish to Lender is or will be (as applicable) a true
and complete copy thereof, including all amendments thereto,
if any, and that Borrower's interest therein is not subject
to any claim, setoff or encumbrance.
(b) Neither this assignment nor any action by Lender
shall constitute an assumption by Lender of any obligations
under any Construction Contract, and Borrower shall continue
to be liable for all obligations of Borrower thereunder,
Borrower hereby agreeing to perform all of its obligations
under each Construction Contract. BORROWER AGREES TO
INDEMNIFY AND HOLD LENDER HARMLESS AGAINST AND FROM ANY
LOSS, COST, LIABILITY OR EXPENSE (INCLUDING BUT NOT LIMITED
TO ATTORNEYS' FEES) RESULTING FROM ANY FAILURE OF BORROWER
TO SO PERFORM.
(c) Following any required notice and opportunity to
cure, Lender shall have the right at any time thereafter
(but shall have no obligation) to take in its name or in the
name of Borrower such action as Lender may at any time
determine to be necessary or advisable to cure any default
under any Construction Contract or to protect the rights of
Borrower or Lender thereunder. LENDER SHALL INCUR NO
LIABILITY IF ANY ACTION SO TAKEN BY IT OR IN ITS BEHALF
SHALL PROVE TO BE INADEQUATE OR INVALID, AND BORROWER AGREES
TO INDEMNIFY AND HOLD LENDER HARMLESS AGAINST AND FROM ANY
LOSS, COST, LIABILITY OR EXPENSE (INCLUDING BUT NOT LIMITED
TO REASONABLE ATTORNEYS' FEES) INCURRED IN CONNECTION WITH
ANY SUCH ACTION.
(d) Borrower hereby irrevocably constitutes and
appoints Lender as Borrower's attorney-in-fact effective
upon the occurrence of an Event of Default, in Borrower's or
Lender's name, to enforce all rights of Borrower under each
Construction Contract. Such appointment is coupled with an
interest and is therefore irrevocable.
(e) Prior to the occurrence of an Event of Default,
Borrower shall have the right to exercise its rights as
owner under each Construction Contract, provided that
Borrower shall not cancel or amend any Construction Contract
or do or suffer to be done any act which would impair the
security constituted by this assignment without the prior
written consent of Lender.
(f) This assignment shall inure to the benefit of
Lender and its successors and assigns, any purchaser upon
foreclosure of the Deed of Trust, any receiver in possession
of the Mortgaged Property and any corporation affiliated
with Lender which assumes Lender's rights and obligations
under this Agreement.
VI.2 Assignment of Plans and Specifications. As additional
security for the Loan, Borrower hereby collaterally transfers and
assigns to Lender all of Borrower's right, title and interest in
and to the Plans and Specifications and hereby represents and
warrants to and agrees with Lender as follows:
(a) Each schedule of the Plans and Specifications for
the Phase II Improvements delivered or to be delivered to
Lender is and shall be a complete and accurate description
of such Plans and Specifications.
(b) The Plans and Specifications for the Phase II
Improvements are and shall be complete and adequate for the
construction of the Phase II Improvements and there have
been no modifications thereof except as described in such
schedule. The Plans and Specifications shall not be
modified without the prior consent of Lender.
(c) Lender may use the Plans and Specifications for
the Phase II Improvements for any purpose relating to the
Phase II Improvements, including but not limited to
inspections of construction and the completion of the
Phase II Improvements.
(d) Lender's acceptance of this assignment shall not
constitute approval of the Plans and Specifications by
Lender. Lender has no liability or obligation in connection
with the Plans and Specifications and no responsibility for
the adequacy thereof or for the construction of the Phase II
Improvements contemplated by the Plans and Specifications
for the Phase II Improvements. Lender has no duty to
inspect either the Phase I or Phase II Improvements, and if
Lender should inspect the Phase I or Phase II Improvements,
Lender shall have no liability or obligation to Borrower or
any other party arising out of such inspection. No such
inspection nor any failure by Lender to make objections
after any such inspection shall constitute a representation
by Lender that the Phase II Improvements are in accordance
with the Plans and Specifications or any other requirement
or constitute a waiver of Lender's right thereafter to
insist that the Phase II Improvements be constructed in
accordance with the Plans and Specifications or any other
requirement.
(e) This assignment shall inure to the benefit of
Lender and its successors and assigns, any purchaser upon
foreclosure of the Deed of Trust, any receiver in possession
of the Mortgaged Property and any corporation affiliated
with Lender which assumes Lender's rights and obligations
under this Agreement.
VI.3 Assignment of Design Services Contract. As additional
security for the payment of the Loan, Borrower hereby
collaterally transfers and assigns to Lender all of Borrower's
rights and interest, but not its obligations, in, under and to
each Design Services Contract upon the following terms and
conditions:
(a) Borrower represents and warrants that the copy of
each Design Services Contract the Borrower has furnished or
will furnish to Lender is or will be (as applicable) a true
and complete copy thereof, including all amendments thereto,
if any, and that Borrower's interest therein is not subject
to any claim, setoff or encumbrance.
(b) Neither this assignment nor any action by Lender
shall constitute an assumption by Lender of any obligations
under any Design Services Contract, and Borrower shall
continue to be liable for all obligations of Borrower
thereunder, Borrower hereby agreeing to perform all of its
obligations under each Design Services Contract. BORROWER
AGREES TO INDEMNIFY AND HOLD LENDER HARMLESS AGAINST AND
FROM ANY LOSS, COST, LIABILITY OR EXPENSE (INCLUDING BUT NOT
LIMITED TO ATTORNEYS' FEES) RESULTING FROM ANY FAILURE OF
BORROWER TO SO PERFORM.
(c) Following any required notice and opportunity to
cure, Lender shall have the right at any time thereafter
(but shall have no obligation) to take in its name or in the
name of Borrower such action as Lender may at any time
determine to be necessary or advisable to cure any default
under any Design Services Contract or to protect the rights
of Borrower or Lender thereunder. LENDER SHALL INCUR NO
LIABILITY IF ANY ACTION SO TAKEN BY IT OR IN ITS BEHALF
SHALL PROVE TO BE INADEQUATE OR INVALID, AND BORROWER AGREES
TO INDEMNIFY AND HOLD LENDER HARMLESS AGAINST AND FROM ANY
LOSS, COST, LIABILITY OR EXPENSE (INCLUDING BUT NOT LIMITED
TO REASONABLE ATTORNEYS' FEES) INCURRED IN CONNECTION WITH
ANY SUCH ACTION.
(d) Borrower hereby irrevocably constitutes and
appoints Lender as Borrower's attorney-in-fact effective
upon the occurrence of an Event of Default, in Borrower's or
Lender's name, to enforce all rights of Borrower under each
Design Services Contract. Such appointment is coupled with
an interest and is therefore irrevocable.
(e) Prior to the occurrence of an Event of Default,
Borrower shall have the right to exercise its rights as
owner under each Design Services Contract, provided that
Borrower shall not cancel or amend any Design Services
Contract or do or suffer to be done any act which would
impair the security constituted by this assignment without
the prior written consent of Lender.
(f) This assignment shall inure to the benefit of
Lender and its successors and assigns, any purchaser upon
foreclosure of the Deed of Trust, any receiver in possession
of the Mortgaged Property and any corporation affiliated
with Lender which assumes Lender's rights and obligations
under this Agreement.
VI.4 Assignment of Proceeds. Borrower hereby further
collaterally transfers and assigns to Lender and acknowledges
that Lender shall be entitled to receive (i) any and all sums
which may be awarded and become payable to Borrower for
condemnation of all or any portion of the Mortgaged Property, or
(ii) the proceeds of any and all insurance upon the Mortgaged
Property (other than the proceeds of general public liability
insurance).
(a) Borrower shall, upon request of Lender, make,
execute, acknowledge and deliver any and all additional
assignments and documents as may be necessary from time to
time to enable Lender to collect and receipt for any of such
insurance or condemnation proceeds.
(b) Lender shall not be, under any circumstances,
liable or responsible for failure to collect, or exercise
diligence in the collection of, any of such sums.
(c) Any sums so received by Lender pursuant to this
Section 6.4 may, in Lender's sole discretion, be provided
back to Borrower for restoration of the Mortgaged Property,
in the amounts, manner, method and pursuant to such
requirements in documents as Lender may require, or shall be
applied to the liquidation of the Indebtedness in accordance
with the provisions of Section 7.4 of the Deed of Trust;
provided, however, if Lender determines that the Mortgaged
Property can be restored prior to the maturity date of the
Note, and no Event of Default exists, then Lender will apply
the proceeds to the restoration of the Mortgaged Property.
ARTICLE VII
EVENTS OF DEFAULT
VII.1 Events of Default. Each of the following shall
constitute an "Event of Default" hereunder:
(a) If Borrower shall fail, refuse, or neglect to pay,
in full, any installment or portion of the Indebtedness as
and when the same shall become due and payable, whether at
the due date thereof stipulated in the Loan Documents, upon
acceleration or otherwise and such default shall continue
for a period of ten (10) calendar days beyond any due date.
(b) If there is an "Event of Default", as defined in
the Phase I Note or in any of the Phase I Loan Documents,
which is not cured within any applicable grace or cure
periods.
(c) If Borrower shall fail, refuse or neglect, or
cause others to fail, refuse, or neglect to comply with,
perform and discharge fully and timely any of the
Obligations as and when called for, and such failure shall
continue for a period of ten (10) days after receipt of
written notice from Lender; provided, however, Borrower
shall have the right to attempt to cure said default for up
to an additional thirty (30) days if Borrower is diligently
prosecuting a cure of said default.
(d) If any representation, warranty, or statement made
by Borrower, Guarantor, or others in, under, or pursuant to
the Loan Documents or any affidavit or other instrument
executed or delivered with respect to the Loan Documents or
the Indebtedness is determined by Lender to be false or
misleading in any material respect as of the date hereof or
thereof or shall become so at any time prior to the
repayment in full of the Indebtedness.
(e) If Borrower shall default or commit an event of
default under and pursuant to any other mortgage or security
agreement which covers or affects any part of the Mortgaged
Property which is not cured within any notice or grace
period.
(f) If Borrower (i) shall execute an assignment for
the benefit of creditors or an admission in writing by
Borrower of Borrower's inability to pay, or Borrower's
failure to pay, debts generally as the debts become due; or
(ii) shall allow the levy against the Mortgaged Property or
any part thereof, of any execution, attachment,
sequestration or other writ which is not vacated within
sixty days after the levy; or (iii) shall allow the
appointment of a receiver, trustee or custodian of Borrower
or of the Mortgaged Property or any part thereof, which
receiver, trustee or custodian is not discharged within
sixty (60) days after the appointment; or (iv) files as a
debtor a petition, case, proceeding or other action pursuant
to, or voluntarily seeks of the benefit or benefits of any
Debtor Relief Law (as defined in the Deed of Trust), or
takes any action in furtherance thereof; or (v) files either
a petition, complaint, answer or other instrument which
seeks to effect a suspension of, or which has the effect of
suspending any of the rights or powers of Lender or the
trustee under the Deed of Trust granted in the Note, herein
or in any Loan Document; or (vi) allows the filing of a
petition, case, proceeding or other action against Borrower
as a debtor under any Debtor Relief Law or seeks appointment
of a receiver, trustee, custodian or liquidator of Borrower
or of the Mortgaged Property, or any part thereof, or of any
significant portion of Borrower's other property and
(a) Borrower admits, acquiesces in or fails to contest
diligently the material allegations thereof, or (b) the
petition, case, proceeding or other action results in the
entry of an order for relief or order granting the relief
sought against Borrower, or (c) the petition, case,
proceeding or other action is not permanently dismissed or
discharged on or before the earlier of trial thereon or
sixty (60) days next following the date of filing.
(g) If Borrower, any Constituent Party (as defined in
the Deed of Trust), or any Guarantor, shall die, dissolve,
terminate or liquidate, or merge with or be consolidated
into any other entity, or become permanently disabled.
(h) If Borrower creates, places, or permits to be
created or placed, or through any act or failure to act,
acquiesces in the placing of, or allows to remain, any
Subordinate Mortgage, regardless of whether such Subordinate
Mortgage is expressly subordinate to the liens or security
interests of the Loan Documents, with respect to the
Mortgaged Property, other than the Permitted Exceptions.
(i) If Borrower makes a Disposition, without the prior
written consent of Lender.
(j) If any condemnation proceeding is instituted or
threatened which would, in Lender's sole judgment,
materially impair the use and enjoyment of the Mortgaged
Property for its intended purposes.
(k) If the Mortgaged Property is demolished,
destroyed, or substantially damaged so that, in Lender's
judgment, it cannot be restored or rebuilt with available
funds to the condition existing immediately prior to such
demolition, destruction, or damage within a reasonable
period of time.
(l) If Lender reasonably determines that any event
shall have occurred that could be expected to have a
Material Adverse Effect.
(m) If Borrower abandons all or any portion of the
Mortgaged Property.
(n) The occurrence of any event referred to in
Sections 7.1(f) and (g) hereof with respect to any
Guarantor, Constituent Party or other person or entity
obligated in any manner to pay or perform the Indebtedness
or Obligations, respectively, or any part thereof (as if
such Guarantor, Constituent Party or other person or entity
were the "Borrower" in such Sections).
(o) An Event of Default as defined in any of the Loan
Documents.
(p) If the construction of the Phase II Improvements
are, at any time, (i) discontinued due to acts or matters
within Borrower's control for a period of ten (10) or more
consecutive days, (ii) not carried on with reasonable
dispatch, or (iii) not completed by the Completion Date;
subject, however, to Force Majeure (hereinafter defined).
"Force Majeure" shall be deemed to mean that Borrower is
delayed or hindered in or prevented from the performance of
any act required hereunder, not the failure of Borrower, by
reason of (i) inability to procure materials or reasonable
substitutes thereof, (ii) failure of power, (iii) civil
commotion, riots, insurrection or war, (iv) unavoidable fire
or other casualty, or acts of God (v) strikes, lockouts or
other labor disputes (not by Borrower's employees),
(vi) restrictive governmental law or regulation, (vii) delay
by Lender of any act required of it hereunder, or (viii) any
other causes of a like nature to the above listed
(i) through (vii). Financial inability on the part of
Borrower shall not be construed a Force Majeure hereunder.
Borrower agrees to use its best efforts to resume the
construction of the Phase II Improvements as soon as
practicable after the cause of such delay has been removed
or canceled.
(q0 If Borrower is unable to satisfy any condition of
Borrower's right to receive Advances hereunder for a period
in excess of thirty (30) days after Lender's refusal to make
any further Advances.
(r0 If Borrower executes any conditional bill of sale,
chattel mortgage or other security instrument covering any
materials, fixtures or articles intended to be incorporated
in the Phase I or Phase II Improvements or the appurtenances
thereto, or covering articles of personal property placed in
the Phase I or Phase II Improvements, or files a financing
statement publishing notice of such security instrument, or
if any of such materials, fixtures or articles are not
purchased in such a manner that the ownership thereof vests
unconditionally in Borrower, free from encumbrances, on
delivery at the Phase I and Phase II Improvements, or if
Borrower does not produce to Lender upon reasonable demand
the contracts, bills of sale, statements, receipted vouchers
or agreements, or any of them, under which Borrower claims
title to such materials, fixtures and articles.
(s0 If any levy, attachment or garnishment is issued,
or if any lien for the performance of work or the supply of
materials is filed, against any part of the Mortgaged
Property and remains unsatisfied or unbonded following the
earlier of (i) fifteen (15) days after the date of filing
thereof or (ii) the requesting by Borrower of an Advance.
VII.2 Remedies. Lender shall have the right, upon the
happening of an Event of Default, in addition to any rights or
remedies available to it under all other Loan Documents, to enter
into possession of the Mortgaged Property and perform any and all
work and labor necessary to complete the Phase II Improvements in
accordance with the Plans and Specifications. All amounts so
expended by Lender shall be deemed to have been disbursed to
Borrower as Loan proceeds and secured by the Deed of Trust. For
this purpose, Borrower hereby constitutes and appoints (which
appointment is coupled with an interest and is therefore
irrevocable) Lender as Borrower's true and lawful
attorney-in-fact, with full power of substitution to complete the
Phase II Improvements in the name of Borrower, and hereby
empowers Lender, acting as Borrower's attorney-in-fact, as
follows: to use any funds of Borrower, including any balance
which may be held in escrow, any Borrower's Deposit and any funds
which may remain unadvanced hereunder, for the purpose of
completing the Phase II Improvements in the manner called for by
the Plans and Specifications; to make such additions and changes
and corrections in the Plans and Specifications which shall be
necessary or desirable to complete the Phase II Improvements in
the manner contemplated by the Plans and Specifications; to
continue all or any existing construction contracts or
subcontracts; to employ such contractors, subcontractors, agents,
design professionals and inspectors as shall be required for said
purposes; to pay, settle or compromise all existing bills and
claims which are or may be liens against the Mortgaged Property,
or may be necessary or desirable for the completion of the work
or the clearing of title; to execute all the applications and
certificates in the name of Borrower which may be required by any
construction contract; and to do any and every act with respect
to the construction of the Phase II Improvements which Borrower
could do in Borrower's own behalf. Lender, acting as Borrower's
attorney-in-fact, shall also have power to prosecute and defend
all actions or proceedings in connection with the Mortgaged
Property and to take such action and require such performance as
is deemed necessary.
ARTICLE VIII
LENDER'S DISCLAIMERS - BORROWER'S INDEMNITIES
VIII.1 No Obligation by Lender to Construct. Lender has
no liability or obligation whatsoever or howsoever in connection
with the Mortgaged Property or the development, construction or
completion thereof or work performed thereon, and has no
obligation except to disburse the Loan proceeds as herein agreed,
Lender is not obligated to inspect the Phase I or Phase II
Improvements nor is Lender liable, and under no circumstances
whatsoever shall Lender be or become liable, for the performance
or default of any contractor or subcontractor, or for any failure
to construct, complete, protect or insure the Mortgaged Property,
or any part thereof, or for the payment of any cost or expense
incurred in connection therewith, or for the performance or
nonperformance of any obligation of Borrower or Guarantor to
Lender nor to any other person, firm or entity without
limitation. Nothing, including without limitation, any
disbursement of Loan proceeds or the Borrower's Deposit nor
acceptance of any document or instrument, shall be construed as
such a representation or warranty, express or implied, on
Lender's part.
VIII.2 No Obligation by Lender to Operate. Any term or
condition of any of the Loan Documents to the contrary
notwithstanding, Lender shall not have, and by its execution and
acceptance of this Agreement hereby expressly disclaims, any
obligation or responsibility for the management, conduct or
operation of the business and affairs of Borrower or Guarantor.
Any term or condition of the Loan Documents which permits Lender
to disburse funds, whether from the proceeds of the Loan, the
Borrower's Deposit or otherwise, or to take or refrain from
taking any action with respect to Borrower, Guarantor, the
Mortgaged Property or any other collateral for repayment of the
Loan, shall be deemed to be solely to permit Lender to audit and
review the management, operation and conduct of the business and
affairs of Borrower and Guarantor, and to maintain and preserve
the security given by Borrower to Lender for the Loan, and may
not be relied upon by any other person. Further, Lender shall
not have, has not assumed and by its execution and acceptance of
this Agreement hereby expressly disclaims any liability or
responsibility for the payment or performance of any indebtedness
or obligation of Borrower or Guarantor and no term or condition
of the Loan Documents, shall be construed otherwise. Borrower
hereby expressly acknowledges that no term or condition of the
Loan Documents shall be construed so as to deem the relationship
between Borrower, Guarantor and Lender to be other than that of
borrower, guarantor and lender, and Borrower shall at all times
represent that the relationship between Borrower, Guarantor and
Lender is solely that of borrower, guarantor and lender.
BORROWER HEREBY INDEMNIFIES AND AGREES TO HOLD LENDER HARMLESS
FROM AND AGAINST ANY COST, EXPENSE OR LIABILITY INCURRED OR
SUFFERED BY LENDER AS A RESULT OF ANY ASSERTION OR CLAIM OF ANY
OBLIGATION OR RESPONSIBILITY OF LENDER FOR THE MANAGEMENT,
OPERATION AND CONDUCT OF THE BUSINESS AND AFFAIRS OF BORROWER OR
GUARANTOR, OR AS A RESULT OF ANY ASSERTION OR CLAIM OF ANY
LIABILITY OR RESPONSIBILITY OF LENDER FOR THE PAYMENT OR
PERFORMANCE OF ANY INDEBTEDNESS OR OBLIGATION OF BORROWER OR
GUARANTOR.
VIII.3 INDEMNITY BY BORROWER. BORROWER HEREBY
INDEMNIFIES LENDER AND EACH AFFILIATE THEREOF AND THEIR
RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES, AND AGENTS FROM, AND
HOLDS EACH OF THEM HARMLESS AGAINST, ANY AND ALL LOSSES,
LIABILITIES, CLAIMS, DAMAGES, COSTS, AND EXPENSES TO WHICH ANY OF
THEM MAY BECOME SUBJECT, INSOFAR AS SUCH LOSSES, LIABILITIES,
CLAIMS, DAMAGES, COSTS, AND EXPENSES ARISE FROM OR RELATE TO ANY
OF THE LOAN DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED
THEREBY OR FROM ANY INVESTIGATION, LITIGATION, OR OTHER
PROCEEDING, INCLUDING, WITHOUT LIMITATION, ANY THREATENED
INVESTIGATION, LITIGATION, OR OTHER PROCEEDING RELATING TO ANY
OF THE FOREGOING. Without intending to limit the remedies
available to Lender with respect to the enforcement of its
indemnification rights as stated herein or as stated in any Loan
Document, in the event any claim or demand is made or any other
fact comes to the attention of Lender in connection with,
relating or pertaining to, or arising out of the transactions
contemplated by this Agreement, which Lender reasonably believes
might involve or lead to some liability of Lender, Borrower
shall, immediately upon receipt of written notification of any
such claim or demand, assume in full the personal responsibility
for and the defense of any such claim or demand and pay in
connection therewith any loss, damage, deficiency, liability or
obligation, including, without limitation, legal fees and court
costs incurred in connection therewith. In the event of court
action in connection with any such claim or demand, Borrower
shall assume in full the responsibility for the defense of any
such action and shall immediately satisfy and discharge any final
decree or judgment rendered therein. Lender may, in its sole
discretion, make any payments sustained or incurred by reason of
any of the foregoing; and Borrower shall immediately repay to
Lender, in cash and not with proceeds of the Loan, the amount of
such payment, with interest thereon at the Default Rate (as
defined in the Note) from the date of such payment. Lender shall
have the right to join Borrower as a party defendant in any legal
action brought against Lender, and Borrower hereby consents to
the entry of an order making Borrower a party defendant to any
such action.
VIII.4 No Agency. Nothing herein shall be construed as
making or constituting Lender as the agent of Borrower in making
payments pursuant to any construction contracts or subcontracts
entered into by Borrower for construction of the Phase II
Improvements or otherwise. The purpose of all requirements of
Lender hereunder is solely to allow Lender to check and require
documentation (including, but not limited to, lien waivers)
sufficient to protect Lender and the Loan contemplated hereby.
Borrower shall have no right to rely on any procedures required
by Lender, Borrower hereby acknowledging that Borrower has sole
responsibility for constructing the Phase I or Phase II
Improvements and paying for work done in accordance therewith and
that Borrower has solely, on Borrower's own behalf, selected or
approved each contractor, each subcontractor and each
materialman, Lender having no responsibility for any such persons
or entities or for the quality of their materials or workmanship.
ARTICLE IX
MISCELLANEOUS
IX.1 Successors and Assigns. This Agreement shall be
binding upon, and shall inure to the benefit of, Borrower and
Lender, and their respective heirs, legal representatives,
successors and assigns; provided, however, that Borrower may not
assign any rights or obligations under this Agreement without the
prior written consent of Lender.
IX.2 Headings. The Article, Section, and Subsection
entitlements hereof are inserted for convenience of reference
only and shall in no way alter, modify, define or be used in
construing the text of such Articles, Sections or Subsections.
IX.3 Survival. The provisions hereof shall survive the
execution of all instruments herein mentioned, shall continue in
full force and effect until the Loan has been paid in full and
shall not be affected by any investigation made by any party.
IX.4 APPLICABLE LAW. THIS AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS
AND THE APPLICABLE LAWS OF THE UNITED STATES OF AMERICA. COURTS
WITHIN THE STATE OF TEXAS SHALL HAVE JURISDICTION OVER ANY AND
ALL DISPUTES BETWEEN BORROWER AND LENDER, WHETHER IN LAW OR
EQUITY, INCLUDING, BUT NOT LIMITED TO, ANY AND ALL DISPUTES
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT; AND VENUE IN ANY SUCH DISPUTE WHETHER IN FEDERAL OR
STATE COURT SHALL BE LAID IN DALLAS COUNTY, TEXAS.
IX.5 Notices. All notices or other communications required
or permitted to be given pursuant to this Agreement shall be in
writing and shall be considered as properly given if (i) mailed
by first class United States mail, postage prepaid, registered or
certified with return receipt requested; (ii) by delivering same
in person to the intended addressee; or (iii) by delivery to an
independent third party commercial delivery service for same day
or next day delivery and providing for evidence of receipt at the
office of the intended addressee. Notice so mailed shall be
effective upon its deposit with the United States Postal Service
or any successor thereto; notice sent a commercial delivery
service shall be effective upon delivery to such commercial
delivery service; notice given by personal delivery shall be
effective only if and when received by the addressee; and notice
given by other means shall be effective only if and when received
at the designated address of the intended addressee. For
purposes of notice, the addresses of the parties shall be as set
forth on page 1 of this Agreement; provided, however, that either
party shall have the right to change its address for notice
hereunder to any other location within the continental United
States by the giving of thirty (30) days notice to the other
party in the manner set forth herein.
IX.6 Reliance by Lender. Lender is relying and is entitled
to rely upon each and all of the provisions of this Agreement;
and accordingly, if any provision or provisions of this Agreement
should be held to be invalid or ineffective, then all other
provisions hereof shall continue in full force and effect
notwithstanding.
IX.7 Participations. Lender shall have the right at any
time and from time to time to grant participations in the Loan
and Loan Documents. Each participant shall be entitled to
receive all information received by Lender regarding the
creditworthiness of Borrower, any of its principals and the
Guarantor, including (without limitation) information required to
be disclosed to a participant pursuant to Banking Circular 181
(Rev., August 2, 1984), issued by the Comptroller of the Currency
(whether the participant is subject to the circular or not).
IX.8 Controlling Agreement. It is expressly stipulated and
agreed to be the intent of Borrower and Lender at all times to
comply with applicable Texas law 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) and that this section shall
control every other covenant and agreement in this Agreement. If
the applicable law is ever judicially interpreted so as to render
usurious any amount called for under the Note or under any of the
other Loan Documents, or contracted for, charged, taken,
reserved, or received with respect to the indebtedness
("Indebtedness") evidenced or secured by the Loan Documents, or
if Lender's exercise of the option to accelerate the maturity of
the Note, or if any prepayment by Borrower results in Borrower
having paid any interest in excess of that permitted by
applicable law, then it is Borrower's and Lender's express intent
that all excess amounts theretofore collected by Lender shall be
credited on the principal balance of the Note and all other
Indebtedness (or, if the Note and all other 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 documents, so as to comply
with the applicable law, but so as to permit the recovery of the
fullest amount otherwise called for hereunder or thereunder. All
sums paid or agreed to be paid to Lender for the use,
forbearance, or detention of the Indebtedness shall, to the
extent permitted by applicable law, be amortized, prorated,
allocated, and spread throughout the full stated term of the
Indebtedness until payment in full so that the rate or amount of
interest on account of the Indebtedness does not exceed the
Maximum Lawful Rate (as defined in the Note) from time to time in
effect and applicable to the Indebtedness for so long as the
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 loan evidenced and/or secured by the Loan Documents.
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.
IX.9 Controlling Document. In the event of a conflict
between the terms and conditions of this Agreement and the terms
and conditions of any other Loan Document, the terms and
conditions of this Agreement shall control.
IX.10 Construction of Agreement. All pronouns, whether
in masculine, feminine or neuter form, shall be deemed to refer
to the object of such pronoun whether same is masculine, feminine
or neuter in gender, as the context may suggest or require. All
terms used herein, whether or not defined in Section 1.1 hereof,
and whether used in singular or plural form, shall be deemed to
refer to the object of such term, whether such is singular or
plural in nature, as the context may suggest or require.
IX.11 Counterpart Execution. To facilitate execution,
this Agreement may be executed in one or more counterparts as may
be convenient or required, with all such counterparts
collectively constituting a single instrument.
IX.12 NOTICE OF INDEMNIFICATION. BORROWER ACKNOWLEDGES
AND AGREES THAT THIS AGREEMENT CONTAINS CERTAIN INDEMNIFICATION
PROVISIONS PURSUANT TO SECTIONS 5.9, 6.1, 6.3, 8.2 AND 8.3
HEREOF.
IX.13 ENTIRE AGREEMENT. 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.
IX.14 Year 2000 Covenant. Borrower shall perform all
acts reasonably necessary to ensure that (i) Borrower and any
business in which Borrower holds a substantial interest, and
(ii) all customers, suppliers and vendors that are material to
Borrower's business, become Year 2000 Compliant in a timely
manner. Such acts shall include, without limitation, performing
a comprehensive review and assessment of all of Borrower's
systems and adopting a detailed plan, with itemized budget, for
the remediation, monitoring and testing of such systems. As used
in this paragraph, "Year 2000 Compliant" shall mean, in regard to
any entity, that all software, hardware, firmware, equipment,
fixtures, goods or systems utilized by or material to the
business operations or financial condition of such entity, will
properly perform date sensitive functions before, during and
after the year 2000. Borrower shall, immediately upon request,
provide to Lender such certifications or other evidence of
Borrower's compliance with the terms of this paragraph as Lender
may from time to time require.
[The remainder of this page is intentionally left blank.]
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day and year first above written.
LENDER:
COMERICA BANK-TEXAS,
a state banking association
By:
Name:
Title:
BORROWER:
STRATUS 7000 WEST JOINT VENTURE,
a Texas joint venture
By: Stratus 7000 West, Ltd.,
a Texas limited partnership,
Its Operating Partner
By: STRS L.L.C.,
a Delaware limited liability
company,
Its General Partner
By: Stratus Properties Inc.,
a Delaware corporation,
Its Sole Member
By: /s/ William H. Armstrong, III
---------------------------------
Name: William H. Armstrong, III
Title: Chairman of the Board, President
and Chief Executive Officer
By: Oly Lantana, L.P.,
a Texas limited partnership,
Its Financial Partner
By: Oly Lantana GP, L.L.C.,
a Texas limited liability company,
Its Sole General Partner
By:
Name:
Title: