Contract
Exhibit 10.1
BY
AND BETWEEN
COMERICA
BANK
AND
STRATUS
PROPERTIES OPERATING CO., L.P.
CIRCLE
C LAND, X.X.
XXXXXX
290 PROPERTIES, INC.
CALERA
COURT, L.P.
Dated
September 30, 2005
THIS
LOAN
AGREEMENT (this “Agreement”)
is
made and delivered effective as of the 30th day of September, 2005, by
and
between STRATUS
PROPERTIES INC.,
a
Delaware corporation (“Stratus”),
STRATUS
PROPERTIES OPERATING CO., L.P.,
a
Delaware limited partnership (“SPOC”),
CIRCLE
C LAND, L.P.,
a Texas
limited partnership (“Circle
C”),
and
AUSTIN
290 PROPERTIES, INC.,
a Texas
corporation (“Austin”)
(Stratus, SPOC, Circle C and Austin are sometimes referred to in this
Agreement
severally as “Borrower”
and
jointly as “Borrowers”),
CALERA
COURT, L.P.,
a Texas
limited partnership and COMERICA
BANK
(“Bank”).
RECITALS
A. Borrowers
desire to obtain certain credit facilities from the Bank, and the Bank
is
willing to provide such credit facilities to and in favor of
Borrowers.
B. Such
credit facilities are subject to the terms and conditions set forth herein
and
in every other Loan Document.
C. This
Agreement is entered into for purposes of renewing, extending and modifying
the
credit facilities and extensions of credit made pursuant to that certain
Loan
Agreement dated effective as of December 16, 1999 entered into by the
Bank and
Borrowers, as the same has heretofore been amended, restated and modified
from
time to time (the "Original
Credit Agreement")
and
amending and restating the Original Credit Agreement in its
entirety.
AGREEMENT
NOW,
THEREFORE, in consideration of the premises and the mutual promises herein
contained, Borrowers and Bank agree as follows:
| SECTION 1. |
DEFINITIONS
|
1.1 Defined
Terms.
The
terms as used in this Agreement shall have the meanings assigned to such
terms
in the Defined Terms Addendum.
1.2 Accounting
Terms.
All
accounting terms not specifically defined in this Agreement shall be
determined
and construed in accordance with GAAP.
1.3 Singular
and Plural.
Where
the context herein requires, the singular number shall be deemed to include
the
plural, the masculine gender shall include the feminine and neuter genders,
and
vice versa.
| SECTION 2. |
TERMS,
CONDITIONS AND PROCEDURES FOR
BORROWING
|
Subject
to the terms, conditions and procedures of this Agreement and each other
Loan
Document including, but not limited to, the terms, conditions and procedures
set
forth in the Defined Terms Addendum and Loan Terms, Conditions and Procedures
Addendum, Bank agrees to make credit available to the Borrowers on such
dates
and in such amounts as the Borrowers shall request from time to time
or as may
otherwise be agreed to by Borrowers and Bank.
| SECTION 3. |
REPRESENTATIONS
AND WARRANTIES
|
Each
Borrower represents and warrants as to itself and, as the context requires,
each
Loan Party within its control, and such representations and warranties
shall be
deemed to be continuing representations and warranties during the entire
life of
this Agreement, and so long as Bank shall have any commitment or obligation
to
make any Advances hereunder, and so long as any Indebtedness remains
unpaid and
outstanding under any Loan Document, as follows:
3.1 Authority.
Stratus
and Austin are each a corporation. SPOC and Circle C are each limited
partnerships of which Stratus is an indirect or direct owner. Each of
Stratus,
Circle C, Austin and SPOC is duly organized, validly existing and in
good
standing under the laws of the jurisdiction of its organization and is
duly
qualified and authorized to do business in the state where the Land it
owns is
located and in each other jurisdiction in which the character of its
assets or
the nature of its business makes such qualification necessary.
3.2 Due
Authorization.
Each
Loan Party has all requisite power and authority to execute, deliver
and perform
its obligations under each Loan Document to which it is a party or is
otherwise
bound, all of which have been duly authorized by all necessary action,
and are
not in contravention of law or the terms of any Loan Party’s organizational or
other governing documents.
3.3 Title
to Property.
Each
Loan Party has good title to all property and assets purported to be
owned by
it, including those assets identified on the Financial Statements most
recently
delivered by Borrowers to Bank, subject to the Permitted
Encumbrances.
3.4 Encumbrances.
There
are no Liens on, and no financing statements on file with respect to,
any of the
property or assets of any Loan Party, except for Permitted Encumbrances
and any
Liens or financing statements in favor of Bank.
3.5 Subsidiaries.
As of
the date hereof, none of the Borrowers has any Subsidiaries, except as
set forth
in Schedule
3.5,
which
Schedule sets forth the percentage of ownership of such Borrower in each
such
Subsidiary as of the date of this Agreement.
3.6 Taxes.
Each
Loan Party (i) has filed, on or before their respective delinquency dates,
all
federal, state, local and foreign tax returns that are required to be
filed, or
has obtained extensions for filing such tax returns, (ii) is not delinquent
in
filing such returns in accordance with such extensions, and (iii) has
paid all
taxes which have become due pursuant to those returns or pursuant to
any
assessments received by any such party, as the case may be, to the extent
such
taxes have become due, except to the extent such tax payments are being
actively
and diligently contested in good faith by appropriate proceedings, and,
if
requested by Bank, have been bonded or reserved in an amount and manner
satisfactory to Bank. Further, no Loan Party knows of any additional
assessments
in respect of any such taxes and related liabilities.
3.7 No-Defaults.
There
exists no default (or event which, with the giving of notice or passage
of time,
or both, would result in a default) under the provisions of any instrument
or
agreement evidencing, governing, securing or otherwise relating to any
Debt of
any Loan Party or pertaining to any of the Permitted Encumbrances (other
than
Contested Items) except to the extent that any such failure has been
waived or
that such failure to comply would not have a Material Adverse
Effect.
3.8 Enforceability
of Agreement and Loan Documents.
Each
Loan Document has been duly executed and delivered by duly authorized
officer(s)
or other representative(s) of each Loan Party that is a party thereto,
and
constitutes the valid and binding obligations of each such Loan Party,
enforceable in accordance with their respective terms, except to the
extent that
enforcement thereof may be limited by applicable bankruptcy, reorganization,
insolvency, moratorium or similar laws affecting the enforcement of creditors’
rights generally at the time in effect.
3.9 Non-contravention.
The
execution, delivery and performance by each Loan Party of the Loan Documents
to
which such Loan Party is a party or otherwise bound, are not in contravention
of
the terms of any indenture, agreement or undertaking to which any such
Loan
Party is a party or by which it is bound, except to the extent that such
terms
have been waived or that failure to comply with any such terms would
not have a
Material Adverse Effect.
3.10 Actions,
Suits, Litigation or Proceedings.
Except
as shown on Schedule
3.10,
there
is no Material Litigation, and, to the best knowledge of each Borrower,
no Loan
Party is under investigation by, or is operating under any restrictions
imposed
by, any Governmental Authority.
3.11 Compliance
with Laws.
To the
best knowledge of each Borrower, each Loan Party has complied with all
applicable Governmental Requirements, including, without limitation,
Environmental Laws, to the extent that failure to so comply could have
a
Material Adverse Effect.
3.12 Consents,
Approvals and Filings, Etc.
Except
as have been previously obtained or as otherwise expressly provided in
this
Agreement, no authorization, consent, approval license, qualification
or formal
exemption from, nor any filing, declaration or registration with, any
Governmental Authority and no material authorization, consent or approval
from
any other Person, is required in connection with the execution, delivery
and
performance by each Loan Party of any Loan Document to which it is a
party. All
such authorizations, consents, approvals, licenses, qualifications, exemptions,
filings, declarations and registrations which have previously been obtained
or
made, as the case may be, are in full force and effect and are not the
subject
of any attack, or to the best knowledge of each Borrower, any threatened
attack,
in any material respect, by appeal, direct proceeding or otherwise.
3.13 Contracts,
Agreements and Leases.
To each
Borrower’s best knowledge and after due inquiry, no Loan Party is in default
(beyond any applicable period of grace or cure) in complying with any
provision
of any material contract, agreement, indenture, lease or instrument to
which it
is a party or by which it or any of its properties or assets are bound,
where
such default would have a Material Adverse Effect. To each Borrower’s knowledge,
each such material contract, commitment, undertaking, agreement, indenture
and
instrument is in full force and effect and is valid and legally
binding.
3.14 ERISA.
Except
as shown on Schedule
3.14,
no Loan
Party maintains or contributes to any employee benefit plan subject to
Title IV
of ERISA. Furthermore, no Loan Party has incurred any accumulated funding
deficiency within the meaning of ERISA or incurred any liability to the
PBGC in
connection with any employee benefit plan established or maintained by
such Loan
Party, and no reportable event or prohibited transaction, as defined
in ERISA,
has occurred with respect to such plans.
3.15 No
Investment Company.
No Loan
Party is an “investment company” within the meaning of the Investment Company
Act of 1940, as amended, nor is any Loan Party “controlled” by an “investment
company” within the meaning of the Investment Company Act of 1940, as
amended.
3.16 No
Margin Stock.
No Loan
Party is engaged principally, or as one of its important activities,
directly or
indirectly, in the business of extending credit for the purpose of purchasing
or
carrying margin stock, and none of the proceeds of the Loan will be used,
directly or indirectly, to purchase or carry any margin stock or made
available
by any Loan Party in any manner to any other Person to enable or assist
such
Person in purchasing or carrying margin stock, or otherwise used or made
available for any other purpose which might violate the provisions of
Regulations G, T, U, or X of the Board of Governors of the Federal Reserve
System.
3.17 Environmental
Representations.
(a) No
Loan
Party has received any notice of any violation of any Environmental Law(s);
and
no Loan Party is a party to any litigation or administrative proceeding,
nor, so
far as is known by any Borrower, is any litigation or administrative
proceeding
threatened against any Loan Party which, in any event, (i) asserts or
alleges
that any Loan Party violated any Environmental Law(s), (ii) asserts or
alleges
that any Loan Party is required to clean up, remove or take any other
remedial
or response action due to the disposal, depositing, discharge, leaking
or other
release of any Hazardous Materials, or (iii) asserts or alleges that
any Loan
Party is required to pay all or a portion of any past, present or future
clean-up, removal or other remedial or response action which arises out
of or is
related to the disposal, depositing, discharge, leaking or other release
of any
Hazardous Materials by any Loan Party, and which in each case of (i)-(iii),
either singularly or in the aggregate, could have a Material Adverse
Effect.
(b) To
Borrowers’ knowledge, there are no conditions existing currently which could
subject any Loan Party to damages, penalties, injunctive relief or clean-up
costs under any applicable Environmental Law(s), or which require, or
are likely
to require, clean-up, removal, remedial action or other response pursuant
to any
applicable Environmental Law(s) by any Loan Party, and which, in any
event,
either singularly or in aggregate, could have a Material Adverse
Effect.
(c) No
Loan
Party is subject to any judgment, decree, order or citation related to
or
arising out of any applicable Environmental Law(s), which, either singularly
or
in the aggregate, could have a Material Adverse Effect; and, to Borrowers’
knowledge, no Loan Party has been named or listed as a potentially responsible
party by any Governmental Authority in any matter arising under any applicable
Environmental Law(s), except as disclosed in Schedule
3.16,
and, in
the event that any such matters are disclosed in said Schedule
3.16
they
will not, either singularly or in the aggregate, have a Material Adverse
Effect.
(d) Each
Loan
Party has all permits, licenses and approvals required under applicable
Environmental Laws, where the failure to so obtain or maintain any such
permits,
licenses or approvals could have a Material Adverse Effect.
3.18 Accuracy
of Information.
The
Financial Statements previously furnished to Bank have been prepared
in
accordance with GAAP and fairly present the financial condition of Borrower
and,
as applicable, the consolidated financial condition of Borrower and such
other
Person(s) as such Financial Statements purport to present, and the results
of
their respective operations as of the dates and for the periods covered
thereby;
and since the date(s) of said Financial Statements, there has been no
material
adverse change in the financial condition of Borrower or any other Person
covered by such Financial Statements. No Loan Party, nor any such other
Person
has any material contingent obligations, liabilities for taxes, long-term
leases
or long-term commitments not disclosed by, or reserved against in, such
Financial Statements. Each Loan Party is solvent, able to pay its respective
debts as they mature, has capital sufficient to carry on its business
and has
assets the fair market value of which exceed its liabilities, and no
Loan Party
will be rendered insolvent, under-capitalized or unable to pay debts
generally
as they become due by the execution or performance of any Loan Document
to which
it is a party or by which it is otherwise bound.
3.19 Equity
Ownership.
Stratus’ entire issued and outstanding capital stock consists of 7,205,690
shares of common stock, $.01 par value; and the names of all Persons
who own
beneficially five percent (5%) or more of such shares, together with
the amount
of such ownership, are set forth in Schedule
3.19, Part 1
attached
hereto. All of the partnership interests in Circle C are owned beneficially
and
of record by the Persons and in the amounts/percentages set forth in
Schedule
3.19, Part 2
attached
hereto. Austin’s entire issued and outstanding capital stock consists of 1,000
shares of common stock, $1.00 par value; and the names of all Persons
who own
beneficially five percent (5%) or more of such shares, together with
the amount
of such ownership, are set forth in Schedule
3.19, Part 4
attached
hereto. All of the partnership interests in SPOC are owned beneficially
and of
record by the Persons and in the amounts/percentages set forth in Schedule
3.19, Part 3.
To the
extent that any such partner is a corporation (other than Stratus or
Austin),
limited liability company or partnership (other than Circle C), similar
information with respect to the beneficial and record owners of all equity
ownership interests in each such entity is set forth in Schedule
3.19, Part 3.
There
are no outstanding options, warrants or rights to purchase, nor any agreement
for the subscription, purchase or acquisition of, any equity ownership
interests
of any Loan Party, except described in Schedule
3.19, Part 5.
3.20 Business
Loan.
The
Loan is a business loan transaction in the stated amount solely for the
purpose
of carrying on the businesses of Borrowers and none of the proceeds of
the Loan
will be used for the personal, family, household or agricultural purposes
of any
Borrower.
3.21 Relationship.
The
relationship between each Borrower and Bank is solely that of borrower
and
lender, and Bank has no fiduciary or other special relationship with
any
Borrower or any other Loan Party, and no term or condition of any of
the Loan
Documents shall be construed so as to deem the relationship between any
Borrower
or any other Loan Party and Bank to be other than that of borrower and
lender.
3.22 Experience.
The
principals of each Borrower are knowledgeable businessmen with experience
in
real estate transactions and real estate financing. In all of their transactions
with Bank, each Borrower and its principals have been represented by
(or have
had the opportunity to be represented by) legal counsel independent of
Bank and
independent of counsel for Bank.
3.23 Compliance
with Laws.
The
Land and any Improvements thereon comply, in all material respects, with
all
applicable Governmental Requirements and restrictive covenants, including,
without limitation, zoning laws, building codes, handicap or disability
legislation, and all rules, regulations and orders relating thereto,
and all
Environmental Laws, and the use to which a Borrower is using or intends
to use
its Land and Improvements complies with all Governmental Regulations
in all
material respects, specifically including, but not limited to, any and
all land
use and development entitlements and Municipal Utility District requirements
for
the Primary Collateral and the Other Collateral, and that Borrower has
taken all
action necessary to preserve and maintain the land use and development
entitlements, and has taken no action which would cause a loss of any
such
entitlements.
3.24 Access.
Access
by vehicles to the Land exists over paved roadways that have been completed,
dedicated to the public use and accepted by the appropriate Governmental
Authority.
3.25 Statements.
No
certificate, statement, report or other information delivered heretofore,
concurrently herewith or hereafter by any Loan Party to Bank 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
materially misleading, and same were true, complete and accurate as of
the date
hereof in all material respects.
3.26 Disclaimer
of Permanent Financing.
Each
Borrower acknowledges and agrees that Bank has not made any commitments,
either
express or implied, to extend the terms of the Loan past its stated maturity
date or to provide Borrowers with any permanent financing, except to
the extent,
if any, that the same is expressly stated in this Agreement and the other
Loan
Documents.
3.27 Not
a
Broker Or Dealer.
No Loan
Party is a “broker” or a “dealer” within the meaning of the Securities Exchange
Act of 1934, as amended from time to time, and any rules or regulations
promulgated thereunder.
| SECTION 4. |
AFFIRMATIVE
COVENANTS
|
Each
Borrower covenants and agrees that, so long as Bank is committed to make
any
Advance or issue any Letter of Credit under this Agreement, and until
all
instruments and agreements evidencing any Loan which is payable on demand
or
which conditions Advances upon the Bank’s discretion are fully discharged and
terminated, and thereafter, so long as any Indebtedness remains outstanding,
it
will, and, as applicable, it will cause each Loan Party within its control
or
under common control to:
4.1 Preservation
of Existence, Etc.
Preserve and maintain its existence and preserve and maintain such of
its
rights, licenses, and privileges as are material to the business and
operations
conducted by it; qualify and remain qualified to do business in each
jurisdiction in which the Land it owns is located and where such qualification
is material to its business and operations or ownership of its properties;
continue to conduct and operate its business substantially as conducted
and
operated during the present and preceding calendar year; at all times
maintain,
preserve and protect all of its franchises and trade names and preserve
all the
remainder of its property and keep the same in good repair, working order
and
condition; and from time to time make, or cause to be made such repairs
or
betterments as Borrower is obligated to make under any Governmental
Requirements.
4.2 Keeping
of Books.
Keep
proper books of record and account in which full and correct entries
shall be
made of all of its financial transactions and its assets and businesses
so as to
permit the presentation of financial statements (including, without limitation,
those Financial Statements to be delivered to Bank pursuant to Section
4.3
hereof)
prepared in accordance with GAAP; and permit Bank, or its representatives,
at
reasonable times and intervals after forty-eight (48) hours prior notice,
at
Borrowers’ cost and expense, to visit any office of any Loan Party, discuss its
financial matters with its officers, employees, and independent certified
public
accountants, and by this provision, each Borrower authorizes such officers,
employees and accountants to discuss the finances and affairs of any
Loan Party
and to examine any of its books and other corporate records; provided,
however,
if no Event of Default exists, such visit will not occur more often than
four
(4) times in any calendar year.
4.3 Reporting
Requirements.
Stratus
shall furnish to Bank, or cause to be furnished to Bank, the
following:
(a) As
soon
as possible, and in any event within five (5) calendar days after becoming
aware
of the occurrence or existence of each Default or Event of Default hereunder
or
of any Material Adverse Effect, a written statement of the chief financial
officer or other appropriate authorized representative of Stratus, setting
forth
details of such Default, Event of Default or Material Adverse Effect,
and the
action which Stratus has taken, or has caused to be taken, or proposes
to take,
or to cause to be taken, with respect thereto.
(b) As
soon
as available, and in any event within ninety (90) days after and as of
the end
of each fiscal year of Stratus, audited consolidated Financial Statements
of
Stratus, including a balance sheet, income statement, statement of profit
and
loss, statement of changes in shareholders equity, statement of cash
flows and
contingent obligations, for and as of such fiscal year then ending, with
comparative numbers for the preceding fiscal year, in each case, prepared
by
Stratus or such other Person, as applicable, and completed in such detail
as
Bank shall require, and certified by the chief financial officer or other
appropriate authorized representative of Stratus or of such other Person,
as
applicable, as to consistency with prior financial reports and accounting
periods, accuracy and fairness of presentation. Such audited Financial
Statements shall be prepared in accordance with GAAP by independent certified
public accountants of recognized standing selected by Borrower and approved
by
Bank and shall contain unqualified opinions as to the fairness of the
statements
therein contained.
(c) As
soon
as available, and in any event not later than sixty (60) days after the
start of
each fiscal year of Stratus, the business plan of Stratus for such forthcoming
fiscal year.
(d) As
soon
as available, and in any event within forty (40) days after and as of
the end of
each calendar quarter, including the last such reporting period of each
calendar
year, consolidated Financial Statements of Stratus and, to the extent
not
covered in the Stratus Financial Statements, from such of the other Loan
Parties
as may be required by the Bank, Consolidated, as applicable, for and
as of such
reporting period, including a balance sheet, income statement, statement
of
profit and loss, surplus reconciliation statement and statement of cash
flows
and contingency for and as of such reporting period then ending and for
and as
of that portion of the calendar year then ending, with comparative numbers
for
the same period of the preceding calendar year, in each case, certified
by the
chief financial officer or other appropriate authorized representative
of
Stratus and, as applicable, each other Loan Party as to consistency with
prior
financial reports and accounting periods, accuracy and fairness of
presentation.
(e) As
soon
as available, and in any event within forty (40) days after and as of
the end of
each calendar month, a statement of Stratus’ sales as of such reporting period
then ending and for and as of that portion of the calendar year then
ending,
with comparative numbers for the same period of the preceding calendar
year, in
each case, certified by the chief financial officer of Stratus as to
consistency
with prior reports and accounting periods, accuracy and fairness of presentation
ended and the year-to-date.
(f) As
soon
as available, and in any event within forty (40) days after and as of
the end of
each calendar quarter, a statement of the status of MUD Reimbursables
and the
MUD Reimbursables Value, Credit Banks and Credit Bank Value, and Material
Litigation as of such reporting period then ending certified by the chief
financial officer of Stratus as to accuracy and completeness.
(g) Promptly
upon receipt thereof, copies of all management letters and other substantive
reports submitted to any Loan Party by independent certified public accountants
in connection with any annual audit of any such party.
(h) Promptly
after filing the same, a copy of Stratus’ annual federal income tax
return.
(i) Simultaneously
with the Financial Statements to be delivered to Bank pursuant to Sections
(b)
and (d) above, a Compliance Certificate dated as of the end of such quarter
or
year, as the case may be.
(j) Promptly,
and in form and detail reasonably satisfactory to Bank, such other information
as Bank may reasonably request from time to time.
4.4 Intentionally
Omitted.
4.5 Further
Assurances: Financing Statements.
Furnish
Bank, at Borrowers’ expense, upon Bank’s request and in form reasonably
satisfactory to Bank, and execute and deliver or cause to be executed
and
delivered, such additional pledges, assignments, mortgages, lien instruments
or
other security instruments, consents, acknowledgments, subordinations
and
financing statements covering any or all of the Mortgaged Property pledged,
assigned, mortgaged or encumbered pursuant to any Loan Document, of every
nature
and description, whether now owned or hereafter acquired by the Person
providing
such Mortgaged Property, together with such other documents or instruments
as
Bank may require to effectuate more fully the express purposes of any
Loan
Document.
4.6 Compliance
with Leases.
Comply
with all material terms and conditions of the Leases, if any, and all
other
lease or rental agreements covering any premises or property (real or
personal)
wherein any of the Mortgaged Property is or may be located, or covering
any of
the other material personal or real property now or hereafter owned,
leased or
otherwise used by any Loan Party in the conduct of its business, and
any
Governmental Requirement, except where the failure to so comply could
not cause
a Material Adverse Effect.
4.7 Indemnification.
Indemnify, defend and save Bank harmless from any and all claims, losses,
costs,
damages, liabilities, obligations and expenses, including, without limitation,
reasonable attorneys’ fees, incurred by Bank by reason of any Default or Event
of Default, in defending or protecting the Liens which secure or purport
to
secure all or any portion of the Indebtedness, whether existing under
any Loan
Document or otherwise or the priority thereof, or in enforcing the obligations
of any Borrower or any other Person under or pursuant to any Loan Document,
or
in the prosecution or defense of any action or proceeding concerning
any matter
growing out of or connected with the Mortgaged Property or any Loan Document,
INCLUDING
ANY CLAIMS, LOSSES, COSTS, DAMAGES, LIABILITIES, OBLIGATIONS, AND EXPENSES
RESULTING FROM BANK’S OWN NEGLIGENCE, EXCEPT AND TO THE EXTENT, BUT ONLY TO THE
EXTENT, CAUSED BY BANK’S GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT.
Without
limiting in any manner any of the foregoing, it is specifically agreed
that the
obligations of Borrowers under this section shall extend to any and all
claims,
losses, costs, damages, liabilities, obligations and expenses, including,
without limitation, reasonable attorneys’ fees, incurred by Bank by reason that
the legal description of any of the Mortgaged Property in any Loan Document
is
incorrect in any respect or because the Liens of any of the Deeds of
Trust are
other than first and prior Liens, except to the extent any such Deed
of Trust
expressly recognizes that it is not a first and prior Lien.
4.8 Governmental
and Other Approvals.
To the
extent necessary to be in compliance, comply with all Governmental Requirements
in a timely matter and apply for, obtain and/or maintain in effect, as
applicable, all authorizations, consents, approvals, licenses, qualifications,
exemptions, filings, declarations, and registrations (whether with any
Governmental Authority, securities exchange or otherwise) which are necessary
in
connection with the execution, delivery and/or performance by any Loan
Party of
any Loan Document to which it is a party, specifically including, but
not
limited to, the entitlements necessary to develop the Mortgaged
Property.
4.9 Insurance.
Each
Borrower shall obtain and maintain or cause to be obtained and maintained
at
such Borrower’s sole expense with respect to the portions of the Mortgaged
Property owned by it: (a) all-risk property insurance with respect to
all
insurable Mortgaged Property, if any, against loss or damage by fire,
lightening, windstorm, explosion, hail, tornado and such hazards as are
presently included in so-called “all-risk” coverage and against such other
insurable hazards as Bank may reasonably require, in an amount not less
than
100% of the full replacement cost, including the cost of debris removal,
without
deduction for depreciation and sufficient to prevent Borrowers or Bank
from
becoming a coinsurer; (b) if and to the extent any insurable Improvements
are in
a special flood hazard area, a flood insurance policy in an amount equal
to the
lesser of the principal balance of the Indebtedness or the maximum amount
available or the replacement cost of the insurable Mortgaged Property;
(c)
commercial general public liability insurance, on an “occurrence” basis, for the
benefit of Borrowers with Bank named as loss payee in respect to the
Land and
Improvements; (d) statutory worker’s compensation insurance with respect to any
work on or about the Mortgaged Property; and (e) such other insurance
on the
insurable Mortgaged Property as may from time to time be reasonably required
by
Bank and against other insurable hazards or casualties which at the time
are
commonly insured against in the case of premises similarly situated,
due regard
being given to the height, type, construction, location, use and occupancy
of
buildings and improvements. All insurance policies shall be issued and
maintained by insurers, in amounts, with deductibles, and in form reasonably
satisfactory to Bank, and shall require not less than fifteen (15) days’ prior
written notice to Bank of any cancellation or material change of coverage.
All
insurance policies maintained, or caused to be maintained, by a Borrower
with
respect to any of the Mortgaged Property shall provide that each such
policy
shall be primary without right of contribution from any other insurance
that may
be carried by such Borrower or Bank and that all of the provisions thereof,
except the limits of liability, shall operate in the same manner as if
there
were a separate policy covering each insured. If any insurer which has
issued a
policy of title, hazard, liability or other insurance required pursuant
to this
Agreement or any other Loan Document becomes insolvent or the subject
of any
bankruptcy, receivership or similar proceeding or if Bank, in good faith,
believes that the financial responsibility of such insurer is or becomes
inadequate, the applicable Borrower shall, in each instance, promptly,
upon the
request of Bank and at such Borrower’s expense, obtain and deliver to Bank a
certificate of insurance issued by another insurer, which insurer and
policy
meet the requirements of this Agreement or such other Loan Document,
as the case
may be and shall furnish a copy of the policy upon Bank’s request. Without
limiting the discretion of Bank with respect to required endorsements
to
insurance policies, all such policies for loss of or damage to the Mortgaged
Property shall contain a standard mortgage clause (without contribution)
naming
Bank as mortgagee with loss proceeds payable to Bank notwithstanding
(i) any
act, failure to act or negligence of or violation of any warranty, declaration
or condition contained in any such policy by any named insured; (ii)
the
occupation or use of the Mortgaged Property for purposes more hazardous
than
permitted by the terms of any such policy; (iii) any foreclosure or other
similar action by Bank under the Loan Documents; or (iv) any change in
title to
or ownership of the Mortgaged Property or any portion thereof, such proceeds
to
be held for application as provided in the Loan Documents. The originals
of each
initial insurance policy (or to the extent permitted by Bank, a copy
of the
original policy and a satisfactory certificate of insurance) shall be
delivered
to Bank at the time of execution of this Agreement, with no delinquent
premium
payments, and each renewal certificate shall be delivered to Bank prior
to the
expiration of the policy it renews or replaces with no delinquent premium
payments; provided that all insurance premiums shall be prepaid on an
annual
basis. Borrower shall pay all premiums on policies required hereunder
as they
become due and payable. If any loss occurs at any time when Borrower
has failed
to perform any Borrower’s covenants and agreements in this Paragraph, Bank shall
nevertheless be entitled to the benefit of all insurance covering the
loss and
held by or for all Borrowers, to the same extent as if it had been made
payable
to Bank. Upon any foreclosure hereof or transfer of title to the Mortgaged
Property in extinguishment of the whole or any part of the Indebtedness,
all of
Borrowers’ right, title and interest in and to the insurance policies referred
to in this Paragraph (including unearned premiums) and all proceeds payable
thereunder shall thereupon vest in the purchaser at foreclosure or other
such
transferee, to the extent permissible under such policies. Bank shall
have the
right (but not the obligation) to make proof of loss for, settle and
adjust any
claim under, and receive the proceeds of, all insurance for loss of or
damage to
the Mortgaged Property, and the expenses incurred by Bank in the adjustment
and
collection of insurance proceeds shall be a part of the Indebtedness,
shall be
due and payable to Bank on demand and shall bear interest from the date
paid by
Bank until reimbursed at the highest rate of interest applicable to any
of the
Indebtedness (but not in excess of the highest rate permitted by applicable
law). Bank and Bank’s employees are each irrevocably appointed attorney-in-fact
for Borrowers and are authorized to adjust and compromise each loss without
the
consent of Bank, to collect, receive and receipt for all insurance proceeds
in
the name of Bank and/or Borrowers, and to endorse Borrowers’ name upon any check
in payment of the loss. Bank shall not be, under any circumstances, liable
or
responsible for failure to collect or exercise diligence in the collection
of
any of such proceeds or for the obtaining, maintaining or adequacy of
any
insurance or for failure to see to the proper application of any amount
paid
over to any Borrower.
4.10 Compliance
with ERlSA.
In the
event that any Loan Party or any of its Subsidiaries maintain(s) or
establish(es) a Pension Plan subject to ERISA, (a) comply in all material
respects with all requirements imposed by ERISA as presently in effect
or
hereafter promulgated, including, but not limited to, the minimum funding
requirements thereof; (b) promptly notify Bank upon the occurrence of
a
“reportable event” or “prohibited transaction” within the meaning of ERlSA, or
that the PBGC or any Loan Party has instituted or will institute proceedings
to
terminate any Pension Plan, together with a copy of any proposed notice
of such
event which may be required to be filed with the PBGC; and (c) furnish
to Bank
(or cause the plan administrator to furnish Bank) a copy of the annual
return
(including all schedules and attachments) for each Pension Plan covered
by
ERlSA, and filed with the Internal Revenue Service by any Loan Party
not later
than thirty (30) days after such report has been so filed.
4.11 Environmental
Covenants.
(a) Comply
with all applicable Environmental Laws in all material respects, including,
but
not limited to, the demolition of any existing house or other buildings,
in
accordance with Texas Department of Health Regulations, and maintain
all
permits, licenses and approvals required under applicable Environmental
Laws,
where the failure to do so could have a Material Adverse Effect. Further,
Borrower acknowledges that certain petroleum hydrocarbons have been released
from Exxon and Shell Oil pipelines located on or in the vicinity of the
Land,
and in the event the subsurface soil affected by such releases on the
Land are
to be disturbed, Borrower will take such health and safety measures as
necessary
to protect any person coming into contact with such releases, and all
impacted
soil resulting from site excavations will be disposed of in accordance
with
applicable regulations.
(b) Promptly
notify Bank, in writing, as soon as any Borrower becomes aware of any
condition
or circumstance which makes any of the environmental representations
or
warranties set forth in this Agreement or any other Loan Document incomplete,
incorrect or inaccurate in any material respect as of any date; and promptly
provide to Bank, immediately upon receipt thereof, copies of any material
correspondence, notice, pleading, citation, indictment, complaint, order,
decree, or other document from any source asserting or alleging a violation
of
any Environmental Laws by any Loan Party, or of any circumstance or condition
which requires or may require, a financial contribution by any Loan Party,
or a
clean-up, removal, remedial action or other response by or on behalf
of any Loan
Party, under applicable Environmental Law(s), or which seeks damages
or civil,
criminal or punitive penalties from any Loan Party or any violation or
alleged
violation of Environmental Law(s).
(c) Borrower
hereby agrees to indemnify, defend and hold Bank, and any of Bank’s past,
present and future officers, directors, shareholders, employees, representatives
and consultants, harmless from any and all claims, losses, damages, suits,
penalties, costs, liabilities, obligations and expenses (including, without
limitation, reasonable legal expenses and attorneys’ fees, whether inside or
outside counsel is used) incurred or arising out of any claim, loss or
damage of
any property, injuries to or death of any persons, contamination of or
adverse
effects on the environment, or other violation of any applicable Environmental
Law(s), in any case, caused by any Loan Party or in any way related to
any
property owned or operated by any Loan Party or due to any acts of any
Loan
Party or any of its officers, directors, shareholders, employees, consultants
and/or representatives, INCLUDING
ANY CLAIMS, LOSSES, DAMAGES, SUITS, PENALTIES, COSTS, LIABILITIES, OBLIGATIONS
OR EXPENSES, RESULTING FROM BANK’S OWN NEGLIGENCE; PROVIDED HOWEVER, THAT THE
FOREGOING INDEMNIFICATION SHALL NOT BE APPLICABLE, AND BORROWER SHALL
NOT BE
LIABLE FOR ANY SUCH CLAIMS, LOSSES, DAMAGES, SUITS, PENALTIES, COSTS,
LIABILITIES, OBLIGATIONS OR EXPENSES, TO THE EXTENT (BUT ONLY TO THE
EXTENT) THE
SAME ARISE OR RESULT FROM ANY GROSS NEGLIGENCE OR WILLFUL MISCONDUCT
OF BANK OR
ANY OF ITS AGENTS OR EMPLOYEES.
4.12 Bank’s
Expenses.
Pay or
reimburse to Bank on demand all costs and expenses of Bank, including,
without
limitation, reasonable attorneys’ fees and legal expenses, incurred in
connection with the preparation, execution, delivery, administration
and
performance of the Loan Documents, the Mortgaged Property, and the transactions
contemplated by this Agreement including, without limitation, title insurance
and examination charges, survey costs, insurance premiums, filing and
recording
fees, attorneys’ fees and expenses, and other expenses payable to third parties
incurred by Bank in connection with the consummation of the transactions
contemplated by this Agreement.
4.13 Surveys.
Furnish
Bank from time to time at the request of Bank but no more often than
once per
year, at Borrowers’ expense recertified and updated Surveys of the Primary
Collateral. All Surveys shall be in form and substance reasonably acceptable
to
Bank.
4.14 Estoppel
Certificates.
Deliver
to Bank, within ten (10) days after request therefor, estoppel certificates
or
written statements, duly acknowledged, stating to Borrowers’ knowledge after
diligent inquiry, the amount that has then been advanced to Borrowers
under this
Agreement, the amount due on the Note, and whether any offsets or defenses
exist
against the Note or any of the other Loan Documents.
4.15 Personalty
and Fixtures.
Deliver
to Bank, on demand, any contracts, bills of sale, statements, receipted
vouchers
or agreements under which any Borrower claims title to any items of personal
property incorporated in any Improvements or subject to the lien of any
of the
Deeds of Trust or to the security interest of any of the Security
Agreements.
4.16 Leases.
Deliver
to Bank executed copies of all Leases; and all said Leases will contain
a
written provision reasonably acceptable to Bank whereby all rights of
the tenant
in the Lease and the Mortgaged Property are subordinated to the liens
and
security interests granted in the Loan Documents. Furthermore, if requested
by
Bank, Borrowers shall cause to be executed and delivered to Bank a
Subordination, Non-Disturbance and Attornment Agreement, in form and
substance
reasonably acceptable to Bank, relating to each Lease and fully executed
by
Bank, Borrowers and such tenant.
4.17 Approval
to Lease Required.
Borrowers will obtain the prior written consent of Bank as to the form
and
substance of each proposed Lease specifically including, but not limited
to, any
ground lease transaction, and of each prospective tenant prior to entering
into
any such Lease, which approval will not be unreasonably withheld, conditioned
or
delayed.
4.18 Brokers.
Pay all
fees, commissions and other compensation payable to all brokers, if any,
involved in this transaction at or prior to the disbursement of the Initial
Advance, except for any brokers expressly contracted with by Bank. Borrowers
hereby agree to indemnify and hold harmless Bank from and against any
loss,
damage, expense or claims of brokers (except for brokers expressly contracted
with by Bank) arising by reason of the execution hereof or the consummation
of
the transactions contemplated hereby, including but not limited to, any
transactions involving or relating to any Lease.
4.19 Appraisals.
Supply
Bank, at Borrowers’ expense, with new or recertified Appraisals from time to
time upon Bank’s request; provided, (i) such Appraisals shall be updated at
least one time every two (2) years and (ii) so long as no Default or
Event of
Default shall have occurred and be continuing, Borrowers shall not be
obligated
to pay for any such Appraisals more frequently than once during any calendar
year; subject, however, to the updated information regarding reconciliation
of
value as may be required by Bank in connection with a Partial Release,
as more
fully set forth in Addendum
3.
Without
limiting the foregoing in any manner, Borrower may, from time to time
and at its
cost and expense, and without affecting Bank's right to require any updated
Appraisal pursuant to this Section
4.19,
obtain
and deliver to Bank new Appraisals or updates of existing Appraisals,
provided
such Appraisals comply with the requirements of this Agreement, for the
purposes
of updating the Borrowing Base Limitation.
4.20 Financial
Covenants.
Maintain compliance with the following financial covenants on a consolidated
basis:
(a) Maintain
a Tangible Net Worth at all times of not less than $80,000,000.00.
(b) Maintain
a minimum Debt-to-Tangible Net Worth Ratio at all times of
not
more than 1.5 to 1.
The
foregoing covenants shall be (i) computed on a consolidated basis, (ii)
tested
at the end of each calendar quarter, (iii) and certified to in the Compliance
Certificate required to be delivered to Bank pursuant to Section
4.3(i)
above.
4.21 FAAM
Loan.
Stratus
previously obtained the FAAM Loan, which is an unsecured loan from one
or more
affiliates of First American Asset Management ("FAAM")
in a
principal amount not to exceed $10,000,000.00. Borrowers hereby represent
and
warrant that the following terms, covenants and restrictions have been
satisfied
and complied with at all times to date and shall continue to be satisfied
and
complied with throughout the term of the FAAM Loan until the Loan has
been
repaid in full and all other obligations of Borrowers under the Loan
Documents
have been fully satisfied: (i) neither the stated principal amount of
the FAAM
Loan, nor the outstanding principal balance of the Holiday Loan, shall
at any
time exceed $10,000,000; (ii) the proceeds of the FAAM Loan shall be
used only
for general corporate purposes of Stratus, including the use of such
proceeds
for the purpose of repurchasing the common stock of Stratus; (iii) the
FAAM Loan
is not and shall at no time be secured by any of the real property or
other
collateral securing the Loan or otherwise be secured by any Liens in
contravention of any terms or provisions in this Agreement (including,
without
limitation, Section
5.5
hereof),
or any of the other Loan Documents; (iv) Bank’s rights to receive, use and apply
any and all proceeds and other amounts as set forth in Sections
2.18
and
2.19
of
Addendum
2
and
elsewhere in this Agreement shall continue in full force and effect and
shall
not be affected in any manner by the FAAM Loan, and FAAM (and any subsequent
holder of the FAAM Loan) shall have no rights to the receipt of any such
proceeds, and Borrowers shall not utilize any of such proceeds for repayment
of
or application to any of the indebtedness evidenced by the FAAM Loan;
(v)
without the prior written approval of Bank, no proceeds of the Loan shall
be
used by Borrowers to repay any principal or other amounts then outstanding
under
the FAAM Loan, except that proceeds of the Loan may be used by Borrowers
for the
repayment of ordinary interest then due and payable under the FAAM Loan
so long
as no Event of Default or Default exists and is continuing under this
Agreement
or the other Loan Documents; and (vi) the promissory note, loan agreement
and
other loan documents (if any) executed in connection with the FAAM Loan
shall
not, without Bank’s written consent, be amended or modified in any manner that
(a) conflicts with any of the foregoing terms, covenants and restrictions,
(b)
increases the principal amount of the FAAM Loan to more than $10,000,000.00,
or
(c) would cause a default or an event of default under this Agreement
or any of
the other Loan Documents. Borrowers shall promptly provide Bank with
a copy of
any notice of default received by Stratus or Borrowers from FAAM (or
the then
holder of the FAAM Loan) or delivered by Stratus or Borrowers to FAAM
(or the
then holder of the FAAM Loan), in connection with the FAAM Loan. Any
failure of
Borrowers or the FAAM Loan to comply with any of the foregoing conditions,
covenants and restrictions set forth in items (i) through (vi) above
shall be an
Event of Default under this Agreement and the other Loan Documents. Any
default
or event of default under the FAAM Loan which continues beyond any applicable
grace or cure period thereunder shall also constitute an Event of Default
under
the Loan Agreement (and the other Loan Documents.
| SECTION 5. |
NEGATIVE
COVENANTS
|
Each
Borrower covenants and agrees that, so long as Bank is committed to make
any
Advance or issue any Letter of Credit under this Agreement and until
all
instruments and agreements evidencing any Loan which is payable on demand
or
which conditions Advances upon the Bank’s discretion are fully discharged and
terminated and, thereafter, so long as any Indebtedness remains outstanding,
it
will not, and it will not allow any Loan Party within its control to,
without
the prior written consent of the Bank:
5.1 Capital
Structure, Business Objects or Purpose.
Purchase, acquire or redeem any of its equity ownership interests, or
enter into
any reorganization or recapitalization or reclassify its equity ownership
interests, or make any material change in its capital structure or general
business objects or purpose. Notwithstanding the foregoing, Borrowers
may
repurchase up to $10,000,000.00 of the outstanding common stock of Stratus
(which amount is inclusive of common stock previously repurchased as
of the date
hereof, which amount is approximately $3,550,000).
5.2 Mergers
or Dispositions.
Change
its name, enter into any merger or consolidation, whether or not the
surviving
entity thereunder, or sell, lease, transfer, relocate or dispose of all,
substantially all, or any material part of its assets (whether in a single
transaction or in a series of transactions), except as expressly permitted
under
this Agreement or the other Loan Documents.
5.3 Guaranties.
Guarantee, endorse, or otherwise become secondarily liable for or upon
the
obligations or Debt of others (whether directly or indirectly),
except:
(a) guaranties
in favor of and satisfactory to Bank;
(b) endorsements
for deposit or collection in the ordinary course of business; and
(c) guaranties
of carve-outs of non-recourse liabilities in connection with permanent
financing
of projects owned by Subsidiaries of Borrowers (collectively, the "Guaranties
of Non-Recourse Carve-Out Liabilities").
5.4 Debt.
Become
or remain obligated for any Debt, except:
(a) Indebtedness
and other Debt from time to time outstanding and owing to Bank;
(b) other
than the FAAM Loan, unsecured trade, utility or non-extraordinary accounts
payable arising in the ordinary course of business and other unsecured
Debt of
Borrowers or the Loan Parties on a Consolidated basis at any one time
not to
exceed $500,000.00;
(c) except
for the Guaranties of Non-Recourse Carve-Out Liabilities and any guaranties
for
the benefit of Bank with regard to other loans to Subsidiaries of Borrowers
or
any other Loan Party, contingent liabilities of Borrowers on a Consolidated
basis at any one time not to exceed $20,000,000.00;
(d) Debt
of a
Related Party but only to the extent of the lesser of seventy-five percent
(75%)
of the appraised value of the real estate project owned by such Related
Party or
eighty percent (80%) of the total costs associated with the real estate
project
owned by such Related Party;
(e) Debt
subordinated to the prior payment in full of the Indebtedness upon terms
and
conditions approved in writing by Bank;
(f) Debt
outstanding as of the date hereof that is shown on the Financial Statements
previously delivered to Bank; and
(g) Debt
of
Loan Party to any other Loan Party.
5.5 Encumbrances.
Create,
incur, assume or suffer to exist any Lien upon, or create, suffer or
permit to
exist any Lien upon any of its property or assets, whether now owned
or
hereafter acquired, except for Permitted Encumbrances.
5.6 Acquisitions.
Except
as expressly permitted under this Agreement, purchase or otherwise acquire
or
become obligated for the purchase of all or substantially all of the
assets or
business interests of any Person or any shares of stock or other ownership
interests of any Person or in any other manner effectuate or attempt
to
effectuate an expansion of present business by acquisition.
5.7 Dividends.
Declare
or pay dividends on, or make any other distribution (whether by reduction
of
capital or otherwise) in respect of any shares of its capital stock or
other
ownership interests, including but not limited to dividends payable by
Stratus
or any dividends payable solely in stock except (a) dividends payable
by a
Subsidiary of a Borrower to a Borrower or by the Subsidiary of another
Loan
Party to such other Loan Party; or (b) the redemption, repurchase or
acquisition
of any shares of its capital stock payable upon an employee’s termination
pursuant to its employee stock option, repurchase, or similar plan; provided,
however, that after giving effect to such redemption, repurchase or acquisition,
such Borrower or such other Loan Party, as applicable, shall be in full
compliance with the terms of this Agreement.
5.8 Investments.
Except
as otherwise permitted in Section
2.17
of
Addendum
2,
make or
allow to remain outstanding any investment (whether such investment shall
be of
the character of investment in shares of stock, evidences of indebtedness
or
other securities or otherwise) in, or any loans, advances or extensions
of
credit to, any Person, other than:
(a) Each
Borrower’s current ownership in its respective Subsidiaries and Related Parties;
and
(b) Acquisition
of a new Subsidiary in connection with the acquisition of additional
land which
otherwise qualifies for a Section 2.17 acquisition as provided in Section
2.17
of
Addendum
2
hereof;
and
(c) any
investment in direct obligations of the United States of America or any
agency
thereof, or in certificates of deposit issued by Bank, maintained consistent
with a Borrower’s or such Subsidiary’s business practices prior to the date
hereof; provided, that no such investment shall mature more than ninety
(90)
days after the date when made or the issuance thereof.
5.9 Transactions
with Affiliates.
Enter
into any transaction with any of their stockholders, officers, employees,
partners or any of their Affiliates or Related Parties, except subject
to the
terms hereof, transactions in the ordinary course of business and on
terms not
less favorable than would be usual and customary in similar transactions
between
Persons dealing at arm’s length, or transfer any assets to any Related Party
which is not a Borrower hereunder without Bank’s prior consent.
5.10 Defaults
on Other Obligations.
Fail to
perform, observe or comply duly with any covenant, agreement or other
obligation
to be performed, observed or complied with by any Loan Party, subject
to any
grace or cure periods provided therein, which failure could have a Material
Adverse Effect.
5.11 Prepayment
of Debt.
Use
proceeds of the Loan to prepay (or take any actions which impose an obligation
to prepay) any Debt, except the Indebtedness, taxes, trade debt of Borrowers
incurred in the ordinary course of business and for the other purposes
set forth
in Section
2.4
of
Addendum
2
hereof.
5.12 Pension
Plans.
Except
in compliance with this Agreement, enter into, maintain, or make contribution
to, directly or indirectly, any Pension Plan that is subject to
ERISA.
5.13 Subordinate
Indebtedness.
Subordinate any indebtedness due to it from any Person to indebtedness
of other
creditors of such Person.
5.14 No
Further Negative Pledges.
Other
than the FAAM Loan, enter into or become subject to any agreement (other
than
this Agreement or the Loan Documents) (a) prohibiting the guaranteeing
by any
Loan Party of any obligations, (b) prohibiting the creation or assumption
of any
Lien upon the properties or assets of any Loan Party, whether now owned
or
hereafter acquired or (c) requiring an obligation to become secured (or
further
secured) if another obligation is secured or further secured.
5.15 No
License Restrictions.
Permit
any restriction in any license or other agreement that restricts any
Borrower or
any other Loan Party from granting a Lien to Bank upon any of any Borrower’s or
such other Loan Party’s rights under such license or agreement.
5.16 No
Transfers to Related Parties.
Transfer or permit any transfer of any assets of any Borrower to any
Related
Party for non-project related purposes.
5.17 Change
in Management.
Not
permit any change in the management of Borrowers, unless such change
in
management is the result of a replacement for normal attrition, retirement,
death or incapacity and within a reasonable period following such change,
Borrowers have provided for the replacement of such manager to Bank’s reasonable
satisfaction; provided, further, Borrowers shall promptly notify Bank
in writing
of the occurrence of any change in the management of any Borrower.
| SECTION 6. |
EVENTS
OF DEFAULT
|
6.1 Events
of Default.
The
occurrence or existence of any one or more of the following conditions
or events
shall constitute an “Event
of Default”
hereunder:
(a) Non-payment
of any principal, interest or other sum due under the terms of this Agreement,
the Note, or under any other Loan Document when due in accordance with
the terms
hereof or thereof, which non-payment continues for five (5) days beyond
its due
date.
(b) Default
by any Borrower in the observance or performance of any of the other
conditions,
covenants or agreements of Borrowers set forth in this Agreement or under
any
other Loan Document, which default continues for thirty (30) days following
the
date on which written notice is delivered by Bank to Borrower with respect
to
such default or event of default; provided, however, that such thirty
(30) day
period will be extended for up to ninety (90) days in Bank’s sole discretion so
long as a Borrower commences to cure such default during such thirty
(30) day
period and thereafter diligently prosecutes such cure to
completion.
(c) Any
representation or warranty made by any Loan Party in any Loan Document
shall be
untrue or incorrect in any material respect; provided that it will not
be an
Event of Default hereunder if (i) Borrower believed that any such representation
or warranty was true when made, (ii) such representation or warranty
is
susceptible of being cured and made true and correct and (iii) within
thirty
(30) days after receipt of written notice Borrower takes whatever action
is
required so that such representation or warranty is made true and correct
within
such thirty (30) day period.
(d) Any
default by any Loan Party, in the payment of any Debt (other than Debt
owing to
Bank) in an individual amount of $50,000.00 or greater, or in an aggregate
amount exceeding $100,000.00, or in the material observance or performance
of
any conditions, covenants or agreements related or given with respect
thereto
and, in each such case, continuation thereof beyond any applicable grace
or cure
period.
(e) Any
default by Stratus or any Borrower under the FAAM Loan which continues
beyond
any applicable grace or cure period.
(f) The
rendering of one or more judgments or decrees for the payment of money,
against
any Loan Party, and such judgment(s) or decree(s) has not been vacated,
bonded
or stayed, by appeal or otherwise, for a period of sixty (60) consecutive
days
after the date of final entry.
(g) The
failure by any Loan Party, to meet the minimum funding requirements under
ERISA
with respect to any Pension Plan established or maintained by it; the
occurrence
of any “reportable event”, as defined in ERISA, which could constitute grounds
for termination by the PBGC of any Pension Plan or for the appointment
by the
appropriate United States District Court of a trustee to administer such
Pension
Plan, and such reportable event is not corrected and such determination
is not
revoked within sixty (60) days after notice thereof has been given to
the plan
administrator or any Loan Party, as the case may be; or the institution
of any
proceedings by the PBGC to terminate any such Pension Plan or to appoint
a
trustee by the appropriate United States District Court to administer
any such
Pension Plan.
(h) If
any
Loan Party, becomes insolvent or generally fails to pay, or admits in
writing
its inability to pay, its debts as they mature, or applies for, consents
to, or
acquiesces in the appointment of a trustee, receiver, liquidator, conservator
or
other custodian for any Loan Party, or a substantial part of its property,
or
makes a general assignment for the benefit of creditors; or in the absence
of
such application, consent or acquiescence, a trustee, receiver, liquidator,
conservator or other custodian is appointed for any Loan Party, or for
a
substantial part of its property, and the same is not discharged within
sixty
(60) days; or any bankruptcy, reorganization, debt arrangement, or other
proceedings under any bankruptcy or insolvency law, or any dissolution
or
liquidation proceeding, is instituted by or against any Loan Party, and,
if
instituted against any Loan Party, the same is consented to or acquiesced
in by
any such Loan Party or otherwise is not dismissed for sixty (60) days;
or any
warrant of attachment is issued against any substantial part of the property
of
any Loan Party, which is not released within thirty (30) days of service
thereof.
(i) If
any
Loan Document shall be terminated, revoked, or otherwise rendered void
or
unenforceable, in any case, without Bank’s prior written consent and Borrower
fails to re-execute same within five (5) days of written notice requesting
same.
(j) Any
Borrower shall dissolve, terminate or liquidate, or merge with or be
consolidated into any other entity without Bank’s prior written
consent.
(k) Without
the Bank’s prior written consent, any 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 Lien with respect to the Mortgaged
Property, or any portion thereof, other than the Permitted Encumbrances
and, in
the case of non-consensual Liens, such Borrower fails to cure same or
bond
around such lien in accordance with applicable Governmental Requirements
and
otherwise in a manner acceptable to Bank within forty-five (45) days
from the
date incurred.
(l) Except
as
otherwise expressly permitted under the Loan Documents, any Borrower
sells,
conveys, transfers or assigns all or any portion of the Mortgaged Property
other
than to a Loan Party and the Mortgaged Property remains subject to the
Lien in
favor of the Bank.
(m) There
is
a transfer, sale, assignment or conveyance of any beneficial interest
in any
Borrower or any entity that directly or indirectly holds a beneficial
interest
in any Borrower, except for Permitted Dispositions.
(n) Any
Borrower abandons all or any portion of the Mortgaged Property.
(o) The
construction of a Calera Court House is, at any time, (i) discontinued
for
a period of twenty (20) or more consecutive days after commencement of
construction thereof, or (ii) not completed within 30 days after
the
Completion Date applicable to such Calera Court House, or the Calera
Court House
Borrower is unable to satisfy any condition precedent to its right to
receive
Advances, after Acceptance, for the construction of a Calera Court House
for a
period in excess of thirty (30) days after Bank's refusal to make any
further
Advances. Notwithstanding the foregoing, so long as no other Event of
Default
exists and is continuing, no Event of Default under this subsection shall
exist
due to the Calera Court Borrower's failure to commence, continue or complete
construction of a Calera Court House or satisfy any condition to Calera
Court
Borrower's right to receive Advances hereunder within the time periods
provided
for in this Agreement to the extent, and only to the extent, the failure
to do
so is due to an act of force majeure if (i) the Calera Court Borrower
has given
Bank written notice of the act of force majeure within fifteen (15) days
after
the event occurs and (ii) the Calera Court Borrower continues to use
its
commercially reasonable best efforts to recommence its performance whenever
and
to whatever extent possible without delay, including through the use
of
alternate sources, work around plans or other means. In no event, however,
shall
any one or more acts of force majeure (i) extend the Completion Date
for a
Calera Court House by more than a total of ninety (90) days or (ii) extend
the
Maturity Date or any date on which payment of any of the Indebtedness
is
due.
(p) Bank
deems itself insecure, believing in good faith that the prospect of payment
or
performance of any of the Indebtedness is impaired.
6.2 Remedies
Upon Event of Default.
Upon
the occurrence and at any time during the existence or continuance of
any Event
of Default, but without impairing or otherwise limiting the Bank’s right to
demand payment of all or any portion of the Indebtedness which is payable
on
demand, at Bank’s option, Bank may give notice to Borrowers declaring all or any
portion of the Indebtedness remaining unpaid and outstanding, whether
under the
Note or otherwise, to be due and payable in full without presentation,
demand,
protest, notice of dishonor, notice of intent to accelerate, notice of
acceleration or other notice of any kind, all of which are hereby expressly
waived, whereupon all such Indebtedness shall immediately become due
and
payable. Furthermore, upon the occurrence of a Default or Event of Default
and
at any time during the existence or continuance of any Default or Event
of
Default, but without impairing or otherwise limiting the right of Bank,
if
reserved under any Loan Document, to make or withhold financial accommodations
at its discretion, to the extent not yet disbursed, any commitment by
Bank to
make any further Advances to Borrowers or issue any further Letters of
Credit
for any Borrower's account under this Agreement shall automatically terminate;
provided, should such Default or Event of Default be cured to Bank’s
satisfaction, Bank may, but shall be under no obligation to, reinstate
any such
commitment by written notice to Borrowers. Notwithstanding the foregoing,
in the
case of an Event of Default under Section
6.1(i),
and
notwithstanding the lack of any notice, demand or declaration by Bank,
the
entire Indebtedness remaining unpaid and outstanding shall become automatically
due and payable in full, and any commitment by Bank to make any further
Advances
to Borrowers or issue any further Letters of Credit for any Borrower's
account
shall be automatically and immediately terminated, without any requirement
of
notice or demand by Bank upon Borrowers, each of which are hereby expressly
waived by Borrowers. Bank may, without waiving any Default or Event of
Default,
advance Loan proceeds to correct Borrowers’ violation giving rise to the Event
of Default. Any Loan proceeds so advanced will either, at Bank’s option, be
evidenced by the Note or constitute Indebtedness of Borrowers to Bank
payable on
demand, bearing interest at the Default Rate from the date advanced by
Bank. All
such demand indebtedness will be a part of the Indebtedness and will
be secured
by the liens and security interests of the Loan Documents. Each Loan
Party that
is a partnership agrees that Bank is not required to comply with Section
3.05(d)
of the Texas Revised Partnership Act and agrees that Bank may proceed
directly
against one or more general (but not limited) partners or their property
without
first seeking satisfaction from partnership property. The foregoing rights
and
remedies are in addition to any other rights, remedies and privileges
Bank may
otherwise have or which may be available to it, whether under this Agreement,
any other Loan Document, by law, or otherwise.
6.3 Setoff.
In
addition to any other rights or remedies of Bank under any Loan Document,
by law
or otherwise, upon the occurrence and during the continuance or existence
of any
Event of Default, Bank may, at any time and from time to time, without
notice to
Borrowers (any requirements for such notice being expressly waived by
Borrowers), setoff and apply against any or all of the Indebtedness (whether
or
not then due), any or all deposits (general or special, time or demand,
provisional or final) at any time held by Borrowers and other indebtedness
at
any time owing by Bank to or for the credit or for the account of Borrowers,
and
any property of Borrowers, from time to time in possession or control
of Bank,
irrespective of whether or not Bank shall have made any demand hereunder
or for
payment of the Indebtedness and although such obligations may be contingent
or
unmatured, and regardless of whether any Mortgaged Property then held
by Bank is
adequate to cover the Indebtedness. The rights of Bank under this Section
are in
addition to any other rights and remedies (including, without limitation,
other
rights of setoff) which Bank may otherwise have. Borrowers hereby grant
Bank a
Lien on and security interest in all such deposits, indebtedness and
other
property as additional collateral for the payment and performance of
the
Indebtedness.
6.4 Waiver
of Certain Laws.
To the
extent permitted by applicable law, Borrowers hereby agree to waive,
and do
hereby absolutely and irrevocably waive and relinquish, the benefit and
advantage of any valuation, stay, appraisement, extension or redemption
laws now
existing or which may hereafter exist, which, but for this provision,
might be
applicable to any sale made under the judgment, order or decree of any
court, on
any claim for interest on the Note, or to any security interest or other
Lien
contemplated by or granted under or in connection with this Agreement
or the
Indebtedness.
6.5 Waiver
of Defaults.
No
Default or Event of Default shall be waived by Bank except in a written
instrument specifying the scope and terms of such waiver and signed by
an
authorized officer of Bank, and such waiver shall be effective only for
the
specific time(s) and purpose(s) given. No single or partial exercise
of any
right, power or privilege hereunder, nor any delay in the exercise thereof,
shall preclude other or further exercise of Bank’s rights. No waiver of any
Default or Event of Default shall extend to any other or further Default
or
Event of Default. No forbearance on the part of Bank in enforcing any
of Bank’s
rights or remedies under any Loan Document shall constitute a waiver
of any of
its rights or remedies. Borrowers expressly agree that this Section may
not be
waived or modified by Bank by course of performance, estoppel or
otherwise.
6.6 Receiver.
In any
action or suit to foreclose upon any of the Mortgaged Property, Bank
shall be
entitled, without notice or consent, and completely without regard to
the
adequacy of any security for the Indebtedness, to the appointment of
a receiver
of the business and premises in question and of the rents and profits
derived
therefrom. This appointment shall be in addition to any other rights,
relief or
remedies afforded Bank. Such receiver, in addition to any other rights
to which
he shall be entitled, shall be authorized to sell, foreclose or complete
foreclosure on Mortgaged Property for the benefit of Bank, pursuant to
provisions of applicable law.
6.7 Discretionary
Credit and Credit Payable Upon Demand.
To the
extent that any of the Indebtedness shall, at anytime, be payable upon
demand,
nothing contained in this Agreement, or any other Loan Document, shall
be
construed to prevent Bank from making demand, without notice and with
or without
reason, for immediate payment of all or any part of such Indebtedness
at any
time or times, whether or not a Default or Event of Default has occurred
or
exists. In the event that such demand is made in accordance with the
Loan
Documents upon any portion of the Indebtedness and Borrower fails to
meet any
such demand within any applicable cure periods, the Bank, at its election,
may
terminate any commitment by Bank to make any further Advances to Borrowers
or
issue any further Letters of Credit for any Borrower's account under
this
Agreement or otherwise. Furthermore, to the extent any Loan Document
authorizes
the Bank, at its discretion, to make or to decline to make financial
accommodations to the Borrowers, nothing contained in this Agreement
or any
other Loan Document shall be construed to limit or impair such discretion
or to
commit or otherwise obligate the Bank to make any such financial
accommodation.
6.8 Application
of Proceeds of Mortgaged Property.
Notwithstanding anything to the contrary set forth in any Loan Document,
during
the existence of any Event of Default, the proceeds of any of the Mortgaged
Property, together with any offsets, voluntary payments, and any other
sums
received or collected in respect of the Indebtedness, may be applied
in such
order and manner as determined by Bank in its sole and absolute
discretion.
| SECTION 7. |
BANK’S
DISCLAIMERS - BORROWERS’
INDEMNITIES
|
7.1 No
Obligation by Bank.
Bank
has no liability or obligation whatsoever or howsoever in connection
with any of
the Mortgaged Property, and has no obligation except to disburse the
proceeds of
the Loan as herein agreed.
7.2 No
Obligation by Bank to Operate.
Any
term or condition of any of the Loan Documents to the contrary notwithstanding,
Bank 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 any Loan Party. Any
term or
condition of the Loan Documents which permits Bank to disburse funds,
whether
from the proceeds of the Loan or otherwise, or to take or refrain from
taking
any action with respect to any Loan Party, the Mortgaged Property or
any other
collateral for repayment of the Loan, shall be deemed to be solely to
permit
Bank to audit and review the management, operation and conduct of the
business
and affairs of any Loan Party, and to maintain and preserve the security
given
by Borrowers to Bank for the Loan, and may not be relied upon by any
other
person. Further, Bank 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 any Loan Party and no term or condition of the Loan Documents, shall
be
construed otherwise. Borrowers, jointly and severally, hereby indemnify
and
agree to hold Bank harmless from and against any cost, expense or liability
incurred or suffered by Bank as a result of any assertion or claim of
any
obligation or responsibility of Bank for the management, operation and
conduct
of the business and affairs of any Borrower or any other Loan Party,
or as a
result of any assertion or claim of any liability or responsibility of
Bank for
the payment or performance of any Indebtedness or obligation of any Borrower
or
any other Loan Party.
7.3 Indemnity
by Borrowers.
Borrowers, jointly and severally, hereby indemnify Bank and each affiliate
thereof and their respective officers, directors, employees, attorneys
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, INCLUDING
WITHOUT LIMITATION, ANY CLAIMS, LOSSES, COSTS, DAMAGES, LIABILITIES,
OBLIGATIONS, AND EXPENSES RESULTING FROM BANK’S OWN NEGLIGENCE, EXCEPT AND TO
THE EXTENT, BUT ONLY TO THE EXTENT, CAUSED BY BANK’S GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT.
Without
intending to limit the remedies available to Bank 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 Bank in connection with, relating or pertaining to,
or
arising out of the transactions contemplated by this Agreement, which
Bank
reasonably believes might involve or lead to some liability of Bank,
Borrowers
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, Borrowers 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. Bank may,
in its
sole but reasonable discretion, make any payments sustained or incurred
by
reason of any of the foregoing; and Borrowers shall immediately upon
receipt of
notice repay to Bank, in cash, the amount of such payment, with interest
thereon
at the Maximum Lawful Rate from the date of such payment. Bank shall
have the
right to join Borrowers, or any of them, as a party defendant in any
legal
action brought against Bank, and Borrowers hereby consent to the entry
of an
order making Borrowers, or any of them, a party defendant to any such
action.
7.4 No
Agency.
Nothing
herein shall be construed as making or constituting Bank as the agent
of any
Loan Party in making payments pursuant to any construction contracts
or
subcontracts entered into by any Loan Party for construction of the Improvements
or otherwise. The purpose of all requirements of Bank hereunder is solely
to
allow Bank to check and require documentation (including, but not limited
to,
lien waivers) sufficient to protect Bank and the Loan contemplated
hereby.
7.5 Assignment
of Reimbursables and Assignment of Partnership Interests.
As
additional security for the Loan, Borrowers or certain Loan Parties have
transferred and assigned to Bank all of Borrowers’ right, title and interest in
and to certain reimbursements and credits due Borrowers from various
municipal
utility districts and cities, certain management and other fees, and
certain
partnership interests, all as more fully set forth in the Assignment
of
Reimbursables and Other Fees and in the Assignment of Partnership Interests
now
or hereafter executed by certain of the Borrowers (collectively, the
“Assignments”).
Any
default which remains uncured beyond an grace or cure period under the
Assignments shall also constitute an Event of Default hereunder. Said
Assignments shall inure to the benefit of Bank and its successors and
assigns,
any purchaser upon foreclosure of any of the Deeds of Trust, any receiver
in
possession of the Mortgaged Property and any corporation affiliated with
Bank
which assumes Bank’s rights and obligations under this Agreement.
| SECTION 8. |
MISCELLANEOUS
|
8.1 Taxes
and Fees.
Unless
otherwise prohibited by applicable law, should any tax (other than a
tax based
upon the net income of Bank) or recording or filing fee become payable
in
respect of any Loan Document, any of the Mortgaged Property, any of the
Indebtedness or any amendment, modification or supplement hereof or thereof,
Borrowers agree to pay such taxes (or reimburse Bank therefor upon demand
for
reimbursement), together with any interest or penalties thereon, and
agrees to
hold Bank harmless with respect thereto.
8.2 Governing
Law.
Each
Loan Document shall be deemed to have been delivered in the State of
Texas, and
shall be governed by and construed and enforced in accordance with the
laws of
the State of Texas, except to the extent that the Uniform Commercial
Code, other
personal property law or real property law of another jurisdiction where
Mortgaged Property is located is applicable, and except to the extent
expressed
to the contrary in any Loan Document. Whenever possible, each provision
of this
Agreement shall be interpreted in such manner as to be effective and
valid under
applicable law, but if any provision of this Agreement shall be prohibited
by or
invalid under applicable law, such provision shall be ineffective to
the extent
of such prohibition or invalidity, without invalidating the remainder
of such
provision or the remaining provisions of this Agreement.
8.3 Audits
of Mortgaged Property; Fees.
Bank
shall have the right from time to time to audit the Mortgaged Property,
provided
that such audits will be conducted no more than one (1) time in any calendar
year unless an Event of Default has occurred. Borrowers agree to reimburse
Bank,
on demand, for customary and reasonable fees and costs incurred by Bank
for such
audits and financial analysis and examination of Borrowers or any other
Loan
Party performed from time to time.
8.4 Costs
and Expenses.
Borrowers shall pay Bank, on demand, all costs and expenses, including,
without
limitation, reasonable attorneys’ fees and legal expenses (whether inside or
outside counsel is used), incurred by Bank in perfecting, revising, protecting
or enforcing any of its rights or remedies against any Loan Party or
any
Mortgaged Property, or otherwise incurred by Bank in connection with
any Default
or Event of Default or the enforcement of the Loan Documents or the
Indebtedness. Following Bank’s demand upon Borrowers for the payment of any such
costs and expenses, and until the same are paid in full, the unpaid amount
of
such costs and expenses shall constitute Indebtedness and shall bear
interest at
the Default Rate.
8.5 Notices.
All
notices and other communications provided for in any Loan Document (unless
otherwise expressly stipulated therein) or contemplated thereby, given
thereunder or required by law to be given, shall be in writing (unless
expressly
provided to the contrary). If personally delivered, such notices shall
be
effective when delivered, and in the case of mailing or delivery by overnight
courier, such notices shall be effective when placed in an envelope and
deposited at a post office or official depository under the exclusive
care and
custody of the United States Postal Service or delivered to an overnight
courier, postage prepaid, in each case addressed to the parties as set
forth on
the signature page of this Agreement, or to such other address as a party
shall
have designated to the other in writing in accordance with this Section.
In the
case of mailing, the mailing shall be by certified or first class mail.
Except
as specifically set forth to the contrary herein, in a Deed of Trust
or in any
other Loan Document, the giving of at least five (5) days’ notice before Bank
shall take any action described in any notice shall conclusively be deemed
reasonable for all purposes; provided, that this shall not be deemed
to require
Bank to give such five (5) days’ notice, or any notice, if not specifically
required to do so in this Agreement.
8.6 Further
Action.
Borrowers, from time to time, upon written request of Bank, will promptly
make,
execute, acknowledge and deliver, or cause to be made, executed, acknowledged
and delivered, all such further and additional instruments, and promptly
take
all such further action as may be reasonably required to carry out the
intent
and purpose of the Loan Documents, and to provide for the Loan thereunder
and
payment of the Note, according to the intent and purpose therein
expressed.
8.7 Successors
and Assigns; Participation.
This
Agreement shall be binding upon and shall inure to the benefit of Borrowers
and
Bank and their respective successors and assigns. The foregoing shall
not
authorize any assignment or transfer by any Borrower of any of its respective
rights, duties or obligations hereunder, such assignments or transfers
being
expressly prohibited. Bank, however, may freely assign, whether by assignment,
participation or otherwise, its rights and obligations hereunder, and
is hereby
authorized to disclose to any such assignee or participant (or proposed
assignee
or participant) any financial or other information in its knowledge or
possession regarding any Loan Party or the Indebtedness.
8.8 Indulgence.
No
delay or failure of Bank in exercising any right, power or privilege
hereunder
or under any of the Loan Documents shall affect such right, power or
privilege,
nor shall any single or partial exercise thereof preclude any further
exercise
thereof, nor the exercise of any other right, power or privilege available
to
Bank. The rights and remedies of Bank hereunder are cumulative and are
not
exclusive of any rights or remedies of Bank.
8.9 Amendment
and Waiver.
No
amendment or waiver of any provision of any Loan Document, or consent
to any
departure by any Loan Party therefrom, shall in any event be effective
unless
the same shall be in writing and signed by Bank, and then such waiver
or consent
shall be effective only in the specific instance(s) and for the specific
time(s)
and purpose(s) for which it is given.
8.10 Severability.
In case
any one or more of the obligations of any Loan Party under any Loan Document
shall be invalid, illegal or unenforceable in any jurisdiction, the validity,
legality and enforceability of the remaining obligations of such Loan
Party
shall not in any way be affected or impaired thereby, and such invalidity,
illegally or unenforceability in one jurisdiction shall not affect the
validity,
legality or enforceability of the obligations of such Loan Party under
any Loan
Document in any other jurisdiction.
8.11 Headings
and Construction of Terms.
The
headings of the various subsections hereof are for convenience of reference
only
and shall in no way modify or affect any of the terms or provisions hereof.
Where the context herein requires, the singular number shall include
the plural,
and any gender shall include any other gender.
8.12 Independence
of Covenants.
Each
covenant hereunder shall be given independent effect so that if a particular
action or condition is not permitted by any such covenant, the fact that
it
would be permitted by an exception to, or would be otherwise within the
limitations of, another covenant shall not avoid the occurrence of any
Default
or Event of Default.
8.13 Reliance
on and Survival of Various Provisions.
All
terms, covenants, agreements, indemnities, representations and warranties
of any
Loan Party made in any Loan Document, or in any certificate, report,
financial
statement or other document furnished by or on behalf of any Loan Party
in
connection with any Loan Document, shall be deemed to have been relied
upon by
Bank, notwithstanding any investigation heretofore or hereafter made
by Bank or
on Bank’s behalf, and those covenants and agreements of Borrowers set forth in
Sections
4.7,
4.11,
4.18,
7.2
and
7.3
hereof
(together with any other indemnities of Borrowers contained elsewhere
in any
Loan Document) shall survive the termination of this Agreement and the
repayment
in full of the Indebtedness.
8.14 Effective
Upon Execution.
This
Agreement shall become effective upon the execution hereof by Bank and
Borrowers, and shall remain effective until the Indebtedness under this
Agreement and the Note and the related Loan Documents shall have been
repaid and
discharged in full and no commitment to extend any credit hereunder (whether
optional or obligatory) remains outstanding.
8.15 No
Third Party Beneficiaries.
The
benefits of this Agreement shall not inure to any third party. This Agreement
shall not be construed to make or render Bank liable to any materialmen,
subcontractors, contractors, laborers or others for goods and materials
supplied
or work and labor furnished in connection with any of the Mortgaged Property
or
for debts or claims accruing to any such persons or entities against
any
Borrower. Bank shall not be liable for the manner in which any Advances
under
this Agreement maybe applied by Borrowers. 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
Bank, 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 Borrowers. Without
limiting
the generality of the foregoing, Advances made to any Person pursuant
to any
requests for Advances, whether or not such request is required to be
approved by
Borrowers, shall not be deemed a recognition by Bank of a third-party
beneficiary status of any such person or entity.
8.16 Complete
Agreement: Conflicts.
The
Loan Documents contain the entire agreement of the parties thereto, and
none of
the parties shall be bound by anything not expressed in writing. In the
event
that and to the extent that any of the terms, conditions or provisions
of any of
the other Loan Documents are inconsistent with or in conflict with any
of the
terms, conditions or provisions of this Agreement, the applicable terms,
conditions and provisions of this Agreement shall govern and
control.
8.17 Exhibits
and Addenda and Schedules.
The
following Addenda and Exhibits and Schedules are attached to this Agreement
and
are incorporated into this Agreement by this reference and made a part
hereof
for all purposes:
Addenda:
Addendum
1 - Defined
Terms Addendum
Addendum
2 - Loan
Terms, Conditions and Procedures Addendum
Addendum
3 - Release
Provisions
Addendum
3-1 - Schedule
of Appraised Value
Exhibits:
Exhibit
A - Primary
Collateral
Exhibit
B
- Other
Collateral
Exhibit
C
- Form
of
Borrowing Base Certificate
Exhibit
D
- MUD
Reimbursables
Exhibit
E - Request
for Advance
Exhibit
F - Form
of
Compliance Certificate
Schedules:
Schedule
3.5 - Subsidiaries
Schedule
3.10 - Material
Litigation
Schedule
3.14 - Employee
Benefit Plans
Schedule
3.16 - Environmental
Disclosures
Schedule
3.19 - Equity
Ownership
8.18 ORAL
AGREEMENTS INEFFECTIVE.
THIS
AGREEMENT AND THE OTHER “LOAN AGREEMENTS” (AS DEFINED IN SECTION 26.02(A)(2) OF
THE TEXAS BUSINESS & COMMERCE CODE, AS AMENDED) REPRESENT THE FINAL
AGREEMENT BETWEEN THE PARTIES, AND THIS AGREEMENT AND THE OTHER WRITTEN
LOAN
AGREEMENTS MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS
OR
SUBSEQUENT ORAL AGREEMENTS BETWEEN THE PARTIES. THERE ARE NO UNWRITTEN
ORAL
AGREEMENTS BETWEEN THE PARTIES.
Remainder
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Page Follows
WITNESS
the due execution hereof as of the day and year first above
written.
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BANK:
COMERICA
BANK
By:
/s/ Xxxxx Xxxxxxx
Name: Xxxxx
Xxxxxxx
Title: Vice
President
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BORROWERS:
a
Delaware corporation
By:
/s/ Xxxx X. Xxxxx
Xxxx
X. Xxxxx, Senior Vice President
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|
|
Bank’s
Address:
0000
Xxx Xxxxxx, 0xx
Xxxxx
Xxxxxx,
Xxxxx 00000
Mail
Code 6504
Xxxxxx,
Xxxxx 00000-0000
Attn:
Xxxxx Xxxxx
Telefax
No.: (000) 000-0000
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STRATUS
PROPERTIES OPERATING CO., L.P., a
Delaware limited partnership
By:
STRS
L.L.C., a Delaware limited liability company, General Partner
By Stratus
Properties Inc., a Delaware corporation, Sole Member
By:
/s/ Xxxx X. Xxxxx
Xxxx
X. Xxxxx,
Senior
Vice President
|
|
|
Borrowers’
Address:
00
Xxx Xxxxxxx Xxxx., Xxxxx 000
Xxxxxx,
Xxxxx 00000
Attn:
Xxxxxxx X. Xxxxxxxxx, III
Telefax
No.: (000) 000-0000
|
CIRCLE
C LAND, L.P.,
a
Texas limited partnership
By:
Circle
C GP, L.L.C., a Delaware limited liability company, General
Partner
By Stratus
Properties Inc., a Delaware corporation, Sole Member
By:
/s/ Xxxx X. Xxxxx
Xxxx
X. Xxxxx,
Senior
Vice President
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|
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AUSTIN
290 PROPERTIES, INC.,
a
Texas corporation
By:
/s/ Xxxx X. Xxxxx
Xxxx
X. Xxxxx, Senior Vice President
|
The
undersigned, Calera Court, L.P., hereby executes the Agreement to evidence
its
agreement to be bound by the provisions of Article 4 of Addendum 2 attached
to
this Agreement, and its obligation and liability for that portion of
the
Indebtedness under the Calera Court Construction Loan.
CALERA
COURT, L.P. a
Texas
limited partnership
|
By:
|
Calera
Court Management, L.L.C., a Texas limited liability company,
its general
partner
|
|
By:
|
Stratus
Properties Operating Co., L.P., a Delaware limited partnership,
its
Manager
|
|
By:
|
STRS
L.L.C., a Delaware limited liability company, its general
partner
|
|
By:
|
Stratus
Properties Inc., a Delaware corporation, its
Manager
|
By:
/s/ Xxxx X. Xxxxx
Xxxx X. Xxxxx,
Senior Vice President
ADDENDUM
1
DEFINED
TERMS ADDENDUM
| SECTION 1. |
DEFINITIONS
|
1.1 Defined
Terms.
As used
in this Agreement, the following terms shall have the following respective
meanings:
"Acceptance"
means
Bank's agreement, to be provided or denied in Bank's sole discretion
as provided
herein, to fund construction of a proposed Calera Court House pursuant
to an
Approved Budget.
“Acceptance
Termination Date” shall
mean the date which is twelve (12) months prior to the Maturity Date,
as such
date may be extended from time to time.
“Accounts,”“Chattel
Paper,”“Documents”,
“Fixtures,”“General
Intangibles,”“Goods,”“Instruments”
and
“Inventory”
shall
have the respective meanings assigned to them in the UCC on the date
of this
Agreement.
“Advance” shall
mean a disbursement by Bank, whether by journal entry, deposit to Borrower’s
account, check to third party or otherwise of any of the proceeds of
the Loan or
any insurance proceeds.
“Affiliate”
shall
mean, when used with respect to any Person, any other Person which, directly
or
indirectly, controls or is controlled by or is under common control with
such
Person. For purposes of this definition, “control” (including, with correlative
meanings, the terms “controlled by” and “under common control with”), with
respect to any Person, shall mean possession, directly or indirectly,
of the
power to generally direct or cause the direction of the management and
policies
of such Person, whether through the ownership of voting securities, by
contract
or otherwise.
"Affiliate
Receivables"
shall
mean, as of any time of determination, any amounts in respect of loans
or
advances owing to Borrower or another Loan Party from any of its Subsidiaries
or
Affiliates at such time.
“Agreement”
shall
mean this Loan Agreement; including the Defined Terms Addendum, the Loan
Terms,
Conditions and Procedures Addendum, and the Partial Release Addendum,
together
with all exhibits and schedules, as it may be amended from time to
time.
"Allocations"
means
the amounts allocated for each stage of construction of a Calera Court
House, as
set forth in the Approved Budget for such Calera Court House for which
Advances
of Loan proceeds will be made.
“Appraisals”
shall
mean appraisals prepared and obtained at Borrowers’ expense covering the Primary
Collateral in form and content and conducted and prepared by one or more
appraisers reasonably acceptable to Bank. Each Appraisal shall comply
with all
appraisal requirements of Bank and any Governmental Authority having
jurisdiction over Bank.
"Approved
Budget"
means
the budget for a Calera Court House, once such budget has been agreed
to and
accepted in writing by Bank; which Approved Budget shall be in form and
substance acceptable to Bank in Bank's reasonable discretion.
"Approved
Sales Contract"
means a
bona fide, legally binding, enforceable contract for the sale of a Calera
Court
House, between the Calera Court Borrower, as seller, and a third party
unrelated
to the Calera Court Borrower, as buyer, with respect to which (i) the
form
and substance of such contract of sale shall have been previously approved
in
writing by Bank, (ii) a non-refundable xxxxxxx money deposit in
an amount
not less than $5,000.00 has been delivered to either an independent escrow
agent
or to the Calera Court Borrower to be deposited into a segregated account
used
solely for xxxxxxx money deposits under sales contracts, and (iii) unless
such contract contemplates a cash only purchase, such buyer has
(A) submitted a fully completed mortgage loan application to a
qualified
single-family mortgage lender for the financing of the acquisition of
such
Calera Court House, (B) such single-family mortgage lender has
given its
written pre-approval of such mortgage loan application, and (C) such
buyer
has, to date, fully satisfied any and all other conditions of the Calera
Court
Borrower as specified in such contract of sale. Notwithstanding the foregoing,
if such pending sale is not an all cash acquisition, then if within forty-five
(45) days after the date of such contract of sale, the buyer has not
received a
final, binding mortgage loan commitment from a qualified single-family
mortgage
lender for the financing of the acquisition of such Calera Court House,
then
such contract of sale shall thereafter not be deemed to constitute an
Approved
Sales Contract until such commitment has been secured.
"Approved
Work"
means
only labor and materials furnished in connection with construction of
any Calera
Court House in accordance with the corresponding Approved Budget, subject
however to change orders made in compliance with this Agreement.
“Assignment
of Reimbursables and Other Fees”
shall
mean the Assignment of Reimbursables and Other Fees of even date herewith
executed by Borrowers and assigning to Bank all reimbursements, credits,
receivables and proceeds due to any Borrower including, but not limited
to, the
MUD Reimbursables, the Credit Banks, all utility reimbursements, fees
for
property management, commission fees and other fee income as more specifically
set forth therein.
“Assignment
of Partnership Interest”
shall
mean, collectively, all Assignments of Partnership Interests now or hereafter
executed by a Loan Party in favor of Bank, assigning to Bank their respective
partnership interests in the joint ventures or partnerships more fully
described
therein.
“Bankruptcy
Code”
shall
mean Title 11 of the United States Code, as amended, or any successor
act or
code.
“Borrowing
Base Limitation”
shall
mean the sum of:
(a) forty-five
percent (45%) of the fair market value of the Primary Collateral which
is
unimproved real property (except for any portions which are covered by
other
subsections in the definition of Borrowing Base Limitation set forth
below), as
indicated by Appraisals delivered to and accepted by Bank pursuant to
Section
4.19
hereof;
(b) seventy-five
percent (75%) of the fair market value of the Developed Lots, as indicated
by
Appraisals delivered to and accepted by Bank pursuant to Section
4.19
hereof;
(c) with
respect to portions of the Land which are currently being developed into
single-family residential lots (but which are not yet fully Developed
Lots), the
lesser of (x) seventy-five percent (75%) of the fair market value of
such Land
(as if improved and developed), as indicated by Appraisals delivered
to and
accepted by Bank pursuant to Section
4.19
hereof
or (y) an amount equal to the sum of (1) the discounted fair market value
of the
Land plus (2) the hard and soft cost of all improvements made to the
Land as of
the date of determination of the Borrowing Base Limitation;
(d) seventy-five
percent (75%) of the Credit Bank Value;
(e) fifty
percent (50%) of the MUD Reimbursables Value;
(f) eighty
percent (80%) of the appraised value of Calera Court Pre-Sold Houses;
and
(g) seventy-five
percent (75%) of the appraised value of the Calera Court Spec Houses
and Calera
Court Model Houses; provided, however, (i) the value of a Calera Court
Spec
House included in the Borrowing Base Limitation shall decrease by ten
percent
(10%) after the first anniversary of the Acceptance of such Calera Court
Spec
House, and the value of a Calera Court Spec House included in the Borrowing
Base
Limitation after the expiration of the final Curtailment Period for such
Calera
Court Spec House shall be reduced to zero; and (ii) the value of a Calera
Court
Model House shall decrease by ten percent (10%) on each anniversary of
the
Acceptance of such Calera Court Model House commencing on the second
(2nd)
anniversary date hereof, and the value of a Calera Court Model House
included in
the Borrowing Base Limitation after the expiration of the final Curtailment
Period for such Calera Court Model House shall be reduced to zero.
Notwithstanding the foregoing, in the event that a Calera Court Spec
House or
Calera Court Model House does not qualify for an extension of a Curtailment
Period, then the value of such Calera Court Spec House or Calera Court
Model
House included in the Borrowing Base Limitation shall be zero.
“Business
Day”
shall
mean any day, other than a Saturday, Sunday or holiday, on which the
Bank is
open to carry on all or substantially all of its normal commercial lending
business in Dallas, Texas.
"Calera
Court Borrower"
means
Calera Court, L.P.
"Calera
Court Construction Loan"
means
that portion of the Loan allocated for the construction of single family
residences on the Calera Court Lots as provided in this Agreement; provided,
the
amount outstanding under the Calera Court Construction Loan, plus any
unfunded
commitment thereunder pursuant to Approved Budgets, shall not exceed
$3,000,000
in any event.
"Calera
Court House"
means a
Developed Lot and an Improvement constructed thereon consisting of a
single-family residence pursuant to the Calera Court Construction Loan
which has
not been sold. A Calera Court House is sometimes referred to as a "House"
under
Article
4
of
Addendum
2
of this
Agreement.
"Calera
Court Lots"
means
that certain property described on Exhibit
A
as the
Calera Court Lots and which is owned by the Calera Court Borrower, and
which
property is legally described as Units 1 through 17, together with the
undivided
interest in and the General and Limited Common Elements appurtenant thereto,
of
Calera Court Condominiums, a condominium project in Xxxxxx County, Texas,
according to the Declaration of Condominium of record under Document
No.
2003111246 of the Official Public Records of Xxxxxx County, Texas, except
for
Unit 16 which has been previously developed and sold by the Calera Court
Borrower.
"Calera
Court Model Houses"
means a
Calera Court House that is to be, has been, or is in the process of being,
constructed thereon and which at the time of any Advance covering such
Calera
Court House is not the subject of an Approved Sales Contract and is intended
by
the Calera Court Borrower to be furnished and used by the Calera Court
Borrower
for on-site office and/or marketing purposes. A Calera Court Model House
shall
not also be deemed to be a Calera Court Spec House. A Calera Court Model
House
will become and constitute a Calera Court Pre-Sold House when, and for
so long
as, such Calera Court Model House becomes subject to an Approved Sales
Contract.
A Calera Court Model House is referred to as a "Model
House"
under
Article
4
of
Addendum
2
of this
Agreement.
"Calera
Court Pre-Sold House"
means a
Calera Court House which is has been or is in the process of being, constructed
thereon, and which is the subject of an Approved Sales Contract. A Calera
Court
Pre-Sold House is referred to as a "Pre-Sold
House"
under
Article
4
of
Addendum
2
of this
Agreement.
"Calera
Court Spec Houses"
means a
Calera Court House which has been or is in the process of being, constructed
thereon, and which at the time of Acceptance is not the subject of an
Approved
Sales Contract and is not Calera Court Model House. A Calera Court Model
House
shall not be deemed to be a Calera Court Spec House. A Calera Court Spec
House
will become and constitute a Calera Court Pre-Sold House when, and for
so long
as, such Calera Court Spec House becomes subject to an Approved Sales
Contract.
A Calera Court Spec House is referred to as a "Spec
House"
under
Article
4
of
Addendum
2
of this
Agreement.
"Calera
Court Sublimit"
means
$3,000,000.00.
"Commencement
Date"
means,
with respect to each Calera Court House, the date on which Approved Work
relating to such Calera Court House is commenced.
“Commitment
Fee”
shall
mean the sum of $24,500 to be paid by Borrowers to Bank pursuant to the
applicable provisions of this Agreement.
"Completion
Date"
means,
with respect to each Calera Court House, the date that is nine (9) months
after
the Commencement Date applicable thereto (subject to extension due to
force
majeure), but in no event beyond the Maturity Date.
“Compliance
Certificate”
shall
mean a certificate to be furnished by Borrowers to Bank, in the form
of
Exhibit
F,
certified by the chief financial officer of Borrowers (or in such officer’s
absence, another responsible officer of Borrowers) pursuant to Section
4.3
of this
Agreement, certifying that, as of the date thereof, no Default or Event
of
Default shall have occurred and be continuing, or if any Default or Event
of
Default shall have occurred and be continuing, specifying in detail the
nature
and period of existence thereof and any action taken or proposed to be
taken by
the Borrowers with respect thereto, and also certifying as to whether
Borrowers
are in compliance with the financial covenants contained in Section
4.20
of this
Agreement.
“Consolidated”
or
“consolidated”
shall
mean, when used with reference to any financial term in this Agreement,
the
aggregate for two or more persons of the amounts signified by such term
for all
such persons determined on a consolidated basis in accordance with GAAP.
Unless
otherwise specified herein, references to “consolidated” financial statements or
data of the Borrowers includes consolidation with their respective Subsidiaries
in accordance with GAAP.
"Construction
Costs"
means,
with respect to each Calera Court House, all costs of labor and material,
reasonable architectural, engineering, interior and landscape design,
legal,
consulting and other related fees, taxes on land and improvements, and
bond and
insurance costs and commitment fees, interest and other financing charges,
all
as set forth in an Approved Budget.
“Contested
Item”shall
mean any Lien asserted against all or any portion of the Mortgaged Property
if,
and so long as (i) Borrowers have notified Bank of same within fifteen
(15) days
of obtaining knowledge thereof, (ii) Borrowers shall diligently and in
good
faith contest the same by appropriate legal proceedings which shall operate
to
prevent the enforcement of collection of the same and the sale of the
Mortgaged
Property or any part thereof, to satisfy the same, (iii) pending resolution
of
such Contested Item, Borrowers shall have furnished to Bank a cash deposit
or an
indemnity bond reasonably satisfactory to Bank with a surety reasonably
satisfactory to Bank in the amount of such imposition or lien claim,
plus a
reasonable additional sum to pay all costs, interest and penalties that
may be
imposed or incurred in connection therewith, to ensure payment of the
matters
under contest and to prevent any sale or forfeiture of the Mortgaged
Property or
any part thereof, (iv) Borrowers shall promptly upon final determination
thereof
pay the amount of any such imposition or lien claim so determined, together
with
all costs, interest and penalties which may be payable in connection
therewith,
(v) the failure to pay such imposition or, lien claim does not constitute
a
default under any other deed of trust, mortgage or security interest
covering or
affecting any part of the Mortgaged Property, and (vi) notwithstanding
the
foregoing, Borrowers shall immediately upon request of Bank pay any such
imposition or lien claim notwithstanding such contest if, in the reasonable
opinion of Bank, the Mortgaged Property shall be in jeopardy or in danger
of
being forfeited or foreclosed. Bank may pay over any such cash deposit
or part
thereof to the claimant entitled thereto at any time when, in the reasonable
judgment of Bank, the entitlement of such claimant is established.
"Credit
Banks"
means
the credits to which Borrower is entitled to receive from the City of
Austin
under Article 12 of the Development Agreement, in the original aggregate
face
amount of $15,000,000.
"Credit
Bank Value"
means
the present discounted value of the Credit Banks, using a discount factor
of six
percent (6%). As of June 30, 2005, it is estimated that the Credit Bank
Value is
approximately $6,257,218.
"Curtailment
Period"
means a
period of 12 months from Acceptance of a Calera Court Spec House and
a period of
12 months from Acceptance of a Calera Court Model House; provided,
that,
with respect to a Calera Court House which is still a part of the Mortgaged
Property upon the expiration of the original Curtailment Period, and
further
provided that (i) no Event of Default is then existing, (ii) Lender has
not sent
written notice to Borrower of a Default which has not been cured as of
such
date, and (iii) the Curtailment Period (after giving effect to such extension)
will not expire after the Maturity Date (as may have been extended by
Bank as
provided in Section
1.5
of
Addendum
2
hereof),
then the Curtailment Period shall be automatically extended as follows:
(a) the
Curtailment Period with respect to any Calera Court Spec House shall
be extended
one time for a period of twelve (12) months; and (b) the Curtailment
Period with
respect to any Calera Court Model House shall be extended up to four
(4) times
time for a period of twelve (12) months each.
“Debt”shall
mean, as of any applicable date of determination thereof, all items of
indebtedness, obligation or liability of a Person, whether matured or
unmatured,
liquidated or unliquidated, direct or indirect, absolute or contingent,
joint or
several, that should be classified as liabilities in accordance with
GAAP. In
the case of Borrowers, the term “Debt” shall include, without limitation, the
Indebtedness.
"Debt-to-Tangible
Net Worth Ratio"
shall
mean, with respect to any Person, and as of any applicable date of determination
thereof, the ratio of (a) the total Debt of such Person to (b) the Tangible
Net
Worth of such Person."
“Deeds
of Trust”shall
mean, collectively, all Deeds of Trust now or hereafter executed for
the benefit
of Bank pursuant to which the Land (and any Improvements located thereon)
is
mortgaged to a trustee for the benefit of Bank to secure the Loan.
“Default”shall
mean, any condition or event which, with the giving of notice or the
passage of
time, or both, would constitute an Event of Default.
“Default
Rate”
shall
mean, at any time of determination thereof with respect to the applicable
portion of the Indebtedness, the Maximum Lawful Rate or if no Maximum
Lawful
Rate is in effect, the sum of the Base Rate (as defined in the Note)
plus six
percent (6%).
"Development
Agreement"
means
that certain Development Agreement dated effective as of August 15, 2002
between
the City of Austin and Circle C Land Corp., as may be amended from time
to time.
"Developed
Lots"
means
that portion of the Land which has been developed into single family
residential
lots with all necessary streets, utilities and other infrastructure improvements
and which are ready for resale to builders.
“Disbursement
Date”shall
mean the date upon which Bank makes an Advance of Loan proceeds under
this
Agreement.
“Distribution”shall
mean any dividend on or other distribution (whether by reduction of capital
or
otherwise) with respect to any shares of capital stock (or other ownership
interests), except for dividends from a Subsidiary to its parent.
“Environmental
Law(s)”shall
mean all laws, codes, ordinances, rules, regulations, orders, decrees
and
directives issued by any federal, state, local, foreign or other governmental
or
quasi governmental authority or body (or any agency, instrumentality
or
political subdivision thereof) pertaining to Hazardous Materials or otherwise
intended to regulate or improve health, safety or the environment, including,
without limitation, any hazardous materials or wastes, toxic substances,
flammable, explosive or radioactive materials, asbestos, and/or other
similar
materials; any so-called “superfund” or “superlien” law, pertaining to Hazardous
Materials on or about any of the Mortgaged Property, or any other property
at
any time owned, leased or otherwise used by any Loan Party, or any portion
thereof, including, without limitation, those relating to soil, surface,
subsurface ground water conditions and the condition of the ambient air;
and any
other federal, state, foreign or local statute, law, ordinance, code,
rule,
regulation, order or decree regulating, relating to, or imposing liability
or
standards of conduct concerning, any hazardous, toxic, radioactive, flammable
or
dangerous waste, substance or material, as now or at anytime hereafter
in
effect.
“ERISA”shall
mean the Employee Retirement Income Security Act of 1974, as amended,
or any
successor act or code.
“Event
of Default”shall
mean any of those conditions or events listed in Section
6.1
of this
Agreement.
“Extension
Fee”shall
have the meaning ascribed to such term in Section
1.6(d)
of
Addendum
2
hereof.
“FAAM
Loan”shall
mean the unsecured term debt of Stratus to First American Asset Management
in an
amount not to exceed $10,000,000.00.
“Financing
Statements”
shall
mean the financing statement or financing statements (on Standard Form
UCC-I or
otherwise) executed and delivered by Borrowers in connection with the
Loan
Documents.
“Financial
Statements”
shall
mean all balance sheets, income statements, statements of profit and
loss,
statements of changes in stockholder equity, statements of cash flow
and
contingency obligations and other financial data, statements and reports
(whether of any Borrower, any of their respective Subsidiaries, or any
other
Loan Party or otherwise) which are required to, have been, or may from
time to
time hereafter, be furnished to Bank, for the purposes of, or in connection
with, this Agreement, the transactions contemplated hereby or any of
the
Indebtedness.
“GAAP”
shall
mean generally accepted accounting principles consistently applied.
“Good
Faith”or
“good
faith”shall
have the meaning ascribed to the term “good faith” in Article 1.201 (20) of the
UCC on the date of this Agreement.
“Governmental
Authority”shall
mean the United States, each state, each county, each city, and each
other
political subdivision in which all or any portion of the Mortgaged Property
is
located, and each other political subdivision, agency, or instrumentality
exercising jurisdiction over Bank, any Loan Party or any Mortgaged
Property.
“Governmental
Requirements”shall
mean all laws, ordinances, rules, and regulations of any Governmental
Authority
applicable to any Loan Party, any of the Indebtedness or any Mortgaged
Property.
“Hazardous
Material”shall
mean and include any hazardous, toxic or dangerous waste, substance or
material
defined as such in, or for purposes of, any Environmental Law(s).
“Improvements”shall
mean any buildings, structures or other permanent improvements to or
located on
any of the Land.
“Indebtedness”shall
mean all loans, advances, indebtedness, obligations and liabilities of
any Loan
Party to Bank under any Loan Document, together with all other indebtedness,
obligations and liabilities whatsoever of any Borrower to Bank, whether
matured
or unmatured, liquidated or unliquidated, direct or indirect, absolute
or
contingent, joint or several, due or to become due, now existing or hereafter
arising, voluntary or involuntary, known or unknown, or originally payable
to
Bank or to a third party and subsequently acquired by Bank including,
without
limitation, any late charges, loan fees or charges, overdraft indebtedness,
costs incurred by Bank in establishing, determining, continuing or defending
the
validity or priority of any Lien or in pursuing any of its rights or
remedies
under any Loan Document or in connection with any proceeding involving
Bank as a
result of any financial accommodation to any Borrower; debts, obligations
and
liabilities for which any Borrower would otherwise be liable to the Bank
were it
not for the invalidity or enforceability of them by reason of any bankruptcy,
insolvency or other law or for any other reason, and reasonable costs
and
expenses of attorneys and paralegals, whether any suit or other action
is
instituted, and to court costs if suit or action is instituted, and whether
any
such fees, costs or expenses are incurred at the trial court level or
on appeal,
in bankruptcy, in administrative proceedings, in probate proceedings
or
otherwise; provided that the term Indebtedness shall not include any
consumer
loan to the extent treatment of such loan as part of the Indebtedness
would
violate any Governmental Requirement.
“Initial
Advance”shall
mean the Advance to be made at the time Borrowers satisfy the conditions
set
forth in Section
2.13
of
Addendum
2.
"Inspecting
Person"
means a
person designated by Bank from time to time who may inspect the Calera
Court
Houses from time to time for the sole benefit of Bank.
“Land”shall
mean the tracts of real property owned by any Loan Party, whether designated
as
Primary Collateral, Other Collateral or a Related Party Asset.
"LC
Collateral" has
the
meaning ascribed to such term in Section
3.6(a)
of
Addendum
2
hereof.
“Leases”
shall
mean all written leases or rental agreements, if any, by which any Borrower,
as
landlord, grants to a tenant a leasehold interest in all or any portion
of the
Land or Improvements.
"Letter
of Credit" shall
mean a letter of credit issued by the Bank for the account of and/or
upon the
application of any Loan Party in accordance with this Agreement, as such
Letter
of Credit may be amended, supplemented, extended or confirmed from time
to
time.
"Letter
of Credit Liabilities"
shall
mean, at any time and in respect of all Letters of Credit, the sum of
(a) the
aggregate amount available to be drawn under all such Letters of Credit
plus (b)
the aggregate unpaid amount of all Matured L/C Obligations then due and
payable
in respect of previous drawings under such Letters of Credit.
“Lien”shall
mean any valid and enforceable interest in any property, whether real,
personal
or mixed, securing an indebtedness, obligation or liability owed to or
claimed
by any Person other than the owner of such property, whether such indebtedness
is based on the common law or any statute or contract and including,
but not
limited to, a security interest, pledge, mortgage, assignment, conditional
sale,
trust receipt, lease, consignment or bailment for security
purposes.
“Loan”shall
mean the Loan made, or to be made, by Bank to or for the credit of Borrowers
in
one or more Advances not to exceed at any one time the Maximum Loan Amount,
pursuant to the Loan Terms, Conditions and Procedures Addendum.
“Loan
Documents”shall
mean collectively, this Agreement, the Note, the Deeds of Trust, the
Security
Agreements, the Financing Statements, any reimbursement agreement or
other
documentation executed in connection with any Letter of Credit, and any
other
documents, instruments or agreements evidencing, governing, securing,
guaranteeing or otherwise relating to or executed pursuant to or in connection
with any of the Indebtedness or any Loan Document (whether executed and
delivered prior to, concurrently with or subsequent to this Agreement),
as such
documents may have been or may hereafter be amended from time to
time.
“Loan
Party”shall
mean each Borrower, each of their respective Subsidiaries (whether or
not a
party to any Loan Document) and each other Person who or which shall
be liable
for the payment or performance of all or any portion of the Indebtedness
or who
or which shall own any property that is subject to (or purported to be
subject
to) a Lien which secures all or any portion of the Indebtedness.
“Material
Adverse Effect”shall
mean any act, event, condition or circumstance which could be expected
to
materially and adversely affect the business, operations, condition (financial
or otherwise), performance or assets of any Loan Party, the ability of
any Loan
Party to perform its obligations under any Loan Document to which it
is a party
or by which it is bound or the enforceability of any Loan Document.
“Material
Litigation”shall
mean any existing or threatened action, suit or litigation reported or
required
by applicable law to be reported by Stratus in any filing with the Securities
and Exchange Commission and any other action, suit, litigation or proceeding,
at
law or in equity, or before any arbitrator or by or before any Governmental
Authority, pending, or, to the best knowledge of any Borrower, threatened
against or affecting any Loan Party, which has a reasonable prospect
of adverse
determination and, if adversely determined, could reasonably be expected
to
materially impair the right of the Loan Party to carry on its business
substantially as now conducted or could have a Material Adverse
Effect.
"Matured
L/C Obligations"
shall
mean, at any time and in respect of all Letters of Credit, all amounts
paid by
Bank on drafts or demands for payment drawn or made under as purported
to be
under any Letter of Credit, and all other amounts due and owing to Bank
under
any application by any Loan Party for any Letter of Credit to be issued
by Bank
(a “LC
Application”),
to
the extent the same have not been repaid to Bank (with the proceeds of
an
Advance or otherwise).
“Maturity
Date”shall
mean May 30, 2007, or such earlier date on which the entire unpaid principal
amount of the Loan becomes due and payable whether by the lapse of time,
acceleration or otherwise; provided, however, if any such date is not
a Business
Day, then the Maturity Date shall be the next succeeding Business
Day.
“Maximum
Lawful Rate”shall
mean the maximum lawful rate of interest which may be contracted for,
charged,
taken, received or reserved by Bank in accordance with the applicable
laws of
the State of Texas (or applicable United States federal law to the extent
that
it permits Bank to contract for, charge, take, receive or reserve a greater
amount of interest than under Texas law), taking into account all Charges
(defined
as all fees, charges and/or any other things of value, if any, contracted
for,
charged, received, taken or reserved by Bank in connection with the transactions
relating to the Note and the other Loan Documents, which are treated
as interest
under applicable law) made in connection with the transaction evidenced
by the
Note and the other Loan Documents. To the extent that Bank is relying
on Chapter
303 of the Texas Finance Code to determine the Maximum Lawful Rate payable
on
the Indebtedness, Bank will utilize the weekly ceiling from time to time
in
effect as provided in such Chapter 303. To the extent United States federal
law
permits Bank to contract for, charge, take, receive or reserve a greater
amount
of interest than under Texas law, Bank will rely on United States federal
law
instead of such Chapter 303 for the purpose of determining the Maximum
Lawful
Rate. Additionally, to the extent permitted by applicable law, Bank may,
at its
option and from time to time, utilize any other method of establishing
the
Maximum Lawful Rate under such Chapter 303 or under other applicable
law by
giving notice, if required, to Borrower as provided by applicable
law.
“Maximum
Loan Amount”
shall
mean the lesser of (a) $45,000,000 or (b) the Borrowing Base
Limitation.
“Mortgaged
Property”shall
mean the Land, Improvements, MUD Reimbursables, Credit Banks, Stratus’ ownership
interests, direct or indirect, in all Related Parties, and all other
property,
assets and rights in which a Lien or other encumbrance in favor of or
for the
benefit of Bank is or has been granted or arises or has arisen, or may
hereafter
be granted or arise, under or in connection with any Loan Document, or
otherwise, including all other property, assets and rights in which any
Borrower
obtains an ownership interest, directly or indirectly, with proceeds
of the
Loan.
“MUD
Reimbursables”
shall
mean those reimbursements due to any one or more of the Borrowers from
the
Municipal Utility Districts, including, but not limited to, those payments
due
to one or more of the Borrowers from the City of Austin, as more fully
identified in Exhibit
D
attached
hereto.
"MUD
Reimbursables Value"
means
the present discounted value of the MUD Reimbursables owned by Borrower,
using a
discount factor of six percent (6%). As of June 30, 2005, it is estimated
that
the MUD Reimbursables Value is approximately $21,351,333.
"Net
Proceeds"
means
the gross sales proceeds received from the sale of an asset of any Borrower
or
any Related Party which is collateral for the Loan, less only reasonable
closing
costs, surveying costs, title insurance premiums, reasonable attorneys’ fees and
a broker’s commission not to exceed six percent (6.0%), with aggregate
deductions not to exceed eight percent (8%) of the gross sales price
of such
asset.
“Note”shall
mean the Revolving Promissory Note of even date herewith in the original
principal amount of $45,000,000.00 made by Borrowers payable to the order
of the
Bank, as the same may be renewed, extended, modified, increased or restated
from
time to time.
“Other
Collateral”
shall
mean the tracts of Land listed on Exhibit
B,
attached hereto, and no other part or portion of the Mortgaged
Property.
“PBGC”shall
mean the Pension Benefit Guaranty Corporation, or any Person succeeding
to the
present powers and functions of the Pension Benefit Guaranty
Corporation.
“Pension
Plan(s)”shall
mean any and all employee benefit pension plans of Borrower and/or any
of its
Subsidiaries in effect from time to time, as such term is defined in
ERISA.
“Permitted
Disposition”
shall
mean (i) a transfer of a beneficial interest in any Borrower or any entity
holding a direct or indirect interest in any Borrower by any person or
entity
holding such an interest to any other person or entity holding such an
interest
as of the date of this Agreement (the “Interest
Holders”);
(ii)
any transfer of a legal or beneficial interest in any publicly-traded
stock of
Stratus; or (iii) a transfer of a legal or beneficial interest in any
Borrower
or any entity holding a direct or indirect interest in any Borrower for
bona
fide estate planning purposes to: (A) members of such transferor’s immediate
family or (B) a trust, the holders of the beneficial interests of which
are a
current Interest Holder or a member of the Interest Holder’s immediate family;
provided, however, that a Permitted Disposition shall not include any
transfer
or series of transfers which (1) after taking into account any prior
Permitted
Disposition shall result in (x) the proposed transferee owning (directly
or
indirectly) more than 49% of the interests in any Borrower or any entity
holding
a direct or indirect interest in any Borrower unless such transferee
owned more
than 49% of such interests as of the date of this Agreement, or (y) a
transfer
of more than 49% of the interests in any Borrower or any entity holding
a direct
or indirect interest in any Borrower; (2) shall result in a change of
control of
any Borrower or the day to day operations of the Mortgaged Property;
(3) notice
of which has not been given by Borrower to Bank, together with copies
of all
instruments effecting such transfer later than seven (7) Business Days
prior to
the effective date of such transfer (except notice shall not be required
with
respect to any stock of any Borrower publicly traded on a national stock
exchange); or (4) occurs at any time when an Event of Default has occurred
and
remains uncured (except with respect to any stock of any Borrower publicly
traded on a national stock exchange). For the purposes of Permitted
Dispositions, a change of control of any Borrower or any entity holding
a direct
or indirect interest in any Borrower shall be deemed to have occurred
if there
is any change in the identity of the individual or group of individuals
who have
the right, by virtue of the articles of incorporation, articles of organization,
the by-laws or an agreement, with or without taking any formative action,
to
cause such Borrower or such entity to take some action or to block such
Borrower
or such entity from taking some action which, in either case, such Borrower
or
such entity could take or could refrain from taking were it not for the
rights
of such stockholders, partners or members of such Borrower or such entity,
as
the case may be.
“Permitted
Encumbrances”
shall
mean Liens in favor of the Bank, all matters shown on Schedule B of the
Title
Policy, Liens for taxes not yet due and payable, Liens not delinquent
arising in
the ordinary course of business and created by statute in connection
with
worker’s compensation, unemployment insurance, social security and similar
statutory obligations, and Contested Items.
“Person”or
“person”shall
mean any individual, corporation, partnership, joint venture, limited
liability
company, association, trust, unincorporated association, joint stock
company,
government, municipality, political subdivision or agency, or other
entity.
"Plans"
means
the plans and specifications for the construction of each House, prepared
by
Borrower or a design professional and approved by Bank as required herein,
by
all applicable Governmental Authorities, and by any party to a purchase
or
construction contract with a right of approval, and all amendments and
modifications thereof approved in writing by the same.
“Primary
Collateral”shall
mean the tracts of Land listed on Exhibit
A,
attached hereto, and no other part or portion of the Mortgaged Property;
provided, however, the Primary Collateral may be expanded by adding additional
collateral to Exhibit
A
and
obtaining an Appraisal, an environmental audit, Title Policy and other
documents
that may be required by Bank with respect to such additional collateral.
“Related
Party”shall
mean any corporation, partnership, limited liability company or any other
legal
entity in which Stratus owns or holds, directly or indirectly, any legal
or
beneficial ownership interest.
“Related
Party Assets”
shall
mean the assets owned by the Borrower which may be transferred to the
Related
Parties from time to time.
“Release
Provisions”shall
mean the provisions set forth on Addendum
3
attached
hereto.
“Request
for Advance”
shall
mean an oral or written request or authorization for an Advance of Loan
proceeds
which, if made in writing, shall be in the form annexed hereto as Exhibit
E,
or in
such other form as is acceptable to Bank.
"Sales
Contracts"
means
all contracts relating to the sale of Calera Court Houses, including
all
Approved Sales Contracts.
“Section
2.17 Assets”
shall
have the meaning given to the term in Section
2.17
of
Addendum
2.
“Security
Agreement”
means,
collectively, all security agreements executed by Borrowers in favor
of Bank
pursuant to which Borrowers grant a security interest in certain personal
property of Borrowers to Bank.
“Special
Account”
means
the account styled "Stratus Properties Inc. Controlled Disbursement Account",
Account No. 1880671001, or any successor account.
“Subsidiary”
shall
mean as to any particular parent entity, any corporation, partnership,
limited
liability company or other entity (whether now existing or hereafter
organized
or acquired) in which more than fifty percent (50%) of the outstanding
equity
ownership interests having voting rights as of any applicable date of
determination, shall be owned directly, or indirectly through one or
more
Subsidiaries, by such parent entity.
“Surveys”shall
mean a survey of each tract of the Primary Collateral in form and content
reasonably satisfactory and acceptable to the Bank and sufficient to
allow the
Title Company to endorse the standard survey exception in the Title Policy
to
“shortages in area” only.
"Tangible
Net Worth"
shall
mean, with respect to any Person and as of any applicable date of determination,
(a) the net book value of all assets of such Person (excluding Affiliate
Receivables, patent rights, trademarks, trade names, franchises, copyrights,
licenses, goodwill, and all other intangible assets of such Person),
after all
appropriate deductions in accordance with GAAP (including, without limitation,
reserves for doubtful receivables, obsolescence, depreciation and amortization),
less (b) all Debt of such Person at such time.
“Telephone
Notice Authorization”shall
mean an agreement in form satisfactory to Bank authorizing telephonic
and
facsimile notices of borrowing and establishing a codeword system of
identification in connection therewith.
“Title
Company”shall
mean the Title Company (and its issuing agent, inapplicable) issuing
the Title
Policy, which shall be acceptable to Bank in its sole and absolute
discretion.
“Title
Policy”shall
mean the mortgagee policy of title insurance issued by the Title Company,
on a
coinsurance or reinsurance basis (with direct access endorsement or rights)
if
and as required by Bank, in the aggregate maximum amount of $45,000,000.00
insuring that the Deeds of Trust covering the Primary Collateral constitute
valid liens covering the Primary Collateral subject only to those exceptions
which Bank may approve and containing such endorsements as Bank may
require.
“UCC”shall
mean the Uniform Commercial Code as adopted and in force in the State
in which
the Land is located, as amended.
ADDENDUM
2
LOAN
TERMS, CONDITIONS AND PROCEDURES ADDENDUM
| SECTION 1. |
THE
LOAN
|
1.1 Agreements
to Lend.
Bank
hereby agrees to lend to Borrowers up to but not in excess of the Maximum
Loan
Amount, and Borrowers hereby agree to borrow such sums from Bank, all
upon and
subject to the terms and provisions of this Agreement, such sums to be
evidenced
by the Note; provided, however, in no event shall the aggregate outstanding
principal balance of the Loan and any Letters of Credit exceed the Maximum
Loan
Amount. Subject to the terms and provisions of this Agreement and the
other Loan
Documents, principal repaid on the Loan may be reborrowed by Borrowers.
Borrowers’ 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
Borrowers pursuant to the terms of this Agreement and the Note and only
from the
date or dates of such disbursements. Bank may, in Bank’s discretion, disburse
Loan proceeds by journal entry to pay interest and financing costs and
disburse
Loan proceeds directly to third parties to pay costs or expenses required
to be
paid by Borrowers pursuant to this Agreement. Loan proceeds disbursed
by Bank by
journal entry to pay interest or financing costs, and Loan proceeds disbursed
directly by Bank to pay costs or expenses required to be paid by Borrowers
pursuant to this Agreement, shall constitute Advances to Borrowers.
1.2 Advances.
The
proceeds of the Loan shall be disbursed to Borrowers in one or more Advances
provided all applicable conditions to Advances for the Loan set forth
in this
Agreement have been satisfied. Without limiting the foregoing, any Advance
requested by Borrower under the Loans shall be subject to Borrower’s
satisfaction of the terms and conditions set forth in this Addendum
2
(including, if applicable, Section
2.17
(Additional Land Acquisitions)) and in particular shall comply with the
use of
proceeds restrictions set forth in Section
2.4
below.
The Initial Advance shall be used to repay all indebtedness outstanding
under
the Original Credit Agreement on the date of this Agreement.
1.3 Limitation
on Advances.
Under
no circumstances shall Bank be required to disburse any proceeds of the
Note
that would cause the outstanding balance thereof plus the Letter of Credit
Liabilities at any one time to exceed the Maximum Loan Amount or disburse
any
proceeds of the Loan that would cause the aggregate outstanding balance
of the
Loan plus the Letter of Credit Liabilities at any one time to exceed
the Maximum
Loan Amount.
1.4 Regulatory
Restrictions.
Notwithstanding anything in this Agreement or the other Loan Documents
to the
contrary, in no event shall Bank be required to disburse, nor shall Borrowers
be
entitled to demand that Bank disburse, all or any portion of the Loan
if the
amounts of the Loan would, in Bank’s sole and absolute discretion, cause Bank to
exceed the lending limit to a single borrower under any applicable state
or
federal law, regulation or ruling. If Bank determines, in its sole and
absolute
discretion, at any time (including after any portion or all of the Loan
has been
disbursed) that the transactions evidenced by this Agreement and the
other Loan
Documents violates such lending limit restriction, then Bank shall have
the
right to immediately declare the Note to be due and payable and shall
thereafter
have no further obligations to disburse any further proceeds of the Loan.
In
such event, Borrowers shall be required to immediately pay all outstanding
Indebtedness and shall have no further rights and privileges under this
Agreement and the other Loan Documents.
1.5 Repayment
of and Interest on Loan.
The
Indebtedness from time to time outstanding under and evidenced by the
Note shall
bear interest at the applicable rate per annum set forth in the Note
until the
occurrence of an Event of Default and thereafter at the Default Rate
and shall
otherwise be repaid in accordance with the terms of the respective Note.
All
unpaid principal, accrued and unpaid interest and other amounts owing
under the
Note shall be due and payable on the Maturity Date. The Bank shall review
the
Loan each year as of the date which is twelve (12) months prior to the
then
Maturity Date (the "Review
Date"),
as
the Maturity Date may be extended from time to time. In connection with
such
review, Bank will notify Borrower on or about the Review Date of whether
the
Bank will agree to extend the Maturity Date. The determination of whether
to
grant a particular 12 month extension option of the Maturity Date hereunder
shall be in Bank's sole discretion. In the event that Bank elects to
so grant an
option to Borrower to extend the Maturity Date and Borrower exercises
such
option, then at Bank's option, Borrowers shall (i) execute an extension
agreement in form and substance reasonably acceptable to Bank evidencing
such
extension, and (ii) provide an endorsement to the Title Policy in connection
with such extension.
1.6 Fees.
(a) Commitment
Fee.
Borrowers shall pay the Commitment Fee to Bank upon the execution of
this
Agreement and the closing of the Loan as consideration for the increase
in the
amount of the Loan from the amount previously committed by Bank in the
Original
Credit Agreement.
(b) Unused
Commitment Fee.
Borrowers shall pay to Bank an unused commitment fee in an amount equal
to the
product of (a) one-eighth of one percent (.125%) per annum multiplied
by (b) the
difference between (i) the Maximum Loan Amount and (ii) the aggregate
outstanding principal balance of the Loan. Such fee shall be computed
on a daily
basis and shall be payable quarterly in arrears as of the end of each
of
Borrower's fiscal quarters. Bank shall invoice Borrower for such fees,
which
invoice shall be due and payable within fifteen (15) days after
receipt.
(c) Administration
Fee.
Borrowers shall pay an annual upfront administration fee to Bank in the
amount
of $15,000, which fee shall be due and payable on the date of this Agreement
and
on each anniversary date hereof; provided that the administration fee
due and
payable on the date hereof shall be prorated based on the number of months
remaining until the Review Date (i.e., the administration fee due on
the date
hereof shall be $10,000).
(d) Extension
Fee.
In the
event that Borrower exercises an extension option granted by Bank to
extend the
Maturity Date (it being acknowledged that Bank has no obligation to grant
an
extension option), Borrowers shall pay an extension fee (an "Extension
Fee")
in
amount equal to one-fourth of one percent (.25%) of the Maximum Loan
Amount on a
per annum basis for such extension.
| SECTION 2. |
ADVANCES,
PAYMENTS, RECOVERIES AND
COLLECTIONS
|
2.1 Advance
Procedure.
Except
as hereinafter provided, Borrowers may request an Advance by submitting
to Bank
a Request for Advance by an authorized representative of Borrowers, subject
to
the following:
(a) each
such
Request for Advance shall include, without limitation, a report setting
forth
the then current Borrowing Base Limitation substantially in the format
attached
hereto as Exhibit
C,
the
proposed amount of such Advance and the proposed Disbursement Date, which
date
must be a Business Day;
(b) a
Request
for Advance, once communicated to Bank, shall not be revocable by
Borrowers;
(c) each
Request for Advance, once communicated to Bank, shall constitute a
representation, warranty and certification by Borrowers as of the date
thereof
that:
(i) both
before and after the making of such Advance, all of the Loan Documents
are and
shall be valid, binding and enforceable against each Loan Party, as
applicable;
(ii) all
terms
and conditions precedent to the making of such Advance have been satisfied,
and
shall remain satisfied through the date of such Advance;
(iii) the
making of such Advance will not cause the aggregate principal amount
outstanding
on the Note plus the Letter of Credit Liabilities to exceed the Maximum
Loan
Amount;
(iv) no
Default or Event of Default shall have occurred or be in existence, and
none
will exist or arise upon the making of such Advance;
(v) the
representations and warranties contained in this Agreement, and the other
Loan
Documents are true and correct in all material respects and shall be
true and
correct in all material respects as of the making of such Advance;
and
(vi) the
Advance will not violate the terms or conditions of any contract, indenture,
agreement or other borrowing of any Loan Party.
Bank
may
elect (but without any obligation to do so) to make an Advance upon the
telephonic or facsimile request of Borrowers, provided that Borrowers
have first
executed and delivered to Bank a Telephone Notice Authorization. If any
such
Advance based upon a telephonic or facsimile request is made by Borrowers,
Bank
may require Borrowers to confirm said telephonic or facsimile request
in writing
by delivering to Bank, on or before 11:00 a.m. (Dallas, Texas time) on
the next
Business Day following the Disbursement Date of such Advance, a duly
executed
written Request for Advance, and all other provisions of this Section
2.1
shall be
applicable with respect to such Advance. In addition, Borrowers may authorize
the Bank to automatically make Advances pursuant to such other written
agreements as may be entered into by Bank and Borrowers. Except as set
forth in
this Agreement, all Advances are to be made by direct deposit into the
Special
Account.
2.2 Voluntary
Prepayment.
Borrowers may prepay all or part of the outstanding balance under the
Note
(subject to the provisions of the Note regarding a prepayment prior to
the
expiration of the applicable Interest Period for a LIBOR Rate Tranche)
at any
time, without premium, penalty or prejudice to the right of Borrowers
to
reborrow sums of the Loan under the terms of this Agreement, subject
to the
terms and conditions of the Loan Documents.
2.3 Maximum
Loan Amount and Reduction of Indebtedness.
Notwithstanding anything contained in this Agreement to the contrary,
the
principal amount of the Loan at any time outstanding plus the Letter
of Credit
Liabilities shall not exceed the Maximum Loan Amount. If said limitation
is
exceeded at anytime, Borrowers shall immediately, without demand by Bank,
pay to
Bank an amount not less than such excess, or, if Bank, in its sole discretion,
shall so agree, Borrowers shall provide Bank cash collateral in an amount
not
less than such excess, and Borrowers hereby pledge and grant to Bank
a security
interest in such cash collateral so provided to Bank.
2.4 Use
of
Proceeds of Loan.
The
proceeds of the Loan shall be used to fund equity contributions for development
ventures of Borrower, for pre-development and development costs for the
Land,
such as xxxxxxx money deposits, and property improvements in connection
with the
Land and other working capital needs of Borrowers, including corporate
and
project general, administrative and operating costs, stock repurchase
costs (not
to exceed $6,500,000 in the aggregate during the term of the Loan), pursuit
costs, entitlement costs, taxes, business endeavors associated with the
development of commercial and residential real properties, and for land
acquisitions in accordance with the terms of Section
2.17
of this
Addendum.
2.5 Non-Application
of Chapter 346 of Texas Finance Code.
The
provisions of Chapter 346 of the Texas Finance Code are specifically
declared by
the parties not to be applicable to any of the Loan Documents or the
transactions contemplated thereby.
2.6 Place
of Advances.
All
Advances are to be made at the office of Bank, or at such other place
as Bank
may designate.
2.7 Bank’s
Books and Records.
The
amount and date of each Advance hereunder, the amount from time to time
outstanding under the Note, the interest rate in respect of the Loan,
and the
amount and date of any repayment hereunder or under the Note, shall be
noted on
Bank’s books and records, which shall be conclusive evidence thereof, absent
manifest error; provided, however, any failure by Bank to make any such
notation, or any error in any such notation, shall not relieve Borrowers
of
their obligations to pay to Bank all amounts owing to Bank under or pursuant
to
the Loan Documents, in each case, when due in accordance with the terms
hereof
or thereof.
2.8 Payments
on Non-Business Day.
In the
event that any payment of any principal, interest, fees or any other
amounts
payable by Borrowers under or pursuant to any Loan Document shall become
due on
any day which is not a Business Day, such due date shall be extended
to the next
succeeding Business Day, and, to the extent applicable, interest shall
continue
to accrue and be payable at the interest rate set forth in the applicable
Note
for and during any such extension.
2.9 Payment
Procedures.
Unless
otherwise expressly provided in a Loan Document, all sums payable by
Borrowers
to Bank under or pursuant to any Loan Document, whether principal, interest,
or
otherwise, shall be paid, when due, directly to Bank at the office of
Bank
identified on the signature page of this Agreement, or at such other
office of
Bank as Bank may designate in writing to Borrowers from time to time,
in
immediately available United States funds, and without setoff, deduction
or
counterclaim. Bank may, in its discretion, charge any and all deposit
or other
accounts (including, without limitation, any account evidenced by a certificate
of deposit or time deposit) of any Borrower maintained with Bank for
all or any
part of any Indebtedness which is not paid when due and payable; provided,
however, that such authorization shall not affect any Borrower’s obligations to
pay all Indebtedness, when due, whether or not any such account balances
maintained by such Borrower with Bank are insufficient to pay any amounts
then
due.
2.10 Maximum
Interest Rate.
It is
expressly stipulated and agreed to be the intent of Borrower and Bank
at all
times to comply strictly with the applicable Texas law governing the
maximum
rate or amount of interest payable on the Indebtedness (or applicable
United
States federal law to the extent that it permits Bank to contract for,
charge,
take, reserve or receive a greater amount of interest than under Texas
law). If
the applicable law is ever judicially interpreted so as to render usurious
any
amount (i) contracted for, charged, taken, reserved or received pursuant
to the
Note, any of the other Loan Documents or any other communication or writing
by
or between Borrower and Bank related to any of the Indebtedness, (ii)
contracted
for, charged or received by reason of Bank’s exercise of the option to
accelerate the maturity of the Note and/or any other portion of the
Indebtedness, or (iii) Borrower will have paid or Bank will have received
by
reason of any voluntary prepayment by Borrower of the Note and/or any
of the
other Indebtedness, then it is Borrower’s and Bank’s express intent that all
amounts charged in excess of the Maximum Lawful Rate shall be automatically
canceled, ab initio, and all amounts in excess of the Maximum Lawful
Rate
theretofore collected by Bank shall be credited on the principal balance
of the
Note and/or any of the other Indebtedness evidenced by the Loan Documents
(or,
if the Note and all other Indebtedness evidenced by the Loan Documents
have been
or would thereby be paid in full, refunded to Borrower), and the provisions
of
the Note and the other Loan Documents immediately be deemed reformed
and the
amounts thereafter collectible hereunder and thereunder reduced, without
the
necessity of the execution of any new document, so as to comply with
the
applicable law, but so as to permit the recovery of the fullest amount
otherwise
called for hereunder and thereunder; provided, however, if the Note has
been
paid in full before the end of the stated term of the Note, then Borrower
and
Bank agree that Bank shall, with reasonable promptness after Bank discovers
or
is advised by Borrower that interest was received in an amount in excess
of the
Maximum Lawful Rate, either refund such excess interest to Borrower and/or
credit such excess interest against any other Indebtedness then owing
by
Borrower to Bank. Borrower hereby agrees that as a condition precedent
to any
claim seeking usury penalties against Bank, Borrower will provide written
notice
to Bank, advising Bank in reasonable detail of the nature and amount
of the
violation, and Bank shall have sixty (60) days after receipt of such
notice in
which to correct such usury violation, if any, by either refunding such
excess
interest to Borrower or crediting such excess interest against the Note
and/or
other Indebtedness then owing by Borrower to Bank. All sums contracted
for,
charged or received by Bank for the use, forbearance or detention of
any of the
Indebtedness, including any portion of the debt evidenced by the Note
shall, to
the extent permitted by applicable law, be amortized or spread, using
the
actuarial method, throughout the stated term of the Note and/or other
Indebtedness (including any and all renewal and extension periods) until
payment
in full so that the rate or amount of interest on account of the Note
and/or
other Indebtedness does not exceed the Maximum Lawful Rate from time
to time in
effect and applicable to the Note and/or the other Indebtedness for so
long as
any Indebtedness is outstanding.
In
no
event shall the provisions of Chapter 346 of the Texas Finance Code (which
regulates certain revolving credit loan accounts and revolving triparty
accounts) apply to the Note and/or any of the other Indebtedness.
Notwithstanding anything to the contrary contained herein or in any of
the other
Loan Document it is not the intention of Bank to accelerate the maturity
of any
interest that has not accrued at the time of such acceleration or to
collect
unearned interest at the time of such acceleration.
2.11 Receipt
of Payments by Bank.
Any
payment by Borrowers of any of the Indebtedness made by mail will be
deemed
tendered and received by Bank only upon actual receipt thereof by Bank
at the
address designated for such payment, whether or not Bank has authorized
payment
by mail or in any other manner, and such payment shall not be deemed
to have
been made in a timely manner unless actually received by Bank on or before
the
date due for such payment, time being of the essence. Borrowers expressly
assume
all risks of loss or liability resulting from non-delivery or delay of
delivery
of any item of payment transmitted by mail or in any other manner. Acceptance
by
Bank of any payment in an amount less than the amount then due shall
be deemed
an acceptance on account only, and any failure to pay the entire amount
then due
shall constitute and continue to be an Event of Default hereunder. Bank
shall be
entitled to exercise any and all rights and remedies conferred upon and
otherwise available to Bank under any Loan Document upon the occurrence
and
during the continuance of any such Event of Default. Borrower further
agrees
that after the occurrence and during the continuance of any Default Bank
shall
have the continuing exclusive right to apply and to reapply any and all
payments
received by Bank at any time or times, whether as voluntary payments,
proceeds
from any Mortgaged Property, offsets, or otherwise, against the Indebtedness
in
such order and in such manner as Bank may, in its sole discretion, deem
advisable, notwithstanding any entry by Bank upon any of its books and
records.
Borrowers hereby expressly agree that, to the extent that Bank receives
any
payment or benefit of or otherwise upon any of the Indebtedness, and
such
payment or benefit, or any part thereof, is subsequently invalidated,
declared
to be fraudulent or preferential, set aside, or required to be repaid
to a
trustee, receiver, or any other Person under any bankruptcy act, state
or
federal law, common law, equitable cause or otherwise, then to the extent
of
such payment or benefit, the Indebtedness, or part thereof, intended
to be
satisfied shall be revived and continued in full force and effect as
if such
payment or benefit had not been made or received by Bank, and, further,
any such
repayment by Bank shall be added to and be deemed to be additional
Indebtedness.
2.12 Security.
Payment
and performance of the Indebtedness shall be secured by Liens on the
assets,
other collateral and properties of Borrowers and of such other Loan Parties
as
Bank may require from time to time, except that any projects owned by
Subsidiaries of Borrowers which are financed with project-related debt
(and not
financed with proceeds of the Loan) shall not be security for the Loan,
provided
that with respect to any of the Mortgaged Property which is collateral
for the
Loan, the required Partial Release Price is paid to Bank pursuant to
Addendum
3
hereof
to obtain a release of such Mortgaged Property in connection with the
commencement of any such project.
2.13 Conditions
Precedent to the Initial Advance.
The
obligation of the Bank to make the Initial Advance on the Loan pursuant
to this
Agreement shall be subject to the satisfaction of all of conditions precedent
set forth in this Section. In the event that any condition precedent
is not so
satisfied but Bank elects to make the Initial Advance on the Loan
notwithstanding the same, such election shall not constitute a waiver
of such
condition and the condition shall be satisfied prior to any subsequent
Advance.
(a) All
of
the Loan Documents shall be in full force and effect and binding and
enforceable
obligations of Borrowers and, to the extent that it is a party thereto
or
otherwise bound thereby, of each other Person who may be a party thereto
or
bound thereby.
(b) All
actions, proceedings, instruments and documents required to carry out
the
borrowings and transactions contemplated by this Agreement or any other
Loan
Document or incidental thereto, and all other related legal matters,
shall have
been satisfactory to and approved by legal counsel for Bank, and said
counsel
shall have been furnished with such certified copies of actions and proceedings
and such other instruments and documents as they shall have
requested.
(c) Each
Loan
Party shall have performed and complied with all agreements and conditions
contained in the Loan Documents applicable to it and which are then in
effect.
(d) Borrowers
shall have delivered; or caused to have been delivered, to Bank or done
or
caused to have been done, to Bank’s satisfaction each and every of the following
items:
(1) This
Agreement (together with all addenda, schedules, exhibits, certificates,
opinions, financial statements and other documents to be delivered pursuant
hereto), the Note, the Deeds of Trust and all other Loan Documents duly
executed, acknowledged (if required) and delivered by Borrowers and any
Person
who is a party thereto.
(2) (i)
Copies of resolutions of the board of directors, partners or members
or
managers, as applicable, of each Loan Party evidencing approval of the
borrowing
hereunder and the transactions contemplated by the Loan Documents, and
authorizing the execution, delivery and performance by each Loan Party
of each
Loan Document to which it is a party or by which it is otherwise bound,
which
resolutions shall have been certified by a duly authorized officer, partner
or
other representative, as applicable, of each Loan Party as of the date
of this
Agreement as being complete, accurate and in full force and effect; (ii)
incumbency certifications of a duly authorized officer, partner or other
representative, as applicable, of each Loan Party, in each case, identifying
those individuals who are authorized to execute the Loan Documents for
and on
behalf of such Person(s), respectively, and to otherwise act for and
on behalf
of such Person(s); (iii) certified copies of each of such Person(s)’ articles of
incorporation and bylaws, partnership agreement, certificate of limited
partnership, articles of organization, regulations or operating agreement,
as
applicable, and all amendments thereto; and (iv) certificates of existence,
good
standing and authority to do business, as applicable, certified substantially
contemporaneously with the date of this Agreement, from the state or
other
jurisdiction of each of such Person(s)’ organization and from every other state
or jurisdiction in which such Person is required, under applicable law,
to be
qualified to do business.
(3) Proof
that appropriate security agreements, financing statements, mortgages,
deeds of
trust, collateral and such additional documents or certificates as may
be
required by Bank and/or contemplated under the terms of any and every
Loan
Document, and such other documents or agreements of security and appropriate
assurances of validity, perfection and priority of Lien as Bank may request
shall have been executed and delivered by the appropriate Persons and
recorded
or filed in such jurisdictions and such other steps shall have been taken
as
necessary to perfect, subject only to Permitted Encumbrances, the Liens
granted
thereby.
(4) An
opinion of Borrowers’ legal counsels, dated as of the date of this Agreement, as
to enforceability and authority issues and covering such other matters
as are
required by Bank and which are otherwise reasonably satisfactory in form
and
substance to Bank.
(5) A
UCC,
tax lien and judgment lien record search, disclosing no notice of any
Liens or
encumbrances filed against any of the Mortgaged Property, other than
the
Permitted Encumbrances.
(6) Evidence
of insurance coverage as required by this Agreement and the Deeds of
Trust.
(7) The
Title
Policy (or the Title Company’s unconditional commitment to issue the Title
Policy upon recordation of the Deeds of Trust).
(8) An
environmental audit report covering the Primary Collateral, in form and
content
and conducted and prepared by an environmental consultant reasonably
acceptable
to Bank. Borrowers agree that Bank may disclose the contents of such
environmental audit report to Governmental Authorities and Borrowers
shall
deliver to Bank the written consent to such disclosure from the respective
environmental consultant.
(9) Evidence
that none of the Primary Collateral is located within any designated
flood plain
or special flood hazard area (as may be shown on the surveys delivered
to Bank
or other evidence acceptable to Bank) or, in lieu thereof at Bank’s request,
evidence that Borrowers have applied for and received flood insurance
covering
the insurable Improvements in the maximum coverage available to
Bank.
(10) To
the
extent portions of the Primary Collateral have been platted, full-size,
single
sheet copies of all recorded subdivision or plat maps of the Primary
Collateral
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 Primary
Collateral.
(11) Current
Financial Statements of Borrowers.
(12) If
requested by Bank, a soils and geological report covering the Primary
Collateral
issued by a laboratory approved by Bank, which report shall be reasonably
satisfactory in form and substance to Bank, and shall include a summary
of soils
test borings.
(e) Bank
shall have received payment of the Commitment Fee.
(f) Bank
shall have received such other instruments, documents and evidence (not
inconsistent with the terms hereof) as Bank may reasonably request in
connection
with the making of the Loan hereunder, and all such instruments, documents
and
evidence shall be satisfactory in form and substance to Bank.
(g) Upon
making the Initial Advance on the Loan, the sum of the amount outstanding
on the
Loan and all Letter of Credit Liabilities shall not exceed the Maximum
Loan
Amount.
2.14 Conditions
to Subsequent Advances and Letters of Credit.
Bank
has no obligation to make any Advance on the Loan or to issue any Letter
of
Credit subsequent to the Initial Advance unless the following conditions
precedent are satisfied on or before the Disbursement Date for such
Advance:
(a) At
Bank’s
request, Borrower shall furnish to Bank an endorsement to the Title Policy
(or
if an endorsement is not available, a letter from the Title Company)
showing
“nothing further” of record affecting the Primary Collateral from the date of
recording of the Deeds of Trust, except such matters as Bank specifically
approves.
(b) All
Loan
Documents shall be in full force and effect and binding and enforceable
obligations of each Loan Party.
(c) Each
of
the representations and warranties of each Loan Party under any Loan
Document
shall be true and correct in all material respects.
(d) No
Default or Event of Default shall have occurred and be continuing; there
shall
exist no Material Adverse Effect; and no provision of law, any order
of any
Governmental Authority, or any regulation, rule or interpretation thereof,
shall
have had any Material Adverse Effect on the validity or enforceability
of any
Loan Document.
(e) To
the
extent that any of the proceeds of the Advance are used to acquire assets,
Borrowers shall grant a first Lien on such assets, except for office
equipment
such as computers and phone systems.
(f) Upon
making the Advance on the Loan then requested, the amount outstanding
on the
Loan in the aggregate shall not exceed the Maximum Loan Amount.
2.15 Advance
Not A Waiver.
No
Advance of the proceeds of the Loan shall constitute a waiver of any
of the
conditions of Bank’s obligation to make further Advances, nor, in the event
Borrowers are unable to satisfy any such condition, shall any such Advance
have
the effect of precluding Bank from thereafter declaring such inability
to be an
Event of Default.
2.16 Advance
Not An Approval.
Bank
shall have no obligation to make any Advance or part thereof during the
existence of any Default or Event of Default, but shall have the right
and
option so to do; provided that if Bank elects to make any such Advance,
no such
Advance shall be deemed to be either a waiver of the right to demand
payment of
the Loan, or any part thereof, or an obligation to make any other
Advance.
2.17 Additional
Land Acquisitions.
Subject
to the satisfaction of all conditions precedent to Advances of the Loan,
Bank
hereby agrees to make one or more Advances of the Loan, which Advances
shall
reduce the amount available to Borrower under the Loan in question, in
an amount
not to exceed, without prior Bank approval, (i) $3,000,000.00 at any
one time,
or (ii) $10,000,000.00 in the aggregate (together with all other outstanding
Advances for land acquisitions), for the purpose of the acquisition of
fee title
to real property, provided that Borrower (i) provides Bank with information
about such real property as Bank may reasonably request, (ii) executes
and
delivers to Bank for each acquisition a deed of trust covering the real
property
acquired, substantially in the form of the Deeds of Trust, granting to
Bank a
deed of trust first lien on such real property, which deed of trust will
be
cross-defaulted and cross-collateralized with the Deeds of Trust and
other Loan
Documents, (iii) causes the Title Company to provide Bank with a Title
Policy
insuring such deed of trust as a first lien on such real property and
containing
only such exceptions to title acceptable to Bank, and in an amount and
otherwise
on terms and conditions reasonably satisfactory to Bank, and (iv) executes
and
delivers to Bank its proposed disposition plan of such real property
which must
be reasonably satisfactory to Bank. Any and all real estate assets acquired
in
whole or part with Advances made under this Section are sometimes referred
to as
"Section
2.17 Assets".
Notwithstanding anything in this Agreement to the contrary, such Section
2.17
Assets shall, for purposes of this Agreement, be deemed to be included
as
"Other
Collateral";
provided, however, that such Section 2.17 Assets may be designated as
part of
the "Primary
Collateral"
by
obtaining an Appraisal, an environmental audit, Title Policy and other
documents
that may be reasonably required by Bank to classify such Section 2.17
Assets as
"Primary Collateral". Advances under the Loan for other than the acquisitions
of
Section 2.17 Assets are not subject to the terms and provisions of this
Section
2.17.
2.18 Mandatory
Prepayments.
Borrower shall immediately pay to Bank for application to the Loan in
accordance
with the terms of this Agreement and in accordance with the Release Provisions
set forth in Addendum
3,
unless
otherwise agreed by Bank in writing, the following sums: (i) one-hundred
percent
(100%) of the Net Proceeds received by or on behalf of any Borrower from
the
sale of all or any portion of the Mortgaged Property (except to the extent
expressly set forth in Addendum
3
attached
hereto) or upon the taking by condemnation of all or any portion of the
Mortgaged Property (except to the extent expressly set forth in Xxxxxxxx
0
xxxxxxxx
xxxxxx), (xx) one-hundred percent (100%) of the Net Proceeds of MUD
Reimbursables, (iii) one-hundred percent (100%) of the Net Proceeds received
upon the sale of any Section 2.17 Asset, (iv) one-hundred percent (100%)
of the
Net Proceeds received from any sale or transfer of any of the Credit
Banks (but
not any of the Credit Banks which are drawn on by Borrower to develop
the Land)
and (v) and one-hundred percent (100%) of the distributions received
by any
Borrower from any partnership or joint venture which is a Related Party
or
Subsidiary of any such Borrower, upon the sale by such Related Party
or
Subsidiary of any real property interest (“Partnership
Distributions”).
2.19 Application
of Payments.
So long
as no Event of Default exists, all payments received from Borrower (including,
without limitation, the application of Net Proceeds received from MUD
Reimbursables, proceeds received from the sale or transfer of Credit
Banks, the
application of Net Proceeds from the sale of Section 2.17 Assets, the
application of Net Proceeds from the sale of Primary Collateral or Other
Collateral or Partnership Distributions, the application of Net Proceeds
from
the conveyance of Primary Collateral or Other Collateral to a Related
Party, and
release price proceeds from any other source) shall be applied as
follows:
(a) First,
such proceeds shall be applied to pay interest current on the Note;
(b) Second,
such proceeds shall be applied to pay any other sums (other than principal)
then
due and payable under the Loan;
(c) Third,
such proceeds shall be applied to pay the outstanding principal balance
then due
under the Note; and
(d) Fourth,
any remaining proceeds after application as above set forth shall be
distributed
to Borrower at its discretion.
| SECTION 3. |
LETTERS
OF CREDIT
|
3.1 Letters
of Credit.
Subject
to the terms and conditions of this Agreement and the other Loan Documents,
Borrower may, prior to the Maturity Date, request Bank to issue one or
more
Letters of Credit under and as part of the Loan, provided that the conditions
to
the issuance of Letters of Credit herein are satisfied. In no event shall
the
Letter of Credit Liabilities ever exceed $10,000,000.00; and the sum
of (i) the
outstanding principal balance of the Loan plus (ii) the Letter of Credit
Liabilities shall not ever exceed the Maximum Loan Amount. Letters of
Credit may
be issued for business purposes reasonably approved by Bank. As of the
date
hereof, a Letter of Credit in the face amount of $3,500,000 issued for
the
account of Stratus 7000 West Joint Venture (a Subsidiary of Stratus)
and a
letter of credit in the face amount of $1,645,000 issued for the account
of
Meridian Developer, L.P. (a Subsidiary of Stratus) have been issued under
and
are outstanding pursuant to this Agreement.
3.2 Conditions
to Letters of Credit.
The
issuance of each Letter of Credit shall be subject to the following
conditions:
(a) such
Letter of Credit and any amounts to be disbursed or advanced under such
Letter
of Credit shall be used only for the same purposes as allowed for Advances
under
the Loan, as set forth in Section
2.4
of
Addendum
2
of the
Loan Agreement;
(b) after
taking into account any such Letter of Credit, the sum of (i) the then
existing
Letter of Credit Liabilities, plus (ii) the then outstanding principal
balance
of the Loan, does not (and shall at no time) exceed the Maximum Loan
Amount.
Accordingly, the amount of all Letter of Credit Liabilities, if any,
shall
reduce the amount of Advances available to Borrower under the Loan;
(c) the
expiration date of such Letter of Credit is not more than six (6) months
after
the maturity date of the Note;
(d) such
Letter of Credit shall be classified as a “Standby” Letter of Credit in
accordance with applicable laws and regulations applicable to Bank and
in
accordance with the Bank’s customary practices at such times for reporting to
regulatory authorities;
(e) the
issuance of such Letter of Credit will be in compliance with all applicable
Governmental Requirements and all other applicable restrictions, policies,
and
guidelines and will not subject Bank to any cost which is not reimbursable
by
Borrower under the Loan Documents;
(f) the
form
and terms of such Letter of Credit must be acceptable to Bank in its
sole
discretion;
(g) all
other
conditions in this Agreement to the issuance of such Letter of Credit
shall have
been satisfied;
(h) immediately
before and after the issuance of such Letter of Credit, no Event of Default
or
Default shall have occurred and be continuing; and
(i) the
representations and warranties of Borrower contained in this Agreement
and the
other Loan Documents shall be true and correct on and as of the date
of issuance
of such Letter of Credit.
Bank
will
honor any such request by Borrower for the issuance of a Letter of Credit
if the
foregoing conditions (a) through (i) (collectively, the “LC
Conditions”)
have
been met as of the date of issuance of such Letter of Credit. Bank may
choose to
honor any such request for any other Letter of Credit but has no obligation
to
do so and may refuse to issue any other requested Letter of Credit for
any
reason which Bank in its sole discretion deems relevant.
3.3 Requesting
Letters of Credit.
Borrower must make written application for any Letter of Credit at least
five
(5) Business Days before the date on which Borrower desires for Bank
to issue
such Letter of Credit. By making any such written application, Borrower
shall be
deemed to have represented and warranted that the LC Conditions will
be met as
of the date of issuance of such Letter of Credit. Two (2) Business Days
after
the LC Conditions have been met (or if Bank otherwise desires to issue
such
Letter of Credit), Bank will issue such Letter of Credit at Bank’s office in
Dallas, Texas. If any provisions of any LC Application conflict with
any
provisions of this Agreement, the provisions of this Agreement shall
govern and
control.
3.4 Reimbursement
and Participations.
(a) Reimbursement
by Borrower.
Each
Matured L/C Obligation shall constitute an Advance under the Loan. To
the extent
the same has not been repaid to Bank (with the proceeds of an Advance
under the
Loan or otherwise), Borrower promises to pay to Bank, or to Bank’s order, on
demand, (i) the full amount of each Matured L/C Obligation, whether such
obligation accrues before or after the Maturity Date, together with (ii)
interest thereon at a rate per annum equal to the "Applicable Base Rate"
for the
"Base Rate Tranche" (as such terms are defined in the Note) until repaid
in
full; provided that after the Maturity Date or following a Default or
an Event
of Default under this Agreement or the other Loan Documents, such interest
shall
accrue at the Default Rate.
(b) Letter
of Credit Advances.
If the
beneficiary of any Letter of Credit makes a draft or other demand for
payment
thereunder, then Borrower may, during the interval between the making
thereof
and the honoring thereof by Bank, request Bank to make an Advance under
the Loan
to Borrower in the amount of such draft or demand, which Advance shall
be made
concurrently with Bank’s payment of such draft or demand and shall be
immediately used by Bank to repay the amount of the resulting Matured
L/C
Obligation. Such a request by Borrower shall be made in compliance with
all of
the provisions hereof.
(c) Letter
of Credit Fees.
In
consideration of Bank’s issuance of any Letter of Credit, Borrower agrees to pay
to Bank a letter of credit fee at a rate equal to two percent (2.0%)
per annum.
Each such fee will be, calculated based on the term and face amount of
such
Letter of Credit and the above applicable rate and will be payable upon
issuance. In no event shall the issuance fee be less than $500.00 for
any Letter
of Credit.
3.5 No
Duty to Inquire.
(a) Drafts
and Demands.
Bank is
authorized and instructed to accept and pay drafts and demands for payment
under
any Letter of Credit without requiring, and without responsibility for,
any
determination as to the existence of any event giving rise to said draft,
either
at the time of acceptance of payment or thereafter. Bank is under no
duty to
determine the proper identity of anyone presenting such a draft or making
such a
demand (whether by tested telex or otherwise) as the officer, representative
or
agent of any beneficiary under any Letter of Credit, and payment by Bank
to any
such beneficiary when requested by any such purported officer, representative
or
agent is hereby authorized and approved. Borrower agrees to hold Bank
harmless
and indemnified against any liability or claim in connection with or
arising out
of the subject matter of this section, WHICH
INDEMNITY SHALL APPLY WHETHER OR NOT ANY SUCH LIABILITY OR CLAIM IS IN
ANY WAY
OR TO ANY EXTENT OWED, IN WHOLE OR IN PART, UNDER ANY CLAIM OR THEORY
OF STRICT
LIABILITY, OR ARE CAUSED, IN WHOLE OR IN PART, BY ANY NEGLIGENT ACT OR
OMISSION
OF ANY KIND BY BANK,
provided only that Bank shall not be entitled to indemnification for
that
portion, if any, of any liability or claim which is approximately caused
by its
own individual gross negligence or willful misconduct, as determined
in a final
judgment.
(b) Extension
of Letter of Credit Maturity.
If the
maturity of any Letter of Credit is extended by its terms or by applicable
law
or governmental action, if any extension of the maturity or time for
presentation of drafts or any other modification of the terms of any
Letter of
Credit is made at the request of Borrower, or if the amount of any Letter
of
Credit is increased at the request of Borrower, this Agreement shall
be binding
upon Borrower with respect to such Letter of Credit as so extended, increased
or
otherwise modified, with respect to drafts and property covered thereby,
and
with respect to any action taken by Bank, or Bank’s correspondents in accordance
with such extension, increase or other modification.
(c) Transferees
of Letters of Credit.
If any
Letter of Credit provides that it is transferable, Bank shall have no
duty to
determine the proper identity of anyone appearing as transferee of such
Letter
of Credit, nor shall Bank be charged with responsibility of any nature
or
character for the validity or correctness of any transfer or successive
transfers, and payment by Bank to any purported transferee or transferees
as
determined by Bank is hereby authorized and approved, and Borrower further
agrees to hold Bank harmless and indemnified against any liability or
claim in
connection with or arising out of the foregoing, WHICH
INDEMNITY SHALL APPLY WHETHER OR NOT ANY SUCH LIABILITY OR CLAIM IS IN
ANY WAY
OR TO ANY EXTENT OWED, IN WHOLE OR IN PART, UNDER ANY CLAIM OR THEORY
OF STRICT
LIABILITY, OR ARE CAUSED, IN WHOLE OR IN PART, BY ANY NEGLIGENT ACT OR
OMISSION
OF ANY KIND BY BANK,
provided only that Bank shall not be entitled to indemnification for
that
portion, if any, of any liability or claim which is proximately caused
by its
own individual gross negligence or willful misconduct, as determined
in a final
judgment.
3.6 LC
Collateral.
(a) Acceleration
of Letter of Credit Liabilities.
On the
Maturity Date, or if the Loan becomes immediately due and payable pursuant
to
the Loan Documents, then, unless Bank otherwise specifically elects to
the
contrary, all Letter of Credit Liabilities shall become immediately due
and
payable without regard to whether or not actual drawings or payments
on the
Letters of Credit have occurred, and Borrower shall be obligated to return
all
original Letters of Credit to Bank and pay to Bank immediately an amount
equal
to the aggregate Letter of Credit Liabilities which are then outstanding
(taking
into account the actual return to Bank of any original outstanding Letters
of
Credit). All amounts so paid shall first be applied to Matured L/C Obligations
and the remainder will be held by Bank as security for the remaining
Letter of
Credit Liabilities (all such amounts held as security for Letter of Credit
Liabilities being herein collectively called “LC
Collateral”)
until
such Letter of Credit Liabilities become Matured L/C Obligations, at
which time
such LC Collateral shall be applied to such Matured L/C Obligations,
and any
remaining amounts after the repayment of all Matured L/C Obligations
and
Indebtedness shall be returned to Borrowers.
(b) Investment
of LC Collateral.
Pending
application thereof, all LC Collateral shall be invested by Bank in such
investments as Bank may elect. All interest on such investments shall
be
reinvested or applied to Matured L/C Obligations. When all indebtedness
evidenced by the Note and all Letter of Credit Liabilities have been
satisfied
in full, all Letters of Credit have expired or been terminated, and all
of
Borrower’s reimbursement obligations in connection therewith have been satisfied
in full, Bank shall release any remaining LC Collateral. Borrower hereby
assigns
and grants to Bank a continuing security interest in all LC Collateral,
all
investments purchased with such LC Collateral, and all proceeds thereof
to
secure its Matured L/C Obligations and its obligations under this Agreement,
the
Note and the other Loan Documents. Borrower further agrees that Bank
shall have
all of the rights and remedies of a secured party under the Uniform Commercial
Code as adopted in the State of Texas with respect to such security interest
and
that an Event of Default under this Agreement shall constitute a default
for
purposes of such security interest.
(c) Payment
of LC Collateral.
When
Borrower is required to provide LC Collateral for any reason and fails
to do so
on the day when required, Bank may without notice to Borrower provide
such LC
Collateral (whether by transfers from other accounts maintained with
Bank or
otherwise) using any available funds of Borrower.
| SECTION 4. |
CALERA
COURT CONSTRUCTION LOAN
|
4.1 Agreement
to Lend.
Subject
to the terms, provisions and conditions of this Agreement, Bank hereby
agrees to
make to the Borrower, and Borrower hereby agrees to accept from Bank,
Advances
of proceeds of the Loan as provided in this Agreement for the construction
of
Houses; provided, however, that the aggregate amount of all Advances
made and/or
committed to be made hereunder, but exclusive of amounts repaid, shall
not
exceed the Calera Court Sublimit. Amounts repaid under the Calera Court
Construction Loan may be reborrowed, subject to the terms and conditions
hereof.
The nature of the Calera Court Construction Loan is a guidance line of
credit.
Nothing to the contrary contained herein or in any of the Loan Documents
shall
obligate or be construed to obligate Bank to make, or shall entitle or
be
construed to entitle the Borrower to receive, any Advance hereunder as
to any
specified House or Houses until Acceptance thereof by Bank. Borrower
acknowledge
and agree that Bank, in its sole and absolute discretion, with or without
reason
or justification, will make the decision as to whether any specified
House or
Houses will receive Acceptance by Bank. Borrower has no right and hereby
waives,
relinquishes and releases any right which it might now or hereafter have,
to
demand Bank to make any Advance hereunder as to any specified House or
Houses
until Acceptance thereof by Bank. Bank may, in Bank's discretion, disburse
Loan
proceeds by journal entry to pay interest and financing costs and disburse
Loan
proceeds directly to third parties to pay costs or expenses required
to be paid
by Borrower pursuant to Section
4
of this
Agreement, and any such disbursements shall constitute Advances to Borrower.
As
used in this Section
4,
the
term "Borrower"
means
the Calera Court Borrower; provided, however, (i) the Calera Court Borrower
shall only be liable for the obligations under the Calera Court Construction
Loan and shall have no personal liability for any of the Indebtedness
or other
obligations arising under the Loan which are not directly related to
the Calera
Court Construction Loan or the Calera Court Lots and (ii) each of the
Borrowers
under this Agreement shall be jointly and severally liable for all Advances
made
to the Calera Court Borrower.
4.2 Acceptance.
Borrower may from time to time propose that Bank accept a House for funding
in
accordance with an Approved Budget for same. "Acceptance" shall be deemed
to
have occurred and Bank shall be deemed to have committed to make Advances
with
respect to any such House at such time as Borrower has executed and/or
delivered
to Bank all of the items required by Section
4.7
hereof
and otherwise satisfied all of the other conditions set forth in Section 4.8
hereof.
Bank shall, within 15 days after receipt of the above written notice,
provide
Borrower written notice of Bank's acceptance or rejection of any such
proposed
House together with an Approved Budget for same. Borrower shall not be
entitled
to propose that any Houses receive Acceptance either (i) after
the
Acceptance Termination Date, or (ii) to the extent the total Maximum
Aggregate Advances Per House for all Houses already equals the Calera
Court
Sublimit.
4.3 Maximum
Commitment for Houses.
Under
no circumstances shall Borrower be entitled to an aggregate amount of
Advances
outstanding at any time for the Calera Court Construction Loan as a whole
in
excess of the Calera Court Sublimit, and in no event shall the sum of
(x) the
aggregate amount of Advances outstanding at any time for the Calera Court
Construction Loan plus (y) the unfunded amount committed for any House
which has
been accepted by Bank pursuant to an Approved Budget, ever exceed the
Calera
Court Sublimit. In addition, the Loan proceeds allocable for any House
which is
accepted by Bank as set forth in the Approved Budget for such House shall
be
reserved and shall not be available for disbursement for any purposes
under the
Loan other than for the construction of such House. It is recognized
and agreed
that all Requests for Advances shall indicate and be based on the actual
percentage of completion of the Approved Work for each House as calculated
using
the Approved Budget for same and shall otherwise be on a form and with
detail as
may be required by Bank in Bank's reasonable discretion. Any percentage
of
completion of Approved Work for any House indicated by Borrower on any
report or
notice delivered to Bank shall be subject to verification by Bank. To
the
extent, for whatever reason, the outstanding balance of the Calera Court
Construction Loan should ever exceed the aggregate amount of then applicable
actual percentage of completion of the Approved Work for each and all
Houses as
calculated using the Approved Budget for each, Borrower shall immediately
upon
demand by Bank make any principal reductions necessary such that the
then
outstanding balance of the Calera Court Construction Loan shall not exceed
then
applicable aggregate amount. The aggregate maximum amount of any and
all
Advances for each House (the "Maximum
Aggregate Advances Per House")
shall
not exceed the lesser of (a) Borrower's total cost of construction and
completion of such House as provided in the Approved Budget for such
House, or
(b) as applicable (i) for any Model House, 75% of the Appraised Value
of such
Model House, (ii) for any Spec House, the lesser of 75% of the Appraised
Value
of such Spec House or $550,000, or (iii) for any House that is Pre-Sold
House,
80% of the Appraised Value of such House.
4.4 Allocations.
The
purposes for which proceeds of the Calera Court Construction Loan are
allocated
and the respective amounts of such Allocations are set forth in each
Approved
Budget. The Allocations for any House shall be disbursed only for the
purposes
set forth in the Approved Budget for such House. Bank shall not be obligated
to
make an Advance for an Allocation set forth in an Approved 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 Approved Budget. Bank reserves the right, at its option
after the
request by Borrower for same, to disburse Loan proceeds allocated to
any of the
Allocations, or any percentage allocated to each stage of disbursement
as set
forth in an Approved Budget, for such other purposes or in such different
percentages as Bank may, in its sole discretion, deem necessary or advisable.
Borrower shall not be entitled to require that Bank reallocate funds
among the
Allocations or percentage among the various stages of disbursement set
forth in
an Approved Budget.
4.5 Contingency
Allocations.
Any
amount allocated in an Approved Budget for "contingencies" or other non-specific
purposes may, in Bank's discretion, be disbursed by Bank to pay contingent
costs
and expenses of construction costs, maintaining, and promoting the Mortgaged
Property and such other costs or expenses as Bank shall approve. Under
no
circumstances shall the Borrower have the right to require Bank to disburse
any
amounts so allocated and Bank 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.
4.6 Limitation
on Spec Houses and Model Houses.
Bank
shall have no obligation to effectuate Acceptance of any new proposed
Spec House
or Model House if the effect of such Acceptance would be to cause (i)
the number
of all Spec Houses under the Calera Court Construction Loan to exceed
at any one
time four (4) Spec Houses or (ii) the number of all Model Houses under
the
Calera Court Construction Loan to exceed at any one time two (2) Model
Houses.
If, at any time or for whatever reason, the number of all Spec Houses
or Model
Houses under the Calera Court Construction Loan should exceed the foregoing
limits, then, Borrower shall be required to effectuate a mandatory partial
release as to the sufficient number of Spec Houses or Model Houses such
that the
foregoing limits would not thereafter be exceeded. Such mandatory release
would
be effectuated in accordance with the provisions of Addendum
3
hereof.
4.7 Conditions
to Acceptance of Houses and Advances With Respect Thereto.
Acceptance by Bank of any House pursuant to Section 4.2
hereof
and the making of an Advance with respect thereto shall be subject to
the prior
or simultaneous satisfaction of each of the conditions set forth in this
Section. In the event that any condition precedent is not so satisfied
but Bank
deems Acceptance to have occurred as to a particular House notwithstanding
the
same, such election shall not constitute a waiver of such condition and
the
condition shall be satisfied prior to any subsequent Advance or Acceptance,
as
the case may be.
(a) All
of
the Loan Documents shall be in full force and effect and binding and
enforceable
obligations of Borrower and, to the extent that it is a party thereto
or
otherwise bound thereby, of each other Person who may be a party thereto
or
bound thereby, and there shall exist no Event of Default or
Default.
(b) Each
Loan
Party shall have performed and complied with all agreements and conditions
contained in the Loan Documents applicable to it and which are then in
effect.
(c) Borrower
shall have delivered, or caused to have been delivered, to Bank or done
or
caused to have been done, to Bank's satisfaction each and every of the
items
required for the Initial Advance under Section
2.13
of
Addendum
2
of this
Agreement, and all conditions to Advances set forth in Sections
2.13
and
2.14
of this
Addendum
2
shall
have been satisfied as of the date of the Advance. In addition, Borrower
shall
have delivered to Bank the following with regard to the Acceptance of
the House
in question:
(i) Evidence
of insurance coverage as required by this Agreement and the Deed of
Trust.
(ii) At
Bank's
request, an Interim Binder for Construction Loan covering such proposed
House.
(iii) When
available, an original or a copy of each proposed construction contract
covering
any proposed House.
(iv) A
copy of
the Plans covering all proposed Houses.
(v) Evidence
that all applicable zoning ordinances and restrictive covenants affecting
that
portion of the Land upon which the House is to be constructed permit
the use for
which the Improvements are intended and have been or will be complied
with.
(vi) Evidence
that all streets furnishing access to that portion of the Land upon which
the
House is to be constructed have been dedicated to public use and installed
and
accepted by applicable Governmental Authorities; and, except as permitted
by
Bank, evidence that all streets furnishing access to any House for which
a
request for Advance has been made, have been or will be timely constructed
in
accordance with all applicable laws and development requirements.
(vii) Evidence
satisfactory to Bank showing the availability of all necessary utilities
at the
boundary lines of that portion of the Land upon which the House is to
be
constructed and, except as permitted by Bank, at the boundary lines of
each Lot
with respect to which a request for Advance has been made, including
sanitary
and storm sewer facilities, potable water, telephone, electricity and
gas
services.
(viii) Building
permit(s) and all other permits required with respect to the construction
of the
Houses and evidence that the proposed use of that portion of the Land
and Houses
and construction of the Improvements thereon complies with all Governmental
Requirements, including applicable zoning ordinances and restrictive
covenants.
(ix) An
Approved Budget for each House.
(x) As
to
each separate floor plan for proposed Houses, an Appraisal.
(xi) If
requested by Bank, a waiver of lien or lien subordination agreement(s)
executed
by each contractor, laborer and supplier furnishing labor or materials
for the
construction of Houses, in a form acceptable to Bank, for work performed
or
materials supplied prior to the date of each Advance.
(xii) Except
in
the case of Spec Houses and Model Houses, a fully executed copy of the
Approved
Sales Contract for each House together with such supplementary documentation
as
Bank may reasonably require (e.g., such buyer's written evidence of
creditworthiness, etc.).
(xiii) Evidence
that each Lot for which an Advance for a House thereon is requested has
been
cleared, filled and graded, as necessary, and is in all respects ready
for
construction of the House thereon.
(xiv) As
a
condition to the final Advance with respect to any House, evidence satisfactory
to Bank that all streets furnishing access to such House have been completed
(and dedicated, if not private streets), and that all necessary utilities
for
the use of such Houses have been brought to the House, are completed
and
connected.
(xv) Such
other instruments, evidence or certificates as Bank may reasonably
request.
4.8 Conditions
to All Advances.
In
addition to any other terms and conditions set forth in this Agreement,
the
obligation of Bank to make any Advance under this Agreement shall be
further
subject to the satisfaction of each of the following conditions precedent
on or
before the Disbursement Date for such Advance:
(a) All
conditions to Advances set forth in Sections
2.13
and
2.14
of this
Addendum
2
shall
have been satisfied as of the date of the Advance.
(b) Receipt
by Bank of a monthly endorsement to the Title Policy (or if an endorsement
is
not available, a letter from the Title Company) showing "nothing further"
of
record affecting that portion of the Land upon which Houses are being
constructed from the date of recording of the Deed of Trust, except such
matters
as Bank specifically approves.
(c) Receipt
by Bank of waivers signed and acknowledged (notarized) by each Contractor
that
has done work included within any prior Request for Advance that the
respective
Contractor has been paid in full (except for required retainage) for,
and
waiving any mechanic's and materialmen's lien rights with respect to,
all work
done at least 45 days prior to the current Request for
Advance.
(d) The
Houses shall not have been materially damaged by fire or other
casualty.
(e) None
of
that portion of the Land upon which Houses are being constructed shall
be
subject to condemnation proceedings or negotiations for sale in lieu
thereof.
(f) Borrower
shall have recorded the executed Affidavits of Commencement to the extent
required hereunder.
(g) Bank
shall have obtained from the Inspecting Person an inspection report relating
to
the House or Houses for which a Request for Advance has been made, which
report
shall be satisfactory to Bank in its sole discretion.
4.9 Limitation
on Advances; Borrower's Deposit.
If at
any time Bank shall in its sole discretion deem that the undisbursed
proceeds of
the Loan are insufficient to meet the costs of completing construction
of the
Approved Work, plus the costs of insurance, ad valorem taxes and other
normal
costs incidental to the Approved Work or ownership of the Houses which
are a
part of the Mortgaged Property, Bank may refuse to make any additional
Advances
to Borrower under this Section
4
until
Borrower shall have deposited with Bank sufficient additional funds
("Borrower's
Deposit")
to
cover the deficiency which Bank deems to exist. Such Borrower's Deposit
will be
disbursed by Bank 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 Bank to deposit with Bank such
Borrower's Deposit. Bank shall pay interest on the Borrower's Deposit
at a rate
typically paid by Bank on similar deposits.
4.10 Withholding
on Advances.
Bank
may withhold from an Advance under this Section
4
or, on
account of subsequently discovered evidence, withhold from a later Advance
under
this Section
4,
or
require Borrower to repay to Bank the whole or any part of any earlier
Advance,
to such extent as may be necessary to protect Bank from loss on account
of
(i) defective work with regard to a House not remedied or requirements
of
Section
4
not
performed, (ii) liens filed or reasonable evidence indicating
probable
filing of liens against the portion of the Mortgaged Property upon which
Houses
are being constructed, or (iii) failure of Contractor to make
payments to
subcontractors for material or labor. When the foregoing applicable grounds
are
satisfied and removed, such withheld amount shall be promptly
released.
4.11 Representations,
Warranties and Covenants of Borrower.
Borrower agrees that all of the representations, warranties and covenants
set
forth in Article 3, Article 4 and Article 5 of this Agreement are applicable
to
Borrower except to the extent otherwise expressly provided or the context
requires that Borrower is not a party to such representation, warranty
or
covenant.
4.12 Insurance.
Borrower shall continue to provide insurance in accordance with the requirements
of this Agreement and as required under that certain Loan Agreement (Revolving
Credit) dated as of September ___, 2003 by and between Borrower and Bank,
as
amended from time to time, the provisions of which are incorporated herein
by
reference.
4.13 Construction
of Houses.
(a) Completion.
As to
each House, cause the construction thereof (i) to be performed
in a good
and workmanlike manner, within the perimeter boundaries of the Lot and
within
all applicable building and setback lines in accordance with all Governmental
Requirements and the Plans, (ii) to be prosecuted with diligence
and
continuity and (iii) to be completed in all material respects
in accordance
with the Plans on or before the applicable Completion Date, free and
clear of
Liens or claims for Liens for material supplied and for labor or services
performed in connection with the construction of such House, other than
Permitted Encumbrances.
(b) Surveys.
Borrower will obtain, at Bank's request and at Borrower's expense,
(i) immediately after the installation of the forms for the pouring
of the
foundations or slabs for each House, (ii) immediately upon completion
of
all foundations or slabs, and before any above ground construction, and
(iii) upon completion of construction of each House, a survey
prepared by a
registered engineer or surveyor acceptable to Bank, showing that the
locations
of such forms, foundation or slabs and Houses, as applicable, are entirely
within the property lines of the applicable Lot, do not encroach upon
any
easement, setback line or restrictions, are placed in accordance with
the Plans,
all Governmental Requirements and all restrictive covenants affecting
the Lot
and/or Houses, and showing no state of facts objectionable to Bank. Borrower
shall maintain such surveys and, if requested by Bank, within five (5)
days
after the request therefor, shall deliver copies of same to Bank. If
such
surveys are so requested, Bank shall have no obligation to make any Advance
hereunder at any time after the completion of foundations or slabs until
receipt
by Bank of such foundation survey. All surveys provided to Bank must
be in form
and substance reasonably acceptable to Bank.
(c) Inspecting
Person.
Pay the
fees and expenses of, and cooperate, with the Inspecting Person and cause
each
contractor, architect, engineer and other professional consultants engaged
by
Borrower in connection with the design and construction of the Houses,
to
cooperate with the Inspecting Person 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,
the Plans 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 Bank, the Inspecting Person and their representative to enter
upon the
Land and wherever else any of the Houses are located for the purposes
of
inspecting same. Borrower acknowledges that the duties of the Inspecting
Person
run solely to Bank and that the Inspecting Person shall have no obligations
or
responsibilities whatsoever to Borrower, any contractor, design professional
or
any other Person, or to any of their agents, employees, contractors or
subcontractors.
(d) Affidavit
of Commencement.
Within
ten (10) days after the applicable Commencement Date as to any House,
and not
before construction of such House has actually begun, file or cause to
be filed
in the appropriate records of the county in which the Lot is situated,
an
Affidavit of Commencement duly executed by Borrower and the contractor
performing the work on such Lot.
(e) Affidavit
of Completion.
Within
ten (10) days after construction of the House on any Lot has been completed,
file or cause to be filed in the appropriate records in the county in
which the
Lot is situated an Affidavit of Completion.
(f) Delivery
of Contracts.
Upon
Bank's request, deliver to Bank a copy of each contract related to the
Houses
promptly after the execution of same by all parties thereto. Within twenty
(20)
days after a request by Bank, Borrower shall prepare and deliver to Bank
a
complete listing of all contracts, showing date, term, parties, subject
matter,
concessions, whether any defaults exist, and other information specified
by
Bank, with respect to each of such contracts.
(g) Correcting
Defects.
Correct: (a) any structural defect in any of the Houses; (b) any
material departure from the Plans not approved in writing by Bank (other
than
work performed in accordance with any change orders permitted hereunder
or any
change orders otherwise approved by Bank); (c) any encroachment
by any part
of any of the Houses or any other structures or improvements over or
on any
set-back line, easement, adjoining property or other restricted area;
and
(d) any encroachment of any adjoining structure upon any of the
Land which
any survey or inspection reflects. The advance of Loan proceeds will
not waive
Bank's right to require compliance with this Section.
(h) Safe
Storage.
Safely
store all equipment, supplies and materials not affixed to or incorporated
into
the Houses on the Calera Court Lots or in a warehouse acceptable to Bank,
in
each case under adequate safeguard to minimize the possibility of loss,
theft,
damage or commingling with other property. Upon Bank's request, Borrower
will
furnish an inventory of all such equipment, supplies and materials stored
off
the Calera Court Lots, specifying their location.
(i) No
Changes.
Not
amend, alter or change in any material respect (pursuant to change order,
amendment or otherwise) the Plans unless the same shall have been approved
in
advance in writing by Bank, by all applicable Governmental Authorities,
by any
party to a sales or construction contract (including an Approved Sales
Contract)
with a right of approval, and by each surety under payment or performance
bonds,
if any, covering any construction contract or any other contract for
construction of all or a portion of the Houses. Notwithstanding anything
in this
Agreement to the contrary, Borrower shall be allowed to make changes
in the
Plans upon and subject to the following conditions and requirements (and
such an
approved change order executed in compliance herewith will increase the
amount
of the Approved Budget for a House as applicable so long as same does
not cause
the Calera Court Sublimit to be exceeded):
(i) Any
single change shall not increase the Construction Costs for a House by
more than
$15,000.00.
(ii) All
changes, including the currently requested change and all prior changes,
shall
not increase the Construction Costs for a House in the aggregate, by
more than
$50,000.00.
(iii) Such
change, by itself and when considered with all prior changes, shall not,
in
Bank's reasonable discretion, cause or be likely to cause the Completion
of the
House to occur after the Completion Date.
(iv) Any
such
change, or all changes in the aggregate, shall not adversely affect,
in Bank's
reasonable discretion, the structural integrity, utility or appearance
of the
Houses.
(v) Borrower
shall have deposited into the Borrower's Deposit, sufficient funds to
cover all
costs associated with the requested change and all increases in the Construction
Costs of the Houses anticipated by such changes, as determined by Bank
in its
reasonable discretion.
(vi) Borrower
shall have submitted to Bank, the Inspecting Person, and the applicable
Contractor the requested change, together with changes in the Plans necessary
to
accomplish such change, a certificate of the applicable Design Professional
in
regard to same, and a change order to the construction contract reflecting
such
change; and Bank shall have received the approval of such change by the
Inspecting Person and the approved and signed change order from the applicable
Contractor reflecting the increase in Construction Costs of the
Houses.
4.14 Completion
of the Improvements after Event of Default.
Bank
shall have the right, upon the occurrence of and during the continuance
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 that portion of
the
Mortgaged Property upon which Houses are being constructed and perform
any and
all work and labor necessary to complete the Houses in accordance with
the
Plans. All amounts so expended by Bank shall be deemed to have been disbursed
to
Borrower as Loan proceeds and secured by the Deeds of Trust. For this
purpose,
effective automatically upon and at all times during the continuance
of an Event
of Default, Borrower hereby constitutes and appoints (which appointment
is
coupled with an interest and is therefore irrevocable) Bank as Borrower's
true
and lawful attorney-in-fact, with full power of substitution to complete
the
Houses in the name of Borrower, and hereby empowers Bank, 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 Houses
in the
manner called for by the Plans; to make such additions and changes and
corrections in the Plans which shall be necessary or desirable to complete
the
Houses in the manner contemplated by the Plans; 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, 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
Houses which Borrower could do in Borrower's own behalf. Bank, acting
as
Borrower's attorney-in-fact, shall also have power in such an event 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.
4.15 Assignment
of Sales Contracts.
Borrower, as additional security for the payment and performance of the
covenants, agreements and obligations of Borrower to Bank arising under
this
Agreement and under all of the Loan Documents, hereby grants a security
interest
in, and sells, transfers, assigns and sets over, to Bank, its successors
and
assigns, all of Borrower's title and interest in and to, and Borrower's
rights,
benefits and privileges under, any and all Sales Contracts whether now
existing
or hereafter entered into, and all proceeds therefrom. In furtherance
of the
foregoing, Borrower hereby agrees that this assignment of Sales Contracts
is
made upon the following terms and conditions:
(a) Borrower
shall pay and perform all of Borrower's covenants, agreements and obligations
under the Sales Contracts and shall promptly notify Bank in writing,
as part of
the monthly reports to be delivered to Bank pursuant to the terms and
conditions
of this Agreement, of any termination of any Sales Contract. Borrower
hereby
covenants and agrees not to (i) materially modify, amend or change
any
Sales Contract after full execution thereof (except with regard to change
orders
and extras), (ii) terminate or otherwise cancel any fully executed
Sales
Contract except in the event of a default thereunder by the purchaser
or the
purchaser's failure to satisfy any contingency thereunder, (iii) take
any
action or exercise any right or option which would permit a purchaser
to
terminate or otherwise cancel a Sales Contract, unless said purchaser
is in
default thereunder, or (iv) further assign or create any further
encumbrance or hypothecation of Borrower's interest in any of the Sales
Contracts, without the prior written consent of Bank, unless required
by any
Governmental Authority, in which case Borrower shall give Bank prior
written
notice thereof.
(b) Upon
the
occurrence of an Event of Default, Bank may elect, in its sole discretion,
to
exercise, in the name of Borrower, all of Borrower's rights, benefits
and
privileges under each of the Sales Contracts, including all rights in
and to all
deposits and other amounts collected or otherwise received from purchasers
under
the Sales Contracts; in connection with such exercise of rights, benefits
and
privileges, Bank shall have full power and authority to do all acts as
may be
necessary, as determined in Bank's sole discretion, to close any transaction
contemplated under any Sales Contract, including to receive any and all
amounts
paid or to be paid by a purchaser in connection therewith. Bank shall
not be
required to give any notice of such election to Borrower. Borrower hereby
covenants and agrees to pay to Bank promptly upon demand any and all
reasonable
costs and expenses, including reasonable attorneys' fees and expenses
incurred
by Bank in connection with such an election by Bank to exercise its rights
under
this Section. Furthermore, promptly upon demand by Bank, Borrower shall
take
such actions and execute such documents as may be necessary to facilitate
Bank's
exercise of its rights hereunder, including (i) delivering to
Bank all then
existing Sales Contracts, (ii) delivering, jointly with Bank,
notices to
purchasers of the assignment of their respective Sales Contracts,
(iii) conveying fee simple title to the purchaser of any of the
Houses by a
proper, recordable warranty deed in connection with the closing of a
transaction
under any of the Sales Contracts, and (iv) instructing any necessary
party,
such as a title company handling a closing, to pay to Bank the proceeds
of sale
which would otherwise have been paid or payable to Borrower.
(c) Borrower
shall indemnify, defend and hold Bank and its affiliates harmless from
and
against any and all losses, liabilities, obligations, penalties, claims,
fines,
lost profits, demands, litigation, defenses, costs, judgments, suits,
proceedings, damages, disbursements or expenses of any kind or nature
whatsoever
(including attorneys' fees and expenses), consequential or otherwise,
which may
at any time be either directly or indirectly imposed upon, incurred by
or
asserted or awarded against Bank or any of Bank's affiliates in connection
with,
arising from or relating to any action or actions taken by Bank pursuant
to this
section prior to a foreclosure by Bank of the Mortgaged Property or other
taking
of title by Bank in lieu of foreclosure of the Mortgaged Property, INCLUDING
ANY CLAIMS, LOSSES, COSTS, DAMAGES, LIABILITIES, OBLIGATIONS, AND EXPENSES
RESULTING FROM BANK'S OWN NEGLIGENCE, EXCEPT
AND TO THE EXTENT BUT ONLY TO THE EXTENT CAUSED BY BANK'S GROSS NEGLIGENCE
OR
WILLFUL MISCONDUCT.
Borrower's duty and obligation to defend, indemnify and hold harmless
Bank shall
survive the payment of the Indebtedness and the release, partial release
or
foreclosure (or action in lieu of foreclosure) of the Liens of the Deeds
of
Trust, and the exercise by Bank of any and all remedies set forth herein
or in
the other Loan Documents.
(d) So
long
as no Event of Default has occurred, Borrower may continue to receive
and
exercise all of its rights, benefits and privileges under the Sales Contracts,
except as herein restricted or provided otherwise.
(e) Neither
the assignment contained in this Section, nor any action or actions on
the part
of Bank, shall constitute an assumption of any of the covenants, agreements
or
obligations of Borrower by Bank under the Sales Contracts and Borrower
shall
continue to be liable for all such covenants, agreements or obligations.
Borrower shall indemnify, defend and hold Bank and its affiliates harmless
from
and against any and all losses, liabilities, obligations, penalties,
claims,
fines, lost profits, demands, litigation, defenses, costs, judgments,
suits,
proceedings, damages, disbursements or expenses of any kind or nature
whatsoever
(including attorneys' fees and expenses), consequential or otherwise,
which may
at any time be either directly or indirectly imposed upon, incurred by
or
asserted or awarded against Bank or any of Bank's affiliates in connection
with,
arising from or relating to any failure of Borrower to perform and observe
any
of such obligations, INCLUDING
ANY CLAIMS, LOSSES, COSTS, DAMAGES, LIABILITIES, OBLIGATIONS, AND EXPENSES
RESULTING FROM BANK'S OWN NEGLIGENCE, EXCEPT AND TO THE EXTENT, BUT ONLY
TO THE
EXTENT, CAUSED BY BANK'S GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT.
Borrower's duty and obligation to defend, indemnify and hold harmless
Bank shall
survive the payment of the Indebted-ness and the release, partial release
or
foreclosure (or action in lieu of foreclosure) of the Liens of the Deeds
of
Trust, and the exercise by Bank of any and all remedies set forth herein
or in
the other Loan Documents.
(f) Bank
shall have the right, at any time (but shall have no obligation), to
take in its
name or in the name of Borrower or otherwise, such action as Bank may
at any
time or from time to time reasonably determine to be necessary to protect
the
rights of Bank as the assignee of Borrower hereunder. Bank shall incur
no
liability on account of any action taken by it or on its behalf in good
faith
pursuant to the foregoing sentence or otherwise hereunder, whether or
not the
same shall prove to be improper, inadequate or invalid, in whole or in
part.
(g) Upon
the
full and complete payment and performance of all of the covenants, agreements
and obligations of Borrower to Bank arising under this Agreement and
the other
Loan Documents, the assignment contained in this Section shall become
null and
void.
4.16 Assignment
of Construction Contract.
Borrower, as additional security for the payment and performance of the
covenants, agreements and obligations of Borrower to Bank arising under
this
Agreement and under all of the Loan Documents, hereby grants a security
interest
in, and sells, transfers, assigns and sets over, to Bank, its successors
and
assigns, all of Borrower's title and interest in and to, and Borrower's
rights,
benefits and privileges under, each Construction Contract upon the following
terms and conditions:
(a) Borrower
represents and warrants that the copy of each Construction Contract the
Borrower
has furnished or will furnish to Bank is or will be (as applicable) a
true and
complete copy thereof, including all amendments thereto, if any, and
that
Borrower's interest therein is not subject to any claim, setoff or
encumbrance.
(b) Neither
this assignment nor any action by Bank shall constitute an assumption
by Bank 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 Bank harmless against and from any loss,
cost,
liability or expense (including attorneys' fees) resulting from any failure
of
Borrower to so perform.
(c) Bank
shall have the right at any time (but shall have no obligation) to take
in its
name or in the name of Borrower such action as Bank may at any time determine
to
be reasonably necessary or advisable to cure any default by Borrower
under any
Construction Contract or to protect the rights of Borrower or Bank thereunder.
Bank 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 Bank harmless against and from any loss, cost, liability or expense
(including reasonable attorneys' fees) incurred in connection with any
such
action.
(d) Effective
automatically upon and at all times during the continuance of an Event
of
Default, Borrower hereby irrevocably constitutes and appoints Bank as
Borrower's
attorney-in-fact, in Borrower's or Bank's name, to enforce all rights
of
Borrower under each Construction Contract. Such appointment is coupled
with an
interest and is therefore irrevocable.
(e) Prior
to
the occurrence of an Event of Default, Borrower shall have the right
to exercise
its rights as owner under each Construction Contract, provided that Borrower
shall not cancel or amend any Construction Contract or do or suffer to
be done
any act which would impair the security constituted by this assignment
without
the prior written consent of Bank.
(f) This
assignment shall inure to the benefit of Bank and its successors and
assigns,
any purchaser upon foreclosure of the Deed of Trust, any receiver in
possession
of the Mortgaged Property and any entity affiliated with Bank which assumes
Bank's rights and obligations under this Agreement.
4.17 Assignment
of Plans.
Borrower, as additional security for the payment and performance of the
covenants, agreements and obligations of Borrower to Bank arising under
this
Agreement and under all of the Loan Documents, hereby grants a security
interest
in, and sells, transfers, assigns and sets over, to Bank, its successors
and
assigns, all of Borrower's title and interest in and to, and Borrower's
rights,
benefits and privileges under, the Plans and hereby represents and warrants
to
and agrees with Bank as follows:
(a) Each
schedule of the Plans delivered or to be delivered to Bank is and shall
be a
complete and accurate description of the Plans.
(b) The
Plans
are and shall be complete and adequate for the construction of the Houses
and
there have been no modifications thereof except as described in such
schedule.
Subject to Section 4.13(i)
of this
Addendum
2,
the
Plans shall not be modified without the prior written consent of
Bank.
(c) Bank
may
use the Plans for any purpose relating to the Houses, including inspections
of
construction and the completion of the Houses.
(d) Bank's
acceptance of this assignment shall not constitute approval of the Plans
by
Bank. Bank has no liability or obligation in connection with the Plans
and no
responsibility for the adequacy thereof or for the construction of the
Houses
contemplated by the Plans. Bank has no duty to inspect the Houses, and
if Bank
should inspect the Houses, Bank shall have no liability or obligation
to
Borrower or any other party arising out of such inspection. No such inspection
nor any failure by Bank to make objections after any such inspection
shall
constitute a representation by Bank that the Houses are in accordance
with the
Plans or any other requirement or constitute a waiver of Bank's right
thereafter
to insist that the Houses be constructed in accordance with the Plans
or any
other requirement.
(e) This
assignment shall inure to the benefit of Bank and its successors and
assigns,
any purchaser upon foreclosure of the Deed of Trust, any receiver in
possession
of the Mortgaged Property and any entity affiliated with Bank which assumes
Bank's rights and obligations under this Agreement.
ADDENDUM
3
RELEASE
PROVISIONS
(Terms
used with initial capital letters in this Addendum
3
that are
not specifically defined in this Agreement shall have the meanings ascribed
to
them in the Deeds of Trust.)
1. Release
Prices.
(a) Primary
Collateral.
The
Partial Release Price for Primary Collateral shall be as follows: The
payment to
Bank of a Partial Release Price equal to one hundred percent (100%) of
the Net
Proceeds, which Net Proceeds shall in no event be less than (i) eighty-five
percent (85%) of the discounted appraised value (hereinafter referred
to as
“Appraised
Value”)
of
that portion of the Primary Collateral other than Developed Lots which
is being
released and (ii) with respect to that portion of the Primary Collateral
consisting of Developed Lots, one hundred percent (100%) of the discounted
Appraised Value of that portion of the Primary Collateral for each Developed
Lot
being released. See Addendum
3-1
attached
hereto for the schedule of Appraised Value.
(b) Other
Collateral.
The
Partial Release Price for Other Collateral shall be as follows: The payment
to
Bank of a Partial Release Price equal to one hundred percent (100%) of
the Net
Proceeds, which Net Proceeds shall in no event be less than eighty-five
percent
(85%) of the assigned value (hereinafter referred to as “Assigned
Value”)
established by Bank and Borrower for each of the Tracts of Other Collateral,
which value shall (i) be established based on values for similar properties
which have been appraised as part of the Primary Collateral, and (ii)
be
determined on a per square foot basis. See Addendum
3-2
attached
hereto for the schedule of Assigned Value.
(c) MUD
Reimbursables, Credit Banks, Etc..
The
Partial Release Price for MUD Reimburseables, Credit Banks, notes receivable,
accounts receivable and Partnership Distributions (as defined in Section
2.18
of
Addendum
2
hereof)
shall be equal to one hundred percent (100%) of the Net Proceeds.
(d) Related
Party Sales.
The
foregoing notwithstanding, the Partial Release Price for Primary Collateral
or
Other Collateral for sale to a Related Party shall be as follows: The
payment of
a Partial Release Price equal to one hundred percent (100%) of all cash
proceeds
received by Borrower, which cash proceeds shall in no event be less than
the
greater of (i) fifty percent (50%) of the Appraised Value for Primary
Collateral
or fifty percent (50%) of the Assigned Value for Other Collateral, as
applicable, of the Primary Collateral or Other Collateral being released;
or
(ii) fifty percent (50%) of the gross sales price paid by the Related
Party. The
gross sales price (i.e., cash proceeds and all other considerations)
for the
sale to the Related Party will not be less than eighty-five percent (85%)
of the
applicable Appraised Value or Assigned Value.
(f) Bank
Financed Projects.
The
foregoing notwithstanding, no release price will be required for the
release of
either Primary Collateral or Other Collateral from the lien of the Deeds
of
Trust in the event such Primary Collateral or Other Collateral is the
subject of
additional project financing by Bank pursuant to a separate loan between
any
Loan Party and Bank, and only so long as (i) in connection with such
loan, Bank
has a priority lien and security interest in such Primary Collateral
or Other
Collateral securing repayment of such loan (subject only to Liens in
favor of
Bank), (ii) such Loan Party owns 100% of the Primary Collateral or Other
Collateral which is the subject of such separate loan, and any and all
equity in
the project is funded solely by Borrower without any third-parties having
any
ownership or equity interest therein, (iii) such loan is cross-defaulted
and
cross collateralized with the Loan to the extent required by Bank; and
(iv) any
ownership interest of Borrower in a Related Party into which Primary
Collateral
or Other Collateral has been transferred will, if required by Bank, be
assigned
to Bank as security for the Indebtedness, and Borrower agrees to execute
and
deliver to Bank an Assignment of Partnership Interest in such form and
content
as Bank may require. If the Land sought to be released as provided above
is
Primary Collateral, then such Primary Collateral shall be removed from
the
borrowing base (i.e., such Primary Collateral shall be removed from the
Borrowing Base Limitation calculations for purposes of determining the
Maximum
Loan Amount allowed hereunder). Except as modified hereby, all of the
release
provisions (including, without limitation, the provisions requiring payment
of a
release price) as set forth in the Loan Agreement will continue to apply
with
respect to any release of Primary Collateral or Other Collateral.
(e) Calera
Court Lots.
As each
Calera Court Lot is transferred into the Calera Court Construction Loan,
an
amount equal to $58,597 for such Calera Court Lot shall be deemed outstanding
under the Calera Court Construction Loan for purposes of calculating
the amount
advanced against the Calera Court Sublimit.
2. Release
Conditions.
Notwithstanding anything contained herein to the contrary, the location
and
configuration of the tract or tracts, requested to be released (herein
called
“Tract”
or
“Tracts”)
shall
be reasonably satisfactory to Bank and no Partial Release shall result
in any
remaining Tract being without access to a public street (which may be
via a
private drive or private street providing perpetual means of access).
Any and
all Partial Releases shall be in accordance with the following
procedures:
(a) Borrowers'
request for a Partial Release shall be given to Bank and accompanied
by (i) the
legal description of the Tract or Tracts to be released, together with
a draft
closing statement prepared for the proposed sale; (ii) information necessary
to
process the request for Partial Release, including whether the property
to be
released is Primary Collateral or Other Collateral and whether it is
being sold
to a Related Party; (iii) any appraisal reconciliation of value information
as
may be required by Bank, together with a reimbursement of the cost of
same,
which cost shall not exceed $750.00; and (iv) the name and address of
the title
company, if any, to whose attention the Partial Release Instrument (as
hereinafter defined) should be directed, numbers that should be referenced
(order number, loan number, etc.) and the date when such Partial Release
is to
be made. Borrowers shall also specify the name and address of the prospective
purchaser and the intended use of the or Tract to be released and shall
supply
such other documents and information concerning such Partial Release
as Bank may
reasonably request.
(b) Within
five (5) days after receipt of such request, and in accordance with and
pursuant
to the terms and conditions of this Addendum 3 and the other applicable
provisions of this Agreement, Bank shall execute an instrument effecting
such
Partial Release (“Partial
Release Instrument”)
and
deliver same to the title company so specified; provided that all costs
and
expenses of Bank associated with such Partial Release (including, but
not
limited to, reasonable legal fees) shall be paid by Borrowers. Borrowers
shall
also obtain all title insurance endorsements reasonably required by Bank
in
connection with such Partial Release.
(c) The
execution and delivery of such Partial Release Instrument shall not affect
any
of Borrowers' obligations under the Loan Documents, except that the payment
of
the Partial Release Price must be actually received by Bank. Regardless
of the
time such Partial Release is executed, delivered and recorded, the payment
made
by Borrowers to Bank in respect to such Partial Release shall be credited
against the Indebtedness in accordance with the terms of this Agreement
only
upon receipt by Bank of the Partial Release Price. The Partial Release
Instrument shall be delivered, in escrow, by Bank to the title company
so
designated, to be held, released, delivered and recorded in accordance
with
Bank’s escrow instructions, which shall require payment, in cash, of the Partial
Release Price to Bank prior to delivery and recordation of the Partial
Release
Instrument.
|
Addendum
3-1 (b) Revised December 31, 2004
|
||||||||||||||||||||
|
Primary
Collateral - Xxxxxx Creek
|
||||||||||||||||||||
|
Schedule
of Release Prices
|
||||||||||||||||||||
|
Inputs
|
Report
for month ending:
|
|||||||||||||||||||
|
|
|
|
|
|
|
Actual
|
||||||||||||||
|
Tract
Description1
|
Release
Price Requirements2
|
|
Quantity
|
|
|
|
Rel.
Pty
|
|||||||||||||
|
Ref
#
|
Land
Use
|
Projected
|
Gross
Area
|
Appraised
Value 4
|
Min.
Net Proceeds Req'd
|
|
Released
|
Release
Price Achieved
|
Net
Proceeds
|
%
of
|
Date
|
Transaction?
|
||||||||
|
|
Type
|
Unit
Density
|
(Acres)
|
Unit
Price
3
|
Extended
Amount 2
|
(50%
for rel. pty.; 85% all others)
|
|
(Gross
Acres)
|
Unit
Price
|
Extended
Amount
|
at
Closing
|
Value
|
Released
|
(Yes/No)
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
BCN1
|
Retail
- Sm
|
14,000
SF
|
2.6683
|
$
87,600
|
$
233,700
|
85%
|
$
199,000
|
|
0.0000
|
$
-
|
$
-
|
$
-
|
0.0%
|
|
||||||
|
BCN1
|
Single
Family
|
1
lot
|
1.3836
|
$
13,600
|
$
18,800
|
85%
|
$
16,000
|
|
0.0000
|
$
-
|
$
-
|
$
-
|
0.0%
|
|
||||||
|
XXX00,
Xxxx. E
|
Ind.
Living
|
1
ea
|
27.8000
|
$
81,800
|
$
2,274,000
|
85%
|
$
1,933,000
|
|
0.0000
|
$
-
|
$
-
|
$
-
|
0.0%
|
|
||||||
|
XXX00,
Xxxx. E
|
Retail
- Sm
|
27,800
SF
|
4.0360
|
$
86,000
|
$
347,100
|
85%
|
$
295,000
|
|
0.0000
|
$
-
|
$
-
|
$
-
|
0.0%
|
|
||||||
|
XXX00,
Xxxx. ABC
|
Ind.
Living
|
1
ea
|
10.2000
|
$
81,800
|
$
834,400
|
85%
|
$
709,000
|
|
0.0000
|
$
-
|
$
-
|
$
-
|
0.0%
|
|
||||||
|
XXX00,
Xxxx. ABC 4
|
Single
Family
|
47
lots
|
120.2450
|
$
72,772
|
$
3,420,300
|
85%
|
$
2,907,000
|
|
18.0000
|
$
196,120
|
$
3,530,200
|
$
3,165,571
|
92.6%
|
Note
5
|
No
|
|||||
|
Pod
#9, Sect. ABC
|
Single
Family
|
1
lot
|
82.8600
|
$
-
|
$
-
|
85%
|
$
-
|
|
82.8600
|
$
21,120
|
$
1,750,000
|
$
1,647,804
|
#DIV/0!
|
29-Sep-04
|
No
|
|||||
|
BCN17,
Sect. E
|
Retail
- Sm
|
27,800
SF
|
4.0960
|
$
87,600
|
$
358,800
|
85%
|
$
305,000
|
|
0.0000
|
$
-
|
$
-
|
$
-
|
0.0%
|
|
||||||
|
XXX0,
Xxxx. X - Xxxxxx Xxxxx
|
Single
Family
|
53
lots
|
70.0000
|
$
13,600
|
$
952,000
|
85%
|
$
809,000
|
|
0.0000
|
$
-
|
$
-
|
$
-
|
0.0%
|
|
||||||
|
BCS1,
Sect. H
|
Single
Family
|
74
lots
|
124.9190
|
$
13,600
|
$
1,698,900
|
|
|
|
|
|
|
|
|
|||||||
|
BCS2,
Sect. I
|
Single
Family
|
125
lots
|
288.2000
|
$
13,600
|
$
3,919,500
|
85%
|
$
3,332,000
|
|
0.0000
|
$
-
|
$
-
|
$
-
|
0.0%
|
|
||||||
|
BCS2,
Sect. I
|
Single
Family
|
40
lots
|
79.4240
|
$
13,600
|
$
1,080,200
|
85%
|
$
918,000
|
|
0.0000
|
$
-
|
$
-
|
$
-
|
0.0%
|
|
||||||
|
BCS4,
Sect. K
|
Single
Family
|
54
lots
|
113.7450
|
$
13,600
|
$
1,546,900
|
85%
|
$
1,315,000
|
|
0.0000
|
$
-
|
$
-
|
$
-
|
0.0%
|
|
||||||
|
BCS5,
Sect. L
|
Single
Family
|
222
lots
|
164.1300
|
$
13,600
|
$
2,232,200
|
85%
|
$
1,897,000
|
|
0.0000
|
$
-
|
$
-
|
$
-
|
0.0%
|
|
||||||
|
BCS7,
Sect. N
|
Retail
- Lg
|
1,500,000
SF
|
317.3350
|
$
12,900
|
$
4,093,600
|
85%
|
$
3,480,000
|
|
0.0000
|
$
-
|
$
-
|
$
-
|
0.0%
|
|
||||||
|
BCS7,
Sect. N
|
Multi-Family
|
1,860
units
|
300.0000
|
$
28,300
|
$
8,490,000
|
85%
|
$
7,217,000
|
|
0.0000
|
$
-
|
$
-
|
$
-
|
0.0%
|
|
||||||
|
BCS8,
Sect. O
|
Single
Family
|
237
lots
|
217.2250
|
$
13,600
|
$
2,954,300
|
85%
|
$
2,511,000
|
|
0.0000
|
$
-
|
$
-
|
$
-
|
0.0%
|
|
||||||
|
Xxxxx
& Xxxxxx Xxxx Outparcels
|
Outparcels
|
3
ea
|
30.7850
|
$
58,900
|
$
1,813,200
|
85%
|
$
1,541,000
|
|
0.0000
|
$
-
|
$
-
|
$
-
|
0.0%
|
|
||||||
|
BCS,
N/A
|
Roadways
|
N/A
|
6.4400
|
$
-
|
$
-
|
85%
|
$
-
|
|
0.0000
|
$
-
|
$
-
|
$
-
|
N/A
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
|
Subtotal:
|
1965.4919
|
Subtotal:
|
$
36,267,900
|
|
|
|
|
|
|
||||||||||
|
|
Less
Releases:
|
(82.8600)
|
Less
improvemts BCN14-Wimb Ph 2:
|
(1,785,000)
|
|
|
|
|
|
|
||||||||||
|
|
|
Total:
|
1882.6319
|
Total:
|
$
34,482,900
|
|
$
29,384,000
|
|
100.8600
|
$
-
|
$
5,280,200
|
$
4,813,375
|
|
|
|
|||||
|
1.
Source:p. 71, December 31, 2004 appraisal by Dugger, Canaday,
Xxxxx, Inc.
($34.5M value)
|
||||||||||||||||||||
|
2.
Dollar amount rounded to the nearest $500.
|
Summary
by Land Use Type
|
|||||||||||||||||||
|
3.
Source:Summary Land Use Table on this sheet & Separate Release Price
Derivation Worksheet.
|
Land
Use Type
|
Gross
Area (Acres)
|
Value/Acre2
|
|||||||||||||||||
|
4.
BCN14, Sect ABC, Xxxxxxxx Phase 2 appraised value is $13,600/acre
plus
$1,785,000 for improvements.
|
Multi-Family
|
300.0000
|
28,300
|
|||||||||||||||||
|
5.
Lots sold as follows:
|
Independent
Living
|
38.0000
|
81,800
|
|||||||||||||||||
|
December-04
|
6
|
|
Retail
- Sm
|
10.8003
|
87,600
|
|||||||||||||||
|
February-05
|
1
|
Retail
- Lg
|
317.3350
|
12,900
|
||||||||||||||||
|
April-05
|
5
|
Single
Family
|
1,179.2716
|
13,600
|
||||||||||||||||
|
May-05
|
2
|
|
|
|
||||||||||||||||
|
July-05
|
3
|
Outparcels
|
30.7850
|
58,900
|
||||||||||||||||
|
August-05
|
1
|
Roadways
|
6.440
|
-
|
||||||||||||||||
|
18
|
Total/Average1:
|
1,882.6319
|
$
18,300
|
|||||||||||||||||
|
1
Average
Value/Acre includes Open/Other acreage.
|
||||||||||||||||||||
EXHIBIT
A
Primary
Collateral - Legal Description
EXHIBIT
B
Other
Collateral - Legal Description
None.
EXHIBIT
C
Form
of Borrowing Base Certificate
|
Stratus
Properties, Inc.
|
Date:
|
|||||||
|
Borrowing
Base Summary
|
||||||||
|
As
of 6/30/05
|
||||||||
|
|
|
Appraised
|
|
Advance
|
|
|
||
|
Borrowing
Base Assets
|
|
Value
|
|
Rate
|
|
Availability
|
||
|
|
|
|||||||
|
Unimproved
Land
|
$
57,800,000
|
45%
|
$
26,010,000
|
|||||
|
|
|
|||||||
|
Discounted
Value of MUD
|
|
|||||||
|
Receivables
|
$
21,119,000
|
45%
|
$
9,503,550
|
|||||
|
|
|
|||||||
|
Discounted
Value of Credit
|
|
|||||||
|
Bank
Receivables
|
$
6,521,000
|
45%
|
$
2,934,450
|
|||||
|
|
|
|||||||
|
Land
Under Development
|
$
-
|
75%
|
$
-
|
|||||
|
|
|
|||||||
|
Finished
Lots
|
$
18,066,000
|
75%
|
$
13,549,500
|
|||||
|
TOTAL
|
|
$
103,506,000
|
|
|
|
$
51,997,500
|
||
|
Borrowing
Base Detail
|
||||||||
|
|
|
|
|
Date
added
|
|
Land
Acreage /
|
|
|
|
|
|
Value
|
|
to
Xxxx. Base
|
|
#
of Lots
|
|
Project
Details
|
|
Unimproved
Land Assets:
|
|
|||||||
|
Circle
C
|
$
12,800,000
|
Jan
of 2005
|
463.84
|
Planned
XX lot development.
|
||||
|
Xxxxxx
Creek
|
$
32,600,000
|
Jan
of 2005
|
1,851.85
|
Planned
XX lot development.
|
||||
|
Lantana
|
$
12,400,000
|
Jan
of 2005
|
315.50
|
Planned
XX lot development.
|
||||
|
Subtotal
|
$
57,800,000
|
2,631.19
|
|
|||||
|
|
|
|||||||
|
MUD
& Credit Bank A/R:
|
$
27,640,000
|
Jan
of 2005
|
N/A
|
Discounted
at 6% over 6 years.
|
||||
|
|
|
|||||||
|
Land
Under Development:
|
$
-
|
N/A
|
N/A
|
N/A
|
||||
|
|
|
|||||||
|
Finished
Lots:
|
|
|||||||
|
Mirador
|
$
3,776,000
|
Jan
of 2005
|
13
|
A
29 lot development. Absorption = x
|
||||
|
Calera
Court
|
$
784,000
|
Jan
of 2005
|
9
|
A
17 lot development. Absorption = x
|
||||
|
Escala
|
$
1,878,000
|
Jan
of 2005
|
6
|
A
54 lot development. Absorption = x
|
||||
|
Xxxxxxxx
Phase II
|
$
3,138,000
|
Jan
of 2005
|
31
|
A
31 lot development. Absorption = x
|
||||
|
Calera
Drive
|
$
8,490,000
|
Jan
of 2005
|
53
|
A
53 lot development. Absorption = x
|
||||
|
Subtotal
|
$
18,066,000
|
112
|
|
|||||
|
|
|
|
|
|
|
|
|
|
EXHIBIT
D
MUD
Reimbursables
| 1. |
That
certain Utility
Construction Agreement Between Xxxxxx County Municipal Utility
District
No. 3 and FM Properties Operating Co.,
executed to be effective as of November 30, 1995, as amended
by that
certain First
Amendment to Utility Construction Agreement Between Xxxxxx
County
Municipal Utility District No. 3 and FM Properties Operating
Co.,
executed to be effective as of August 16,
1999.
|
| 2. |
That
certain Utility
Construction Agreement Between Xxxxxx County Municipal Utility
District
No. 4 and FM Properties Operating Co.,
executed to be effective as of November 20, 1995, as amended
by that
certain First
Amendment to Utility Construction Agreement Between Xxxxxx
County
Municipal Utility District No. 4 and FM Properties Operating
Co.,
executed to be effective as of August 16,
1999.
|
| 3. |
That
certain Utility
Construction Agreement Between Xxxxxx County Municipal Utility
District
No. 5 and FM Properties Operating Co.,
executed to be effective as of November 27, 1995, as amended
by that
certain First
Amendment to Utility Construction Agreement Between Xxxxxx
County
Municipal Utility District No. 5and FM Properties Operating
Co.,
executed to be effective as of August 19,
1999.
|
| 4. |
That
certain Utility
Construction Agreement Between Xxxxxx County Municipal Utility
District
No. 6 and FM Properties Operating Co.,
executed to be effective as of November 28, 1995, as amended
by that
certain First
Amendment to Utility Construction Agreement Between Xxxxxx
County
Municipal Utility District No. 6 and FM Properties Operating
Co.,
executed to be effective as of August 17,
1999.
|
| 5. |
That
certain Utility
Construction Agreement Between Xxxxxx County Municipal Utility
District
No. 7 and FM Properties Operating Co.,
executed to be effective as of November 30, 1995, as amended
by that
certain First
Amendment to Utility Construction Agreement Between Xxxxxx
County
Municipal Utility District No. 7 and FM Properties Operating
Co.,
executed to be effective as of August 25,
1999.
|
| 6. |
That
certain Utility
Construction Agreement Between Xxxxxx County Municipal Utility
District
No. 8 and FM Properties Operating Co.,
executed to be effective as of November 28, 1995, as amended
by that
certain First
Amendment to Utility Construction Agreement Between Xxxxxx
County
Municipal Utility District No. 8 and FM Properties Operating
Co.,
executed to be effective as of August 31,
1999.
|
| 7. |
That
certain Utility
Construction Agreement Between Xxxxxx County Municipal Utility
District
No. 9 and FM Properties Operating Co.,
executed to be effective as of November 29, 1995, as amended
by that
certain First
Amendment to Utility Construction Agreement Between Xxxxxx
County
Municipal Utility District No. 9 and FM Properties Operating
Co.,
executed to be effective as of August 25,
1999.
|
EXHIBIT
E
Request
for Advance
The
undersigned hereby requests COMERICA BANK ("Bank")
to
make an Advance under the Loan to the undersigned on _________________,
in the
amount of ________________________ Dollars ($_________) under the Loan
Agreement
dated as of September 30, 2005, by and between the undersigned and Bank
(the
"Credit
Agreement").
The
undersigned represent, warrant and certify that no Default or Event of
Default
has occurred and is continuing under the Loan Agreement, and none will
exist
upon the making of the Advance requested hereunder. The undersigned further
certify that upon making the Advance in the amount of the sum requested
hereunder, the aggregate principal amount outstanding under the Note
will not
exceed the Maximum Loan Amount.
The
undersigned hereby authorize Bank to disburse the proceeds of the Advance
being
requested by this Request for Advance by crediting the Special Account
of the
undersigned with Bank separately designated by the undersigned or as
the
undersigned and Bank may otherwise agree.
Capitalized
terms used but not otherwise defined herein shall have the respective
meanings
given to them in the Loan Agreement.
Dated
this ___ day of ______________, __________.
a
Delaware corporation
By:
Xxxx
X.
Xxxxx, Senior Vice President
STRATUS
PROPERTIES OPERATING CO., L.P.,
a
Delaware limited partnership
|
By:
|
STRS
L.L.C., a Delaware limited liability company, General
Partner
|
|
By:
|
Stratus
Properties Inc., a Delaware corporation, its General
Partner
|
By:
Xxxx
X.
Xxxxx,
Senior
Vice President
CIRCLE
C LAND, L.P.,
a
Texas
limited partnership
|
By:
|
Circle
C GP, L.L.C., a Delaware limited liability company, General
Partner
|
|
By
|
Stratus
Properties Inc., a Delaware corporation, Sole
Member
|
By:
Xxxx
X.
Xxxxx,
Senior
Vice President
AUSTIN
290 PROPERTIES, INC.,
a
Texas
corporation
By:
Xxxx
X.
Xxxxx, Senior Vice President
CALERA
COURT, L.P. a
Texas
limited partnership
|
By:
|
Calera
Court Management, L.L.C., a Texas limited liability company,
its general
partner
|
|
By:
|
Stratus
Properties Operating Co., L.P., a Delaware limited partnership,
its
Manager
|
|
By:
|
STRS
L.L.C., a Delaware limited liability company, its general
partner
|
|
By:
|
Stratus
Properties Inc., a Delaware corporation, its
Manager
|
By:
Xxxx X. Xxxxx,
Senior Vice President
EXHIBIT
F
Form
of Compliance Certificate
This
Compliance Certificate is executed and delivered to Comerica Bank ("Bank")
by
Stratus Properties Inc., Stratus Properties Operating Co, L.P., Circle
C Land,
L.P., and Austin 290 Properties, Inc. ("Borrower"),
this
_____ day of ______________, _____. All capitalized terms used but not
defined
herein, shall have the meanings given to such terms in that certain Loan
Agreement, dated as of September 30, 2005, between Bank and Borrower
(as
renewed, extended, modified and restated from time to time, the "Loan
Agreement").
The
undersigned hereby certifies to Bank as follows:
(1) The
undersigned are authorized to make and deliver this Certificate.
(2) The
undersigned have reviewed the provisions of the Loan Agreement and confirms
that, as of the date hereof:
(a) the
representations and warranties contained in Section
3
of the
Loan Agreement are true and correct in all material respects on and as
of the
date hereof with the same force and effect as though made on and as of
the date
hereof;
(b) no
Default or Event of Default has occurred and is continuing or is imminent,
and
to Borrower's best knowledge after diligent inquiry, Borrower has complied
with
all of the terms, covenants and conditions set forth in the Loan
Agreement.
(c) The
Tangible Net Worth of Borrower on a consolidated basis as of the calendar
quarter ended _____________ is __________________.
(d) The
Debt-to-Tangible Net Worth Ratio of Borrower on a consolidated basis
as of the
calendar quarter ended _____________ is __________________.
STRATUS
PROPERTIES INC.,
a
Delaware corporation
By:
Xxxx
X.
Xxxxx, Senior Vice President
STRATUS
PROPERTIES OPERATING CO., L.P.,
a
Delaware limited partnership
|
By:
|
STRS
L.L.C., a Delaware limited liability company, General
Partner
|
|
By:
|
Stratus
Properties Inc., a Delaware corporation, its General
Partner
|
By:
Xxxx
X.
Xxxxx,
Senior
Vice President
CIRCLE
C LAND, L.P.,
a
Texas
limited partnership
|
By:
|
Circle
C GP, L.L.C., a Delaware limited liability company, General
Partner
|
|
By
|
Stratus
Properties Inc., a Delaware corporation, Sole
Member
|
By:
Xxxx
X.
Xxxxx,
Senior
Vice President
AUSTIN
290 PROPERTIES, INC.,
a
Texas
corporation
By:
Xxxx
X.
Xxxxx, Senior Vice President
SCHEDULE
3.5
Subsidiaries
See
attached.
SCHEDULE
3.10
Material
Litigation
None.
SCHEDULE
3.14
Employee
Benefit Plans
None.
SCHEDULE
3.16
Environmental
Disclosures
None.
SCHEDULE
3.19
Equity
Ownership
