Exhibit 10.26
CONSTRUCTION LOAN AGREEMENT
This CONSTRUCTION LOAN AGREEMENT ("Agreement") is made and
entered into as of the 11th day of June, 2001, by and between
0000 XXXXXX XXXXXXXXX, L.P., a Texas limited partnership
("Borrower"), whose address is 00 Xxx Xxxxxxx Xxxxxxxxx,
Xxxxx 000, Xxxxxx, Xxxxx 00000, and COMERICA BANK-TEXAS, a state
banking association ("Lender"), whose address is 0000 Xxx Xxxxxx,
0xx Xxxxx, Xxxxxx, Xxxxx 00000, 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.
Assignment of Leases: The Assignment of Leases and Rents
assigning to Lender Borrower's interest in all leases entered
into for the Mortgaged Property and all rents and other rights
and benefits to which Borrower is entitled under the terms of
such leases.
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.
Commencement Date: March 29, 2001.
Commitment Fee: The sum of $45,875.00 to be paid by
Borrower to Lender in connection with funding for the Phase I
Improvements, and if the Phase II Conditions are satisfied as
evidenced by the execution of a modification agreement between
Lender and Borrower, an additional commitment fee of $45,875.00
shall be due from Borrower to Lender.
Completion Date: January 15, 2002, for completion of the
shell portion of the Phase I Improvements.
Construction Contract: Collectively, all contracts and
agreements entered into between Borrower and Contractor
pertaining to the development, construction and completion of the
Phase I Improvements.
Contractor: Xxxxxxx/Xxxx Construction Company, L.C.,
together with any other person or entity with whom Borrower
contracts for the development, construction and completion of the
Phase I Improvements or any portion thereof.
Cross-Default Agreement: The Cross-Default and
Cross-Collateralization Agreement of even date herewith executed
by and among Lender, Borrower and Guarantor, and other parties
whereby the Mortgaged Property and the collateral of Guarantor as
more fully described therein which secures that certain
$30,000,000.00 loan from Lender to Guarantor as evidenced by a
$20,000,000.00 Promissory Note and a $10,000,000.00 Revolving
Credit Note, respectively, each dated December 16, 1999, and
thereafter modified by Modification Agreement dated December 27,
2000, by and between Lender, Guarantor, Stratus Properties
Operating Co., L.P., Circle C Land Corp., and Austin 290
Properties, Inc., are cross-collateralized and the $30,000,000.00
loan and this loan are cross-defaulted.
Deed of Trust: The Amended and Restated Deed of Trust of
even date herewith pursuant to which Borrower mortgages the Land
to secure the Loan.
Design Professional: Xxxxxx Xxxxxxx Xxxxx, 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 I 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 I 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.
Draw Request: a request by Borrower to Lender for an
Advance in such form and containing such information as Lender
may reasonably 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 Land or
Improvements, including the 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 ("XXXX"), 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 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. Xxx. art. 4477-7; and
regulations, rules, guidelines, or standards promulgated pursuant
to such laws, statutes and regulations.
Event of Default: Any happening or occurrence described in
Section 8.1 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 xxxx (xxxxxxx, xxxxx, xxxxxx,
xxxxxxxx, xxxxxxxxx, xxxx 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.
Improvements: Collectively, the Phase I Improvements and
the Phase II Improvements.
Indebtedness: As defined in the Deed of Trust.
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: A representative of AECC will from time
to time inspect the Phase I 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: Up to a maximum amount of EIGHTEEN MILLION
THREE HUNDRED FIFTY THOUSAND AND NO/100 DOLLARS ($18,350,000.00).
Loan Documents: The Note, the Deed of Trust, this
Agreement, the Security Agreement, the Financing Statement, the
Guaranty, the Assignment, 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.
Loan Extension: That certain twelve (12) month extension of
the Maturity Date of the Loan provided the conditions of
Section 2.9 are satisfied.
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
Improvements and the Phase II Improvements if constructed, 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 77,500 square foot
office building, together with a parking deck providing
approximately one hundred (100) covered spaces and all other
amenities, to be constructed on the Mortgaged Property, all as
more particularly described in the Plans and Specifications.
Phase II Improvements: A second office building consisting
of 77,500 square feet of space to be constructed on the Mortgaged
Property, together with all amenities, which shall be constructed
in accordance with the Plans and Specifications and which shall
be funded out of the loan proceeds of this Loan PROVIDED the
conditions of Lender are met in accordance with this Agreement
(the "Phase II Conditions").
Plans and Specifications: The plans and specifications for
the development and construction of the Phase I Improvements,
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.
Soft Costs: All architectural, engineering, interior and
landscape design, legal, consulting and other related fees, taxes
on land and improvements, bond and insurance costs, and
commitment fees, interest and other financing charges, all as set
forth in the Approved Budget.
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. Borrower hereby acknowledges and agrees
that the maximum amount to be funded by Lender for the Phase I
Improvements shall be $9,175,000.00 and that no Advances shall be
used by Borrower to pay for any development or construction costs
for the Phase II Improvements unless and until the Phase II
Conditions of Article VI hereafter have been fully satisfied and
Lender and Borrower have entered into a modification agreement
acceptable to the parties hereto whereby the commencement and
completion dates for the Phase II Improvements and such other
terms and conditions as Lender may require has been executed.
II.2 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.3 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.4 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 for the
construction of the Phase II Improvements until the Phase II
Conditions have been satisfied or in excess of the Loan Amount.
II.5 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.6 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.7 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 a
maximum amount of $9,175,000.00, or, if the Phase II Conditions
have been met, that the Phase II 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.8 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; and
II.9 Loan Extension. Provided the following conditions
precedent shall have been satisfied, then Borrower shall be
entitled to extend the maturity of the Note by an additional
twelve (12) months. The conditions precedent to extension of the
Note for the twelve (12) month period are as follows:
(a) Written notice of such extension shall be given by
Borrower at least thirty (30) days prior to the expiration
of the original Maturity Date (as defined in the Note) of
the Note; and, with such notice, Borrower shall pay to the
Lender, in cash, the Extension Fee of $22,937.50 for the
extension;
(b) The Lender shall have received a current tenant
estoppel certificate (which certificate shall be reasonably
satisfactory to the Lender in form and substance) from each
tenant who has entered into a Lease for a portion of the
Mortgaged Property.
(c) No Event of Default, or any event, circumstance or
action of which the Borrower is aware (by notice from Lender
or otherwise) and with the passage of time or failure to
cure would give rise to an Event of Default, has occurred
and is then existing;
(d) No event, claim, liability or circumstance shall
have occurred which, in the Lender's determination, could be
expected to have or have had a Material Adverse Effect;
(e) Written evidence being provided by Borrower and
reasonably satisfactory to the Lender indicating that the
Debt Coverage Ratio (as defined in Section 5.20 below)
calculated for the three (3) month calendar period ending as
of the last day of the then term (absent extension pursuant
to this Section 2.9) shall be not less than 1.20X of the
then outstanding Indebtedness; or Borrower shall have
prepaid the Curative Amount pursuant to Section 5.20(d)
below necessary to achieve a 1.20 Debt Coverage Ratio or
pledged adequate liquid collateral pursuant to
Section 5.20(e) below; and
(f) Net Operating Income (as defined in Section 5.20
below) shall be a minimum of $1,100,000.00.
(g) Lender shall have received an updated appraisal of
the Mortgaged Property, at Borrower's expense, prepared by
an appraiser acceptable to Lender and based upon such
standards as Lender may require.
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) for the
construction of the Phase I 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.
In the event the Phase II Conditions are met, the
requirements of this paragraph shall then also be in place
for the Phase II Improvements.
(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 I 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 I
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 I
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 the Mortgaged
Property have been paid in full.
(10) A copy of the Plans and Specifications for
the Phase I Improvements.
(11) Building permit(s), grading permit(s) and all
other permits required with respect to the construction
of the Phase I 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 Guarantor
certified by said Guarantor.
(15) A Guaranty executed by the Guarantor.
(16) A schedule of construction progress for the
Phase I 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.
(17) Copies of all agreements entered into by
Borrower or its operating partner pertaining to the
development, construction and completion of the Phase I
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.
(18) 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.
(19) 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.
(20) 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 $45,875.00
of the Commitment Fee.
(l) Borrower shall have furnished evidence to Lender
that it has contributed cash equity and/or the Land (at its
fair market value) of an amount not less than $3,431,177.00
in the aggregate.
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 I Improvements shall be prepared and submitted by
Borrower to Lender on or before the tenth (10th) day of each
month, commencing on or before May 10, 2001 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 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 I
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 I 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 I
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 I 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 I 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 I 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 I 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 I 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 I Improvements, plus any and all Soft
Costs for the Phase I 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 I 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 with respect to the Phase I Improvements:
(a) Lender has received a completion certificate
prepared by the Inspecting Person and executed by Borrower
and the Design Professional stating that the Phase I
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 I 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 I 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 I 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 the Phase I 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 I Improvements are satisfactory to Borrower, are in
compliance with all Governmental Requirements in all material
respects 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 the Phase I
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 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 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 general 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 except as expressly set forth herein.
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 I Improvements to commence by the
Commencement Date and 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 I
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 I Improvements. If the Phase II Conditions as set forth in
Article VI below are met, then Lender and Borrower shall agree
upon a commencement date and a completion date for the Phase II
Improvements, and the warranties and representations and
covenants of Borrower shall be applicable to the Phase II
Improvements as are set forth above with respect to the Phase I
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 I 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
or any other contract for construction of all or a portion of the
Phase I 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 for the Phase I Improvements..
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 I 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 the locations of the Phase I 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 the Phase I 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 I Improvements or any variance from the Plans
and Specifications for the Phase I 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. 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 I 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 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 Improvements.
V.13 Affidavit of Commencement. Borrower has filed in the
appropriate records of the county in which the Land is situated,
an Affidavit of Commencement ("Affidavit of Commencement"),
substantially in the form of Exhibit C attached hereto and
incorporated herein by this reference, duly executed by Borrower
and Contractor. The date of commencement of work set forth in
such Affidavit of Commencement shall not be the date of or prior
to the date on which the original Deed of Trust was recorded.
V.14 Affidavit of Completion. Borrower, within ten (10)
days after construction of the Phase I 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 D 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 Approval to Lease Required. Borrower will obtain the
prior written consent of Lender, which consent shall be granted
or denied in Lender's sole discretion, as to any tenant lease
("Lease") proposed to be entered into by Borrower for space in
the Phase I 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 E.
V.19 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,
commencing in the calendar year 2002, prepared and certified
to by Guarantor and, in the case of Borrower, the chief
financial officer of the general partner of Borrower;
(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;
(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 I 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.
V.20 Debt Coverage. If, at any time after the commencement
of the Loan Extension, the Borrower should maintain with respect
to the Mortgaged Property a Debt Coverage Ratio (hereinafter
defined) of less than 1.20, then Borrower must partially prepay
the Note to the extent of the Curative Amount (hereinafter
defined).
(a) Calculation. The Debt Coverage Ratio calculation
shall be undertaken for each three (3) month calendar period
(the "Calendar Period"). The term "Debt Coverage Ratio"
means Net Operating Income (hereinafter defined) for a
Calendar Period divided by Debt Service Requirements
(hereinafter defined) with respect to such same Calendar
Period. Borrower shall provide written evidence and
documents to Lender indicating the calculations and backup
information for the Debt Coverage Ratio for each Calendar
Period within fifteen (15) days after the expiration of each
such Calendar Period. The Lender shall be entitled to
request and require such backup documentation, including but
not limited to certified financial information, as may be
reasonably required by the Lender in order to satisfy itself
as to the correct calculation of the Debt Coverage Ratio for
any Calendar Period.
(b) Debt Service Requirements. For Calendar Periods
occurring from and after Loan Extension, the term "Debt
Service Requirements" shall mean all principal and interest
payments with respect to the Loan which would be owing
during such Calendar Period, based upon a hypothetical
payment schedule calculated using the outstanding balance of
the Note at Loan Extension, utilizing an interest rate based
upon a level-payment mortgage amortization schedule of
twenty-five (25) years and is the greater of: (i) two
hundred (200) basis points over the ten (10) year Treasury
Index, or (ii) eight and 50/100 percent (8.50%).
(c) Net Operating Income. The term "Net Operating
Income" shall mean, for each applicable Calendar Period, the
Gross Income less Operating Expenses, determined on a cash
basis of accounting except as otherwise provided herein. As
used herein, the following terms shall have the respective
meanings set forth below.
(1) Gross Income. The term "Gross Income" for
each Calendar Period shall mean rentals, revenues and
other cash forms of consideration, received by, or paid
to or for the account of or for the benefit of,
Borrower resulting from or attributable to the
operation, leasing and occupancy of the Mortgaged
Property, determined on a cash basis (except as
specified herein), including, but not limited to, the
following:
(i) rents by any lessees or tenants of the
Mortgaged Property actually in occupancy;
(ii) rents and receipts received by or for
the benefit of Borrower with respect to the full
or partial reimbursement of Operating Expenses
from any lessee or tenant of the Mortgaged
Property;
(iii) installments of proceeds received
by or for the benefit of Borrower in connection
with any rental loss or business interruption
insurance with respect to the Mortgaged Property
calculated on an accrual basis;
(iv) any other fees or rents collected by,
for or on behalf of Borrower with respect to the
leasing and operation of the Mortgaged Property;
(v) any refunds of deposits for obtaining,
using or maintaining utility services for all or
any portion of the Mortgaged Property;
(vi) interest, if any, earned by Borrower on
security and other type deposits of and advance
rentals paid by, any lessees or tenants of the
Mortgaged Property; and
(vii) the amount of any security and
other type deposits and advance rentals relating
to the Mortgaged Property which have been
forfeited.
Notwithstanding anything included within the above
definition of Gross Income, there shall be excluded
from Gross Income the following: (i) any security or
other deposits of lessees and tenants, unless and until
the same actually are either applied to actual rentals
owed or other charges or fees or forfeited; (ii) the
proceeds of any financing or refinancing with respect
to all or any part of the Mortgaged Property; (iii) the
proceeds of any sale or other capital transaction
(excluding leases for occupancy purposes only) of all
or any portion of the Mortgaged Property; (iv) any
insurance or condemnation proceeds paid with respect to
the Mortgaged Property, except for rental loss or
business interruption insurance; and (v) any insurance
and condemnation proceeds applied in reduction of the
principal of the Note in accordance with the terms of
the Deed of Trust or the other Loan Documents;
provided, however, nothing set forth herein shall in
any manner imply the Lender's consent to a sale,
refinancing or other capital transaction.
(2) Operating Expenses. The term "Operating
Expenses" shall mean the greater of (a) the pro-forma
expenses (as assumed in the Appraisal dated March 16,
2001, prepared by Xxxxxxxxx & Xxxxxxx) allocable to the
applicable period which shall be not less than $7.99
per square foot for either the Phase I Improvements or
the Phase II Improvements (inclusive of the management
fee), or (b) those amounts actually incurred and paid
with respect to the ownership, operation, management,
leasing and occupancy of the Mortgaged Property,
determined on a cash basis, except as otherwise
specified herein, including, but not limited to, any
and all of the following (but without duplication of
any item):
(i) ad valorem taxes calculated on an
accrual basis (and not on the cash basis) of
accounting for the Calendar Period; such accrual
accounting for ad valorem taxes shall be based
upon taxes actually assessed for the current
calendar year, or if such assessment for the
current calendar year has not been made, then
until such assessment has been made (and with any
retroactive adjustments for prior calendar months
as may ultimately be needed when the actual
assessments has been made) ad valorem taxes for
the Calendar Period shall be estimated based on
the last such assessment for the Mortgaged
Property;
(ii) foreign, U.S., state and local sales,
use or other taxes, except for taxes measured by
net income;
(iii) installments of special assessments
or similar charges against the Mortgaged Property
calculated on an accrual basis;
(iv) costs of utilities, air conditioning and
heating for the Mortgaged Property to the extent
not directly paid by lessees or tenants;
(v) maintenance and repair costs for the
Mortgaged Property;
(vi) management fees provided, however, the
amount of such management fees which may be
charged hereunder shall not be less than the sum
of four percent (4%) of the Gross Income for each
applicable calendar month;
(vii) all salaries, wages and other
benefits to "on-site" employees of the Borrower
(excluding all salaries, wages and other benefits
of officers and supervisory personnel, and other
general overhead expenses of Borrower and
Borrower's property manager) employed in
connection with the leasing, maintenance and
management of the Mortgaged Property;
(viii) insurance premiums calculated on an
accrual basis (and not on the cash basis) of
accounting for the Calendar Period; such accrual
accounting for insurance premiums shall be based
upon the insurance premiums for the Mortgaged
Property which was last billed to the Borrower,
adjusted to an annualized premium if necessary;
(ix) to the extent not included in the
Budget, costs, including leasing commissions,
advertising and promotion costs, to obtain new
leases or to extend or renew existing leases, and
the costs of work performed and materials provided
to ready tenant space in the Mortgaged Property
for new or renewal occupancy under leases;
provided, however, such costs shall be amortized
throughout the period of the primary term of the
applicable Lease;
(x) outside accounting and audit fees and
costs and administrative expenses in connection
with the direct operation and management of the
Mortgaged Property; and
(xi) any payments, and any related interest
thereon, to lessees or tenants of the Mortgaged
Property with respect to security deposits or
other deposits required to be paid to tenants but
only to the extent any such security deposits and
related interest thereon have been previously
included in Gross Income.
Notwithstanding anything to the contrary as being
included in the definition of Operating Expenses, there
shall be excluded from Operating Expenses the
following: (i) depreciation and any other non-cash
deduction allowed to Borrower for income tax purposes,
and (ii) costs incurred to obtain new leases or to
extend or renew existing leases to the extent included
in the Budget (i.e., leasing commissions, advertising
and promotion costs, costs of work performed and
material provided to ready tenant space in the
Mortgaged Property).
(d) Curative Amount. In the event the Debt Coverage
Ratio for any Calendar Period should be less than 1.20, and
unless Borrower otherwise elects to pledge Additional
Collateral as provided in Section 5.20(e) below, then,
within fifteen (15) days after written notice from the
Lender to Borrower, Borrower shall prepay a portion of the
Note (the "Curative Amount") such that a minimum Debt
Coverage Ratio of 1.20 or more is created based on (1) the
actual Net Operating Income for the immediately preceding
Calendar Period and (2) a revised Debt Service Requirement
for the then current Calendar Period, determined as of the
beginning of such Calendar Period, which results from a
reamortization of such reduced balance of the Loan
sufficient to fully amortize such Loan on a level-payment
mortgage amortization basis in 25-years from the date of
Loan Extension. Failure of Borrower to timely fund any
required Curative Amount shall be deemed an "Event of
Default" pursuant to this Agreement in addition to any other
"Events of Default" specified herein.
(e) Pledge of Liquid Collateral. As an alternative to
payment of the Curative Amount, Borrower shall be entitled,
in the event the Debt Coverage Ratio for any Calendar Period
should be determined to be less than 1.20, to pledge
additional collateral to secure the Loan. The collateral to
be so pledged to the Lender must be in the form of cash,
certificates of deposit, letters of credit, stocks, bonds or
other highly liquid investments acceptable in all respects
to the Lender in its sole and absolute discretion (for
purposes of this Agreement, the term "Additional Collateral"
shall mean and refer to such additional collateral as shall
be approved by the Lender and pledged pursuant to this
Section 5.20[e]). The amount or value of the Additional
Collateral required to be pledged shall be a function of the
liquidation value of such collateral, as determined by the
Lender in its reasonable discretion, and shall be such
amount properly margined (i.e., the liquidation value) as
would, if subtracted from the total amount of indebtedness
evidenced and represented by the Note at such time, result
in a Debt Coverage Ratio (calculated as provided above)
equal to 1.20. In connection with such pledge of Additional
Collateral, and not later than fifteen (15) days after
written notice from the Lender to Borrower of Borrower's
obligation to either pay the Curative Amount or to pledge
the Additional Collateral, and provided that Borrower has
not instead paid the Curative Amount required at that time
pursuant to Section 5.20(d) above, Borrower shall execute
and deliver to the Lender all pledge and security
agreements, financing statements and other instruments,
certificates and agreements as the Lender shall reasonably
require, and shall deliver to the Lender the Additional
Collateral or such instruments, certificates,
acknowledgments, stock powers, authorizations, powers of
attorney, consents and any and all other documentation, as
executed by all appropriate parties as may be necessary to
effectuate the collateral pledge and assignment of such
collateral to the Lender, as the Lender and its counsel
shall reasonably deem necessary or appropriate. If, after
the Borrower's provision of Additional Collateral, the Debt
Coverage Ratio should improve so as to be 1.20 or more for
any Calendar Period (without taking into account the
Additional Collateral), then Borrower shall be entitled to a
release of the Additional Collateral. Borrower shall
thereafter be required to either pay to Lender the Curative
Amount or repledge Additional Collateral to the extent the
required Debt Coverage Ratio should fail to be met during
any subsequent Calendar Period and shall likewise be
entitled to a re-release of any such subsequently pledged
Additional Collateral consistent with the immediately
preceding sentence.
ARTICLE VI
PHASE II CONDITIONS
VI.1 Agreement to Lend Additional Funds Under the Note. As
set forth in Section 2.1 above, Lender has agreed to lend up to
but not in excess of $9,175,000.00 in connection with
construction of the Phase I Improvements. Lender hereby agrees
to lend up to the additional sum of $9,175,000.00 for
construction of the Phase II Improvements, such total loan amount
not to exceed the sum of $18,350,000.00 as evidenced by the Note
provided that the following conditions are satisfied by Borrower:
(a) At least seventy-five percent (75%) of the
rentable space in the Phase I Improvements has been leased
on terms and conditions and with tenants approved by the
Lender and written leases for said space have been executed
and delivered to the Lender, together with a tenant estoppel
certificate and subordination, non-disturbance and
attornment agreement, each of which shall be reasonably
satisfactory to the Lender in form and substance from each
tenant who has entered into a lease for space in the Phase I
Improvements;
(b) No Event of Default, or any event, circumstance or
action of which the Borrower is aware (by notice from Lender
or otherwise), and with the passage of time or failure to
cure would give rise to an Event of Default, has occurred
and is then existing either under the Loan or under that
certain $30,000,000.00 loan from Lender to Stratus
Properties, Inc. dated the 16th day of December, 1999, as
modified on December 27, 2000, and which is secured by
multiple properties located in Travis, Hays, Bexar, Xxxxxx
and Xxxxxx Counties, Texas, or under that certain
$6,600,000.00 loan from Lender to Stratus 7000 West Joint
Venture dated April 9, 1999, which is secured by that
certain office building located in Xxxxxx County, Texas (the
"$6,600,000.00 Stratus 7000 West Loan"), said $6,600,000.00
Stratus 7000 West Loan having been modified pursuant to
Modification Agreement dated August 16, 1999, or under that
certain $7,700,000.00 loan from Lender to Stratus 7000 West
Joint Venture dated February 24, 2000, which is secured by
that certain office building located in Xxxxxx County, Texas
(the "$7,700,000.00 Stratus 7000 West Loan").
(c) No event, claim, liability or circumstance shall
have occurred which, in the Lender's determination, could be
expected to have or have had a Material Adverse Effect;
(d) There shall have been no material adverse change
in the Austin, Texas office market;
(e) Lender shall have received an updated appraisal in
form and substance acceptable to the Lender;
(f) The first Advance under the Note for the funding
of the Phase II Improvements shall commence no later than
twelve (12) months from the date hereof; and
(g) Borrower shall have furnished evidence
satisfactory to Lender that it has contributed additional
equity (over and above the equity contributed in connection
with the Phase I Improvements) of either cash or the Land
(at its fair market value) in an amount of not less than
$2,918,632.00.
Provided the above conditions are satisfied within twelve (12)
months from the date hereof, then Borrower and Lender agree that
a modification agreement acceptable to the parties shall be
entered into and which shall contain the following terms for the
funds to be advanced for the Phase II Improvements as follows:
(a) The interest rate for the funds to be advanced for
the Phase II Improvements shall be the same as the interest
rate set forth in the Note of even date herewith;
(b) A 0.50% commitment fee shall be due and payable in
advance for the $9,175,000.00 in loan funds to be advanced
for the Phase II Improvements;
(c) The term of the indebtedness for the Phase II
funds shall be twenty-four (24) months from funding, with
one twelve (12) month extension option, such extension
option to be granted provided the terms and conditions set
forth in Section 2.9 above are also met for the Phase II
Improvements;
(d) The Cross-Default Agreement of even date herewith
executed by Guarantor shall be in full force and effect and
no Event of Default shall have occurred thereunder;
(e) All of the conditions and requirements for
advances as set forth in Section 3.1 above shall also be
required for any advances requested for the Phase II
Improvements, and all of the covenants of Borrower set forth
in Article V above and the representations and warranties of
Borrower set forth in Article IV above shall be reaffirmed
and applicable to the Phase II Improvements.
VI.2 Borrower's Right to Purchase the Note. Borrower shall
have the right, at Borrower's option by written notice to Lender,
to purchase the Note, related loan documents and liens securing
same (collectively, this "Construction Loan") from Lender for the
sum of all funds advanced by Lender under the Note provided that
Borrower has released, or simultaneously with such purchase,
causes the release of any liens of Lender against the Mortgaged
Property securing the Senior Debt (defined below) in accordance
with the Release Provisions set forth in Addendum 3 of the Loan
Agreement dated December 16, 1999 between Lender and Stratus
Properties, Inc., Stratus Properties Operating Co., L.P.,
Circle C Land Corp., and Austin 290 Properties, Inc. (as amended
from time to time, the "Stratus Loan Agreement"), which Stratus
Loan Agreement sets forth the terms and conditions of a
$30,000,000.00 loan from Lender to said entities (the "Senior
Debt") and which Senior Debt is currently secured by a prior lien
on the Mortgaged Property pursuant to that certain prior deed of
trust dated December 16, 1999 and recorded under Document
No. 1999158707 of the Official Public Records of Xxxxxx County,
Texas, as modified by instrument recorded under Document
No. 2000204551 of the Official Public Records of Xxxxxx County,
Texas. Borrower may assign its right to purchase the
Construction Loan to a third party. Any acquisition of the
Construction Loan by Borrower, or its assignee, will be
consummated pursuant to an endorsement to the Note and an
assignment of note and liens in form reasonably acceptable to the
Borrower and the Lender. Borrower and Lender will endeavor to
consummate the sale and purchase of the Construction Loan within
fourteen (14) days of Borrower's exercise of its option to
acquire the Construction Loan.
ARTICLE VII
ASSIGNMENTS
VII.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:
(a0 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.
(b0 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.
(c0 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.
(d0 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.
(e0 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.
(f0 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.
VII.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:
(a0 Each schedule of the Plans and Specifications for
the Phase I Improvements delivered or to be delivered to
Lender is and shall be a complete and accurate description
of such Plans and Specifications.
(b0 The Plans and Specifications for the Phase I
Improvements are and shall be complete and adequate for the
construction of the Phase I 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.
(c0 Lender may use the Plans and Specifications for
the Phase I Improvements for any purpose relating to the
Phase I Improvements, including but not limited to
inspections of construction and the completion of the
Phase I Improvements.
(d0 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 I
Improvements contemplated by the Plans and Specifications
for the Improvements. Lender has no duty to inspect the
Phase I Improvements, and if Lender should inspect the
Phase I 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 I
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 I Improvements be constructed in accordance with the
Plans and Specifications or any other requirement.
(e0 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.
VII.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:
(a0 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.
(b0 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.
(c0 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.
(d0 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.
(e0 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.
(f0 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.
VII.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).
(a0 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.
(b0 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.
(c0 Any sums so received by Lender pursuant to this
Section 7.4 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 VIII
EVENTS OF DEFAULT
VIII.1 Events of Default. Each of the following shall
constitute an "Event of Default" hereunder:
(a0 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.
(b0 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.
(c0 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.
(d0 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.
(e0 If an Event of Default occurs under either (i) the
$6,600,000.00 Stratus 7000 West Loan as defined in that
certain Construction Loan Agreement dated April 9, 1999,
between Lender and Stratus 7000 West Joint Venture; or under
(ii) the $7,700,000.00 Stratus 7000 West Loan as defined in
that certain Construction Loan Agreement dated February 24,
2000, between Lender and Stratus 7000 West Joint Venture.
(f0 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.
(g0 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.
(h0 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.
(i0 If Borrower makes a Disposition, without the prior
written consent of Lender.
(j0 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.
(k0 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.
(l0 If Lender reasonably determines that any event
shall have occurred that could be expected to have a
Material Adverse Effect.
(m0 If Borrower abandons all or any portion of the
Mortgaged Property.
(n0 The occurrence of any event referred to in
Sections 8.1(e) and (f) 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).
(o0 An Event of Default as defined in any of the Loan
Documents.
(p0 If the construction of the Phase I 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 I Improvements as soon as
practicable after the cause of such delay has been removed
or cancelled.
(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 xxxx of sale,
chattel mortgage or other security instrument covering any
materials, fixtures or articles intended to be incorporated
in the Phase I Improvements or the appurtenances thereto, or
covering articles of personal property placed in the Phase I
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
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.
VIII.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 I 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 I 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 I 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 I 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 I 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 IX
LENDER'S DISCLAIMERS - BORROWER'S INDEMNITIES
IX.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 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.
IX.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.
IX.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.
IX.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 I
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 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 X
MISCELLANEOUS
X.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.
X.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.
X.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.
X.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.
X.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.
X.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.
X.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).
X.8 Maximum Interest. It is expressly stipulated and
agreed to be the intent of Borrower and Lender at all times to
comply strictly with the applicable Texas law governing the
maximum rate or amount of interest payable on the Indebtedness
(as defined in the Deed of Trust) (or applicable United States
federal law to the extent that it permits Lender to contract for,
charge, take, reserve or receive a greater amount of interest
than under Texas law). If the applicable law is ever judicially
interpreted so as to render usurious any amount (i) contracted
for, charged, taken, reserved or received pursuant to the Note,
any of the other Loan Documents or any other communication or
writing by or between Borrower and Lender related to any of the
Indebtedness, (ii) contracted for, charged or received by reason
of Lender's exercise of the option to accelerate the maturity of
the Note and/or any other portion of the Indebtedness, or
(iii) Borrower will have paid or Lender will have received by
reason of any voluntary prepayment by Borrower of the Note and/or
any of the other Indebtedness, then it is Borrower's and Lender's
express intent that all amounts charged in excess of the Maximum
Lawful Rate (as defined in the Deed of Trust) shall be
automatically canceled, ab initio, and all amounts in excess of
the Maximum Lawful Rate theretofore collected by Lender shall be
credited on the principal balance of the Note and/or any of the
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 document, so as to
comply with the applicable law, but so as to permit the recovery
of the fullest amount otherwise called for hereunder and
thereunder; provided, however, if the Note has been paid in full
before the end of the stated term of the Note, then Borrower and
Lender agree that Lender shall, with reasonable promptness after
Lender discovers or is advised by Borrower that interest was
received in an amount in excess of the Maximum Lawful Rate,
either refund such excess interest to Borrower and/or credit such
excess interest against any other Indebtedness then owing by
Borrower to Lender. Borrower hereby agrees that as a condition
precedent to any claim seeking usury penalties against Lender,
Borrower will provide written notice to Lender, advising Lender
in reasonable detail of the nature and amount of the violation,
and Lender shall have sixty (60) days after receipt of such
notice in which to correct such usury violation, if any, by
either refunding such excess interest to Borrower or crediting
such excess interest against the Note and/or other Indebtedness
then owing by Borrower to Lender. All sums contracted for,
charged or received by Lender for the use, forbearance or
detention of any of the Indebtedness, including any portion of
the debt evidenced by the Note shall, to the extent permitted by
applicable law, be amortized or spread, using the actuarial
method, throughout the stated term of the Note and/or other
Indebtedness (including any and all renewal and extension
periods) until payment in full so that the rate or amount of
interest on account of the Note and/or other Indebtedness does
not exceed the Maximum Lawful Rate from time to time in effect
and applicable to the Note and/or the other Indebtedness for so
long as any Indebtedness is outstanding. In no event shall the
provisions of Chapter 346 of the Texas Finance Code (which
regulates certain revolving credit loan accounts and revolving
triparty accounts) apply to the Note and/or any of the other
Indebtedness. Notwithstanding anything to the contrary contained
herein or in any of the other Loan Documents, it is not the
intention of 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.
X.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.
X.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.
X.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.
X.12 NOTICE OF INDEMNIFICATION. BORROWER ACKNOWLEDGES AND
AGREES THAT THIS AGREEMENT CONTAINS CERTAIN INDEMNIFICATION
PROVISIONS PURSUANT TO SECTIONS 5.9, 7.1, 7.3, 9.2 AND 9.3
HEREOF.
X.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.
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: /s/ Xxxxx X. Xxxxx
-----------------------
Name: Xxxxx X. Xxxxx
Title: Senior Vice President
BORROWER:
0000 XXXXXX XXXXXXXXX, L.P.,
a Texas limited partnership
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/ Xxxxxxx X. Xxxxxxxxx, III
---------------------------
Xxxxxxx X. Xxxxxxxxx, III
Chairman of the Board,
President and Chief
Executive Officer
