Exhibit 10.1

 

THIRD AMENDED AND RESTATED MASTER CREDIT AGREEMENT

 

DATED AUGUST 8, 2013

 

among

 

THE WOODLANDS COMMERCIAL PROPERTIES COMPANY, L.P.,

 

THE WOODLANDS LAND DEVELOPMENT COMPANY, L.P.,

 

and

 

KEYBANK NATIONAL ASSOCIATION,

 

and

 

THE OTHER LENDERS THAT ARE A PARTY

TO THIS AGREEMENT

 

and

 

OTHER LENDERS WHICH MAY BECOME

PARTIES TO THIS AGREEMENT

 

AND

 

KEYBANK NATIONAL ASSOCIATION,

AS AGENT

 

AND

 

KEYBANC CAPITAL MARKETS,

AS LEAD MANAGER AND ARRANGER

 

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TABLE OF CONTENTS

 

 

 

Page

 

 

 

§1.

DEFINITIONS AND RULES OF INTERPRETATION; AMENDMENT AND RESTATEMENT

1

 

 

 

 

§1.1

Definitions

1

 

§1.2

Rules of Interpretation

34

 

§1.3

Amendment and Restatement

35

 

 

 

§2.

THE REVOLVING CREDIT FACILITY

35

 

 

 

 

§2.1

Commitment to Lend Revolving Credit Loans

35

 

§2.2

Unused Fee

36

 

§2.3

Optional Reduction of Revolving Credit Commitment

36

 

§2.4

Evidence of Debt

37

 

§2.5

Interest on Revolving Credit Loans

38

 

§2.6

Requests for Revolving Credit Loans

38

 

§2.7

Funds for Revolving Credit Loans

39

 

 

 

 

§2A.

THE SECURED TERM LOAN FACILITY

40

 

 

 

 

§2A.1

Commitment to Lend Commercial Company Secured Term Loan

40

 

§2A.1A

Commitment to Lend Land Company Secured Term Loan

40

 

 

 

§2B.

OPTIONAL REDUCTION OF REVOLVING CREDIT COMMITMENT

41

 

 

 

§2C.

OPTIONAL REDUCTION OF REVOLVING CREDIT COMMITMENT

41

 

 

 

§3.

REPAYMENT OF THE LOANS

43

 

 

 

 

§3.1

Stated Maturity

43

 

§3.2

Mandatory Prepayments

43

 

§3.3

Optional Prepayments

43

 

§3.4

Partial Prepayments

43

 

§3.5

Effect of Prepayments

44

 

 

 

§4.

CERTAIN GENERAL PROVISIONS

44

 

 

 

 

§4.1

Conversion Options; Number of LIBOR Contracts

44

 

§4.2

Closing Fees

45

 

§4.3

Agent Fee

45

 

§4.4

Funds for Payments

45

 

§4.5

Computations

47

 

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(continued)

 

 

 

Page

 

 

 

 

§4.6

Inability to Determine LIBOR Rate

47

 

§4.7

Illegality

47

 

§4.8

Additional Interest

47

 

§4.9

Additional Costs, Etc.

48

 

§4.10

Capital Adequacy

49

 

§4.11

Indemnity of Borrowers

49

 

§4.12

Interest Following Default; Late Charge

50

 

§4.13

Certificate

50

 

§4.14

Limitation on Interest

50

 

§4.15

Extension of Maturity Date

52

 

 

 

§5.

COLLATERAL SECURITY AND GUARANTY

53

 

 

 

 

§5.1

Collateral

53

 

§5.2

Appraisals; Adjusted Value

54

 

§5.3

[Intentionally Omitted.]

55

 

§5.4

Releases of Certain Liens

55

 

§5.5

Release of Mortgaged Property; Consent to Easements

56

 

§5.6

Additional Guarantors

57

 

§5.7

Release of Collateral

58

 

 

 

§6.

REPRESENTATIONS AND WARRANTIES

58

 

 

 

 

§6.1

Corporate Authority, Etc.

58

 

§6.2

Governmental Approvals

59

 

§6.3

Title to Properties; Leases

59

 

§6.4

Financial Statements

59

 

§6.5

No Material Changes

60

 

§6.6

Franchises, Patents, Copyrights, Etc.

60

 

§6.7

Litigation

60

 

§6.8

No Materially Adverse Contracts, Etc.

61

 

§6.9

Compliance with Other Instruments, Laws, Etc.

61

 

§6.10

Tax Status

61

 

§6.11

No Event of Default

61

 

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TABLE OF CONTENTS

(continued)

 

 

 

Page

 

 

 

 

§6.12

Investment Company Act

61

 

§6.13

Absence of UCC Financing Statements, Etc.

61

 

§6.14

Setoff, Etc.

62

 

§6.15

Certain Transactions

62

 

§6.16

Employee Benefit Plans

62

 

§6.17

ERISA Taxes

62

 

§6.18

Plan Payments

63

 

§6.19

Regulations U and X

63

 

§6.20

Environmental Compliance

63

 

§6.21

Subsidiaries

64

 

§6.22

Loan Documents

64

 

§6.23

Property

65

 

§6.24

Material Agreements

65

 

§6.25

Brokers

66

 

§6.26

Partners

66

 

§6.27

Options to Acquire; Restrictions on Development

66

 

§6.28

Restricted Subsidiaries

66

 

§6.29

Fair Consideration

66

 

§6.30

Solvency

67

 

§6.31

No Bankruptcy Filing

67

 

§6.32

Other Debt

67

 

§6.33

OFAC

67

 

§6.34

Additional Land

67

 

§6.35

Affiliate Leases; Management Agreements

68

 

§6.36

Guarantor Contribution Agreement

68

 

§6.37

Borrowing Base Assets

68

 

 

 

 

§7.

AFFIRMATIVE COVENANTS OF THE BORROWERS

68

 

 

 

 

§7.1

Punctual Payment

68

 

§7.2

Maintenance of Office

68

 

§7.3

Records and Accounts

69

 

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TABLE OF CONTENTS

(continued)

 

 

 

 

Page

 

 

 

 

 

§7.4

Financial Statements, Certificates and Information

69

 

§7.5

Notices

71

 

§7.6

Existence; Maintenance of Properties

73

 

§7.7

Insurance

73

 

§7.8

Taxes

77

 

§7.9

Inspection of Properties and Books

78

 

§7.10

Compliance with Laws, Contracts, Licenses, and Permits

78

 

§7.11

Use of Proceeds

78

 

§7.12

Further Assurances

78

 

§7.13

Management

78

 

§7.14

Leases; Development

79

 

§7.15

ERISA Compliance

79

 

§7.16

Interest Cap

79

 

§7.17

Partnership Pledge; Assignment of Notes; Additional Real Estate

79

 

§7.18

Business Operations

80

 

§7.19

Borrowing Base Assets

80

 

§7.20

Acquisition of Real Estate

82

 

§7.21

Distribution of Income to the Borrowers

82

 

§7.22

More Restrictive Agreements

82

 

§7.23

Associations

82

 

§7.24

Acquisition of Interest Rate Protection

83

 

§7.25

Condemnation

83

 

 

 

 

§8.

CERTAIN NEGATIVE COVENANTS OF THE BORROWERS

84

 

 

 

 

 

§8.1

Restrictions on Indebtedness

84

 

§8.2

Restrictions on Liens, Etc.

88

 

§8.3

Restrictions on Investments

89

 

§8.4

Merger, Consolidation

90

 

§8.5

Sale and Leaseback

90

 

§8.6

Compliance with Environmental Laws

90

 

§8.7

Distributions

91

 

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TABLE OF CONTENTS

(continued)

 

 

 

 

Page

 

 

 

 

 

§8.8

Asset Sales

93

 

§8.9

Development

94

 

§8.10

Sources of Capital

96

 

§8.11

Restriction on Prepayment of Indebtedness

96

 

§8.12

Restrictions on Amendments; Transfers

96

 

§8.13

Transfers

96

 

 

 

 

§9.

FINANCIAL COVENANTS OF THE BORROWERS

96

 

 

 

 

 

§9.1

Liabilities to Market Value Capitalization Ratio

96

 

§9.2

Interest Coverage

97

 

§9.3

Borrowing Base

97

 

§9.4

Market Value Net Worth

97

 

 

 

 

§10.

CLOSING CONDITIONS

97

 

 

 

 

 

§10.1

Loan Documents

97

 

§10.2

Certified Copies of Organizational Documents

97

 

§10.3

Bylaws; Resolutions

98

 

§10.4

Incumbency Certificate; Authorized Signers

98

 

§10.5

Opinion of Counsel

98

 

§10.6

Payment of Fees

98

 

§10.7

[Intentionally omitted.]

98

 

§10.8

[Intentionally Omitted.]

98

 

§10.9

Insurance

99

 

§10.10

Performance; No Default

98

 

§10.11

Representations and Warranties

98

 

§10.12

Proceedings and Documents

99

 

§10.13

Collateral Qualification Documents

99

 

§10.14

Compliance Certificate

99

 

§10.15

Consents

99

 

§10.16

Other Documents

99

 

§10.17

No Condemnation/Taking

99

 

§10.18

Interest Cap

100

 

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TABLE OF CONTENTS

(continued)

 

 

 

 

Page

 

 

 

 

 

§10.19

Other

100

 

 

 

 

§11.

CONDITIONS TO ALL BORROWINGS

100

 

 

 

 

 

§11.1

Prior Conditions Satisfied

100

 

§11.2

Representations True; No Default

100

 

§11.3

No Legal Impediment

100

 

§11.4

Governmental Regulation

100

 

§11.5

Proceedings and Documents

100

 

§11.6

Borrowing Documents

100

 

§11.7

Future Advances Tax Payment

101

 

 

 

 

§12.

EVENTS OF DEFAULT; ACCELERATION; ETC.

101

 

 

 

 

 

§12.1

Events of Default and Acceleration

101

 

§12.1A

Limitation of Cure Periods

104

 

§12.2

Termination of Commitments

105

 

§12.3

Remedies

105

 

§12.4

Distribution of Collateral Proceeds

106

 

 

 

 

§13.

SETOFF

107

 

 

 

§14.

THE AGENT

107

 

 

 

 

 

§14.1

Authorization

107

 

§14.2

Employees and Agents

108

 

§14.3

No Liability

108

 

§14.4

No Representations

108

 

§14.5

Payments

109

 

§14.6

Holders of Notes

110

 

§14.7

Indemnity

110

 

§14.8

Agent as Lender

110

 

§14.9

Resignation; Removal

111

 

§14.10

Duties in the Case of Enforcement

111

 

§14.11

Reliance on Hedge Provider

111

 

§14.12

Co-Agents

112

 

§14.13

Request for Agent Action

112

 

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TABLE OF CONTENTS

(continued)

 

 

 

 

Page

 

 

 

 

 

§14.14

[Intentionally omitted.]

112

 

§14.15

Bankruptcy

112

 

§14.16

Lender Intercreditor Agreement

112

 

 

 

 

§15.

EXPENSES

112

 

 

 

§16.

INDEMNIFICATION

113

 

 

 

§17.

SURVIVAL OF COVENANTS, ETC.

115

 

 

 

§18.

ASSIGNMENT AND PARTICIPATION

116

 

 

 

 

 

§18.1

Conditions to Assignment by Lenders

116

 

§18.2

Register

117

 

§18.3

New Notes

117

 

§18.4

Participations

118

 

§18.5

Pledge by Lender

118

 

§18.6

No Assignment by Borrowers

118

 

§18.7

Cooperation; Disclosure

118

 

§18.8

Mandatory Assignment

118

 

 

 

 

§19.

NOTICES

119

 

 

 

§20.

RELATIONSHIP

120

 

 

 

§21.

GOVERNING LAW; CONSENT TO JURISDICTION AND SERVICE

121

 

 

 

§22.

HEADINGS

121

 

 

 

§23.

COUNTERPARTS

121

 

 

 

§24.

ENTIRE AGREEMENT, ETC.

121

 

 

 

§25.

WAIVER OF JURY TRIAL AND CERTAIN DAMAGE CLAIMS

122

 

 

 

§26.

DEALINGS WITH THE BORROWERS

122

 

 

 

§27.

CONSENTS, AMENDMENTS, WAIVERS, ETC.

122

 

 

 

§28.

SEVERABILITY

123

 

 

 

§29.

[INTENTIONALLY OMITTED.]

123

 

 

 

§30.

REPLACEMENT OF NOTES

123

 

 

 

§31.

TIME OF THE ESSENCE

124

 

 

 

§32.

NONRECOURSE OBLIGATIONS

124

 

 

 

§33.

JOINT AND SEVERAL LIABILITY

125

 

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(continued)

 

 

 

 

Page

 

 

 

 

§34.

ADDITIONAL AGREEMENTS CONCERNING OBLIGATIONS OF BORROWERS

125

 

 

 

 

§34.1

Waiver of Automatic or Supplemental Stay

125

 

§34.2

Consideration

125

 

§34.3

Waiver of Defenses

126

 

§34.4

Waiver

126

 

§34.5

Subordination

126

 

 

 

 

§35.

RIGHTS OF THIRD PARTIES

127

 

 

 

§36.

PATRIOT ACT

127

 

viii

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EXHIBITS

 

EXHIBIT A-1

RESERVED

EXHIBIT A-2

FORM OF REVOLVING CREDIT NOTE

EXHIBIT B-1

FORM OF COMMERCIAL COMPANY SECURED TERM LOAN NOTE

EXHIBIT B-2

FORM OF LAND COMPANY SECURED TERM LOAN NOTE

EXHIBIT C-1

RESERVED

EXHIBIT C-2

FORM OF REQUEST FOR LOAN (LAND COMPANY)

EXHIBIT D

FORM OF REQUEST FOR EXTENSION OF LOANS

EXHIBIT E

FORM OF COMPLIANCE CERTIFICATE WITH BORROWING BASE WORKSHEET

EXHIBIT F

FORM OF ASSIGNMENT AND ACCEPTANCE AGREEMENT

EXHIBIT G

FORM OF CONFIDENTIALITY AGREEMENT

EXHIBIT H

FORM OF JOINDER AGREEMENT

 

SCHEDULES

 

SCHEDULE 1.1

LENDERS AND COMMITMENTS

SCHEDULE 1.2

BORROWING BASE

SCHEDULE 1.3

QUALIFYING INCOME PROPERTIES

SCHEDULE 1.4

PARTIAL INTERESTS

SCHEDULE 1.5

PARTNERSHIPS

SCHEDULE 1.6

NOTE RECEIVABLES

SCHEDULE 6.3

TITLE TO PROPERTIES; LEASES

SCHEDULE 6.7

LITIGATION

SCHEDULE 6.15

TRANSACTIONS OF AFFILIATES

SCHEDULE 6.16

ERISA COMPLIANCE

SCHEDULE 6.17

ERISA MATTERS

SCHEDULE 6.20

ENVIRONMENTAL MATTERS

SCHEDULE 6.21

SUBSIDIARIES

SCHEDULE 6.27

RIGHT OF FIRST REFUSALS, PURCHASE OPTIONS, ETC.

SCHEDULE 7.19

UNPLEDGED PARTIAL INTERESTS

 

ix

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THIRD AMENDED AND RESTATED MASTER CREDIT AGREEMENT

 

THIS THIRD AMENDED AND RESTATED MASTER CREDIT AGREEMENT is made the 8th day of
August, 2013, by and among THE WOODLANDS COMMERCIAL PROPERTIES COMPANY, L.P.
(“Commercial Company”), a Texas limited partnership having its principal place
of business at c/o The Woodlands Operating Company, L.P., 24 Waterway Avenue,
Suite 1100, The Woodlands, Texas 77380, THE WOODLANDS LAND DEVELOPMENT COMPANY,
L.P. (“Land Company”; Commercial Company and Land Company are hereafter referred
to collectively as “Borrowers”), a Texas limited partnership having its
principal place of business at c/o The Woodlands Operating Company, L.P., 24
Waterway Avenue, Suite 1100, The Woodlands, Texas 77380, KEYBANK NATIONAL
ASSOCIATION, the other lenders that are a party to this Agreement, and the other
lending institutions which may become parties hereto pursuant to §18 (the
“Lenders”), and KEYBANK NATIONAL ASSOCIATION, as Administrative Agent for the
Lenders (the “Agent”).

 

RECITALS

 

WHEREAS, Commercial Company, Land Company, KeyBank, Agent and the other parties
thereto have entered into that certain Second Amended and Restated Master Credit
Agreement, dated March 29, 2011, as amended by that certain First Amendment and
Consent Pursuant to Second Amended and Restated Master Credit Agreement, dated
November 30, 2011 (the “Original Credit Agreement”); and

 

WHEREAS, the parties desire to enter into this Agreement to amend and restate
the Original Credit Agreement in its entirety;

 

NOW, THEREFORE, in consideration of the recitals herein and the mutual covenants
contained herein, the parties hereto hereby covenant and agree and amend and
restate the Original Credit Agreement in its entirety as follows:

 

§1.                               DEFINITIONS AND RULES OF INTERPRETATION;
AMENDMENT AND RESTATEMENT

 

§1.1        Definitions.  The following terms shall have the meanings set forth
in this §1 or elsewhere in the provisions of this Agreement referred to below:

 

Account Debtor.  Any person who is obligated on any of the Accounts Receivable.

 

Accounts Receivable.  All accounts, whether now owned or hereafter acquired by
the respective Borrowers and whether now existing or hereafter arising, and all
proceeds of the foregoing, from the Municipal Utility District Contracts and the
Note Receivables, as more particularly described in the Security Agreements.

 

Adjusted Net Amount.  The outstanding principal amount payable pursuant to the
Eligible Accounts Receivable, as adjusted as provided in the Borrowing Base
worksheet attached hereto as Exhibit E.

 

--------------------------------------------------------------------------------

 

Adjusted Value.  As of any Quarterly Measurement Date, the Appraised Value as
most recently determined under §5.2(a), (c) or (d) of a Borrowing Base Asset
(other than Eligible Accounts Receivable), as adjusted as of such Quarterly
Measurement Date by the Borrowers to reflect any sales, changes in leasing
status, transfers, new Indebtedness, new development or other circumstance
affecting the Borrowing Base Assets, as provided in §5.2(b).  With respect to
any Qualifying Income Properties for which there is not an Appraised Value set
forth on Schedule 1.2 hereto or a subsequent Appraised Value determined pursuant
to §5.2, the Adjusted Value of each such Qualifying Income Property shall be the
historic cost (including land value) of such Qualifying Income Property.

 

Affiliates.  As applied to any Person, any other Person directly or indirectly
controlling, controlled by, or under common control with, that Person.  For
purposes of this definition, “control” (including, with correlative meanings,
the terms “controlling”, “controlled by” and “under common control with”), as
applied to any Person, means (a) the possession, directly or indirectly, of the
power to vote ten percent (10%) or more of the stock, shares, voting trust
certificates, beneficial interests, partnership interests, member interests or
other interests having voting power for the election of directors of such Person
or otherwise to direct or cause the direction of the management and policies of
that Person, whether through the ownership of voting securities or by contract
or otherwise, or (b) the ownership of (i) a general partnership interest, (ii) a
managing member’s or manager’s interest in a limited liability company or
(iii) a limited partnership interest or preferred stock (or other ownership
interest) representing ten percent (10%) or more of the outstanding limited or
general partnership interests, preferred stock or other ownership interests of
such Person.  An Affiliate shall not include a Restricted Subsidiary or an
Unrestricted Subsidiary.

 

Agent.  KeyBank, acting as Administrative Agent for the Lenders, its successors
and assigns.

 

Agent’s Head Office.  The Agent’s head office located at 127 Public Square,
Cleveland, Ohio 44114-1306, or at such other location as the Agent may designate
from time to time by notice to the Borrowers and the Lenders.

 

Agent’s Special Counsel.  McKenna Long & Aldridge LLP or such other counsel as
may be approved by the Agent.

 

Agreement.  This Third Amended and Restated Master Credit Agreement, including
the Schedules and Exhibits hereto.

 

Agreement Regarding Fees.  See §4.2.

 

Appraisal.  An MAI appraisal (or update of a prior Appraisal) of the value of a
parcel of Real Estate ordered by and addressed to Agent, determined on an as-is
basis, performed by an independent appraiser selected by the Agent who is not an
employee of the Borrowers, the Agent or a Lender, the form and substance of such
appraisal and the identity of the appraiser to be in accordance with regulatory
laws and policies (both regulatory and internal) applicable to the Lenders and
otherwise acceptable to the Agent.

 

2

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Appraised Value.  The “as-is” value of a parcel of Real Estate determined by the
most recent Appraisal of such parcel or update obtained pursuant to
§5.2(c) subject, however, to such changes or adjustments to the value determined
thereby as may be required by the appraisal department of the Agent in its good
faith business judgment, or the valuation proposed by the Borrowers and approved
by the Agent as provided in §5.2(c), whichever is applicable.  With respect to
Land Assets, the Appraised Value may be determined on a per lot or per acre
basis and then multiplied by the number of lots or acres.

 

Architect’s Contract.  For the applicable Vertical Commercial Improvements, the
contract, between a Borrower and the Project Architect, providing for the design
of the Improvements for the applicable Vertical Commercial Improvements and the
supervision of the construction thereof.

 

Assignment of Hedge.  An Assignment of Hedge Agreement by the Borrowers to the
Agent for the benefit of the Lenders, as the same may be modified and amended,
pursuant to which the Interest Cap described in §7.24 is pledged as security for
the Obligations, and any financing statements that may be delivered in
connection therewith, such assignment to be in form and substance satisfactory
to Agent.

 

Assignment of Interests.  Each of the collateral assignments of partner’s or
limited liability company member’s interest or rights to distributions from a
Borrower to the Agent, as the same may be modified or amended, pursuant to which
there shall be collaterally assigned to the Agent for the benefit of the Lenders
a security interest in the interest of such Person in certain of the
Partnerships or in rights to distributions as more particularly described
therein, each such assignment to be in form and substance satisfactory to the
Agent.

 

Assignment of Leases and Rents.  Each of the collateral assignments of leases
and rents from a Borrower or a Guarantor as permitted by §7.19, to the Agent, as
the same may be modified or amended, pursuant to which there shall be assigned
to the Agent for the benefit of the Lenders a security interest in the interest
of such Borrower as lessor with respect to all Leases of all or any part of a
Mortgaged Property, each such collateral assignment to be in form and substance
satisfactory to the Agent.

 

Assignment of Management Agreement and Subordination.  Each collateral
assignment of the Management Agreements from a Borrower or a Guarantor as
permitted by §7.19 to the Agent for the benefit of the Lenders, as the same may
be modified or amended, pursuant to which there shall be collaterally assigned
to the Agent for the benefit of the Lenders a security interest in the interest
of such Borrower with respect to the Management Agreements, together with the
consent of the manager thereunder to such assignment and a subordination of the
manager’s rights with respect to the Mortgaged Properties to the rights of the
Agent with respect thereto.

 

Assignment of Project Documents.  Each assignment of project documents made by a
Borrower to the Agent for the benefit of the Lenders, as the same may be
modified or amended, pursuant to which a Borrower assigns and grants a security
interest in such Borrower’s right, title and interest in and to, among other
things, the Architect’s Contract, Construction Contract, Plans and
Specifications and Project Consents pertaining to the applicable Vertical
Commercial

 

3

--------------------------------------------------------------------------------

 

Improvements, each such assignment of project documents to be in form and
substance satisfactory to the Agent.

 

Associations.  Collectively, The Woodlands Township and Woodlands Commercial
Owners Association.

 

Assumption Agreement.  The assumption agreement dated August 29, 2006, pursuant
to which Land Company assumed the obligations of Stibbs under the “Security
Deed” and the “Assignment of Leases and Rents” delivered pursuant to the Master
Credit Agreement dated November 30, 2004 among Borrowers, Agent, and the other
parties thereto.

 

Authorized Officer.  As to Commercial Company, Randy Davis, Tim Welbes, Alex
Sutton, or such other officer familiar with the matters subject to the
applicable certification being executed by such officer having a title of vice
president or president of Woodlands Operating as is designated in a written
notice from Commercial Company to Agent and the Title Insurance Company.  As to
Land Company, Randy Davis, Tim Welbes, Alex Sutton, or such other officer
familiar with the matters subject to the applicable certification being executed
by such officer having a title of vice president or president of Woodlands
Operating as is designated in a written notice from Land Company to Agent and
the Title Insurance Company.

 

Balance Sheet Date.  March 31, 2013.

 

Bankruptcy Code.  Title 11, U.S.C.A., as amended from time to time or any
successor statute thereto.

 

Base Rate.  The greatest of (a) the variable per annum rate of interest
announced from time to time by Agent at Agent’s Head Office as its “prime rate”,
(b) one-half of one percent (0.5%) above the Federal Funds Effective Rate
(rounded to the nearest 1/100th of one percent), or (c) the LIBOR Rate for an
Interest Period of one (1) month plus one percent (1%).  The Base Rate is a
reference rate and does not necessarily represent the lowest or best rate being
charged to any customer.  Any change in the rate of interest payable hereunder
resulting from a change in the Base Rate shall become effective as of the
opening of business on the day on which such change in the Base Rate becomes
effective, without notice or demand of any kind.

 

Base Rate Loans.  Collectively, the Revolving Credit Base Rate Loans and the
Secured Term Base Rate Loans.

 

Borrowers.  As defined in the preamble hereto.

 

Borrowing Base.  At any time, the Borrowing Base for the Borrowers on a combined
basis shall be an amount equal to the sum of:

 

(a)                                 sixty percent (60%) of the Adjusted Value of
the Developed Residential Land;

 

(b)                                 fifty percent (50%) of the Adjusted Value of
the Developed Commercial Land;

 

4

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(c)                                  sixty percent (60%) of the Adjusted Value
of the Undeveloped Residential Land;

 

(d)                                 fifty percent (50%) of the Adjusted Value of
the Undeveloped Commercial Land;

 

(e)                                  forty percent (40%) of the Adjusted Value
of the Golf Courses;

 

(f)                                   for each Qualifying Income Property, an
amount equal to the product obtained by multiplying (i) the Adjusted Value of
such Qualifying Income Property, by (ii) 0.70;

 

(g)                                  ninety percent (90%) of the Adjusted Net
Amount of the Eligible Accounts Receivable; and

 

(h)                                 sixty-five percent (65%) of the historic
costs (including land at its Adjusted Value) of Properties under Construction
owned by a Borrower that are subject to a lien in favor of the Agent to secure
the Obligations, provided that the maximum Borrowing Base value pursuant to this
clause (h) shall not exceed $50,000,000.00 at any time.

 

A form showing the computation of the Borrowing Base as of a Quarterly
Measurement Date is set forth on Exhibit E hereto.  The Borrowing Base Assets
must satisfy the conditions of §7.19 at all times.

 

Notwithstanding the foregoing, in no event shall (1) more than sixty percent
(60%) of the Borrowing Base be comprised of the items described in clause
(b) and (d) above and (2) the Conference Center be included in the Borrowing
Base if any Borrower or Restricted Subsidiary has incurred other Indebtedness
with respect thereto.

 

Borrowing Base Assets.  Collectively, the Developed Residential Land, the
Developed Commercial Land, the Undeveloped Residential Land, the Undeveloped
Commercial Land, the Golf Courses, the Qualifying Income Properties, the
Eligible Accounts Receivable and Properties under Construction.  The Conference
Center (a) is not, as of the Closing Date, a Borrowing Base Asset and (b) may
not be a Borrowing Base Asset if the Conference Center is undergoing or about to
undergo renovation.  However, the Conference Center may subsequently become a
Borrowing Base Asset if all other terms and conditions set forth in this
Agreement are complied with.

 

Budget.  The annual budgets of the Borrowers, which Budget shall be a detailed
estimate of projected income, cash flow, land development costs and other
capital expenditures of the Borrowers for each quarter of the calendar year in
question, the projected cash flows and net income for such year, and a summary
of the significant assumptions upon which such projections are based.  In
addition, the Budget shall include the annual income and expenditures for the
management, leasing, maintenance, supervision, direction and operation of each
Qualifying Income Property (including those owned by Restricted Subsidiaries to
the extent reasonably available from such entities) included within the Property
for the calendar year in question.  The budget shall also include a budget of
significant capital improvements, repairs, replacements, tenant improvements and
leasing commissions and other similar tenant-related expenses with respect to
each Qualifying Income Property (including those owned by Restricted
Subsidiaries to

 

5

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the extent reasonably available from such entities) included within the Property
for the calendar year in question, which shall be a complete and reasonable
estimate of the capital expenditures, and expenditures for tenant improvements
and leasing commissions and other similar tenant-related expenses, for such
Property for the period covered thereby.  Each Budget shall be a reasonable
estimate of the Borrowers of the income and expenditures for the Property for
the period covered thereby and shall be prepared by the Borrowers in good faith
and in accordance with sound cash basis accounting practices applied on a
consistent basis (except that net income shall be prepared in accordance with
generally accepted accounting principles applied on a consistent basis). 
Notwithstanding anything herein to the contrary, any fees or expenses to be paid
to the Borrowers, any General Partner, any Second Tier Partner, any Third Tier
Partner or any affiliate of any of such Persons shall not exceed an amount which
would be paid to an unaffiliated entity in any arms-length transaction.

 

Building.  All of the buildings and related structures and improvements now or
hereafter located on a parcel of Real Estate.

 

Build-To-Suit Properties.  Properties owned by a Borrower or its Restricted
Subsidiaries or Unrestricted Subsidiaries which are each 100% preleased under a
net lease having a term of not less than five (5) years and with respect to
which Vertical Commercial Improvements are to be constructed.

 

Business Day.  Any day on which banking institutions in Cleveland, Ohio are open
for the transaction of banking business and, in the case of LIBOR Rate Loans,
which also is a LIBOR Business Day.

 

Capital Reserve.  For any period with respect to any office, retail or
multifamily project (as applicable), an amount determined by the Agent based on
the then current market standards, which determination shall be made in Agent’s
reasonable discretion, multiplied by the leasable area or number of units, as
applicable, in the applicable office, retail or multifamily project.

 

Capitalized Lease.  A lease under which a Person is the lessee or obligor, the
discounted future rental payment obligations under which are required to be
capitalized on the balance sheet of the lessee or obligor in accordance with
generally accepted accounting principles.

 

Cash.  Money in legal tender of the United States.

 

Cash Collateral Account Agreement.  The Third Amended and Restated Cash
Collateral Account and Control Agreement between the Borrowers, the Agent and
KeyBank, as the same may be modified or amended, such agreement to be in form
and substance satisfactory to the Agent.

 

Cash Equivalents.  As of any date, (i) securities issued or directly and fully
guaranteed or insured by the United States government or any agency or
instrumentality thereof having maturities of not more than one year from such
date, (ii) time deposits and certificates of deposits having maturities of not
more than one year from such date and issued by any domestic commercial bank
having (A) senior long term unsecured debt rated at least A or the equivalent
thereof by S&P or A2 or the equivalent thereof by Moody’s and (B) capital and
surplus in excess of $100,000,000.00, (iii) commercial paper rated at least A-1
or the equivalent thereof by S&P or

 

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P-1 or the equivalent thereof by Moody’s and in either case maturing within one
hundred twenty (120) days from such date, and (iv) shares of any money market
mutual fund rated at least AAA or the equivalent thereof by S&P or at least Aaa
or the equivalent thereof by Moody’s.

 

CERCLA.  See §6.20.

 

Change of Control.  A Change of Control shall be deemed to occur upon the
occurrence of any of the following events: (a) The Howard Hughes Group does not
own and control, directly or indirectly, at least seventy-five percent (75%) of
the voting interests and ownership interests in each Borrower; or (b) The Howard
Hughes Group (or a wholly-owned (directly or indirectly) subsidiary of the
Howard Hughes Group) is not the sole general partner of each Borrower.

 

Closing Date.  The first date on which all of the conditions set forth in §10
and §11 have been satisfied or waived in writing.

 

Code.  The Internal Revenue Code of 1986, as amended, and all regulations and
formal guidance issued thereunder.

 

Collateral.  All of (a) the property, rights and interests of the Borrowers and
the Guarantors which are subject to the security interests, liens and mortgages
created by the Security Documents, including, without limitation, the Mortgaged
Property, and (b) the Guaranty.

 

Collateral Qualification Documents.  With respect to any Vertical Commercial
Improvements included in the Borrowing Base, or other Income Producing
Properties, Developed Residential Land, Developed Commercial Land, Undeveloped
Residential Land, Undeveloped Commercial Land or other property as required
under this Agreement, each of the following:

 

(a)                                 Security Documents.  Such Security Documents
relating to such property as the Agent shall require, in form and substance
satisfactory to the Agent and duly executed and delivered by the respective
parties thereto.

 

(b)                                 Perfection of Liens.  Evidence reasonably
satisfactory to the Agent that the Security Documents are effective to create in
favor of the Agent a legal, valid and enforceable first lien and security
interest in such property and that all filings, recordings, deliveries of
instruments and other actions necessary or desirable to protect and preserve
such liens or security interests have been duly effected.

 

(c)                                  Survey.  The Survey of the Land upon which
such Vertical Commercial Improvements are to be constructed or of such other
property.

 

(d)                                 Title.  A current report from the Title
Insurance Company covering the Land upon which such Vertical Commercial
Improvements are to be constructed or such other property, or other evidence
satisfactory to Agent, showing that title is vested in a Borrower or as
permitted in §7.19, a Guarantor, and, if requested by Agent, true and accurate
copies of all documents listed as exceptions in such report or to such title.

 

7

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(e)                                  UCC Certification.  A certification from
the Title Insurance Company or other person to the Agent that a search of the
public records designated by the Agent disclosed no conditional sales contracts,
security agreements, chattel mortgages, leases of personalty, financing
statements or title retention agreements which affect any property, rights or
interests of such Borrower or as permitted by §7.19, a Guarantor that are or are
intended to be subject to the security interest, assignments, and mortgage liens
created by the Security Documents relating to such property except to the extent
that the same are discharged prior to the inclusion of the Security Documents
relating to such property in the Collateral.

 

(f)                                   Management Agreement.  If requested by
Agent, a true copy of any Management Agreement relating to such Vertical
Commercial Improvements or such other property, and if such Management Agreement
is with an Affiliate of a Borrower, an Assignment of Management Agreement and
Subordination.

 

(g)                                  Leases.  True copies of any Leases relating
to such property requested by Agent together with a Rent Roll for such property
certified by the Borrower owning such land as accurate and complete as of a
recent date, and if any Lease is to any Affiliate of a Borrower, a subordination
of such Lease to the Loan Documents in form and substance reasonably
satisfactory to Agent.

 

(h)                                 Certificates of Insurance.  Each of (i) a
current certificate of insurance as to the insurance maintained by the Borrower
or as permitted by §7.19, a Guarantor owning such property or the Project
Contractor with respect to such Vertical Commercial Improvements (including
flood insurance if necessary) from the insurer or an independent insurance
broker, identifying insurers, types of insurance, insurance limits, and policy
terms; (ii) certified copies of all policies evidencing such insurance (or
certificates therefor signed by the insurer or an agent authorized to bind the
insurer); and (iii) such further information and certificates from the Borrower
or as permitted by §7.19, a Guarantor owning the land on which such Vertical
Commercial Improvements are to be constructed or such other property, the
Project Contractor, their insurers and insurance brokers as the Agent may
reasonably request, all of which shall be in compliance with the requirements of
this Agreement and the Security Deeds.

 

(i)                                     Hazardous Substance Assessments.  A
hazardous waste site assessment report concerning Hazardous Substances and
asbestos on the Land relating to such Vertical Commercial Improvements or such
other property dated or updated not more than three months prior to the
inclusion of such property in the Collateral, from an Environmental Engineer,
such report to contain no qualification except those that are acceptable to the
Agent in its sole discretion and to otherwise be in form and substance
satisfactory to the Agent.

 

(j)                                    Appraisal.  In the event such property is
to be included in the Borrowing Base, an Appraisal of the proposed Vertical
Commercial Improvements, assuming completion in accordance with the Plans and
Specifications, or such other property in form and substance satisfactory to the
Agent and dated not more than three (3) months prior to the inclusion of the
Security Documents relating to the applicable Vertical Commercial Improvements
or such other property in the Collateral.

 

8

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(k)                                 Budget.  If requested by Agent, the Project
Budget for the proposed Vertical Commercial Improvements.

 

(l)                                     Construction Documents.  If requested by
Agent, a fully executed copy of the Architect’s Contract and the Construction
Contract for the proposed Vertical Commercial Improvements.

 

(m)                             Plans and Specifications; Permit.  If requested
by Agent, one complete set of the Plans and Specifications for the proposed
Vertical Commercial Improvements and copies of the Project Consents received
through the date of inclusion of the Security Documents for such Vertical
Commercial Improvements in the Collateral.

 

(n)                                 Additional Documents.  Such other documents,
opinions, certificates, reports or assurances as the Agent may reasonably
require in its discretion.

 

Commercial Company Secured Term Loan Commitment.  As to each Secured Term Loan
Lender, the amount equal to such Secured Term Loan Lender’s Commercial Company
Secured Term Loan Commitment Percentage of the aggregate principal amount of the
Secured Term Loans from time to time outstanding to Commercial Company.

 

Commercial Company Secured Term Loan Commitment Percentage.  With respect to
each Secured Term Loan Lender, the percentage set forth on Schedule 1.1 hereto
as such Secured Term Loan Lender’s percentage of the aggregate Secured Term Loan
to Commercial Company, as the same may be changed from time to time in
accordance with the terms of this Agreement.

 

Commercial Company Secured Term Loan or Secured Term Loans.  An individual
Secured Term Loan or the aggregate Secured Term Loans, as the case may be, made
by the Secured Term Loan Lenders hereunder to Commercial Company.

 

Commercial Company Secured Term Loan Note.  A promissory note made by the
Borrowers in favor of a Secured Term Loan Lender in the principal face amount
equal to such Secured Term Loan Lender’s Secured Term Loan Commitment, in
substantially the form of Exhibit B-1 hereto.

 

Commercial Land.  Collectively, the Developed Commercial Land and the
Undeveloped Commercial Land.  The Commercial Land shall not include any of the
Common Area Land.

 

Commitment.  With respect to each Lender, the aggregate of (a) the Revolving
Credit Commitment of such Lender and (b) the Secured Term Loan Commitment of
such Lender.

 

Commitment Percentage.  With respect to each Lender, the percentage set forth on
Schedule 1.1 hereto as such Lender’s percentage of the aggregate Commitments of
all of the Lenders, as the same may be changed from time to time in accordance
with the terms of this Agreement.

 

Commodity Exchange Act.  The Commodity Exchange Act (7 U.S.C. §1 et seq.), as
amended from time to time, and any successor statute.

 

9

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Common Area Land.  The Common Area Land shall be all land located within the
Woodlands Project which is now or hereafter used, designated or reserved for
amenities, green space, open space and infrastructure.  As of the date hereof,
the Woodlands Project includes approximately 10,433 acres of Common Area Land.

 

Compliance Certificate.  See §7.4(e).

 

Conference Center.  The Woodlands Conference Center & Resort, currently
consisting of approximately 440 guestrooms, 34 meeting rooms, 6 restaurants and
related facilities.

 

Consolidated or combined.  With reference to any term defined herein, that term
as applied to the accounts of a Person and its Restricted Subsidiaries,
consolidated or combined in accordance with generally accepted accounting
principles.

 

Construction Contract.  With respect to each Vertical Commercial Improvement,
the contract between a Borrower that owns the land upon which the applicable
Vertical Commercial Improvements are to be constructed, as the case may be, and
the applicable Project Contractor providing for the construction of the
applicable Vertical Commercial Improvements.

 

Construction Inspector.  A firm of professional engineers or architects selected
by Borrowers and reasonably acceptable to the Agent.

 

Construction Schedule.  With respect to each Vertical Commercial Improvement,
the schedule broken down by trade, job and subcontractor, of the estimated dates
of commencement and completion of construction of the Improvements, prepared by
the applicable Project Contractor, approved by the Agent.

 

Contribution Agreement.  The Cross Reimbursement and Indemnity Agreement dated
as of July 31, 1997, between Commercial Company and Land Company, as amended,
such Agreement to be in form and substance satisfactory to the Agent.

 

Conversion Request.  A notice given by the Borrowers to the Agent of their
election to convert or continue a Loan in accordance with §4.1.

 

Debt Service Coverage Ratio.  As of any date of determination, the ratio of
(a) Net Operating Income for an office, retail or multifamily project for the
prior six (6) calendar months most recently ended, annualized, divided by
(b) the Implied Debt Service.

 

Default.  See §12.1.

 

Default Rate.  See §4.12.

 

Defaulting Lender.  Any Lender that, as reasonably determined by the Agent,
(a) has failed to perform any of its funding obligations hereunder, including in
respect of its Loans, within two (2) Business Days of the date required to be
funded by it hereunder and such failure is continuing, unless such failure
arises out of a good faith dispute between such Lender and either the Borrowers
or the Agent, (b) (i) has notified the Borrowers, the Agent or any Lender that
it does not intend to comply with its funding obligations hereunder or (ii) has
made a public

 

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statement to that effect with respect to its funding obligations under other
agreements generally in which it commits to extend credit, unless with respect
to this clause (b), such failure is subject to a good faith dispute, (c) has
failed, within two (2) Business Days after request by the Agent, to confirm in a
manner reasonably satisfactory to the Agent that it will comply with its funding
obligations; provided that, notwithstanding the provisions of §2C, such Lender
shall cease to be a Defaulting Lender upon the Agent’s receipt of confirmation
that such Defaulting Lender will comply with its funding obligations, or
(d) has, or has a direct or indirect parent company that has, (i) become the
subject of a proceeding under any bankruptcy, insolvency, reorganization,
liquidation, conservatorship, assignment for the benefit of creditors,
moratorium, receivership, rearrangement or similar debtor relief law of the
United States or other applicable jurisdictions from time to time in effect,
including any law for the appointment of the Federal Deposit Insurance
Corporation or any other state or federal regulatory authority as receiver,
conservator, trustee, administrator or any similar capacity, (ii) had a
receiver, conservator, trustee, administrator, assignee for the benefit of
creditors or similar Person, including the Federal Deposit Insurance Corporation
or any other state or federal regulatory authority acting in such capacity,
charged with reorganization or liquidation of its business or a custodian
appointed for it, or (iii) taken any action in furtherance of, or indicated its
consent to, approval of or acquiescence in any such proceeding or appointment;
provided that a Lender shall not be a Defaulting Lender solely by virtue of the
ownership or acquisition of any equity interest in that Lender or any direct or
indirect parent company thereof by a governmental authority (including any
agency, instrumentality, regulatory body, central bank or other authority) so
long as such ownership interest does not result in or provide such Lender with
immunity from the jurisdiction of courts of the United States or from the
enforcement of judgments or writs of attachment of its assets or permit such
Lender (or such governmental authority or instrumentality) to reject, repudiate,
disavow, or disaffirm any contracts or agreements made with such Person).  Any
determination by the Agent that a Lender is a Defaulting Lender under any one or
more of clauses (a) through (d) above shall be conclusive and binding absent
manifest error, and such Lender shall be deemed to be a Defaulting Lender
(subject to §2C(e)) upon delivery of written notice of such determination to the
Borrowers and each Lender.

 

Developed Commercial Land.  Developed Commercial Land shall mean the land
designated for commercial or multifamily use under the Master Plan of the
Woodlands Project with respect to which infrastructure development has been
substantially completed to such an extent that permits construction of Vertical
Commercial Improvements, and with respect to which the commencement of the
construction of Vertical Commercial Improvements has not yet commenced.

 

Developed Residential Land.  Developed Residential Land shall mean that portion
of the Woodlands Project (i) designated under the applicable Master Plan for
single-family residential or institutional use, schools, churches, nurseries or
day care centers or designated for gas stations, convenience stores or similar
retail uses or apartment use and other commercial uses and designated as part of
the Residential Land under the applicable Master Plan, (ii) for which a
Municipal Utility District has been established or has been applied for,
(iii) with respect to which infrastructure development has been substantially
completed, and (iv) as to which the commencement of construction of such single
family housing, institutional facilities or other improvements described above
has not yet commenced.

 

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Direct Costs.  Direct Costs shall mean and include the Adjusted Value of the
Land, the costs of the Personal Property, and all labor, materials, fixtures,
machinery and equipment required to construct, equip and complete the Vertical
Commercial Improvements.

 

Disbursement Accounts.  As defined in the Cash Collateral Account Agreement.

 

Distribution.  With respect to any Person, the declaration or payment of any
cash, cash flow, dividend or distribution on or in respect of any shares of any
class of capital stock, partner’s interest, member’s interest or other
beneficial interest of such Person; the purchase, redemption, exchange or other
retirement of any shares of any class of capital stock, partner’s interest,
member’s interest or other beneficial interest of such Person, directly or
indirectly through a Restricted Subsidiary of such Person or otherwise; the
return of capital by a Person to its shareholders, partners, members or other
beneficial owners as such; or any other distribution on or in respect of any
shares of any class of capital stock, partner’s interest, member’s interest or
other beneficial interest of such Person.

 

Division Agreement.  The Certificate of Merger of The Woodlands Commercial
Properties Company, L.P. and The Woodlands Land Development Company, L.P. dated
July 31, 1997 and the Plan of Merger attached thereto.

 

Dollars or $.  Dollars in lawful currency of the United States of America.

 

Domestic Lending Office.  Initially, the office of each Lender designated as
such in Schedule 1.1 hereto; thereafter, such other office of such Lender, if
any, located within the United States that will be making or maintaining Base
Rate Loans.

 

Drawdown Date.  The date on which any Loan is made or is to be made, and the
date on which any Revolving Credit Loan or Secured Term Loan which is made prior
to the Maturity Date is converted to a Loan of the other Type.

 

Eligible Accounts Receivable. That portion of the Accounts Receivable which is
owned by a Borrower, subject to a Security Agreement, in which Agent has a
perfected first priority security interest, subject to no other security
interest, lien, charge or other encumbrance of any nature, evidenced by
promissory notes or other documentation acceptable to Agent, and consisting of
accounts which have payment terms acceptable to the Agent and which:  (i) are
and shall be created in the ordinary course of business of the Borrowers, except
with respect to Accounts Receivable described in (ix) below so long as Land
Company and Account Debtor are in compliance with (A) through (D) described
therein; (ii) arise from a complete bona fide transaction and which require no
further act under any circumstances on the part of any Borrower to make such
receivable payable by the Account Debtor; (iii) are not subject to dispute,
offset or counterclaim; (iv) do not arise out of any transaction with an Account
Debtor which is insolvent or the subject of any bankruptcy or insolvency
proceedings of any kind or of any other proceeding or action, threatened or
pending, which might have a material adverse effect on the financial condition
of such Account Debtors; (v) conform to all representations and warranties made
by Borrowers in this Agreement and the other Loan Documents; (vi) have not
remained unpaid for more than thirty (30) days from any payment date; (vii) do
not arise out of any transaction with any affiliate of either Borrower, the
General Partner, a Second Tier Partner, a

 

12

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Third Tier Partner, any Guarantor or any affiliate thereof; (viii) are owed by
Account Debtors located within the United States of America; (ix) with respect
to each Municipal Utility District Contract, (A) Land Company is in full
compliance with the applicable CON-10 necessary to give rise to the obligation
of the applicable Municipal Utility District to purchase the relevant facilities
in accordance with the applicable CON-10, including without limitation the terms
and conditions set forth in the applicable Policy Manual for Construction or
Acquisition of Facilities, (B) except with respect to Accounts Receivable
related to the San Jacinto River Authority contracts, Land Company has obtained
and delivered to the Agent a copy of the executed confirmatory letter of such
Municipal Utility District’s obligation contemplated by the applicable Policy,
(C) the obligation of the applicable Municipal Utility District to acquire the
“facility” has not lapsed or expired, and (D) Land Company has delivered
satisfactory evidence to the Agent that each Municipal Utility District Contract
does not exceed the applicable Municipal Utility District’s authority to issue
bond indebtedness to satisfy the Municipal Utility District’s obligations under
the applicable Municipal Utility District Contract; and (x) are not determined
by the Majority Lenders in their sole discretion to be otherwise ineligible for
any other reason (it nevertheless being understood that the receivables
described in (i) through (ix) above shall be included as part of the
Collateral).  Eligible Accounts Receivable shall in no event include any
Investments of the type described in §8.3(k).

 

Eligible Assignee.  (a) A Lender or any Affiliate or Related Fund of such
Lender; (b) a commercial bank; (c) a savings and loan association or savings
bank; or (d) an insurance company, financing company, other financial
institution, fund or institutional investor experienced in real estate lending
or investing in loans similar to the Loans in the ordinary course of its
business reasonably acceptable to Agent and Borrower; provided that an Eligible
Assignee shall not include any Borrower or any of their Affiliates or Restricted
Subsidiaries or Unrestricted Subsidiaries.

 

Employee Benefit Plan.  Any employee benefit plan within the meaning of §3(3) of
ERISA maintained or contributed to by a Borrower or any ERISA Affiliate, other
than a Multiemployer Plan.

 

Environmental Engineer.  A firm of independent professional engineers or other
scientists generally recognized as expert in the detection, analysis and
remediation of the Hazardous Substances and related environmental matters and
reasonably acceptable to the Agent.

 

Environmental Laws.  See §6.20(a).

 

Equity Offering.  The issuance and sale by a Borrower subsequent to the date of
this Agreement of any partnership interests or equity securities of such
Borrower to investors other than the then current partners.

 

ERISA.  The Employee Retirement Income Security Act of 1974, as amended and in
effect from time to time, and all regulations and formal guidance issued
thereunder.

 

ERISA Affiliate.  Any Person which is treated as a single employer with a
Borrower under §414 of the Code or §4001 of ERISA, and any predecessor entity of
any of them.

 

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ERISA Reportable Event.  A reportable event with respect to a Guaranteed Pension
Plan within the meaning of §4043 of ERISA as to which the requirement of notice
has not been waived or any other event with respect to which a Borrower or an
ERISA Affiliate could have liability under §4062(e) or §4063 of ERISA.

 

Event of Default.  See §12.1.

 

Excess Cash Flow.  With respect to the Borrowers on a combined basis for any
fiscal year period, an amount equal to the Operating Cash Flow of the Borrowers,
minus (a) the sum of all interest and mandatory principal payments due and
payable with respect to the Loans for such period, minus (b) mandatory interest
and principal payments due and payable during such period on other permitted
Indebtedness of the Borrowers for such period, and minus (c) Vertical
Development Costs incurred during the applicable test period.

 

Excluded FATCA Tax.  Any tax, assessment or other governmental charge imposed on
a Lender under FATCA that would not have been imposed but for a failure by a
Lender (or any financial institution through which any payment is made to such
Lender) to comply with the requirements of FATCA.

 

Excluded Hedge Obligation.  With respect to any Borrower or Guarantor, any Hedge
Obligation, if, and to the extent that, all or a portion of the obligation of
such Borrower or guarantee of such Guarantor of, or the grant by such Borrower
or Guarantor of a security interest to secure, such Hedge Obligation (or any
guarantee thereof) is or becomes illegal under the Commodity Exchange Act or any
rule regulation or order of the Commodity Futures Trading Commission (or the
application or official interpretation of any thereof) by virtue of such
Borrower’s or Guarantor’s failure for any reason to constitute an “eligible
contract participant” as defined in the Commodity Exchange Act and the
regulations thereunder at the time the obligation of such Borrower or guarantee
of such Guarantor or the grant of such security interest becomes effective with
respect to such Hedge Obligation.  If a Hedge Obligation arises under a master
agreement governing more than one swap, such exclusion shall apply only to the
portion of such Hedge Obligation that is attributable to swaps for which such
guarantee or security interest is or becomes illegal.

 

Exiting Lenders.  See §1.3.

 

Extension Option.  See §4.15(a)

 

Extension Request.  See §4.15(a).

 

FATCA.  §§ 1471 through 1474 of the Internal Revenue Code.

 

Federal Funds Effective Rate.  For any day, the rate per annum (rounded to the
nearest one-hundredth of one percent (1/100 of 1%)) announced by the Federal
Reserve Bank of Cleveland on such day as being the weighted average of the rates
on overnight federal funds transactions arranged by federal funds brokers on the
previous trading day, as computed and announced by such Federal Reserve Bank in
substantially the same manner as such Federal Reserve Bank computes and
announces the weighted average it refers to as the “Federal Funds Effective
Rate”, or, if such rate is not so published for any day that is a Business Day,
the

 

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average of the quotations for such day on such transactions received by the
Agent from three (3) Federal funds brokers of recognized standing selected by
the Agent.

 

Fees.  The fees payable to either Borrower pursuant to any management agreements
relating to the Woodlands Project or any part thereof, and easement usage fees
payable to Commercial Company pursuant to the agreements commonly known as the
TCI Easement Agreement.

 

FF&E.  All fixtures, furnishings, equipment, furniture, and other items of
tangible personal property now or hereafter located on any hotel or used in
connection with the ownership, use, occupancy, operation or maintenance of all
or any part of such hotel, other than stocks of food and other supplies held for
consumption in normal operation but including, without limitation, appliances,
machinery, equipment, signs, artwork, office furnishings and equipment, guest
room furnishings, beds, linens, televisions, radios, telephones, specialized
equipment for kitchens, dishware, utensils, tables, chairs, laundries, bars,
restaurants, public rooms, health and recreational facilities, all partitions,
screens, awnings, shades, blinds, floor coverings, hall and lobby equipment,
heating, lighting, plumbing, ventilating, refrigerating, incinerating,
elevators, escalators, air conditioning and communication plants or systems with
appurtenant fixtures, vacuum cleaning systems, call or beeper systems, security
systems, sprinkler systems and other fire prevention and extinguishing apparatus
and materials, reservation system computer and related equipment, and vehicles.

 

FF&E Reserve.  For any period, an amount equal to four percent (4%) of Gross
Hotel Revenues from such hotel for such period.

 

First Extension Option.  See §4.15(a)

 

Funding Agreement. The Funding Agreement effective as of July 31, 1997 among
Borrowers and the other parties thereto regarding contributions, distributions
and loans, as amended by that certain First Amendment to Funding Agreement
effective as of November 24, 2004.

 

Funding Subordination and Standstill Agreement.  The Third Amended and Restated
Subordination and Standstill Agreement dated of even date herewith, by and among
Agent, Commercial Company and Land Company relating to the Funding Agreement, as
the same may be modified or amended.

 

General Partner.  Collectively, TWLDC Holdings GP and TWCPC Holdings GP.

 

Generally Accepted Accounting Principles.  Principles that are (a) consistent
with the principles promulgated or adopted by the Financial Accounting Standards
Board and its predecessors, as in effect from time to time and (b) consistently
applied with past financial statements of the Borrower adopting the same
principles; provided that a certified public accountant would, insofar as the
use of such accounting principles is pertinent, be in a position to deliver an
unqualified opinion (other than a qualification regarding changes in generally
accepted accounting principles) as to financial statements in which such
principles have been properly applied.

 

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Golf Courses.  The two existing golf courses (including the clubhouses, swimming
pools, driving ranges, tennis courts and other related amenities) located in
Carlton Woods Country Club commonly known as the Carlton Woods Nicklaus Golf
Course and the Tom Fazio Carlton Woods Creekside Golf Course, together with any
new golf courses that are developed and opened within the Woodlands Project and
are included within the Collateral.

 

Gross Hotel Revenues.  All revenues and receipts of every kind derived from
operating a hotel and parts thereof, including, without limitation, income (from
both cash and credit transactions), before commissions and discounts for prompt
or cash payments, from rentals or sales of rooms, stores, offices, meeting
space, exhibit space, or sales space of every kind; license, lease, and
concession fees and rentals (not including gross receipts of licensees, lessees,
and concessionaires); net income from vending machines; health club membership
fees; food and beverage sales; parking; sales of merchandise (other than
proceeds from the sale of furniture, fixtures and equipment no longer necessary
to the operation of such hotel); service charges, to the extent not distributed
to the employees at such hotel as, or in lieu of, gratuities; and proceeds, if
any, from business interruption or other loss of income insurance; provided,
however, that, Gross Hotel Revenues shall not include gratuities to employees of
such hotel; federal, state, or municipal excise, sales, use, or similar taxes
collected directly from tenants, patrons, or guests or included as part of the
sales price of any goods or services; insurance proceeds (other than proceeds
from business interruption or other loss of income insurance); condemnation
proceeds; or any proceeds from any sale of such hotel.

 

Guaranteed Pension Plan.  Any employee pension benefit plan within the meaning
of §3(2) of ERISA maintained or contributed to by a Borrower of any ERISA
Affiliate the benefits of which are guaranteed on termination in full or in part
by the PBGC pursuant to Title IV of ERISA, other than a Multiemployer Plan.

 

Guarantor Contribution Agreement.  That certain First Amended and Restated
Contribution Agreement dated of even date herewith among Borrowers, the
Guarantors and each additional Person which may become a Guarantor which may
hereafter become a party thereto, as the same may be modified, amended or
ratified from time to time.

 

Guarantors.  Woodlands Operating, Town Center Development Company, L.P., Town
Center Development Company GP, L.L.C., Woodlands Office Equities-95, LLC and any
Person which may become a guarantor of the Obligations after the date hereof.

 

Guaranty.  The First Amended and Restated Unconditional Guaranty of Payment and
Performance made by the Guarantors and each Person which becomes a Guarantor
pursuant to §5.6 in favor of the Agent and the Lenders, as the same may be
modified, amended, ratified or confirmed, such Guaranty to be in form and
substance satisfactory to the Agent.

 

Hazardous Substances.  See §6.20(b).

 

Hedge Obligations.  All obligations of Borrowers to any Lender or an Affiliate
of a Lender to make any payments (including, without limitation, any payments
due upon a termination or default) under any agreement with respect to an
interest rate swap, collar, cap or floor or a forward rate agreement or other
agreement regarding the hedging of interest rate risk

 

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exposure executed in connection with the satisfaction of the condition set forth
in §7.24 relating to the Obligations, and any confirming letter executed
pursuant to such hedging agreement, and which shall include, without limitation,
any obligation to pay or perform under any agreement, contract or transaction
that constitutes a “swap” within the meaning of §1a(47) of the Commodity
Exchange Act, all as amended, restated or otherwise modified.  Under no
circumstances shall any of the Hedge Obligations secured or guaranteed by any
Loan Document as to a Borrower or a Guarantor include any obligation that
constitutes an Excluded Hedge Obligation of such Borrower or Guarantor.  Nothing
herein shall require the Borrowers to obtain any such agreement from any Lender
or an Affiliate of a Lender.

 

Highest Lawful Rate.  With respect to Agent or any Lender, the maximum
nonusurious interest rate, if any, that at any time or from time to time may be
contracted for, taken, reserved, charged or received on the Obligations under
laws applicable to Agent or such Lenders which are currently in effect or, to
the extent allowed by law, under such applicable laws which may hereafter be in
effect and which allow a higher maximum nonusurious interest rate than
applicable laws now allow.  On each day, if any, that Texas law establishes the
Highest Lawful Rate, the Highest Lawful Rate shall be the “weekly ceiling” from
time to time in effect (as defined in §303 of the Texas Finance Code, as
amended) for that day.

 

Hospitality Management Fee.  Any fees payable to a Borrower or any of their
respective Restricted Subsidiaries, Unrestricted Subsidiaries or Affiliates
pursuant to any management agreement of any hospitality property included as a
Borrowing Base Asset, including the Conference Center, but only if such
hospitality property or the Conference Center is included as a Borrowing Base
Asset consistent with the terms of this Agreement.

 

Hotel Debt Service Coverage Ratio.  As of any date of determination, the ratio
of Hotel Net Operating Income for a hotel for the prior six (6) calendar months
most recently ended, annualized, divided by the Implied Debt Service.

 

Hotel Net Operating Income.  For any hotel as of any date of determination, an
amount equal to the total Gross Hotel Revenues of such hotel during such period;
minus the sum of (A) the sum of all expenses and other proper charges incurred
or accrued in connection with and directly attributable to the ownership and
operation of such hotel during such period (including real estate taxes,
management fees (calculated at the greater of (1) actual management fees and
(2) an amount equal to three percent (3%) of total Gross Hotel Revenues for such
period), franchise fees, payments under ground leases, insurance premiums, and
bad debt expenses, but excluding any general and administrative expense,
impairment charges, debt service charges, income taxes, capital expenses,
depreciation, amortization of financing costs, and other non-cash charges) and
(B) the FF&E Reserve for such period.

 

Howard Hughes Group.  The Howard Hughes Corporation, a Delaware corporation.

 

Hughes Landing I Apartments.  Approximately 391 multifamily apartments to be
constructed in a 66-acre mixed-use development project at Lake Woodlands.

 

Hughes Landing Hotel.  A 175 room boutique hotel to be constructed in a 66-acre
mixed-use development project at Lake Woodlands.

 

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Implied Debt Service.  On any date of determination, an amount equal to the
annual principal and interest payment that would be payable using a mortgage
debt constant of seven and one-half percent (7.5%) on a loan amount equal to the
principal balance of the construction loan for the applicable project, or if
there is no such loan, then on a hypothetical construction loan in a principal
amount equal to sixty-five percent (65%) of the Project Costs for such project.

 

Improvements.  The improvements to be constructed on the Land for any Vertical
Commercial Improvements in accordance with the Plans and Specifications
therefor.

 

Income Producing Properties.  Income producing properties owned by Commercial
Company or Land Company or their Restricted Subsidiaries located within the
Woodlands Project or, with the approval of the Agent, adjacent thereto.

 

Indebtedness.  All obligations, contingent and otherwise, that in accordance
with Generally Accepted Accounting Principles should be classified upon the
obligor’s balance sheet as liabilities, or to which reference should be made by
footnotes thereto, including in any event and whether or not so classified:
(a) all debt and similar monetary obligations, whether direct or indirect;
(b) all liabilities secured by any mortgage, pledge, security interest, lien,
charge or other encumbrance existing on property owned or acquired subject
thereto, whether or not the liability secured thereby shall have been assumed;
(c) all guarantees, endorsements and other contingent obligations whether direct
or indirect in respect of indebtedness of others, including any obligation to
supply funds to or in any manner to invest directly or indirectly in a Person,
to purchase indebtedness, or to assure the owner of indebtedness against loss
through an agreement to purchase goods, supplies or services for the purpose of
enabling the debtor to make payment of the indebtedness held by such owner or
otherwise, and the obligation to reimburse the issuer in respect of any letter
of credit; (d) any obligation as a lessee or obligor under a Capitalized Lease;
(e) all obligations with respect to letters of credit or similar instruments
issued by a Person; (f) all subordinated debt; and (g) all indebtedness,
obligations or other liabilities under or with respect to (i) interest rate
swap, collar, cap or similar agreements providing interest rate protection and
(ii) foreign currency exchange agreements.  Indebtedness shall not include
current liabilities of the Borrowers or their respective Restricted Subsidiaries
or Unrestricted Subsidiaries incurred in the ordinary course of business but not
incurred through (i) the borrowing of money, or (ii) the obtaining of credit
except for credit on an open account basis customarily extended and in fact
extended in connection with normal purchases of goods and services. 
Indebtedness shall also include loans made pursuant to the Funding Agreement;
provided, however, that loans made pursuant to the Funding Agreement shall be
excluded from Indebtedness so long as no Event of Default exists, and no
default, material misrepresentation or breach of warranty has occurred under the
Funding Subordination and Standstill Agreement.

 

Indemnity Agreement.  The Indemnity Agreement Regarding Hazardous Materials,
made by the Borrowers and the Guarantors in favor of the Agent and the Lenders,
as the same may be modified or amended, pursuant to which the Borrowers agree to
indemnify the Agent and the Lenders with respect to Hazardous Substances and
Environmental Laws, such Indemnity Agreement to be in form and substance
satisfactory to the Agent.

 

Indirect Costs.  Indirect Costs shall mean and include title insurance report
fees, survey charges, engineering fees, architectural fees, real estate taxes,
appraisal costs, commitment fees

 

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and interest payable to the Lenders under the Loan with respect to the Vertical
Commercial Improvements, premiums for insurance, marketing, advertising and
leasing costs, brokerage commissions, legal fees, accounting fees, overhead and
administrative costs, and all other expenses which are expenditures relating to
Vertical Commercial Improvements and are not Direct Costs.

 

Interest Cap.  See §7.24.

 

Interest Expense.  For any period, the sum of all actual interest expense
(excluding capitalized interest funded pursuant to a construction loan but
including all other capitalized interest) due and payable by (i) the Borrowers
and (ii) the Restricted Subsidiaries with respect to any indebtedness other than
Non-Recourse Indebtedness during such period.  Interest Expense shall include
interest paid by the Borrowers and Land Company, respectively, with respect to
loans made pursuant to the Funding Agreement; provided, however, that payments
or accruals of interest by the Borrowers with respect to loans made pursuant to
the Funding Agreement shall be excluded from Interest Expense so long as no
Event of Default exists, and no default, material misrepresentation or breach of
warranty has occurred under the Funding Subordination and Standstill Agreement.

 

Interest Payment Date.  The first day of each calendar month during the term of
such Loan.

 

Interest Period.  With respect to each LIBOR Rate Loan (a) initially, the period
commencing on the Drawdown Date of such Loan and ending one, two, three or six
months thereafter, and (b) thereafter, each period commencing on the day
following the last day of the next preceding Interest Period applicable to such
LIBOR Loan and ending on the last day of one of the periods set forth above, as
selected by the Borrowers in a Conversion Request; provided that all of the
foregoing provisions relating to Interest Periods are subject to the following:

 

(i)                                     if any Interest Period with respect to a
LIBOR Rate Loan would otherwise end on a day that is not a LIBOR Business Day,
that Interest Period shall end and the next Interest Period shall commence on
the next preceding or succeeding LIBOR Business Day as determined conclusively
by the Agent in accordance with the then current bank practice in the applicable
LIBOR interbank market;

 

(ii)                                  if the Borrowers shall fail to give notice
as provided in §4.1, the Borrowers shall be deemed to have requested a
conversion of the affected LIBOR Rate Loan to a Base Rate Loan on the last day
of the then current Interest Period with respect thereto; and

 

(iii)                               no Interest Period relating to any LIBOR
Rate Loan shall extend beyond the Maturity Date.

 

Investment.  With respect to any Person, all shares of capital stock, evidences
of Indebtedness and other securities issued by any other Person, all loans,
advances, or extension of credit to, or contributions to the capital of, any
other Person, all purchases of the securities or business or integral part of
the business of any other Person and commitments to make such purchases, all
interests in real property, and all other investments; provided, however, that
the term “Investment” shall not include (i) equipment, inventory and other
tangible personal

 

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property acquired in the ordinary course of business, or (ii) current trade and
customer accounts receivable for services rendered in the ordinary course of
business and payable in accordance with customary trade terms.  In determining
the aggregate amount of Investments outstanding at any particular time: (a) the
amount of any investment represented as a guaranty shall be taken at not less
than the principal amount of the obligations guaranteed and still outstanding;
(b) there shall be included as an Investment all interest accrued with respect
to Indebtedness constituting an Investment unless and until such interest is
paid; (c) there shall be deducted in respect of each such Investment any amount
received as a return of capital (but only by repurchase, redemption, retirement,
repayment, liquidating dividend or liquidating distribution); (d) there shall
not be deducted in respect of any Investment any amounts received as earning on
such Investment, whether as dividends, interest or otherwise, except that
accrued interest included as provided in the foregoing clause (b) may be
deducted when paid; and (e) there shall not be deducted from the aggregate
amount of Investments any decrease in the value thereof.

 

Joinder Agreement.  The Joinder Agreement with respect to the Guaranty,
Guarantor Contribution Agreement and Indemnity Agreement to be executed and
delivered pursuant to §5.6 by any Person required to become a Guarantor
thereunder, such Joinder Agreement to be substantially in the form of
Exhibit “H” hereto.

 

KeyBank.  KeyBank National Association, a national banking association, and its
successors by merger.

 

Land.  With respect to each Vertical Commercial Improvement, the real estate
upon which the Vertical Commercial Improvements are to be constructed.

 

Land Assets.  Collectively, the Residential Land and the Commercial Land.

 

Land Company.  As defined in the preamble hereto.

 

Land Company Secured Term Loan Commitment.  As to each Secured Term Loan Lender,
the amount equal to such Secured Term Loan Lender’s Land Company Secured Term
Loan Commitment Percentage of the aggregate principal amount of the Secured Term
Loans to Land Company from time to time outstanding.

 

Land Company Secured Term Loan Commitment Percentage.  With respect to each
Secured Term Loan Lender, the percentage set forth on Schedule 1.1 hereto as
such Secured Term Loan Lender’s percentage of the aggregate Secured Term Loans
to Land Company, as the same may be changed from time to time in accordance with
the terms of this Agreement.

 

Land Company Secured Term Loan or Loans.  An individual Secured Term Loan or the
aggregate Secured Term Loans, as the case may be, made by the Secured Term Loan
Lenders hereunder to Land Company.

 

Land Company Secured Term Loan Note.  A promissory note made by the Borrowers in
favor of a Secured Term Loan Lender in the principal face amount equal to such
Secured Term Loan Lender’s Land Company Secured Term Loan Commitment, in
substantially the form of Exhibit B-2 hereto.

 

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Lead Arranger.  KeyBanc Capital Markets.

 

Leases.  Leases, licenses and agreements whether written or oral, relating to
the use of occupation of space in or on the Building or on the Real Estate.

 

Lenders.  KeyBank, the other Lenders a party hereto, and any other Person who
becomes an assignee of any rights of a Lender pursuant to §18; and collectively,
the Revolving Credit Lenders and the Secured Term Loan Lenders.

 

LIBOR Business Day.  Any day on which commercial banks are open for
international business (including dealings in Dollar deposits) in the London
interbank market.

 

LIBOR Lending Office.  Initially, the office of each Lender designated as such
in Schedule 1.1 hereto; thereafter, such other office of such Lender, if any,
that shall be making or maintaining LIBOR Rate Loans.

 

LIBOR Rate.  For any LIBOR Rate Loan for any Interest Period, the average rate
(rounded to the nearest 1/100th) as shown in Reuters Screen LIBOR01 Page (or any
successor service, or if such Person no longer reports such rate as determined
by Agent, by another commercially available source providing such quotations
approved by Agent) at which deposits in U.S. dollars are offered by first class
banks in the London Interbank Market at approximately 11:00 a.m. (London time)
on the day that is two (2) LIBOR Business Days prior to the first day of such
Interest Period with a maturity approximately equal to such Interest Period and
in an amount approximately equal to the amount to which such Interest Period
relates, adjusted for reserves and taxes if required by future regulations.  If
such service or such other Person approved by Agent no longer reports such rate
or Agent determines in good faith that the rate so reported no longer accurately
reflects the rate available to Agent in the London Interbank Market, Agent may
select a replacement index.  For any period during which a Reserve Percentage
shall apply, the LIBOR Rate with respect to LIBOR Rate Loans shall be equal to
the amount determined above divided by an amount equal to 1 minus the Reserve
Percentage.

 

LIBOR Rate Loans.  Collectively, the Revolving Credit LIBOR Rate Loans and the
Secured Term LIBOR Rate Loans.

 

Liens.  See §8.2.

 

Liquidity.  As of any date of determination, the sum of (a) the Borrowers’ Cash
plus (b) the amount of the Revolving Credit Loans available to be borrowed by
Land Company as of such Quarterly Measurement Date.

 

Loan Documents.  This Agreement, the Notes (if any), the Security Documents, the
Guarantor Contribution Agreement, the Joinder Agreements and all other
documents, instruments or agreements now or hereafter executed or delivered by
or on behalf of any Borrower or any Guarantor in connection with the Loans.

 

Loan or Loans.  Collectively, the Revolving Credit Loans and the Secured Term
Loans.

 

Loan Request.  See §2.6.

 

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Majority Lenders.  As of any date, the Lender or Lenders (excluding any
Defaulting Lenders) whose aggregate Commitment Percentage is more than fifty
percent (50%) of the total Commitments.  Commitments and Loans held by
Defaulting Lenders shall be disregarded when determining Majority Lenders.

 

Management Agreements.  Agreements, whether written or oral, providing for the
management of all or any portion of the Mortgaged Properties.

 

Market Value Net Worth.  As of any date of determination, the sum of (a) Total
Market Value Capitalization as of such date minus (b) the aggregate Total
Indebtedness of the Borrowers and their respective Restricted Subsidiaries.

 

Master Plan.  The Master Plan for the Woodlands Project.

 

Material Agreements.  Collectively, the Master Plan, the documents and
agreements governing the Associations, and, to the extent any rights thereunder
are a part of the Collateral, any of the Municipal Utility District Contracts,
the Note Receivables and the partnership agreements or other organizational
documents pursuant to which rights have been pledged to Agent pursuant to an
Assignment of Interests.

 

Material Assets.  Collectively, (a) Commercial Land sold in one transaction or a
series of related transactions to the same Person (which for the purposes hereof
shall include affiliated or related entities) for an aggregate purchase price of
more than $50,000,000.00 within any twelve (12) month period, (b) Residential
Land sold in one transaction or a series of related transactions to the same
Person (which for the purposes hereof shall include affiliated or related
entities) involving 750 or more contiguous single family lots within any twelve
(12) month period, or (c) Land Assets sold for an aggregate purchase price of
more than $50,000,000.00 within any twelve (12) month period to one or more
Unrestricted Subsidiaries.

 

Maturity Date.  August 8, 2016, as the same may be extended by the Borrowers as
provided in §4.15, or such earlier date on which the Loans shall become due and
payable pursuant to the terms hereof.

 

Millennium II Apartments.  314 luxury apartment homes to be located at
Timberloch Place and Six Pines Drive which shall be commonly known as The
Millennium Six Pines.

 

Mortgaged Property or Mortgaged Properties.  Collectively, the Real Estate of
Borrowers, or as permitted by §7.19, a Guarantor which is security for the
Obligations pursuant to the Security Deeds.

 

Multiemployer Plan.  Any multiemployer plan within the meaning of §3(37) or
§4001(a)(3) of ERISA or §414(f) of the Code maintained or contributed to by a
Borrower or any ERISA Affiliate.

 

Municipal Utility District Contracts.  The Municipal Utility District Contracts
and the Road Utility District Contracts included within MUD Contracts and Note
Receivables in Schedule 1.2 hereto.

 

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Net Income (or Deficit).  With respect to any Person, for any fiscal period, the
net income (or deficit) of such Person, after deduction of all expenses, taxes
and other proper charges, determined in accordance with Generally Accepted
Accounting Principles.

 

Net Operating Income.  For any office, retail or multifamily project (as
applicable) and for a given period, an amount equal to the sum of rents and
other recurring revenues received in the ordinary course of business from such
office, retail or multifamily project (as applicable) (excluding pre-paid rents
and revenues and security deposits except to the extent applied in satisfaction
of tenants’ obligations for rent as applicable) minus the sum of (a) all
expenses paid or accrued and related to the ownership, operation, or maintenance
of such office, retail or multifamily project (as applicable) for such period,
including, but not limited to, taxes, assessments and the like, insurance,
utilities, payroll costs, maintenance, repair and landscaping expenses,
marketing expenses, and general and administrative expenses (including an
appropriate allocation for legal, accounting, advertising, marketing and other
expenses incurred in connection with such office, retail or multifamily project
(as applicable), but specifically excluding general overhead expenses of the
Borrowers and their Subsidiaries and any property management fees), (b) the
greater of (i) actual property management fees of such office, retail or
multifamily project (as applicable) or (ii) an imputed property management fee
in an amount equal to four percent (4%) of the gross revenues from such office,
retail or multifamily project (as applicable), (c) all rents and other income
for such Real Estate received from tenants in default of payment or other
material obligations under their lease, or with respect to leases as to which
the tenant or any guarantor thereunder is subject to any bankruptcy,
reorganization, arrangement, insolvency, readjustment of debt, dissolution,
liquidation or similar debtor relief proceeding, in each case for the applicable
period and (d) Capital Reserves for such period.  Net Operating Income shall be
adjusted to remove any impact of straight lining of rents and amortization of
intangibles pursuant to Accounting Standards Codification No. 805, Business
Combinations (formerly Statement of Financial Accounting Standards No. 141
(revised 2007), Business Combinations).

 

Non-Defaulting Lender.  At any time, any Lender that is not a Defaulting Lender
at such time.

 

Non-Recourse Indebtedness.  Indebtedness of a Person which is secured by one or
more parcels of Real Estate and related personal property or interests therein
and is not a general obligation of such Person, the holder of such Indebtedness
having recourse solely to the parcels of Real Estate securing such Indebtedness,
the Building and any leases thereon and the rents and profits thereof securing
such Indebtedness, subject to such exceptions for fraud or material
misrepresentation, misapplication of rents or misappropriation of funds
(including insurance proceeds or condemnation awards), environmental issues, any
loss of collateral due to forfeiture as a result of any criminal or
quasi-criminal activity, springing recourse obligations due to voluntary or
involuntary bankruptcy, encumbrances or transfers of interests or assets in
violation of loan documents, or amendment, dissolution or other modifications or
failures to follow organizational documents, and other customary matters as
Agent may reasonably approve; provided, however, that the amount of any claims
for liability with respect to any springing recourse obligations to the extent
that a Person becomes liable therefor shall not be considered Non-Recourse
Indebtedness.

 

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Non-Recurring Amount.  For any period, the sum of (a) any amounts included in
Operating Cash Flow which are attributable to the non-recurring sale of
income-producing assets (other than land sales) minus (b) any such amounts from
a sale of completed Vertical Commercial Improvements which are in excess of the
cost basis (exclusive of land) of such Vertical Commercial Improvements and
minus (c) the market value of the land attributable to such Vertical Commercial
Improvements.

 

Note Receivables.  The notes payable to Commercial Company or Land Company and
all proceeds of the foregoing, as more particularly described on Schedule 1.6
hereto and which are subject to the Security Agreement to which Commercial
Company or Land Company is a party, together with any additional notes payable
to Commercial Company or Land Company and all proceeds of the foregoing
hereafter approved by Agent in writing for inclusion as a Note Receivable and
which is subject to a Security Agreement.

 

Notes.  Collectively, the Revolving Credit Notes and the Secured Term Loan
Notes, if any.

 

Notice.  See §19.

 

Obligations.  All indebtedness, obligations and liabilities of the Borrowers and
the Guarantors to any of the Lenders and the Agent, individually or
collectively, under this Agreement or any of the other Loan Documents or in
respect of any of the Loans or the Notes, or other instruments at any time
evidencing any of the foregoing, whether existing on the date of this Agreement
or arising or incurred hereafter, direct or indirect, joint or several, absolute
or contingent, matured or unmatured, liquidated or unliquidated, secured or
unsecured, arising by contract, operation of law or otherwise.

 

OFAC.  Office of Foreign Asset Control of the Department of the Treasury of the
United States of America.

 

Operating Cash Flow.  For any period, an amount equal to the sum of (a) the
Operating Income of a Borrower for such period minus (b) the Operating Expenses
of a Borrower for such period.

 

Operating Expenses.  For any period, all expenses of a Borrower directly
attributable to the operation of such Borrower or the operation, repair and/or
maintenance of the Property (if applicable) including, without limitation,
taxes, insurance premiums, management fees, payments to third party suppliers,
marketing and operating expenses, capital expenditures for maintenance or
improvement of Income Producing Properties, general and administrative expenses
and all land and lot development expenditures (other than the amounts expended
in respect of construction of Vertical Commercial Improvements) including,
without limitation, amounts reimbursable under Municipal Utility District
Contracts.  For the purposes of this Agreement, Operating Expenses shall not
include any Foreign, U.S., state and local income taxes, franchise taxes or
other taxes based on the income imposed on a Borrower generally and not as owner
of the Property, depreciation and any other non-cash expenditures of a Borrower,
or any payment of principal or interest with respect to the Obligations or other
Indebtedness or other fees or charges payable under the Loan Documents (except
that appraisals and cost

 

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reimbursements to the Agent or the Lenders shall be Operating Expenses). 
Operating Expenses shall be determined on the basis of sound cash basis
accounting practices applied on a consistent basis, modified as described above,
and consistent with the manner in which they have previously been calculated and
provided to the Lenders.  Operating Expenses shall not include expenses of a
Borrower’s Restricted Subsidiaries and Unrestricted Subsidiaries (except, for
the purposes of calculation of the covenant set forth in §9.2 only, Operating
Expenses shall include the expenses of a Restricted Subsidiary attributable to
Real Estate that is secured by Indebtedness that is also fully recourse to a
Borrower), or costs of Vertical Commercial Improvements.

 

Operating Income.  For any period, all revenue or receipts derived by a Borrower
from any source, including, without limitation (as applicable), net proceeds of
sales, excess proceeds from refinancing of existing debt, exchanges or transfers
of Residential Land, Commercial Land and Income Producing Properties or
interests therein, partnership distributions, dividends, management and other
fees or similar payments, payments received on Accounts Receivable, interest
income, rents and profits, operating expense and real estate tax expense
reimbursements, escalations, percentage rents, administrative and supervisory
fees, insurance proceeds and condemnation awards (other than proceeds and
condemnation awards that are applied to Indebtedness by a lender or are used to
restore and rebuild improvements) and any other extraordinary, non-recurring or
miscellaneous revenues, but excluding capital contributions from a Borrower’s
partners and net proceeds of new construction and development financings or any
borrowings of the Loans.  Operating Income shall be determined on the basis of
sound cash basis accounting practices applied on a consistent basis, modified as
provided above and consistent with the manner in which they have previously been
calculated and provided to the Lenders.  Operating Income shall not include
gross income of Restricted Subsidiaries and Unrestricted Subsidiaries of a
Borrower [except, for the purposes of calculation of the covenant set forth in
§9.2 only, Operating Income shall include the income of a Restricted Subsidiary
attributable to Real Estate that is secured by Indebtedness that is also fully
recourse to a Borrower,] but instead the amount distributed to such Borrower.

 

Original Credit Agreement.  As defined in the recitals.

 

Outstanding.  With respect to the Loans, the aggregate unpaid principal thereof
as of any date of determination.

 

Partial Interest.  The ownership interest (determined based on its right to
receive cash flow and other distributions) of Land Company or Commercial
Company, whether such interest is evidenced by a partnership interest or
otherwise, in certain Persons which own office, retail, research/industrial and
multifamily rental properties more particularly, as of the date hereof,
described in Schedule 1.4 hereto, together with such additional interests as may
hereafter be added as provided in §7.17.  For the purposes of calculating
compliance with financial covenants, a Partial Interest shall sometimes be
expressed as a percentage interest in the underlying Income Producing Property.

 

Partnerships.  The Persons described on Schedule 1.5 hereto in which a Borrower
has an ownership interest, together with each other Person in which a Borrower
may hereafter obtain an ownership interest which is a Restricted Subsidiary.

 

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Patriot Act.  The Uniting and Strengthening America by Providing Appropriate
Tools Required to Intercept and Obstruct Terrorism Act of 2001, as the same may
be amended from time to time, and corresponding provisions of future laws.

 

PBGC.  The Pension Benefit Guaranty Corporation created by §4002 of ERISA and
any successor entity or entities having similar responsibilities.

 

Performance Obligations.  Letters of credit issued on behalf of a Borrower or
one of its Restricted Subsidiaries to, or a guaranty provided by a Borrower or
Restricted Subsidiary to, a governmental authority, the purpose of which is to
assure completion by a Borrower or such Restricted Subsidiary of the development
or maintenance of land improvements.

 

Permitted Excess Cash Flow Investments.  Investments permitted pursuant to
§8.3(a)-(g), the investments permitted pursuant to §8.3(h) and (i) (regardless
of whether such Investment is deposited with Agent or any other Person), and
such other investments as the Agent may reasonably approve.

 

Permitted Liens.  Liens, security interests and other encumbrances permitted by
§8.2.

 

Person.  Any individual, corporation, partnership, limited liability company,
trust, unincorporated association, business, or other legal entity, and any
government or any governmental agency or political subdivision thereof.

 

Personal Property.  With respect to each Vertical Commercial Improvements, all
materials, furnishings, fixtures, furniture, machinery, equipment and all items
of tangible personal property now or hereafter owned or acquired by a Borrower,
wherever located, and either (i) to be located on or incorporated into the
applicable Vertical Commercial Improvements, (ii) used in connection with the
construction of the applicable Vertical Commercial Improvements or (iii) to be
used in connection with the operation or maintenance of the applicable Vertical
Commercial Improvements.

 

Plan.  An Employee Benefit Plan, Multiemployer Plan and/or Guaranteed Pension
Plan.

 

Plans and Specifications.  The final and/or permitted detailed architectural,
structural, mechanical, electrical, landscaping, erosion control, grading,
utility and other plans and specifications for the applicable Vertical
Commercial Improvements prepared by the Project Architect.

 

Principal Financial Officer.  The primary officer or the authorized agent of the
Borrowers, the General Partners, the Second Tier Partners, or the Third Tier
Partners responsible for the preparation and certification of financial
statements.

 

Project Architect.  With respect to each Vertical Commercial Improvements, the
licensed professional architect retained by a Borrower to design such Vertical
Commercial Improvements and prepare the Plans and Specifications therefor, and
supervise the construction of such Vertical Commercial Improvements.

 

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Project Budget.  The budget for total estimated Project Costs for Vertical
Commercial Improvements in such form as the Agent may reasonably request.

 

Project Consents.  All approvals, consents, waivers, orders, agreements,
acknowledgments, authorizations, permits and licenses required under applicable
Requirements or under the terms of any agreement, restriction, covenant or
easement affecting Vertical Commercial Improvements, or otherwise necessary or
desirable, for the ownership and acquisition of Vertical Commercial
Improvements, the construction and equipping of the Improvements, and the use,
occupancy and operation of Vertical Commercial Improvements following completion
of construction of the Improvements, whether obtained from a governmental
authority or any other Person.

 

Project Contractor.  With respect to each Vertical Commercial Improvements, the
general contractor hired by a Borrower to construct the Vertical Commercial
Improvements.

 

Project Costs.  For each Vertical Commercial Improvements, the sum of all Direct
Costs and Indirect Costs that will be incurred by a Borrower in connection with
the construction, equipping and completion of the Improvements and the operation
and carrying of such Vertical Commercial Improvements through stabilization.

 

Properties under Construction.  Vertical Commercial Improvements located in the
Woodlands Project under construction; provided that a property shall cease to be
under construction and eligible for inclusion in the Borrowing Base as a
Property Under Construction upon the earlier to occur of (a) eighteen months
following the commencement of construction and (b) six (6) months after the
issuance of a shell certificate of occupancy or an equivalent thereto for such
improvements.

 

Property.  Collectively, the Accounts Receivable, the Residential Land, the
Commercial Land, the Common Area Land, the Golf Courses, the Qualifying Income
Properties, the Partial Interests, the Properties under Construction, the Income
Producing Properties and the Fees.

 

Qualifying Income Properties.  Income Producing Properties that satisfy the
terms of §5.2 and §7.19.  The initial Qualifying Income Properties are more
particularly described in Schedule 1.3 hereto.

 

Quarterly Measurement Date.  Each December 31, March 31, June 30 and
September 30 during the term of the Agreement, with the first Quarterly
Measurement Date occurring June 30, 2013.

 

Real Estate.  All real property at any time owned or leased (as lessee or
sublessee) by the Borrowers, any of their respective Restricted Subsidiaries, a
Guarantor or any of the Partnerships.

 

Register.  See §18.2.

 

Related Fund.  With respect to any Lender which is a fund that invests in loans,
any Affiliate of such Lender or any other fund that invests in loans that is
managed by the same investment advisor as such Lender or by an Affiliate of such
Lender or such investment advisor.

 

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Release.  See §6.20(c) (iii).

 

Rent Roll.  A report prepared and certified by a Borrower showing for each
property its type, occupancy status, lease expiration date, lease rent and other
information in substantially the form presented to the Lenders prior to the date
hereof or in such other form as may have been approved by the Agent, such
approval not to be unreasonably withheld.

 

Requirements.  Any law, ordinance, code, order, rule or regulation of any
governmental authority relating in any way to the acquisition, ownership,
construction, use, occupancy and operation of Vertical Commercial Improvements
before, during and following the completion thereof, including those relating to
subdivision control, zoning, building, use and occupancy, fire prevention,
health, safety, sanitation, handicapped access, historic preservation and
protection, tidelands, wetlands, flood control, access and earth removal, and
all Environmental Laws.

 

Reserve Percentage.  For any Interest Period, that percentage which is specified
three (3) Business Days before the first day of such Interest Period by the
Board of Governors of the Federal Reserve System (or any successor) or any other
governmental or quasi-governmental authority with jurisdiction over Agent or any
Lender for determining the maximum reserve requirement (including, but not
limited to, any marginal reserve requirement) for Agent or any Lender with
respect to liabilities constituting of or including (among other liabilities)
Eurocurrency liabilities in an amount equal to that portion of the Loan affected
by such Interest Period and with a maturity equal to such Interest Period.

 

Residential Land. Collectively, the Developed Residential Land and the
Undeveloped Residential Land.  The Residential Land shall not include any of the
Common Area Land.

 

Restricted Subsidiary.  A Restricted Subsidiary shall mean (a) any corporation,
association, partnership, limited liability company, trust, or other business
entity of which the designated parent (i) shall be the general partner, managing
member, controlling shareholder or similar controlling Person of such entity,
(ii) shall own directly or indirectly through a Person or Persons at least fifty
percent (50%) (by number of votes or controlling interests) of the outstanding
Voting Interests and (iii) shall have control over all major decisions
(including the decision to sell or encumber such Person’s assets) and day-to-day
operations of such entity, and (b) any other entity the accounts of which are
consolidated with the accounts of a Borrower in accordance with Generally
Accepted Accounting Principles; provided that such Borrower has not elected that
such entity be an Unrestricted Subsidiary as permitted in this Agreement. 
Notwithstanding the foregoing, Stewart Title of Montgomery County, Inc. shall
not constitute a Restricted Subsidiary.

 

Revolving Credit Base Rate Loans.  Revolving Credit Loans bearing interest
calculated by reference to the Base Rate.

 

Revolving Credit Commitment.  With respect to each Revolving Credit Lender, the
amount set forth on Schedule 1.1 hereto as the amount of such Revolving Credit
Lender’s Revolving Credit Commitment to make or maintain Revolving Credit Loans
to Land Company, as the same may be changed from time to time in accordance with
the terms of this Agreement.

 

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Revolving Credit Commitment Percentage.  With respect to each Revolving Credit
Lender, the percentage set forth on Schedule 1.1 hereto as such Revolving Credit
Lender’s percentage of the aggregate Revolving Credit Commitments of all of the
Revolving Credit Lenders, as the same may be changed from time to time in
accordance with the terms of this Agreement.

 

Revolving Credit LIBOR Rate Loans.  Revolving Credit Loans bearing interest
calculated by reference to the LIBOR Rate.

 

Revolving Credit Lenders.  Collectively, the Lenders which have a Revolving
Credit Commitment, such Revolving Credit Lenders being identified on Schedule
1.1 hereto.

 

Revolving Credit Loan or Loans.  An individual Revolving Credit Loan or the
aggregate Revolving Credit Loans, as the case may be, to be made by the
Revolving Credit Lenders hereunder as more particularly described in §2.

 

Revolving Credit Note or Notes.  A promissory note or notes made by the
Borrowers in favor of a Revolving Credit Lender in the principal face amount
equal to such Revolving Credit Lender’s Revolving Credit Commitment, or if less,
the outstanding amount of all Revolving Credit Loans made by such Revolving
Credit Lender, in substantially the form of Exhibit A-2 hereto.

 

Second Extension Option.  See §4.15(a)

 

Second Tier Partners.  Collectively, TWLDC Holdings and TWCPC Holdings.

 

Secured Term Base Rate Loans.  The Secured Term Loans bearing interest by
reference to the Base Rate.

 

Secured Term LIBOR Rate Loans.  The Secured Term Loans bearing interest by
reference to the LIBOR Rate.

 

Secured Term Loan or Secured Term Loans.  An individual Secured Term Loan or the
aggregate Secured Term Loans, as the case may be, made by the Secured Term Loan
Lenders hereunder.

 

Secured Term Loan Commitment.  As to each Secured Term Loan Lender, the amount
equal to such Secured Term Loan Lender’s percentage set forth on Schedule 1.1 of
the aggregate principal amount of the Secured Term Loans from time to time
outstanding.

 

Secured Term Loan Commitment Percentage.  With respect to each Secured Term Loan
Lender, the percentage set forth on Schedule 1.1 hereto as such Secured Term
Loan Lender’s percentage of the aggregate Secured Term Loans, as the same may be
changed from time to time in accordance with the terms of this Agreement.

 

Secured Term Loan Lenders.  Collectively, the Lenders which have a Secured Term
Loan Commitment, the initial Secured Term Loan Lenders being identified on
Schedule 1.1 hereto.

 

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Secured Term Loan Notes.  Collectively, the Commercial Company Secured Term Loan
Notes and the Land Company Secured Term Loan Notes, if any.

 

Security Agreements.  Collectively the Collateral Assignment of Documents from
Commercial Company to the Agent for the benefit of the Lenders and the
Collateral Assignment of Documents from Land Company to the Agents for the
benefit of the Lenders, as the same may be modified or amended, pursuant to
which the Accounts Receivable and the Fees have been pledged as security for the
Obligations, such Security Agreements to be in form and substance satisfactory
to the Agent.

 

Security Deeds.  The Deeds of Trust from a Borrower, Stibbs (which has been
assumed by Land Company pursuant to the Assumption Agreement), or a Guarantor as
permitted by §7.19 to the Agent for the benefit of the Lenders (or to trustees
named therein acting on behalf of the Agent for the benefit of the Lenders), as
the same may be modified or amended, pursuant to which a Borrower has conveyed a
Mortgaged Property as security for the Obligations, such Security Deeds to be in
form and substance satisfactory to the Agent.

 

Security Documents.  The Security Deeds, the Assignments of Rents and Leases,
the Assignment of Management Agreements and Subordination, the Assignment of
Interests, the Assignment of Project Documents, the Security Agreements, the
Assignment of Hedge, the Cash Collateral Account Agreement, the Indemnity
Agreement, the Guaranty, the Assumption Agreement, and any further collateral
assignments to the Agent for the benefit of the Lenders, including, without
limitation, UCC-1 financing statements executed and delivered in connection
therewith.

 

Short-term Investments.  Investments described in subsections (a) through (g),
inclusive, of §8.3.

 

Speculative Development.  Development of Commercial Land or Residential Land for
(a) hotel, (b) multifamily or (c) office, retail or research/industrial use
which is less than sixty-five percent (65%) leased pursuant to Third Party
Leases.  A lease shall not be deemed a lease with an Affiliated Person in the
event that a Borrower, any of the General Partners, any Second Tier Partner, any
of the Third Tier Partners, any Guarantor, or any of their Restricted
Subsidiaries or Unrestricted Subsidiaries enters into a joint venture with a
third party unaffiliated with any of such Persons which in turn leases a portion
of such property to such unaffiliated Person.  In the event that any of such
property is to be leased to an Affiliate of a Borrower, any of the General
Partners, any Second Tier Partner, any of the Third Tier Partners, any
Guarantor, or any of their Restricted Subsidiaries or Unrestricted Subsidiaries,
the square footage subject to such lease shall be deducted from the overall
square footage of the project and excluded in calculating compliance with the
foregoing tests.  Once a particular development is leased at or above such
level, such development shall cease to be a Speculative Development, and shall
be an Income Producing Property.

 

Stated Rate.  See §4.14(b).

 

Stibbs.  John H. Stibbs, Jr., as Trustee for a Borrower.

 

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Super-Majority Lenders.  As of any date, the Lender or Lenders (excluding any
Defaulting Lenders) whose aggregate Commitment Percentage is equal to or greater
than sixty-six and two-thirds percent (66 2/3%) of the total Commitments. 
Commitments and Loans of Defaulting Lenders shall be disregarded when
determining Super-Majority Lenders.

 

Survey.  With respect to each Mortgaged Property, an instrument survey of such
Mortgaged Property or the Land upon which Vertical Commercial Improvements are
to be constructed and any improvements thereon, if any, a plat, or other
description of the Mortgaged Property reasonably satisfactory to Agent.

 

TCI Easement Agreement.  That certain Access Agreement between Woodlands and The
Woodlands Communication Network pursuant to which Comcast Cable
Communications, Inc., successor to The Woodlands Communication Network, operates
a cable system within private easements owned by Woodlands for a period which
ends on June 15, 2015.

 

Test Period.  See §9.2.

 

Third Party Lease.  A bona-fide arm’s length lease to a third party that is not
an Affiliate of any Borrower, any of the General Partners, any Second Tier
Partner, any of the Third Tier Partners, any Guarantor, or any of their
Restricted Subsidiaries or Unrestricted Subsidiaries at the time construction
commences.

 

Third Tier Partners.  Collectively, TWC Commercial Properties and TWC Commercial
Properties, LLC, a Texas limited liability company as the general partners of
TWCPC Holdings and TWC Land Development and TWC Land Development, LLC, a Texas
limited liability company, as the general partners of TWLDC Holdings.

 

Title Insurance Company.  Stewart Title Company of Montgomery County, Inc. or
another title insurance company or companies or title agent approved by the
Agent.

 

Total Commitment.  The sum of the Commitments of the Lenders, as in effect from
time to time.  As of the date of this Agreement, the Total Commitment is Two
Hundred Fifty Million and No/100 Dollars ($250,000,000.00).  The Total
Commitment may decrease in accordance with §2.3.

 

Total Debt Ratio.  As of any Quarterly Measurement Date, the ratio of (a) the
aggregate Total Indebtedness of the Borrowers and their respective Restricted
Subsidiaries to (b) Total Market Value Capitalization of the Borrowers.

 

Total Indebtedness.  See §9.1(a).

 

Total Market Value Capitalization.  At any time the sum of (a) an amount equal
to the total value of the Borrowing Base Assets as determined for the purposes
of computing the Borrowing Base at such time (without reference to any
percentage advance rate), plus (b) the Appraised Value as most recently
determined hereunder (or if the Appraised Value has not been determined, the
historic cost (including construction in progress and land value)) of Income
Producing Properties that are owned by Commercial Company or Land Company but do
not constitute Borrowing Base Assets other than Build-To-Suit Properties (or in
the event that such

 

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property is owned by a direct or indirect Restricted Subsidiary of Commercial
Company or Land Company, then a percentage of such Appraised Value or cost, as
applicable, equal to the percentage that Commercial Company’s or Land Company’s
Partial Interest bears to the entire equity interest in such property), plus
(c) the historic cost (including land value) of Build-To-Suit Properties owned
by Commercial Company or Land Company which do not constitute Borrowing Base
Assets (or in the event that such property is owned by a direct or indirect
Restricted Subsidiary of Commercial Company or Land Company, then a percentage
of such cost equal to the percentage that Commercial Company’s or Land Company’s
Partial Interest bears to the entire equity interest in such property), plus
(d) for each Partial Interest, an amount equal to the product obtained by
multiplying (x) (i) the product obtained by multiplying (A) the sum of the
historic cost of each Income Producing Property underlying the Partial Interest
by (B) 0.70, by (y) the Partial Interest (expressed as a percentage) (but not
less than zero).  Notwithstanding the foregoing, any property described in
clauses (a), (b), (c) and (d) above that is security for any Non-Recourse
Indebtedness in the event that the Non-Recourse Indebtedness secured by such
asset exceeds fifty-five percent (55%) of the Adjusted Value of such asset,
shall be excluded for the purposes of determining Total Market Value
Capitalization.

 

Total Revolving Credit Commitment.  The sum of the Revolving Credit Commitments
of the Revolving Credit Lenders, as in effect from time to time.  As of the date
of this Agreement, the Total Revolving Credit Commitment is One Hundred
Twenty-Five Million and No/100 Dollars ($125,000,000.00).  The Total Revolving
Credit Commitment may decrease in accordance with §2.3.

 

Total Secured Term Loan Commitment.  The sum of the Secured Term Loan
Commitments of the Secured Term Loan Lenders, as in effect from time to time. 
As of the date of this Agreement, the Total Secured Term Loan Commitment is One
Hundred Twenty-Five Million and No/100 Dollars ($125,000,000.00).

 

Tri-Party Agreement.  An agreement among the Agent, the Borrowers and the Title
Insurance Company providing for the execution by the Title Insurance Company on
behalf of the Agent of releases and other consents pursuant to §5.5, as the same
may be modified or amended, such agreement to be in form and substance
satisfactory to Agent.

 

TWC Commercial Properties.  TWC Commercial Properties, LP, a Delaware limited
partnership.

 

TWC Land Development.  TWC Land Development, LP, a Delaware limited partnership.

 

TWCPC Holdings.  TWCPC Holdings, L.P., a Texas limited partnership.

 

TWCPC Holdings GP.  TWCPC Holdings GP, L.L.C., a Texas limited liability
company.

 

TWLDC Holdings.  TWLDC Holdings, L.P., a Texas limited partnership.

 

TWLDC Holdings GP.  TWLDC Holdings GP, L.L.C., a Texas limited liability
company.

 

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Type.  As to any Revolving Credit Loan or Secured Term Loan, its nature as a
Base Rate Loan or a LIBOR Rate Loan.

 

UCC.  The Uniform Commercial Code as from time to time in effect in the State of
Texas.

 

Undeveloped Commercial Land.  Land designated for commercial use under the
Master Plan of the Woodlands Project, but not Developed Commercial Land.

 

Undeveloped Residential Land.  Land designated for residential or institutional
use, schools, churches, nurseries or day care centers or designated for gas
stations, service stations or similar retail use or apartment use and other
commercial uses designated as part of the Residential Land under the applicable
Master Plan of the Woodlands Project, but not Developed Residential Land.

 

Unrestricted Cash and Cash Equivalents.  As of any date of determination, the
sum of (a) the aggregate amount of Unrestricted Cash and (b) the aggregate
amount of Unrestricted Cash Equivalents (valued at fair market value).  As used
in this definition, “Unrestricted” means the specified asset is not subject to
any escrow, reserves or Liens or claims of any kind in favor of any Person.

 

Unrestricted Subsidiaries.  Any corporation, association, partnership, limited
liability company, trust, or other business entity of which the designated
parent shall at any time own directly or indirectly through a Person or Persons
an ownership interest but which is not a Restricted Subsidiary or which a
Borrower elects to be an Unrestricted Subsidiary.

 

Vertical Commercial Improvements.  Improvements to the Commercial Land or
Residential Land, as applicable (which may include improvements to be used for
multifamily rental housing), which are intended to be income-producing operating
properties upon completion, rising vertically from such land together with any
site work and grading performed on the Commercial Land or Residential Land, as
applicable, in connection therewith.

 

Vertical Development Costs.  The aggregate amount of all historic costs
(including land at its Adjusted Value) of Properties under Construction, less
the amount of such costs paid for through any date of determination from
proceeds of any financing secured by the applicable Properties under
Construction.

 

Voting Interests.  Stock or similar ownership interests of any class or classes
(however designated), the holders of which are at the time entitled, as such
holders, (a) to vote for the election of a majority of the directors (or persons
performing similar functions) of the corporation, association, partnership,
trust or other business entity involved, or (b) to control, manage, or conduct
the business of the corporation, partnership, association, trust or other
business entity involved.

 

Waterway Project.  A planned approximately 500,000 rentable square foot Class A
office building to be located at 10 Waterway Avenue, The Woodlands, Texas.

 

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Waterway Square Garage.  An approximately 1,942 space parking garage located off
Lake Robbins Drive between Fountains Plaza & Woodloch Court in The Woodlands,
Texas.

 

Waterway Square Hotel.  A planned hotel, including approximately 336 rooms, 27
meeting rooms and bar.

 

Woodlands.  The Woodlands Corporation.

 

Woodlands Operating.  The Woodlands Operating Company, L.P.

 

Woodlands Operating Distributions.  A Distribution made by The Woodlands
Operating Company, L.P. to the partners or other beneficial owners of The
Woodlands Operating Company, L.P.

 

Woodlands Operating Payments.  The sum of (a) the amount of all Distributions
made by Woodlands Operating to the partners or other beneficial owners of
Woodlands Operating during any period, plus (b) the amount of any Hospitality
Management Fees paid during any period.

 

Woodlands Project.  The project commonly known as The Woodlands and described in
the Master Plan.

 

§1.2                        Rules of Interpretation.

 

(a)                                 A reference to any document or agreement
shall include such document or agreement as amended, modified or supplemented
from time to time in accordance with its terms and the terms of this Agreement.

 

(b)                                 The singular includes the plural and the
plural includes the singular.

 

(c)                                  A reference to any law includes any
amendment or modification to such law.

 

(d)                                 A reference to any Person includes its
permitted successors and permitted assigns.

 

(e)                                  Accounting terms not otherwise defined
herein have the meanings assigned to them by Generally Accepted Accounting
Principles applied on a consistent basis by the accounting entity to which they
refer.

 

(f)                                   The words “include,” “includes” and
“including” are not limiting.

 

(g)                                  The words “approval” and “approved” as the
context so determines, means an approval in writing given to the party seeking
approval after full and fair disclosure to the party giving approval of all
material facts necessary in order to determine whether approval should be
granted.

 

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(h)                                 All terms not specifically defined herein or
by Generally Accepted Accounting Principles, which terms are defined in the
Uniform Commercial Code as in effect in the State of Texas, have the meanings
assigned to them therein.

 

(i)                                     Reference to a particular “§” refers to
that section of this Agreement unless otherwise indicated.

 

(j)                                    The words “herein,” “hereof,” “hereunder”
and words of like import shall refer to this Agreement as a whole and not to any
particular section or subdivision of this Agreement.

 

(k)                                 In the event of any change in Generally
Accepted Accounting Principles after the date hereof or any other change in
accounting procedures pursuant to §7.3 which would affect the computation of any
financial covenant, ratio or other requirement set forth in any Loan Document,
then upon the request of Borrower or Agent, the Borrower, the Guarantors, the
Agent and the Lenders shall negotiate promptly, diligently and in good faith in
order to amend the provisions of the Loan Documents such that such financial
covenant, ratio or other requirement shall continue to provide substantially the
same financial tests or restrictions of the Borrower as in effect prior to such
accounting change, as determined by the Majority Lenders in their good faith
judgment.  Until such time as such amendment shall have been executed and
delivered by the Borrower, the Guarantors, the Agent and the Majority Lenders,
such financial covenants, ratio and other requirements, and all financial
statements and other documents required to be delivered under the Loan
Documents, shall be calculated and reported as if such change had not occurred.

 

§1.3                        Amendment and Restatement.  In order to facilitate
the amendment and restatement of the Original Credit Agreement, certain lenders
that were a party to the Original Credit Agreement are no longer continuing as
Lenders under this Agreement (the “Exiting Lenders”), and certain new lenders
are becoming a party to this Agreement as Lenders.  Contemporaneously with the
execution of this Agreement, the Exiting Lenders shall be deemed to have
assigned their Commitments under the Original Credit Agreement to the Lenders
under this Agreement, and the Exiting Lenders shall be paid all principal,
interest and fees due to them in connection therewith.  The Revolving Credit
Commitments and the Secured Term Loan Commitments shall be allocated among the
Lenders a party to this Agreement in accordance with their respective Revolving
Credit Commitment Percentages and their Secured Term Loan Commitment
Percentages.  The foregoing is done as an accommodation to the Borrowers, the
Exiting Lenders and the Lenders, and shall be deemed to have occurred with the
same force and effect as if such assignments were evidenced by the applicable
Assignment and Acceptance Agreements (as defined in the Original Credit
Agreement), and no other documents shall be, or shall be required to be,
executed in connection therewith.

 

§2.                               THE REVOLVING CREDIT FACILITY

 

§2.1                        Commitment to Lend Revolving Credit Loans.  Subject
to the terms and conditions set forth in this Agreement, each of the Revolving
Credit Lenders severally agrees to lend to Land Company, and Land Company may
borrow (and repay and reborrow) from time to time between the date hereof and
the Maturity Date, upon notice by Land Company to the Agent

 

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given in accordance with §2.6, such sums as are requested by Land Company for
the purposes set forth in §7.11 up to the lesser of (a) a maximum aggregate
principal amount outstanding (after giving effect to all amounts requested) at
any one time equal to such Revolving Credit Lender’s Revolving Credit Commitment
and (b) such Revolving Credit Lender’s Revolving Credit Commitment Percentage of
the sum of (i) the Borrowing Base minus (ii) the amount of all outstanding or
requested Commercial Company Secured Term Loans and Land Company Secured Term
Loans; provided, that, in all events no Default or Event of Default shall have
occurred and be continuing and the Borrowers shall be in compliance with all
covenants as required pursuant to §2.6(ii); and provided, further, that the
outstanding principal amount of the Revolving Credit Loans (after giving effect
to all amounts requested) shall not at any time exceed the Total Revolving
Credit Commitment.  The Revolving Credit Loans shall be made pro rata in
accordance with each Revolving Credit Lender’s Revolving Credit Commitment
Percentage.  Each request for a Revolving Credit Loan hereunder shall constitute
a representation and warranty by Land Company that all of the conditions set
forth in §10 and §11, in the case of the initial Revolving Credit Loan, and §11,
in the case of all other Revolving Credit Loans, have been satisfied on the date
of such request.  No Revolving Credit Lender shall have any obligation to make
Revolving Credit Loans to Land Company in the maximum aggregate principal amount
outstanding of more than the amount of its Revolving Credit Commitment.

 

§2.2                        Unused Fee.  The Borrowers agree to pay to the Agent
for the accounts of the Revolving Credit Lenders in accordance with their
respective Revolving Credit Commitment Percentages an unused fee calculated at
the rate per annum set forth below on the average daily amount by which the
Revolving Credit Commitment from time to time exceeds the outstanding principal
amount of Revolving Credit Loans during each calendar quarter or portion thereof
commencing on the date hereof and ending on the Maturity Date.  The unused fee
shall be calculated for each day based on the ratio (expressed as a percentage)
of (a) the average daily amount of the outstanding principal amount of the
Revolving Credit Loans during such quarter to (b) the Revolving Credit
Commitment, and shall be payable based upon the ratios set forth below:

 

Ratio of Revolving Credit Loans
to Revolving Credit Commitment

 

Unused Fee

 

 

 

 

 

Less than 50%

 

0.35

%

 

 

 

 

Greater than or equal to 50%

 

0.25

%

 

The unused fee shall be payable quarterly in arrears on the first day of each
calendar quarter for the immediately preceding calendar quarter or portion
thereof, or on any earlier date on which the Revolving Credit Commitment shall
terminate as provided in §2.3, with a final payment on the Maturity Date.  Any
payment due under this §2.2 shall be prorated for any partial calendar quarter.

 

§2.3                        Optional Reduction of Revolving Credit Commitment. 
Land Company shall have the right at any time and from time to time upon three
Business Days’ prior written notice to the Agent to reduce by $5,000,000.00 or
an integral multiple of $500,000.00 in excess thereof (provided that in no event
shall the aggregate Revolving Credit Commitment be reduced to an

 

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amount less than $25,000,000.00) or to terminate entirely the unborrowed portion
of the Revolving Credit Commitment, whereupon the Revolving Credit Commitment of
the Revolving Credit Lenders shall be reduced pro rata in accordance with their
respective Revolving Credit Commitment Percentages of the amount specified in
such notice or, as the case may be, terminated, any such reduction to be without
penalty.  Promptly after receiving any notice of Land Company delivered pursuant
to this §2.3, the Agent will notify the Revolving Credit Lenders of the
substance thereof.  Upon the effective date of any such termination in full, the
Borrowers shall pay to the Agent for the respective accounts of the Revolving
Credit Lenders the full amount of any unused fee under §2.2 then accrued.  No
reduction or termination of the Revolving Credit Commitment may be reinstated. 
Any reduction of the Revolving Credit Commitment pursuant to this Agreement
shall be allocated pro rata among the Revolving Credit Lenders in accordance
with their Revolving Credit Commitment Percentages.

 

§2.4                        Evidence of Debt.  The indebtedness of the Borrowers
resulting from the Loans made by each Lender from time to time shall be
evidenced by one or more accounts or records maintained by such Lender and the
Agent in the ordinary course of business, including, without limitation, the
amounts of principal and interest payable and paid to such Lender from time to
time hereunder.  The Borrowers hereby irrevocably authorize Agent and the
Lenders to make, or cause to be made, at or about the time of the Drawdown Date
of any Loan or at the time of receipt of any payment thereof, an appropriate
notation on Agent’s and the Lender’s records reflecting the making of such Loan
or (as the case may be) the receipt of such payment.  The Agent shall maintain
accounts or records in accordance with its usual practice in which it shall
record: (i) the date and the amount of each Loan made hereunder, the Type of
Loan and, if appropriate, the Interest Period applicable thereto, (ii) the
amount of any principal or interest due and payable or to become due and payable
from the Borrowers to each Lender hereunder, and (iii) the amount of any sum
received by the Agent hereunder from the Borrowers and each Lender’s share
thereof.  The accounts or records maintained by the Agent and each Lender shall
be prima facie evidence of the existence and amounts of the Obligations recorded
therein and shall be conclusive absent manifest error of the amount of the Loans
made by the Lenders to the Borrowers and the interest and payments thereon.  Any
failure to so record or any error in doing so shall not, however, limit or
otherwise affect the obligation of the Borrowers hereunder or under the Notes,
if any, to pay any amount owing with respect to the Obligations.  In the event
of any conflict between the accounts and records maintained by any Lender and
the accounts and records of the Agent in respect of such matters, the accounts
and records of the Agent shall control in the absence of manifest error.  The
Borrowers agree that upon the request of any Lender made through the Agent
(whether for purposes of pledge, enforcement or otherwise), the Borrowers shall
promptly execute and deliver to such Lender (through the Agent) a Revolving
Credit Note, a Commercial Company Secured Term Loan Note and/or a Land Company
Secured Term Loan Note, as applicable, payable to the order of such Lender,
which shall evidence such Lender’s Loans in addition to such accounts or
records.  Each Lender may attach schedules to its Notes and endorse thereon the
date, Type (if applicable), amount and maturity of its Loans and payments with
respect thereto.  All references to Notes in the Loan Documents shall mean
Notes, if any, to the extent issued hereunder.  By delivery of this Agreement
and any Revolving Credit Note, Commercial Company Secured Term Loan Note and/or
a Land Company Secured Term Loan Note, there shall not be deemed to have
occurred, and there has not otherwise occurred, any payment, satisfaction or
novation of the Indebtedness evidenced by the Original Credit Agreement, the
“Revolving Credit Notes” and the “Secured Term Loan Notes” described in the

 

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Original Credit Agreement, which Indebtedness is instead allocated among the
Revolving Credit Lenders and the Secured Term Loan Lenders as of the date hereof
in accordance with their respective Revolving Credit Commitment Percentages,
Commercial Company Secured Term Loan Commitment Percentages and Land Company
Secured Term Loan Commitment Percentages, and is evidenced by this Agreement and
any Revolving Credit Notes, Commercial Company Secured Term Loan Notes and Land
Company Secured Term Loan Notes, and the Revolving Credit Lenders and the
Secured Term Loan Lenders shall as of the date hereof make such adjustments to
the outstanding Revolving Credit Loans and Secured Term Loans of such Revolving
Credit Lenders and Secured Term Loan Lenders so that such outstanding Revolving
Credit Loans and Secured Term Loans are consistent with their respective
Revolving Credit Commitment Percentages and Secured Term Loan Commitment
Percentages.  By execution hereof, the Lenders waive payment of any prepayment
fees payable to such Lenders, if any, under the Original Credit Agreement.

 

§2.5                        Interest on Revolving Credit Loans.

 

(a)                                 Each Revolving Credit LIBOR Rate Loan shall
bear interest for the period commencing with the Drawdown Date thereof and
ending on the date on which such Revolving Credit LIBOR Rate Loan is converted
to a Revolving Credit Base Rate Loan from a Revolving Credit LIBOR Rate Loan at
the rate per annum equal to the sum of (i) the LIBOR Rate plus (ii) two and
three quarters of one percent (2.75%).

 

(b)                                 Each Revolving Credit Base Rate Loan shall
bear interest for the period commencing with the Drawdown Date thereof and
ending on the date on which such Revolving Credit Base Rate Loan is converted to
a Revolving Credit LIBOR Rate Loan from a Revolving Credit Base Rate Loan at a
rate per annum equal to the sum of (i) the Base Rate plus (ii) one and one
quarter of one percent (1.25%).

 

(c)                                  The Borrowers promise to pay interest on
each Revolving Credit Loan in arrears on each Interest Payment Date with respect
thereto.

 

§2.6                        Requests for Revolving Credit Loans.  Land Company
(i) shall notify the Agent of a potential request for a Revolving Credit Loan as
soon as possible prior to Land Company’s proposed Drawdown Date, and (ii) shall
give to the Agent written notice in the form of Exhibit C-2 hereto (or
telephonic notice confirmed in writing in the form of Exhibit C-2 hereto) of
each Revolving Credit Loan requested hereunder (a “Loan Request”) no later than
10:00 a.m. three (3) Business Days prior to the proposed Drawdown Date.  The
Agent shall promptly notify each of the Revolving Credit Lenders following the
receipt of a Loan Request, but in any event not less than two (2) Business Days
prior to the proposed Drawdown Date.  Land Company shall not make a Loan Request
more frequently than five (5) times each month.  Each such notice shall specify
with respect to the requested Revolving Credit Loan the proposed principal
amount, Drawdown Date and Type (if applicable).  Each such notice shall also
contain (i) a statement as to the purpose for which such advance shall be used
(which purpose shall be in accordance with the terms of §7.11), and (ii) a
certification by the Principal Financial Officer of each Borrower that the
Borrowers are and will be in compliance with all covenants under the Loan
Documents after giving effect to the making of such Revolving Credit Loan. 
Except as provided in this §2.6, each such Loan Request shall be irrevocable and
binding on Land Company and shall obligate

 

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Land Company to accept the Revolving Credit Loan requested from the Revolving
Credit Lenders on the proposed Drawdown Date, provided that, in addition to Land
Company’s other remedies against any Revolving Credit Lender which fails to
advance its proportionate share of a requested Revolving Credit Loan, such Loan
Request may be revoked by Land Company by notice received by the Agent no later
than the Drawdown Date if any Revolving Credit Lender fails to advance its
proportionate share of the requested Revolving Credit Loan in accordance with
the terms of this Agreement, provided further that Land Company shall be liable
in accordance with the terms of this Agreement to any Revolving Credit Lender
which is prepared to advance its proportionate share of the requested Revolving
Credit Loan for any costs, expenses or damages incurred by such Revolving Credit
Lender as a result of Land Company’s election to revoke such Loan Request. 
Nothing herein shall prevent Land Company from seeking recourse against any
Revolving Credit Lender that fails to advance its proportionate share of a
requested Revolving Credit Loan as required by this Agreement.  Land Company may
without cost or penalty revoke a Loan Request by delivering notice thereof to
each of the Revolving Credit Lenders no later than 10:00 a.m. two (2) Business
Days prior to the Drawdown Date.  Each Loan Request shall be for a minimum
aggregate amount of $1,000,000 or an integral multiple of $100,000 in excess
thereof.

 

§2.7                        Funds for Revolving Credit Loans.

 

(a)                                 Not later than 2:00 p.m. (Atlanta time) on
the proposed Drawdown Date of any Revolving Credit Loans, each of the Revolving
Credit Lenders will make available to the Agent, at the Agent’s Head Office, in
immediately available funds, the amount of such Revolving Credit Lender’s
Revolving Credit Commitment Percentage of the amount of the requested Revolving
Credit Loans which may be disbursed pursuant to §2.1.  Upon receipt from each
Revolving Credit Lender of such amount, and upon receipt of the documents
required by §10 and §11 and the satisfaction of the other conditions set forth
therein, to the extent applicable, the Agent will make available to Land Company
the aggregate amount of such Revolving Credit Loans made available to the Agent
by the Revolving Credit Lender by promptly crediting such amount to the account
of Land Company maintained at the Agent’s Head Office.  The failure or refusal
of any Revolving Credit Lender to make available to the Agent at the aforesaid
time and place on any Drawdown Date the amount of its Revolving Credit
Commitment Percentage of the requested Revolving Credit Loans to the extent it
is obligated to fund such Revolving Credit Loan hereunder shall not relieve any
other Revolving Credit Lender from its several obligation hereunder to make
available to the Agent the amount of such other Revolving Credit Lender’s
Revolving Credit Commitment Percentage of any requested Revolving Credit Loans,
including any additional Revolving Credit Loans that may be requested by Land
Company subject to the terms and conditions hereof to provide funds to replace
those not advanced by the Revolving Credit Lender so failing or refusing,
provided that Land Company may by notice received by the Agent no later than the
Drawdown Date refuse to accept any Revolving Credit Loan which is not fully
funded in accordance with Land Company’s Loan Request subject to the terms of
§2.6; provided further that no Revolving Credit Lender shall be obligated to
advance any amount in excess of the limits set forth in §2.1.  In the event of
any such failure or refusal, the Revolving Credit Lenders not so failing or
refusing shall be entitled to a priority position as against the Revolving
Credit Lender or Revolving Credit Lenders so failing or refusing for such
Revolving Credit Loans as provided in §2C.

 

39

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(b)                                 Unless Agent shall have been notified by any
Revolving Credit Lender prior to the applicable Drawdown Date that such
Revolving Credit Lender will not make available to Agent such Revolving Credit
Lender’s pro rata share of a proposed Revolving Credit Loan, Agent may in its
discretion assume that such Revolving Credit Lender has made such Revolving
Credit Loan available to Agent in accordance with the provisions of this
Agreement and Agent may, if it chooses, in reliance upon such assumption make
such Revolving Credit Loan available to Land Company, and such Revolving Credit
Lender shall be liable to the Agent for the amount of such advance.  If such
Revolving Credit Lender does not pay such corresponding amount upon the Agent’s
demand therefor, the Agent will promptly notify the Borrowers, and, if such
amount was actually advanced to the Borrowers, the Borrowers shall promptly pay
such corresponding amount to the Agent.  The Agent shall also be entitled to
recover from the Revolving Credit Lender or the Borrowers, as the case may be,
interest on such corresponding amount in respect of each day from the date such
corresponding amount was made available by the Agent to the applicable Borrower
to the date such corresponding amount is recovered by the Agent at a per annum
rate equal to (i) from the Borrowers at the applicable rate for such Revolving
Credit Loan or (ii) from a Revolving Credit Lender at the Federal Funds
Effective Rate plus one-half of one percent (0.5%).

 

§2A.                      THE SECURED TERM LOAN FACILITY

 

§2A.1               Commitment to Lend Commercial Company Secured Term Loan. 
Subject to the terms and conditions set forth in this Agreement, each of the
Secured Term Loan Lenders severally agrees to lend to Commercial Company on the
Closing Date such Secured Term Loan Lender’s Commercial Company Secured Term
Loan Commitment Percentage of the Commercial Company Secured Term Loan
Commitment.

 

§2A.1A      Commitment to Lend Land Company Secured Term Loan.  Subject to the
terms and conditions set forth in this Agreement, each of the Secured Term Loan
Lenders severally agrees to lend to Land Company on the Closing Date such
Secured Term Loan Lender’s Land Company Secured Term Loan Commitment Percentage
of the Land Company Secured Term Loan Commitment.

 

§2A.2               Interest on Secured Term Loans.

 

(a)                                 Each Secured Term LIBOR Rate Loan (whether
of Commercial Company or Land Company) shall bear interest for the period
commencing with the Drawdown Date thereof and ending on the date on which such
Secured Term LIBOR Rate Loan is converted to a Secured Term Base Rate Loan at a
rate per annum equal to the sum of (i) the LIBOR Rate plus (ii) two and three
quarters of one percent (2.75%).

 

(b)                                 Each Secured Term Base Rate Loan shall bear
interest for the period commencing with the Drawdown Date thereof and ending on
the date on which such Secured Term Base Rate Loan is converted to a Secured
Term LIBOR Rate Loan at a rate per annum equal to the sum of (i) the Base Rate
plus (ii) one and one quarter of one percent (1.25%).

 

(c)                                  The Borrowers promise to pay interest on
the Secured Term Loans in arrears on each Interest Payment Date with respect
thereto.

 

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§2B.                      INTENTIONALLY OMITTED.

 

§2C.                      DEFAULTING LENDERS.

 

(a)                                 If for any reason any Lender shall be a
Defaulting Lender, then, in addition to the rights and remedies that may be
available to the Agent or the Borrowers under this Agreement or applicable law,
such Defaulting Lender’s right to participate in the administration of the
Loans, this Agreement and the other Loan Documents, including without
limitation, but subject to a Defaulting Lender’s rights pursuant to §27, any
right to vote in respect of, to consent to or to direct any action or inaction
of the Agent, shall be suspended during the pendency of such failure or
refusal.  If a Lender is a Defaulting Lender because it has failed to make
timely payment to the Agent of any amount required to be paid to the Agent
hereunder (without giving effect to any notice or cure periods), in addition to
other rights and remedies which the Agent or the Borrowers may have under the
immediately preceding provisions or otherwise, the Agent shall be entitled to
(i) collect interest from such Defaulting Lender on such delinquent payment for
the period from the date on which the payment was due until the date on which
the payment is made at the Federal Funds Effective Rate plus one-half of one
percent (0.5%), (ii) withhold or setoff and to apply in satisfaction of the
defaulted payment and any related interest, any amounts otherwise payable to
such Defaulting Lender under this Agreement or any other Loan Document and
(iii) bring an action or suit against such Defaulting Lender in a court of
competent jurisdiction to recover the defaulted amount and any related
interest.  Any amounts received by the Agent in respect of a Defaulting Lender’s
Loans shall be applied as set forth in §2C(c).

 

(b)                                 Any Non-Defaulting Lender may, but shall not
be obligated to, in its sole discretion, acquire all or a portion of a
Defaulting Lender’s Commitments.  Any Lender desiring to exercise such right
shall give written notice thereof to the Agent and the Borrowers no sooner than
two (2) Business Days and not later than five (5) Business Days after such
Defaulting Lender became a Defaulting Lender.  If more than one Lender exercises
such right, each such Lender shall have the right to acquire an amount of such
Defaulting Lender’s Commitments in proportion to the Commitments of the other
Lenders exercising such right.  If after such fifth Business Day, the Lenders
have not elected to purchase all of the Commitments of such Defaulting Lender,
then the Borrowers (so long as no Default or Event of Default exists) or the
Lenders may, by giving written notice thereof to the Agent, such Defaulting
Lender and the other Lenders, demand that such Defaulting Lender assign its
Commitments to an eligible assignee subject to and in accordance with the
provisions of §18.1 for the purchase price provided for below.  No party hereto
shall have any obligation whatsoever to initiate any such replacement or to
assist in finding an eligible assignee.  Upon any such purchase or assignment,
and any such demand with respect to which the conditions specified in §18.1 have
been satisfied, the Defaulting Lender’s interest in the Loans and its rights
hereunder (but not its liability in respect thereof or under the Loan Documents
or this Agreement to the extent the same relate to the period prior to the
effective date of the purchase) shall terminate on the date of purchase, and the
Defaulting Lender shall promptly execute all documents reasonably requested to
surrender and transfer such interest to the purchaser or assignee thereof,
including an appropriate Assignment and Acceptance Agreement.  The purchase
price for the Commitments of a Defaulting Lender shall be equal to the amount of
the principal balance of the Loans outstanding and owed by the Borrowers to the
Defaulting Lender plus any accrued but unpaid interest thereon and accrued but

 

41

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unpaid fees.  Prior to payment of such purchase price to a Defaulting Lender,
the Agent shall apply against such purchase price any amounts retained by the
Agent pursuant to §2C(c).

 

(c)                                  Any payment of principal, interest, fees or
other amounts received by the Agent for the account of such Defaulting Lender
(whether voluntary or mandatory, at maturity, or otherwise, and including any
amounts made available to the Agent for the account of such Defaulting Lender
pursuant to §13) shall be applied at such time or times as may be determined by
the Agent as follows:  first, to the payment of any amounts owing by such
Defaulting Lender to the Agent hereunder; second, as the Borrowers may request
(so long as no Default or Event of Default exists), to the funding of any Loan
in respect of which such Defaulting Lender has failed to fund its portion
thereof as required by this Agreement, as determined by the Agent; third, if so
determined by the Agent and the Borrowers, to be held in a non-interest bearing
deposit account and released pro rata in order to satisfy obligations of such
Defaulting Lender to fund Loans under this Agreement; fourth, to the payment of
any amounts owing to the Agent or the Lenders as a result of any judgment of a
court of competent jurisdiction obtained by the Agent or any Lender against such
Defaulting Lender as a result of such Defaulting Lender’s breach of its
obligations under this Agreement; fifth, so long as no Default or Event of
Default exists, to the payment of any amounts owing to the Borrowers as a result
of any judgment of a court of competent jurisdiction obtained by the Borrowers
against such Defaulting Lender as a result of such Defaulting Lender’s breach of
its obligations under this Agreement; and sixth, to such Defaulting Lender or as
otherwise directed by a court of competent jurisdiction; provided that if
(i) such payment is a payment of the principal amount of any Revolving Credit
Loans and (ii) such Revolving Credit Loans were made at a time when the
conditions set forth in §10 and §11, to the extent required by this Agreement,
were satisfied or waived, such payment shall be applied solely to pay the
Revolving Credit Loans of all Non-Defaulting Lenders on a pro rata basis until
such time as all Revolving Credit Loans are held by the Lenders pro rata in
accordance with their Commitment Percentages, prior to being applied to the
payment of any Revolving Credit Loans of such Defaulting Lender.  Any payments,
prepayments or other amounts paid or payable to a Defaulting Lender that are
applied (or held) to pay amounts owed by a Defaulting Lender or to post cash
collateral pursuant to this §2.13(c) shall be deemed paid to and redirected by
such Defaulting Lender, and each Lender irrevocably consents hereto, and to the
extent allocated to the repayment of principal of the Loan, shall not be
considered outstanding principal under this Agreement.

 

(d)                                 Each Revolving Credit Lender that is a
Defaulting Lender shall not be entitled to receive any facility unused fee
pursuant to §2.2 for any period during which that Revolving Credit Lender is a
Defaulting Lender.  With respect to any facility unused fee not required to be
paid to any Defaulting Lender, the Borrowers shall not be required to pay any
remaining amount of any such fee.

 

(e)                                  If the Borrowers (so long as no Default or
Event of Default exists) and the Agent agree in writing in their sole discretion
that a Defaulting Lender should no longer be deemed to be a Defaulting Lender,
the Agent will so notify the parties hereto, whereupon as of the date specified
in such notice and subject to any conditions set forth therein (which may
include arrangements with respect to any cash collateral), that Lender will, to
the extent applicable, purchase that portion of outstanding Loans of the other
Lenders or take such other actions as the Agent may determine to be necessary to
cause the Loans to be held on a pro rata

 

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basis by the Lenders in accordance with their Commitments, whereupon such Lender
will cease to be a Defaulting Lender; provided that no adjustments will be made
retroactively with respect to fees accrued or payments made by or on behalf of
the Borrowers while such Lender was a Defaulting Lender; and provided, further,
that except to the extent otherwise expressly agreed by the affected parties, no
change hereunder from Defaulting Lender to Lender will constitute a waiver or
release of any claim of any party hereunder arising from such Lender’s having
been a Defaulting Lender.

 

§3.                               REPAYMENT OF THE LOANS

 

§3.1                        Stated Maturity.  The Borrowers promise to pay on
the Maturity Date (as the same may be extended pursuant to §4.15), and there
shall become absolutely due and payable on the Maturity Date, all of the Loans
outstanding on such date, together with any and all accrued and unpaid interest
thereon.

 

§3.2                        Mandatory Prepayments.

 

(a)                                 If at any time the aggregate outstanding
principal amount of the Revolving Credit Loans exceeds the Total Revolving
Credit Commitment, or the aggregate Secured Term Loans exceeds the Total Secured
Term Loan Commitment, or the aggregate outstanding principal amount of the
Revolving Credit Loans and the Secured Term Loans exceeds the Borrowing Base,
then the Borrowers shall immediately pay the amount of such excess to the Agent
for the respective accounts of the Revolving Credit Lenders and the Secured Term
Loan Lenders for application to the Revolving Credit Loans and the Secured Term
Loans.

 

(b)                                 Without limiting the terms of this
Agreement, in the event that a Change of Control shall occur and all of the
Lenders shall not have consented in writing thereto, then the Revolving Credit
Lenders shall be relieved of all obligations to make Revolving Credit Loans and
the Borrowers shall immediately pay to the Agent for the respective accounts of
the Revolving Credit Lenders and the Secured Term Loan Lenders for application
to the Revolving Credit Loans and the Secured Term Loans all of the Revolving
Credit Loans and Secured Term Loans outstanding on such date, together with any
and all accrued and unpaid interest thereon.

 

§3.3                        Optional Prepayments.  The Borrowers shall have the
right, at their election, to prepay the outstanding amount of the applicable
Revolving Credit Loans or Secured Term Loans, as a whole or in part, at any time
without penalty or premium except as otherwise provided herein.  The applicable
Borrower shall give the Agent, no later than 10:00 a.m., Atlanta time, at least
three (3) Business Days prior written notice of any prepayment pursuant to this
§3.3, in each case specifying the proposed date of payment of applicable
Revolving Credit Loans or Secured Term Loans and the principal amount to be
paid.

 

§3.4                        Partial Prepayments.  Each partial prepayment of the
Loans under §3.3 shall be in the minimum amount of $5,000,000.00 or an integral
multiple of $1,000,000.00 in excess thereof (unless the applicable Loan is being
prepaid in full), and each partial prepayment of the Loans under §3.2 and §3.3
shall be applied, in the absence of instruction by the applicable Borrower,
first to the principal of the Secured Term Loans and then to the principal of
the Revolving Credit Loans, and within each category, first to the principal of
Base Rate Loans and then to the

 

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principal of LIBOR Rate Loans.  Notwithstanding anything herein to the contrary
(but subject to the terms of this sentence), all prepayments pursuant to §5.5
and §8.7 shall be applied first to the principal of the Secured Term Loans and
then to the principal of the Revolving Credit Loans, and may be further
allocated between the Commercial Company Secured Term Loans and the Land Company
Secured Term Loans, as applicable, as specified in a notice to the Agent.

 

§3.5                        Effect of Prepayments.  Except as provided in this
Agreement, amounts of the Revolving Credit Loans prepaid under §3.2, §3.3 and
§3.4 prior to the Maturity Date may be reborrowed as provided in §2.  Any
portion of the Secured Term Loan that is prepaid may not be reborrowed.  Except
as otherwise expressly provided herein, all payments shall first be applied to
accrued but unpaid interest and then to principal as provided above.

 

§4.                               CERTAIN GENERAL PROVISIONS

 

§4.1                        Conversion Options; Number of LIBOR Contracts.

 

(a)                                 The Borrowers may elect from time to time to
convert any of their outstanding Secured Term Loans or Revolving Credit Loans to
a Secured Term Loan or Revolving Credit Loan, respectively, of another Type and
such Secured Term Loan or Revolving Credit Loan shall thereafter bear interest
as a Base Rate Loan or a LIBOR Rate Loan, as applicable; provided that (i) with
respect to any such conversion of a LIBOR Rate Loan to a Base Rate Loan, the
Borrowers shall give the Agent at least three (3) Business Days’ prior written
notice of such election, and such conversion shall only be made on the last day
of the Interest Period with respect to such LIBOR Rate Loan; (ii) with respect
to any such conversion of a Base Rate Loan to a LIBOR Rate Loan, the Borrowers
shall give the Agent at least three (3) LIBOR Business Days’ prior written
notice of such election and the Interest Period requested for such Loan; the
principal amount of the Loan so converted shall be in a minimum aggregate amount
of $2,000,000 or an integral multiple of $100,000 in excess thereof; and
(iii) no Loan may be converted into a LIBOR Rate Loan when any Default or Event
of Default has occurred and is continuing.  All or any part of the outstanding
Secured Term Loans or Revolving Credit Loans of any Type may be converted as
provided herein, provided that no partial conversion shall result in a Secured
Term Base Rate Loan or Revolving Credit Base Rate Loan in an aggregate principal
amount of less than $1,000,000 or a Secured Term LIBOR Rate Loan or a Revolving
Credit LIBOR Rate Loan in an aggregate principal amount of less than $2,000,000
and that the aggregate principal amount of each Loan shall be an integral
multiple of $100,000.  On the date on which such conversion is being made, each
Lender shall take, to the extent it deems it necessary to do so, such action as
is necessary to transfer its Commitment Percentage of such Loans to its Domestic
Lending Office or its LIBOR Lending Office, as the case may be.  Each Conversion
Request relating to the conversion of a Base Rate Loan to a LIBOR Rate Loan
shall be irrevocable by the Borrowers.

 

(b)                                 Any Secured Term Loan or Revolving Credit
Loan may be continued as such Type upon the expiration of an Interest Period
with respect thereto by compliance by the Borrowers with the terms of §4.1;
provided that no LIBOR Rate Loan may be continued as such when any Default or
Event of Default has occurred and is continuing, but shall be automatically
converted to a Base Rate Loan on the last day of the Interest Period relating
thereto ending during the continuance of any Default or Event of Default.

 

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(c)                                  In the event that the Borrowers do not
notify the Agent of their election hereunder with respect to any Loan, such Loan
shall be automatically converted to a Base Rate Loan at the end of the
applicable Interest Period.

 

(d)                                 There shall be no more than ten (10) LIBOR
Rate Loans outstanding at any one time.

 

§4.2                        Closing Fees.  The Borrowers shall pay to KeyBank
certain fees for services rendered or to be rendered in connection with the Loan
as provided pursuant to that certain fee letter between the Borrowers and
KeyBank (the “Agreement Regarding Fees”).  All such fees shall be solely for the
account of KeyBank as provided in such agreement.

 

§4.3                        Agent Fee.  The Borrowers shall pay to the Agent,
for the Agent’s own account, a non-refundable Agent’s fee pursuant to the
Agreement Regarding Fees.  The Agent’s fee shall be payable quarterly in arrears
on the first day of each calendar quarter for the preceding calendar quarter or
portion thereof.  The Agent’s fee shall also be paid upon the Maturity Date or
earlier termination of the Commitment.  The Agent’s fee for any partial quarter
shall be prorated.

 

§4.4                        Funds for Payments.

 

(a)                                 All payments of principal, interest, unused
fees, Agent’s fees, closing fees and any other amounts due hereunder or under
any of the other Loan Documents shall be made to the Agent, for the respective
accounts of the Lenders and the Agent, as the case may be, at the Agent’s Head
Office, no later than 1:00 p.m. (Atlanta time) on the day when due, in each case
in lawful money of the United States in immediately available funds.

 

(b)                                 All payments by the Borrowers hereunder and
under any of the other Loan Documents shall be made without set off or
counterclaim and free and clear of and without deduction for any taxes (other
than any Excluded FATCA Tax), levies, imposts, duties, charges, fees,
deductions, withholdings, compulsory loans, restrictions or conditions of any
nature now or hereafter imposed or levied by any jurisdiction or any political
subdivision thereof or taxing or other authority therein unless the Borrowers
are compelled by law to make such deduction or withholding.  If any such
obligation is imposed upon the Borrowers with respect to any amount payable by
them hereunder or under any of the other Loan Documents, the Borrowers will pay
to the Agent, for the account of the Lenders or (as the case may be) the Agent,
on the date on which such amount is due and payable hereunder or under such
other Loan Document, such additional amount in Dollars as shall be necessary to
enable the Lenders or the Agent to receive the same net amount which the Lenders
or the Agent would have received on such due date had no such obligation been
imposed upon the Borrowers.  If any such Lender, to the extent it may lawfully
do so, fails to deliver the forms or other documentation required by this
Agreement, then the Agent may withhold from any payments to be made to such
Lender under any of the Loan Documents such amounts as are required by the
Code.  If any governmental authority asserts that the Agent or the Borrowers (as
to the Borrowers, with respect to Excluded FATCA Taxes only) did not properly
withhold or backup withhold, as the case may be, any tax or other amount from
payments made to or for the account of any Lender, such Lender shall indemnify
the Agent and/or the Borrowers (as to the Borrowers, with respect to Excluded
FATCA Taxes only) therefor, including all penalties and interest, any taxes
imposed by any jurisdiction on the

 

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amounts payable to the Agent or by the Borrowers (as to the Borrowers, with
respect to Excluded FATCA Taxes only) under this section, and costs and expenses
(including all reasonable fees and disbursements of any law firm or other
external counsel and the allocated cost of internal legal services and all
disbursements of internal counsel) of the Agent and the Borrowers (as to the
Borrowers, with respect to Excluded FATCA Taxes only).  The obligation of the
Lenders under this section shall survive the termination of the Commitments,
repayment of all Obligations and the resignation or replacement of the Agent. 
Without limitation of §4.4(b), if a payment made to a Lender under any Loan
Document would be subject to United States federal withholding tax imposed by
FATCA if such Lender were to fail to comply with the applicable reporting and
document provision requirements of FATCA (including those contained in
§1471(b) or §1472(b) of the Code, as applicable), such Lender shall deliver to
the Borrowers and the Agent, at the time or times prescribed by law and at such
time or times reasonably requested by either, such documentation prescribed by
applicable law (including as prescribed by §1471(b)(3)(C)(i) of the Code) and
such additional documentation reasonably requested by the Borrowers and/or the
Agent as may be necessary for the Borrowers and the Agent to comply with their
obligations under FATCA, to determine that such Lender has or has not complied
with such Lender obligations under FATCA and, as necessary, to determine the
amount to deduct and withhold from such payment.  The Borrowers will deliver
promptly to the Agent certificates or other valid vouchers for all taxes or
other charges deducted from or paid with respect to payments made by the
Borrowers hereunder or under such other Loan Document.

 

(c)                                  Each Lender organized under the laws of a
jurisdiction outside the United States, if requested in writing by the Borrowers
(but only so long as such Lender remains lawfully able to do so), shall provide
the Borrowers with such duly executed form(s) or statement(s) which may, from
time to time, be prescribed by law and, which, pursuant to applicable provisions
of (i) an income tax treaty between the United States and the country of
residence of such Lender, (ii) the Code, or (iii)any applicable rules or
regulations in effect under (i) or (ii) above, indicates the withholding status
of such Lender; provided that nothing herein (including without limitation the
failure or inability to provide such form or statement) shall relieve the
Borrowers of their obligations under §4.4(b).  In the event that the Borrowers
shall have delivered the certificates or vouchers described above for any
payments made by the Borrowers and such Lender receives a refund of any taxes
paid by the Borrowers pursuant to §4.4(b), such Lender will pay to the Borrowers
the amount of such refund promptly upon receipt thereof; provided that if at any
time thereafter such Lender is required to return such refund, the Borrowers
shall promptly repay to such Lender the amount of such refund. In the event that
any such Lender shall, after it becomes a Lender hereunder, become subject to
withholding as described above (such Lender is hereinafter referred to as a
“Withholding Lender”), then the Withholding Lender shall promptly notify the
Agent and the Borrowers and the Borrowers shall have the one-time right as to
such Withholding Lender, to be exercised by delivery of written notice delivered
to the Agent and the Withholding Lender within thirty (30) days of receipt of
such notice, to elect to cause the Withholding Lender to transfer its
Commitment.  The Agent shall promptly notify the remaining Lenders that each of
such Lenders shall have the right, but not the obligation, to acquire a portion
of the Commitment, pro rata based upon their relevant Commitment Percentages, of
the Commitment of the Withholding Lender (or if any of such Lenders does not
elect to purchase its pro rata share, then to such remaining Lenders in such
proportion as approved by the Agent).  In the event that the Lenders do not
elect to acquire all of the Withholding Lender’s Commitment, then the Agent
shall endeavor to obtain a new Lender to

 

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acquire such remaining Commitment.  Upon any such purchase of the Commitment of
the Withholding Lender, the Withholding Lender’s interest in the Obligations and
its rights hereunder and under the Loan Documents shall terminate at the date of
purchase, and the Withholding Lender shall promptly execute all documents
reasonably requested to surrender and transfer such interest.  The purchase
price for the Withholding Lender’s Commitment shall equal the principal balance
of the Obligations outstanding and owed by Borrowers to the Withholding Lender,
plus any and all accrued and unpaid interest and fees thereon (provided that the
Borrowers may pay the amount of any interest or fees owed to such Withholding
Lender).

 

§4.5                        Computations.  All computations of interest on the
Loans and of other fees to the extent applicable shall be based on a 360-day
year and paid for the actual number of days elapsed.  Whenever a payment
hereunder or under any of the other Loan Documents becomes due on a day that is
not a Business Day, the due date for such payment shall be extended to the next
succeeding Business Day, and interest shall accrue during such extension.  The
outstanding amount of the Loans as reflected on the records of the Agent from
time to time shall be considered prima facie evidence of such amount.

 

§4.6                        Inability to Determine LIBOR Rate.  In the event
that at any time the Agent shall determine in the exercise of its good faith
business judgment that adequate and reasonable methods do not exist for
ascertaining the LIBOR Rate or the Agent shall reasonably determine that the
LIBOR Rate will not accurately and fairly reflect the cost of the Lenders making
or maintaining LIBOR Rate Loans for such Interest Period, the Agent shall
forthwith give notice of such determination (which shall be conclusive and
binding on the Borrowers and the Lenders) to the Borrowers and the Lenders.  In
such event (a) any Loan Request or Conversion Request then made with respect to
such LIBOR Rate Loans shall be automatically withdrawn and shall be deemed a
request for Base Rate Loans and (b) any such LIBOR Rate Loan will automatically
become a Base Rate Loan, and the obligations of the Lenders to make LIBOR Rate
Loans shall be suspended until the Agent determines in the exercise of its good
faith business judgment that the circumstances giving rise to such suspension no
longer exist, whereupon the Agent shall so notify the Borrowers and the Lenders.

 

§4.7                        Illegality.  Notwithstanding any other provisions
herein, if any present or future law, regulation, treaty or directive or the
interpretation or application thereof shall make it unlawful, or any central
bank or other governmental authority having jurisdiction over a Lender or its
LIBOR Lending Office shall assert that it is unlawful, for any Lender to make or
maintain LIBOR Rate Loans, such Lender shall forthwith give notice of such
circumstances to the Agent and the Borrowers and thereupon (a) the commitment of
the Lenders to make LIBOR Rate Loans shall forthwith be suspended and (b) the
LIBOR Rate Loans then outstanding shall be converted automatically to Base Rate
Loans.  Notwithstanding the foregoing, before giving such notice, the applicable
Lender shall designate a different lending office if such designation will void
the need for giving such notice and will not, in the judgment of such Lender, be
otherwise materially disadvantageous to such Lender.

 

§4.8                        Additional Interest.  If any LIBOR Rate Loan or any
portion thereof is repaid or is converted to a Base Rate Loan for any reason on
a date which is prior to the last day of the Interest Period applicable to such
LIBOR Rate Loan, or if repayment of the Loans has been accelerated as provided
in §12.1, the Borrowers will pay to the Agent upon demand for the

 

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account of the Lenders in accordance with their respective Commitment
Percentages, in addition to any amounts of interest otherwise payable hereunder,
any amounts required to compensate the Lenders for any losses, costs or expenses
which may reasonably be incurred as a result of such payment or conversion.

 

§4.9                        Additional Costs, Etc..  Notwithstanding anything
herein to the contrary, if any present or future applicable law, or any
amendment or modification of present applicable law, which expression, as used
herein, includes statutes, rules and regulations thereunder and legally binding
interpretations thereof by any competent court or by any governmental or other
regulatory body or official with appropriate jurisdiction charged with the
administration or the interpretation thereof and requests, directives,
instructions and notices at any time or from time to time hereafter made upon or
otherwise issued to any Lender or the Agent by any central bank or other fiscal,
monetary or other authority (whether or not having the force of law), shall:

 

(a)                                 subject any Lender or the Agent to any tax,
levy, impost, duty, charge, fee, deduction or withholding of any nature with
respect to this Agreement, the other Loan Documents, such Lender’s Commitment or
the Loans (other than franchise taxes and taxes based upon or measured by the
income or profits of such Lender or the Agent), or

 

(b)                                 materially change the basis of taxation
(except for changes in taxes on income or profits) of payments to any Lender of
the principal of or the interest on any Loans or any other amounts payable to
any Lender under this Agreement or the other Loan Documents, or

 

(c)                                  impose or increase or render applicable any
special deposit, reserve, assessment, liquidity, capital adequacy or other
similar requirements (whether or not having the force of law) against assets
held by, or deposits in or for the account of, or loans by, or commitments of an
office of any Lender, or

 

(d)                                 impose on any Lender or the Agent any other
conditions or requirements with respect to this Agreement, the other Loan
Documents, the Loans, such Lender’s Commitment, or any class of loans or
commitments of which any of the Loans or such Lender’s Commitment forms a part;
and the result of any of the foregoing is

 

(i)                                     to increase the cost to any Lender of
making, funding, issuing, renewing, extending or maintaining any of the Loans or
such Lender’s Commitment, or

 

(ii)                                  to reduce the amount of principal,
interest or other amount payable to such Lender or the Agent hereunder on
account of such Lender’s Commitment or any of the Loans, or

 

(iii)                               to require such Lender or the Agent to make
any payment or to forego any interest or other sum payable hereunder, the amount
of which payment or foregone interest or other sum is calculated by reference to
the gross amount of any sum receivable or deemed received by such Lender or the
Agent from the Borrowers hereunder;

 

then, and in each such case, the Borrowers will, within fifteen (15) days of
demand made by such Lender or (as the case may be) the Agent at any time and
from time to time and as often as the occasion therefor may arise, pay to such
Lender or the Agent such additional amounts as such

 

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Lender or the Agent shall determine in good faith to be sufficient to compensate
such Lender or the Agent for such additional cost, reduction, payment or
foregone interest or other sum.  Each Lender and the Agent in determining such
amounts may use any reasonable averaging and attribution methods, generally
applied by such Lender or the Agent.  Notwithstanding the foregoing, Borrowers
shall not be required to compensate any Lender pursuant to this §4.9 for any
increased costs or reductions incurred more than one hundred eighty (180) days
prior to the date of such Lender’s demand.  Notwithstanding the foregoing, the
Borrowers shall have the right, in lieu of making the payment referred to in
this §4.9, to prepay the Loan of the applicable Lender within fifteen (15) days
of such demand and avoid the payment of the amounts otherwise due under this
§4.9, provided, however, that the Borrowers shall be required to pay together
with such prepayment of the Loan all other costs, damages and expenses otherwise
due under this Agreement as a result of such prepayment.

 

§4.10                 Capital Adequacy.  If after the date hereof any Lender
reasonably determines that (a) the adoption of or change in any law, rule,
regulation or guideline regarding capital or liquidity requirements for banks or
bank holding companies or any change in the interpretation or application
thereof by any governmental authority charged with the administration thereof,
or (b) compliance by such Lender or its parent bank holding company with any
guideline, request or directive of any such entity regarding capital or
liquidity adequacy or any amendment or change in interpretation of any existing
guideline, request or directive (whether or not having the force of law), has
the effect of reducing the return on such Lender’s or such holding company’s
capital as a consequence of such Lender’s commitment to make Loans hereunder to
a level below that which such Lender or holding company could have achieved but
for such adoption, change or compliance (taking into consideration such Lender’s
or such holding company’s then existing policies with respect to capital
adequacy and assuming the full utilization of such entity’s capital) by any
amount deemed by such Lender to be material, then such Lender may notify the
Borrowers thereof.  The Borrowers agree to pay to such Lender the amount of such
reduction in the return on capital as and when such reduction is determined,
upon presentation by such Lender of a statement of the amount setting for the
Lender’s calculation thereof.  In determining such amount, such Lender may use
any reasonable averaging and attribution methods.  For purposes of §4.9 and
§4.10, the Dodd-Frank Wall Street Reform and Consumer Protection Act and all
requests, rules, publications, orders, guidelines and directives thereunder or
issued in connection therewith and all requests, rules, guidelines or directives
promulgated by the Bank for International Settlements, the Basel Committee on
Banking Supervision (or any successor or similar authority) or the United States
or foreign regulatory authorities, in each case pursuant to Basel III, shall be
deemed to have been adopted and gone into effect after the date hereof
regardless of when adopted, enacted or issued.

 

§4.11                 Indemnity of Borrowers.  THE BORROWERS AGREE TO INDEMNIFY
EACH LENDER AND TO HOLD EACH LENDER HARMLESS FROM AND AGAINST ANY LOSS, COST OR
EXPENSE THAT SUCH LENDER MAY SUSTAIN OR INCUR AS A CONSEQUENCE OF (A) DEFAULT BY
THE BORROWERS IN PAYMENT OF THE PRINCIPAL AMOUNT OF OR ANY INTEREST ON ANY LIBOR
RATE LOANS AS AND WHEN DUE AND PAYABLE, INCLUDING ANY SUCH LOSS OR EXPENSE
ARISING FROM INTEREST OR FEES PAYABLE BY SUCH LENDER TO LENDERS OF FUNDS
OBTAINED BY IT IN ORDER TO MAINTAIN ITS LIBOR RATE LOANS, OR (B) DEFAULT BY A
BORROWER IN MAKING A BORROWING OR

 

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CONVERSION AFTER SUCH BORROWER HAS GIVEN (OR IS DEEMED TO HAVE GIVEN) A LOAN
REQUEST, OR (C) DEFAULT BY THE BORROWERS IN MAKING THE PAYMENTS OR PERFORMING
THEIR OBLIGATIONS UNDER §§4.9, 4.10 OR 4.12.  THE BORROWERS AGREE THAT THE
INDEMNIFICATION OF LENDERS BY BORROWERS SET FORTH IN THIS §4.11 INCLUDES
INDEMNIFICATION IN THE EVENT OR ORDINARY NEGLIGENCE ON THE PART OF LENDER BUT
DOES NOT INCLUDE INDEMNIFICATION OF LENDER FOR LENDER’S GROSS NEGLIGENCE OR
WILLFUL MISCONDUCT.  THIS INDEMNITY INCLUDES, BUT IS NOT LIMITED TO, THE EXPENSE
OF REASONABLE ATTORNEYS’ FEES (INCLUDING THE REASONABLE AMOUNT OF ALLOCATED COST
OF IN-HOUSE COUNSEL.)

 

§4.12                 Interest Following Default; Late Charge.  Following the
occurrence and during the continuance of any Event of Default (after, as well as
before, any judgment), and regardless of whether or not the Agent or the Lenders
shall have accelerated the maturity of the Loans, all Loans shall bear interest
payable on demand at a rate per annum equal to two percent (2%) above the rate
that would otherwise be applicable at such time (the “Default Rate”), until all
Obligations shall be paid in full, or if such rate shall exceed the maximum rate
permitted by law, then at the maximum rate permitted by law.  In addition, the
Borrowers shall pay a late charge equal to three percent (3%) of any amount of
interest and/or principal payable on the Loans or any other amounts payable
hereunder or under the Loan Documents, which amount is not paid within ten
(10) days of the date when due (such late charge being applicable only to the
amounts not paid within ten (10) days of the date when due).  Borrowers
acknowledge that it would be extremely difficult or impracticable to determine
the Lenders’ actual damages resulting from any late payment, Event of Default or
prepayment, and the late charges and Default Rate described in this Agreement
are reasonable estimates of those damages and do not constitute a penalty.  The
imposition and payment of a late charge shall not constitute a waiver of the
Lenders’ rights with respect to the default.

 

§4.13                 Certificate.  A certificate setting forth any amounts
payable pursuant to §4.8, §4.9, §4.10, §4.11 or §4.12 and a brief explanation of
such amounts which are due, submitted by any Lender or the Agent to the
Borrowers, shall be conclusive in the absence of manifest error.

 

§4.14                 Limitation on Interest.

 

(a)                                 Notwithstanding anything in this Agreement
or the other Loan Documents to the contrary, it is the intent of the Agent, the
Lenders and the Borrowers to conform to and contract in strict compliance with
all applicable usury laws from time to time in effect.  All agreements
(including the Loan Documents) between Agent, the Lenders and the Borrowers (or
any other party liable with respect to any indebtedness under the Loan
Documents) are hereby limited by the provisions of this Section which shall
override and control all such agreements, whether now existing or hereafter
arising and whether written or oral.  In no way, nor in any event or contingency
(including but not limited to prepayment, default, demand for payment, or
acceleration of the maturity of any obligation), shall the interest taken,
reserved, contracted for, charged or received under this Agreement, any other
Loan Document, or otherwise, exceed the maximum nonusurious amount permissible
under applicable law.  If, from any possible construction of this Agreement, any
other Loan Document, or any other document, interest would otherwise be taken,
reserved, contracted for, charged or payable in excess of the

 

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maximum nonusurious amount, any such construction shall be subject to the
provisions of this Section and this Agreement, such other Loan Document, and
such other document shall be automatically reformed and the interest taken,
reserved, contracted for, charged or payable shall be automatically reduced to
the maximum nonusurious amount permitted under applicable law, without the
necessity of execution of any amendment or new document.  If any Lender shall
ever receive anything of value which is interest or characterized as interest
under applicable law and which would apart from this provision be in excess of
the maximum lawful nonusurious amount, an amount equal to the amount which would
have been excessive interest shall, without penalty, be applied to the reduction
of the principal amount owing on the Loans to it (in inverse order of maturity)
and not to the payment of interest, or refunded to the Borrowers if and to the
extent such amount which would have been excessive exceeds such unpaid
principal.  The right to accelerate maturity of the Loans and the other
Obligations does not include the right to accelerate any interest which has not
otherwise accrued on the date of such acceleration, and the Agent and the
Lenders do not intend to charge or receive any unearned interest in the event of
acceleration.  All interest paid or agreed to be paid to the Lenders on the
Loans shall, to the extent permitted by applicable law, be amortized, prorated,
allocated and spread throughout the full stated term (including any renewal or
extension) of the Loans so that the amount of interest on account of the Loans
does not exceed the maximum nonusurious amount permitted by applicable law.  As
used in this Section, the term “applicable law” shall mean such laws as they now
exist or may be changed or amended or come into effect in the future.  As used
in this Section, the term “interest” includes all amounts that constitute, are
deemed, or are characterized as interest under applicable law.

 

(b)                                 If at any time the interest rate (the
“Stated Rate”) called for under this Agreement or any other Loan Document
exceeds or would exceed the Highest Lawful Rate, the rate at which interest
shall accrue hereunder or thereunder shall automatically be limited to the
Highest Lawful Rate, and shall remain at the Highest Lawful Rate until the total
amount of interest accrued equals the total amount of interest which would have
accrued but for the operation of this sentence.  Thereafter, interest shall
accrue at the Stated Rate unless and until the Stated Rate would again exceed
the Highest Lawful Rate, in which case the immediately preceding sentence shall
apply.

 

(c)                                  Borrowers hereby agree that as a condition
precedent to any claim seeking usury penalties against Lenders, Borrowers will
provide written notice to Agent, advising Agent in reasonable detail of the
nature and amount of the violation, and Lenders 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 Borrowers or crediting such excess
interest against the Loans and/or any other indebtedness then owing by Borrowers
to Lenders.  To the extent that Lenders are relying on Chapter 303, as amended,
of the Texas Finance Code to determine the Highest Lawful Rate, Lenders will
utilize the weekly rate ceiling from time to time in effect as provided in such
Chapter 303, as amended.  To the extent United States federal law permits a
greater amount of interest than is permitted under Texas law, Lenders will rely
on United States federal law instead of such Chapter 303, as amended, for the
purpose of determining the Highest Lawful Rate.  Additionally, to the extent
permitted by applicable law now or hereafter in effect, Lenders may, at Lenders’
option and from time to time, implement any other method of computing the
maximum lawful rate under such Chapter 303, as amended, or under other
applicable law by

 

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giving notice, if required, to Borrowers as provided by applicable law now or
hereafter in effect.  This §4.14 will control all agreements between Borrowers,
Agents and Lenders.

 

(d)                                 Borrowers and Lenders expressly agree that
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 Revolving Credit Loans or to any advance of Revolving Credit
Loans made pursuant to the terms of this Agreement.

 

§4.15                 Extension of Maturity Date.

 

(a)                                 Provided that no Default or Event of Default
shall have occurred and be continuing, the Borrowers shall have two
(2) consecutive options (the first option, the “First Extension Option”, the
second option, the “Second Extension Option”, each an “Extension Option”), to be
exercised by giving written notice to the Agent in the form of Exhibit D hereto
not more than ninety (90) days and not less than forty-five (45) days prior to
the then effective Maturity Date (each, an “Extension Request”), subject to the
terms and conditions set forth in this Agreement, to extend the then effective
Maturity Date for the First Extension Option to August 8, 2017 and for the
Second Extension Option to August 8, 2018.  Each request by the Borrowers for
extension of the Maturity Date shall constitute a representation and warranty by
the Borrowers that all of the conditions set forth in this Section shall have
been satisfied on the date of such request.

 

(b)                                 The obligations of the Agent and the Lenders
to extend the Maturity Date as provided in §4.15(a) shall be subject to the
satisfaction of the following conditions precedent on the then effective
Maturity Date (without regard to such extension request):

 

(i)                                     Payment of Extension Fee.  The Borrowers
shall pay to the Agent on or before the then effective Maturity Date (without
regard to such extension request) for the pro rata account of the Lenders in
accordance with their respective Commitment Percentages an extension fee equal
to one quarter of one percent (0.25%) of the Total Commitment, which fee shall,
when paid, be fully earned and non-refundable under any circumstances.

 

(ii)                                  No Default.  On the date the Extension
Request is given and on the Maturity Date (as determined without regard to such
extension) there shall exist no Default or Event of Default.

 

(iii)                               Representations and Warranties.  The
representations and warranties made by the Borrowers, the Restricted
Subsidiaries and the Guarantors in the Loan Documents or otherwise made by or on
behalf of such Persons in connection therewith or after the date thereof shall
have been true and correct in all material respects when made and shall also be
true and correct in all material respects on the Maturity Date (as determined
without regard to such extension) other than for changes in the ordinary course
of business permitted by this Agreement that have not had any materially adverse
affect on the business of any of such Persons.

 

(iv)                              Extension of Interest Cap.  The Interest Cap
required under §7.24 shall be extended to a date not earlier than the Maturity
Date (as extended) at the strike rate and for the notional amount required
pursuant to §7.24.

 

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(v)                                 Reduction of Total Commitment.  With respect
to the First Extension Option, (1) the sum of the Total Revolving Credit
Commitment and the Total Secured Term Loan Commitment shall be reduced pro rata
in the aggregate to $220,000,000.00.  The Maturity Date for the First Extension
Option shall not be extended until (along with the satisfaction of all other
conditions set forth in this §4.15), the Borrowers pay to Agent for the
respective accounts of the Revolving Credit Lenders and the Secured Term Loan
Lenders for application to the Revolving Credit Loans and the Secured Term Loans
prior to the then effective Maturity Date (without regard to such extension),
all aggregate outstanding principal balances of all Revolving Credit Loans and
Secured Term Loan in excess of $220,000,000.00.  If the First Extension Option
is properly exercised, then with respect to the Second Extension Option, (2) the
sum of the Total Revolving Credit Commitment and the Total Secured Term Loan
Commitment shall be further reduced pro rata in the aggregate to
$185,000,000.00.  The Maturity Date for the Second Extension Option shall not be
extended until (along with the satisfaction of other conditions set forth in
this §4.15) the Borrowers pay to Agent for the respective accounts of the
Revolving Credit Lenders and the Secured Term Loan Lenders for application to
the Revolving Credit Loans and the Secured Term Loans prior to the then
effective Maturity Date (without regard to such extension), all aggregate
outstanding principal balances of all Revolving Credit Loans and Secured Term
Loan in excess of $185,000,000.00.  As between the Commercial Company Secured
Term Loan Commitments and the Land Company Secured Term Loan Commitments, the
Borrowers shall be permitted to allocate such reductions resulting from the
application of the reduced amounts between the respective Secured Term Loan
Commitments as specified in a notice to the Agent.  If the Borrowers do not
deliver to the Agent such notice, then the Agent shall apply the reductions pro
rata among the Commercial Company Secured Term Loan Commitments and the Land
Company Secured Term Loan Commitments, respectively.  No reduction of the
Revolving Credit Commitments, the Commercial Company Secured Term Loan
Commitments and the Land Company Secured Term Loan Commitments pursuant to this
§4.15 may be reinstated.

 

(c)                                  The Agent shall notify each of the Lenders
in the event that the Maturity Date is extended as provided in this §4.15.

 

§5.                               COLLATERAL SECURITY AND GUARANTY

 

§5.1                        Collateral.  The Obligations shall be secured by
(i) a perfected first priority lien or security title and security interest to
be held by the Agent for the benefit of the Lenders in the Mortgaged Property
and certain personal property of Borrowers and certain Guarantors related to the
Mortgaged Property, pursuant to the terms of the Security Deeds, (ii) a
perfected first priority security interest to be held by the Agent for the
benefit of the Lenders in leases, rents and profits pursuant to the Assignment
of Rents and Leases, in the Management Agreements pursuant to the Assignment of
Management Agreements and Subordination and in the Construction Contracts,
Architect’s Contracts and other items pursuant to the Assignment of Project
Documents, (iii) the Indemnity Agreement, (iv) a perfected first priority lien
to be held by the Agent for the benefit of the Lenders in the interest of the
Borrowers in the Fees and the Accounts Receivable pursuant to the Security
Agreements, (v) a perfected first priority security interest to be held by the
Agent for the benefit of the Lenders in the interest of Borrowers in certain of
the Partnerships pursuant to the Assignment of Interests that are not otherwise
exempt from such pledge in accordance with §7.17 hereof, (vi) the Cash
Collateral Account Agreement, and (vii) such additional collateral, if

 

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any, as the Agent for the benefit of the Lenders from time to time may accept as
security for the Obligations with the consent of the Majority Lenders, which
consent may be given or withheld in the sole discretion of the Majority
Lenders.  The Obligations shall also be guaranteed pursuant to the terms of the
Guaranty.

 

§5.2                        Appraisals; Adjusted Value.

 

(a)                                 The Appraised Value for the Borrowing Base
as of the date hereof shall be as set forth on Schedule 1.2 hereto.  With
respect to Land Assets, the Adjusted Value may be determined as provided herein
on a per lot or per acre basis and then multiplied by the number of lots or
acres.

 

(b)                                 The Borrowers acknowledge that the Borrowers
shall make such quarterly adjustments to the Adjusted Value of the Borrowing
Base Assets and the Borrowing Base as may be required by the Agent in the
exercise of its good faith business judgment to account for the effects of
development costs, sales of land and other assets, new debt, defaults under
Indebtedness, or other circumstances, as reflected in the quarterly Compliance
Certificate and the attached Borrowing Base worksheet, a form of which is
attached hereto as Exhibit E.

 

(c)                                  In addition to such quarterly adjustments
as may be necessary, the Agent shall order an Appraisal or a thorough update
revising a prior Appraisal each year with the as-is value of the Borrowing Base
Assets (other than the Eligible Accounts Receivable, Properties under
Construction and Qualifying Income Properties, but specifically including the
Waterway Square Garage and 1400 Woodloch) to be determined as of year end, and
request that such Appraisal or update be provided to Agent on or prior to
March 31 of each year during the term of the Loans for the purpose of
determining the Appraised Value thereof.  Upon Borrower’s written request, Agent
shall also order an Appraisal or a thorough update revising a prior Appraisal
for Income Producing Properties, no more than once each quarter, with the as-is
value of such properties to be determined as of the applicable quarter, and
request that such Appraisal or update be provided to Agent within ninety (90)
days of Agent’s request for the purpose of determining the Appraised Value
thereof.  From time to time, but provided there is no existing Event of Default,
not more frequently than once in any twelve (12) month period, Agent may in its
discretion order an Appraisal or a thorough update revising a prior Appraisal of
the as-is value of the Qualifying Income Properties commonly known as 1400
Woodloch, 1505 Lake Robbins and any new Qualifying Income Properties after the
date of this Agreement as selected by Agent.  Each Appraisal or update shall be
reviewed by the appraisal department of the Agent to determine the Appraised
Value of the applicable Borrowing Base Assets.  The Appraised Values of the
Borrowing Base Assets (other than the Eligible Accounts Receivable, Properties
under Construction and Qualifying Income Properties) and of the Qualifying
Income Properties commonly known as 1400 Woodloch, 1505 Lake Robbins and any new
Qualifying Income Properties after the date of this Agreement as selected by
Agent determined therefrom shall be the Appraised Value for such Borrowing Base
Assets for the purposes of this Agreement until such time as such Appraised
Value is required hereunder to be redetermined.  Borrowers shall have the right
to request that Agent select a different appraiser to perform the Appraisals or
updates, but any selection of an appraiser shall be in accordance with the legal
requirements applicable to Agent.  The Borrowers shall pay the Agent within
thirty (30) days of demand from Agent all reasonable costs of such Appraisals. 
During such valuation process, the prior

 

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Appraised Value (as the same may have been adjusted to reflect changes in the
Borrowing Base Assets) shall continue to be in effect until the new Appraised
Value is determined hereunder.

 

(d)                                 [Intentionally omitted.]

 

(e)                                  Notwithstanding the other provisions of
this §5.2, the Agent may, for the purpose of determining the current Appraised
Value of the Borrowing Base Assets (other than the Eligible Accounts Receivable
and Properties under Construction) and Borrowing Base, obtain thorough interim
Appraisals updating and revising prior Appraisals with respect to the Borrowing
Base Assets or such portion thereof as the Agent shall determine (i) at any time
that the regulatory requirements of any Lender generally applicable to real
estate loans of the category made under this Agreement as reasonably interpreted
by such Lender shall require more frequent Appraisals, (ii) at any time
following a condemnation of more than an immaterial portion of an asset within a
category of Borrowing Base Assets (as determined by the Agent) or any material
adverse change with respect to a Borrowing Base Asset (provided that such
Appraisal shall be limited to the affected Borrowing Base Asset), or (iii) at
the request of the Majority Lenders.  The expense of such Appraisals and updates
performed pursuant to this §5.2(e) shall be borne by the Borrowers.  Copies of
any Appraisals or updates revising prior Appraisals obtained pursuant to this
§5.2 shall be promptly delivered to each of the Lenders (and for the purposes
hereof any Related Funds shall be considered a single Lender).

 

(f)                                   In the event that the Agent shall advise
the Borrowers, on the basis of any Appraisal, update or other valuation pursuant
to this §5.2, that the Borrowing Base is insufficient to comply with the
requirements of §9.3, then until the Borrowing Base shall be restored to
compliance with §9.3 the Revolving Credit Lenders shall not be required to make
advances under §2.1.

 

(g)                                  The Borrowers acknowledge that the Agent
may make changes or adjustments to the value set forth in any Appraisal as may
be required by the appraisal department of the Agent in the exercise of its good
faith business judgment, and that the Agent is not bound by the value set forth
in any Appraisal performed pursuant to this Agreement and does not make any
representations or warranties with respect to any such Appraisal.  The Borrowers
further agree that the Lenders and Agent shall have no liability as a result of
or in connection with any such Appraisal for statements contained in such
Appraisal, including without limitation, the accuracy and completeness of
information, estimates, conclusions and opinions contained in such Appraisal, or
variance of such Appraisal from the fair value of such property that is the
subject of such Appraisal given by the local tax assessor’s office, or the
Borrowers’ idea of the value of such property.

 

§5.3                        [Intentionally Omitted.]

 

§5.4                        Releases of Certain Liens.  The Borrowers shall have
the right to obtain the release of the interests described in the Assignment of
Interests and the Note Receivables pursuant to the cash sale of same for fair
market value to third parties unaffiliated with any Borrower and their
respective Restricted Subsidiaries and Unrestricted Subsidiaries; provided,
however, that all net proceeds from any such sales shall be deposited by the
Borrowers in such Borrower’s Disbursement Account; and provided further that a
Borrower may obtain a release of

 

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the Municipal Utility District Contracts upon a transfer of such Municipal
Utility District Contracts to an Unrestricted Subsidiary of such Borrower
pursuant to §8.8, provided that no Default or Event of Default exists or would
be created as a result of such transfer.  Notice of each such proposed sale
together with a request for release by the Agent must be received by the Agent
at least five (5) Business Days prior to the date the release shall be required
by the Borrowers.  The Borrowers shall reimburse the Agent for all costs and
expenses incurred in granting such release as provided in §15.

 

§5.5                        Release of Mortgaged Property; Consent to Easements.

 

(a)                                 Provided no Default or Event of Default
shall have occurred hereunder and be continuing (or would exist immediately
after giving effect to the transactions contemplated by this §5.5), the Agent
shall release one or more individual properties included in the Mortgaged
Property or Developed Commercial Land, Developed Residential Land, Undeveloped
Commercial Land or Undeveloped Residential Land from the lien or security title
of the Security Documents encumbering the same upon the request of the Borrowers
subject to and upon the following terms and conditions as applicable:

 

(i)                                     Except as set forth in §5.5(a)(v) and
(vi) below or in §8.8 as to sales by a Borrower, such release shall be for fair
market value as a result of an arms-length sale of such Mortgaged Property in
the ordinary course of such Borrower’s business to a party that is not an
Affiliate of any Borrower, any General Partner, any Second Tier Partner, any
Third Tier Partner or any Guarantor; and provided that the applicable Borrower
shall have delivered to the Agent a certificate pursuant to §7.4(g) from the
Principal Financial Officer of such Borrower to such effect for all such sales
and releases the preceding calendar month, a Borrower shall be entitled to
obtain releases of Undeveloped Residential Land, Developed Residential Land,
Undeveloped Commercial Land and Developed Commercial Land on which there are no
Vertical Commercial Improvements from the Title Insurance Company pursuant to
the Tri-Party Agreement without further certification to the Agent or the Title
Insurance Company; provided, further, that in the event that such sale is of any
other Mortgaged Property, the applicable Borrower shall deliver to Agent and the
Title Insurance Company a certificate from an Authorized Officer of such
Borrower to the effect that such sale is in compliance with the terms of this
§5.5(a)(i);

 

(ii)                                  In the event that such sale is to an
Affiliate of any Borrower, any General Partner, any Second Tier Partner, any
Third Tier Partner or any Guarantor (including a Restricted Subsidiary or
Unrestricted Subsidiary), Agent shall have confirmed that such sale is in
accordance with the requirements of §8.8 (and if the Title Insurance Company is
executing releases pursuant to the Tri-Party Agreement, Agent shall send to the
Title Insurance Company written notice of such confirmation).  In the event such
transfer is from a Borrower to the other Borrower, such release shall be
conditioned upon the delivery to Agent by the transferee Borrower of an
amendment of such Borrower’s Security Documents to include such property as
additional property encumbered thereby;

 

(iii)                               The applicable Borrower shall cause the
Title Insurance Company to pay or cause to be deposited contemporaneously with
each sale of all excess net sales

 

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proceeds, if any, into the Disbursement Account of the applicable Borrower
maintained pursuant to the Cash Collateral Account Agreement;

 

(iv)                              In the event that Agent is required to execute
the release or confirmation documents, Agent shall provide such release or
confirmation to the Title Insurance Company within four (4) Business Days of
receipt of Borrower’s request to have such property released, and any release
documents to be executed by the Agent shall be in form and substance reasonably
satisfactory to the Agent;

 

(v)                                 Releases of Mortgaged Property may be made
by Agent or the Title Insurance Company pursuant to the Tri-Party Agreement of
parcels consistent with good land development practices contributed, donated or
sold at a reduced price by a Borrower to non-profits and other like entities,
and to public agencies, such as The Woodlands Town Center Improvement District,
The Woodlands Association, Municipal Utility Districts, Property Owners’
Associations or Harris County Park Authority, for the development of churches,
public facilities, parks or for other public or community purposes; and

 

(vi)                              Agent may consent or subordinate to (and the
Title Insurance Company may pursuant to the Tri-Party Agreement do so on behalf
of Agent), easements, subdivision plats, road dedications, restrictions or
similar agreements provided that the applicable Borrower shall have delivered to
Agent the certificate required by §7.4(g) as to such agreements or matters for
the preceding calendar month.

 

(b)                                 Notwithstanding the foregoing, the Agent
shall delegate the release of Mortgaged Property from the lien of the Security
Documents and consents to easements, subdivision plats, road dedications,
restrictions and similar agreements to the Title Insurance Company pursuant to
the Tri-Party Agreement.  Such releases will be administered by the Title
Insurance Company in accordance with the terms of the Tri-Party Agreement, and
Agent shall have the right to revoke the authority of any such Title Insurance
Company to execute such releases at any time as provided in the Tri-Party
Agreement; provided, that so long as no Event of Default has occurred and is
continuing, Agent shall enter into another Tri-Party Agreement with another
Title Insurance Company approved by Agent.  The Borrowers shall pay all fees,
costs and expenses of each such Title Insurance Company.  Upon an Event of
Default, Agent may revoke the authority of the Title Insurance Company under the
Tri-Party Agreement and at its option either execute such releases and consents
itself or designate another Title Insurance Company to execute such releases and
consents pursuant to a Tri-Party Agreement.

 

(c)                                  As a result of the frequency and volume of
sales of property by the Borrowers, it is possible that the title information
provided by the Title Insurance Company to the Agent may not reflect all sales
that have occurred to date.  In the event that Agent shall receive evidence
satisfactory to it that the Security Documents encumber property not owned by or
on behalf of a Borrower, Agent shall be authorized to release such property from
the lien of the Security Documents.  The Borrowers shall be permitted to submit
such evidence to Agent.

 

§5.6                        Additional Guarantors.  In the event that either of
the Borrowers shall form a Restricted Subsidiary, the Borrowers shall cause such
Restricted Subsidiary to become a Guarantor promptly following its formation
unless such Restricted Subsidiary is prohibited from

 

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guaranteeing the Indebtedness of any other Person pursuant to any document,
instrument or agreement evidencing secured Indebtedness of such Restricted
Subsidiary permitted by this Agreement or any provision of such Restricted
Subsidiary’s organizational documents entered into as a condition of the
extension of such secured Indebtedness.  In the event a Restricted Subsidiary is
no longer subject to a prohibition described in the immediately preceding
sentence, Borrowers shall promptly cause such Restricted Subsidiary to become a
Guarantor hereunder.  Each such Restricted Subsidiary which is required
hereunder to become a Guarantor shall execute and deliver to Agent a Joinder
Agreement, and shall cause all of the conditions set forth in §10 applicable to
Guarantors or Loan Documents executed by Guarantors to be satisfied.  The
organizational agreements of such Restricted Subsidiary or such other
resolutions or consents satisfactory to Agent shall specifically authorize such
Restricted Subsidiary to guaranty the Obligations and the Borrowers shall
certify to the Agent that applicable law does not preclude such Subsidiary from
executing the Joinder Agreement.  Borrowers shall further cause all
representations in the Loan Documents made by or with respect to Guarantors and
their Subsidiaries in the Loan Documents to be true and correct with respect to
such additional Guarantor, and no Default or Event of Default shall exist or
might exist in the event that such Restricted Subsidiary becomes a Guarantor.

 

§5.7                        Release of Collateral.  Upon the refinancing or
repayment of the Obligations, then the Agent shall release the Collateral from
the lien and security interest of the Security Documents and release the
Guarantors, provided that Agent has not received a notice from the
“Representative” (as defined in §14.11) or the holder of the Hedge Obligations
that any Hedge Obligation is then due and payable to the holder thereof.

 

§6.                               REPRESENTATIONS AND WARRANTIES

 

The Borrowers represent and warrant to the Agent and the Lenders as follows:

 

§6.1                        Corporate Authority, Etc.

 

(a)                                 Organization; Good Standing.  Each Borrower
is a Texas limited partnership duly organized and is validly existing under the
laws of Texas.  Each Second Tier Partner is a Texas limited partnership duly
organized and validly existing under the laws of the State of Texas.  Each
General Partner is a Texas limited liability company duly organized and validly
existing and in good standing under the laws of the State of Texas.  Woodlands
Operating is a Texas limited partnership duly organized and validly existing
under the laws of Texas.  Each of the Borrowers and the Guarantors (i) has all
requisite power to own its respective properties and conduct its respective
business as now conducted and as presently contemplated, and (ii) as to each of
such Persons, is duly authorized to do business in each other jurisdiction where
a failure to be so qualified in such other jurisdiction could have a materially
adverse effect on the business, assets or financial condition of such Person.

 

(b)                                 Subsidiaries.  Each of the Restricted
Subsidiaries of the Borrowers (i) is a corporation, limited partnership, limited
liability company or trust duly organized under the laws of its State of
organization and is validly existing and in good standing under the laws
thereof, (ii) has all requisite power to own its property and conduct its
business as now conducted and as presently contemplated and (iii) is in good
standing and is duly authorized to do business in each

 

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jurisdiction where a failure to be so qualified could have a materially adverse
effect on the business, assets or financial condition of such Borrower or such
Restricted Subsidiary.

 

(c)                                  Authorization.  The execution, delivery and
performance of this Agreement and the other Loan Documents to which the
Borrowers, the General Partners, Woodlands Operating or the Guarantors are or
are to become a party and the transactions contemplated hereby and thereby
(i) are within the authority of such Person, (ii)have been duly authorized by
all necessary proceedings on the part of such Person, (iii)do not and will not
conflict with or result in any breach or contravention of any provision of law,
statute, rule or regulation to which such Person is subject or any judgment,
order, writ, injunction, license or permit applicable to such Person, (iv)do not
and will not conflict with or constitute a default (whether with the passage of
time or the giving of notice, or both) under any provision of the articles of
incorporation, partnership agreement, declaration of trust or other charter
documents or bylaws of, or any agreement or other instrument binding upon, such
Person or any of its properties, and (v)do not and will not result in or require
the imposition of any lien or other encumbrance on any of the properties, assets
or rights of such Person.

 

(d)                                 Enforceability.  The execution and delivery
of this Agreement and the other Loan Documents to which the Borrowers, Woodlands
Operating or the Guarantors are or are to become a party are valid and legally
binding obligations of such Person enforceable in accordance with the respective
terms and provisions hereof and thereof, except as enforceability is limited by
bankruptcy, insolvency, reorganization, moratorium or other laws relating to or
affecting generally the enforcement of creditors’ rights and except to the
extent that availability of the remedy of specific performance or injunctive
relief is subject to the discretion of the court before which any proceeding
therefor may be brought.

 

§6.2                        Governmental Approvals.  The execution, delivery and
performance of this Agreement and the other Loan Documents to which the
Borrowers, the General Partners, Woodlands Operating or the Guarantors are or
are to become a party and the transactions contemplated hereby and thereby do
not require the approval or consent of, or filing with, any governmental agency
or authority other than those already obtained and the filing of the Security
Documents in the appropriate records office with respect thereto.

 

§6.3                        Title to Properties; Leases.  Except as set forth on
Schedule 6.3 hereto, each Borrower and its Restricted Subsidiaries owns all of
the assets reflected in the consolidated balance sheet of the applicable
Borrower as at the Balance Sheet Date or acquired since that date (except
property and assets sold or otherwise disposed of in the ordinary course of
business since that date), subject to no rights of others, including any
mortgages, leases, conditional sales agreements, title retention agreements,
liens or other encumbrances except Permitted Liens.  Without limiting the
foregoing, each Borrower and its Restricted Subsidiaries has good and
indefeasible fee simple title to all real property reasonably necessary for the
operation of its business, free from all liens or encumbrances of any nature
whatsoever, except for Permitted Liens (provided that Borrowers lease their
headquarters building).

 

§6.4                        Financial Statements.  The Borrowers have furnished
or caused to be furnished to each of the Lenders:  (a) the consolidated balance
sheet of each Borrower and its subsidiaries as of the Balance Sheet Date
certified by each Borrower’s Principal Financial Officer as fairly

 

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presenting the balance sheet of such Persons for such period, and (b) certain
other financial information.  Such balance sheet and statements have been
prepared in accordance with generally accepted accounting principles (other than
the inclusion of footnotes) and fairly present the financial condition of such
Borrower and its subsidiaries as of such dates and the results of the operations
of such Borrower and its subsidiaries for such periods.  There are no
liabilities, contingent or otherwise, of any Borrower or any of its subsidiaries
involving material amounts not disclosed in said financial statements and the
related notes thereto.

 

§6.5                        No Material Changes.  Since the Balance Sheet Date,
there has occurred no materially adverse change in the financial condition or
business of either Borrower, or their respective subsidiaries taken as a whole
as shown on or reflected in the consolidated balance sheet of such Borrower as
of the Balance Sheet Date, or its consolidated statement of income or cash flows
for the fiscal year then ended, other than changes in the ordinary course of
business that have not had any materially adverse effect either individually or
in the aggregate on the business or financial condition of such Person.  There
has been no materially adverse change to the physical condition of any of the
Borrowing Base Assets since the last Appraisal thereof (or if no Appraisal has
been performed under this Agreement with respect thereto, then since the last
Compliance Certificate and accompanying Borrowing Base Worksheet).  There has
occurred no materially adverse change in the financial condition or business of
any of the Borrowing Base Assets from the condition shown on the statements
delivered to the Lenders pursuant to §6.4 other than changes in the ordinary
course of business that have not had any materially adverse effect either
individually or in the aggregate on the business or financial condition of the
Borrowing Base Assets.

 

§6.6                        Franchises, Patents, Copyrights, Etc.  The Borrowers
and their respective Restricted Subsidiaries possess all franchises, patents,
copyrights, trademarks, trade names, servicemarks, licenses, liquor licenses and
permits, and rights in respect of the foregoing, adequate for the conduct of
their business substantially as now conducted without known violation of any
rights of others, except where a failure to possess such rights could not have a
materially adverse effect on the business, assets or financial condition of such
Person.

 

§6.7                        Litigation.  Except as stated on Schedule 6.7 there
are no actions, suits, proceedings or investigations of any kind pending or to
the best of the Borrowers’ knowledge and belief, threatened against any
Borrower, any Guarantor, any of the Restricted Subsidiaries of a Borrower or any
of the Associations before any court, arbitrator, mediator, tribunal or
administrative agency or board that, if adversely determined, might, either in
any case or in the aggregate, materially adversely affect the properties,
assets, financial condition or business of such Person (in the case of the
Associations, which materially adversely affects a Borrower) or materially
impair the right of such Person to carry on business substantially as now
conducted by it, or which question the validity of this Agreement or any of the
other Loan Documents, any action taken or to be taken pursuant hereto or thereto
or any lien or security interest created or intended to be created pursuant
hereto or thereto, or which will adversely affect the ability of such Person to
pay and perform the Obligations in the manner contemplated by this Agreement and
the other Loan Documents.  There are no judgments or awards outstanding against
or effecting any Borrower, any Guarantor, any of the Restricted Subsidiaries of
a Borrower, or any of the Collateral.

 

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§6.8                        No Materially Adverse Contracts, Etc.  None of the
Borrowers, the Guarantors nor any of the Restricted Subsidiaries of a Borrower
is subject to any charter, corporate or other legal restriction, or any
judgment, decree, order, rule or regulation that has or is expected in the
future to have a materially adverse effect on the business, assets or financial
condition of such Person.  None of the Borrowers, the Guarantors nor any of the
Restricted Subsidiaries of a Borrower is a party to any contract or agreement
that has or is expected, in the judgment of the partners or officers of such
Person, to have any materially adverse effect on the business of any of them.

 

§6.9                        Compliance with Other Instruments, Laws, Etc.  None
of the Borrowers, the Guarantors nor any of the Restricted Subsidiaries of a
Borrower is in violation of any provision of its partnership agreement, charter
or other organizational documents, bylaws, or any agreement or instrument to
which it may be subject or by which it or any of its properties may be bound or
any decree, order, judgment, statute, license, rule or regulation, in any of the
foregoing cases in a manner that could result in the imposition of substantial
penalties or materially and adversely affect the financial condition, properties
or business of such Person.

 

§6.10                 Tax Status.  The Borrowers, the Guarantors and each of the
Restricted Subsidiaries of a Borrower (a) has made or filed all federal and
state income and all other tax returns, reports and declarations required by any
jurisdiction to which it is subject, if applicable or required, except to the
extent such Person has obtained an extension of the deadline to file such
return, (b) has paid all taxes and other private or governmental assessments and
charges shown or determined to be due on such returns, reports and declarations,
if applicable or required, except those being contested in good faith and by
appropriate proceedings or where a failure to so pay could not have a materially
adverse effect on the business, assets or financial condition of such Person and
(c) has set aside on its books provisions reasonably adequate for the payment of
all taxes for periods subsequent to the periods to which such returns, reports
or declarations apply, if applicable or required.  There are no unpaid taxes or
assessments in any material amount claimed to be due by the taxing authority of
any jurisdiction or pursuant to any private agreement except for those that are
being contested as permitted in this Agreement, and the partners or officers of
such Person know of no basis for any such claim.

 

§6.11                 No Event of Default.  No Default or Event of Default has
occurred and is continuing.

 

§6.12                 Investment Company Act.  None of the Borrowers, the
Guarantors nor any of the Restricted Subsidiaries of a Borrower is an
“investment company,” or an “affiliated company” or a “principal underwriter” of
an “investment company,” as such terms are defined in the Investment Company Act
of 1940.

 

§6.13                 Absence of UCC Financing Statements, Etc.  Except with
respect to Liens permitted by §8.2, there is no financing statement, security
agreement, chattel mortgage, real estate mortgage or other document filed or
recorded with any filing records, registry, or other public office, that
purports to cover, affect or give notice of any present or possible future lien
on, or security interest or security title in, the Collateral (excluding any
such items in favor of Agent) or any other property of a Borrower or its
Restricted Subsidiaries or rights thereunder.

 

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§6.14                 Setoff, Etc.  The Collateral and the rights of the Agent
and the Lenders with respect to the Collateral are not subject to any setoff,
claims, withholdings or other defenses.  The Borrowers are the owners of the
Collateral free from any lien, security interest, encumbrance or other claim or
demand, except those encumbrances permitted in the Security Deeds or permitted
by §8.2.

 

§6.15                 Certain Transactions.  Except as set forth in Schedule
6.15 hereto, none of the partners, officers, trustees, directors, or employees
of the Borrowers, the General Partners, the Second Tier Partners, the Third Tier
Partners, the Guarantors or any of the Restricted Subsidiaries of a Borrower is
a party to any material transaction with either of the Borrowers or any of their
respective Restricted Subsidiaries (other than employment and severance
agreements relating to services as partners, employees, officers, trustees and
directors), including any contract, agreement or other arrangement providing for
the furnishing of services to or by, providing for rental of real or personal
property to or from, or otherwise requiring payments to or from any partner,
officer, trustee, director or such employee or, to the knowledge of the
Borrowers, any corporation, partnership, trust or other entity in which any
partner, officer, trustee, director, or any such employee has a substantial
interest or is an officer, director, trustee or partner, unless such contract,
agreement or other arrangement is an arm’s-length arrangement with terms
comparable to those which would be obtained from an unaffiliated Person or as
otherwise approved by the Agent.  For the purposes of this §6.15, a transaction
shall be deemed “material” to the extent such transaction would be required to
be disclosed to the shareholders pursuant to applicable securities laws
(including, without limitation, Item 404 of Regulation SK promulgated by the
Securities and Exchange Commission).

 

§6.16                 Employee Benefit Plans.  Except as set forth on Schedule
6.16, each Borrower is in compliance in all material respects with ERISA.  There
has been no ERISA Reportable Event with respect to any Employee Benefit Plan,
Multiemployer Plan or Guaranteed Pension Plan.  There has been no institution of
proceedings or any other action by PBGC, any Borrower or any ERISA Affiliate to
terminate or withdraw or partially withdraw from any such Plan under any
circumstances which could lead to material liabilities to PBGC or, with respect
to a Multiemployer Plan, the “Reorganization” or “Insolvency” (as each such term
is defined in ERISA) of any such Plan.  No “prohibited transaction” (within the
meaning of §406 of ERISA or §4975 of the Code) has occurred with respect to any
such Plan, and the consummation of the transactions provided for in this
Agreement and compliance by the Borrowers with the provisions hereof and the
other Loan Documents will not involve any prohibited transaction.  None of the
Borrowing Base Assets constitutes a “plan asset” (within the meaning of ERISA
and the Code) of any Employee Benefit Plan, Multiemployer Plan or Guaranteed
Pension Plan.

 

§6.17                 ERISA Taxes.  None of the Borrowers or any ERISA Affiliate
thereof is currently and the Borrowers have no reason to believe that any
Borrower or any ERISA Affiliate thereof will become subject to any liability
(other than routine expenses or contributions relating to the Plans set forth on
Schedule 6.17, if timely paid), tax or penalty whatsoever to any person
whomsoever, which liability, tax or penalty is directly or indirectly related to
any Plans set forth on Schedule 6.17 including, but not limited to, any penalty
or liability arising under Title I or Title IV of ERISA, any tax or penalty
resulting from a loss of deduction under Sections 404 and 419 of the Code, or
any tax or penalty under Chapter 43 of the Code, except such liabilities,

 

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taxes or penalties (when taken as a whole) as will not have a material adverse
effect on such Borrowers or upon their financial condition, assets, business,
operations, liabilities or prospects.

 

§6.18                 Plan Payments.  Each Borrower and each ERISA Affiliate has
made full and timely payment of all amounts (i) required to be contributed under
the terms of each Plan set forth on Schedule 6.17 and applicable law and
(ii) required to be paid as expenses of each Plan set forth on Schedule 6.17. 
No Plan set forth on Schedule 6.17 would have an “amount of unfunded benefit
liabilities” (as defined in §4001(a)(18) of ERISA) if such Plan were terminated
as of the date on which this representation and warranty is made.

 

§6.19                 Regulations U and X.  No portion of any Loan is to be used
by any Borrower for the purpose of purchasing or carrying any “margin security”
or “margin stock” as such terms are used in Regulations U and X of the Board of
Governors of the Federal Reserve System, 12 C.F.R. Parts 221 and 224.  Neither
Borrower is engaged, nor will it engage, principally or as one of its important
activities, in the business of extending credit for the purpose of purchasing or
carrying any “margin security” or “margin stock” as such terms are used in
Regulations T, U and X of the Board of Governors of the Federal Reserve System,
12 C.F.R. Parts 220, 221 and 224.

 

§6.20                 Environmental Compliance.  The Borrowers have taken all
commercially reasonable steps necessary to investigate the past and present
conditions and usage of the Real Estate and the operations conducted thereon
and, based upon such investigation, make the following representations and
warranties.

 

(a)                                 To the best of the Borrowers’ knowledge,
none of the Borrowers, the Guarantors nor the Restricted Subsidiaries of any
Borrower or any operator of the Real Estate, or any operations thereon is in
violation, or alleged violation, of any judgment, decree, order, law, license,
rule or regulation pertaining to environmental matters, including without
limitation, those arising under the Resource Conservation and Recovery Act
(“RCRA”), the Comprehensive Environmental Response, Compensation and Liability
Act of 1980 as amended (“CERCLA”), the Superfund Amendments and Reauthorization
Act of 1986 (“SARA”), the Federal Clean Water Act, the Federal Clean Air Act,
the Toxic Substances Control Act, or any state or local statute, regulation,
ordinance, order or decree relating to the environment (hereinafter
“Environmental Laws”), which violation involves the Real Estate and would have a
material adverse effect on the environment or the business, assets or financial
condition of either Borrower, any Guarantor or any of a Borrower’s Restricted
Subsidiaries.

 

(b)                                 Except as set forth on Schedule 6.20, none
of the Borrowers, the Guarantors nor any of the Restricted Subsidiaries of any
Borrower has received notice from any third party including, without limitation,
any federal, state or local governmental authority, (i) that it has been
identified by the United States Environmental Protection Agency (“EPA”) as a
potentially responsible party under CERCLA with respect to a site listed on the
National Priorities List, 40 C.F.R. Part 300 Appendix B (1986); (ii) that any
hazardous waste, as defined by 42 U.S.C. §9601(5), any hazardous substances as
defined by 42 U.S.C. §9601(14), any pollutant or contaminant as defined by 42
U.S.C. §9601(33) or any toxic substances, oil or hazardous materials or other
chemicals or substances regulated by any Environmental Laws (“Hazardous
Substances”) which it has generated, transported or disposed of have been found
at any site at, on or under the Real Estate for which a federal, state or local
agency or other third

 

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party has conducted or has ordered that any of the Borrowers, any Guarantor or
any of the Restricted Subsidiaries of any Borrower conduct a remedial
investigation, removal or other response action pursuant to any Environmental
Law; or (iii) that it is or shall be a named party to any claim, action, cause
of action, complaint, or legal or administrative proceeding (in each case,
contingent or otherwise) arising out of any third party’s incurrence of costs,
expenses, losses or damages of any kind whatsoever in connection with the
release of Hazardous Substances.

 

(c)                                  To the best of the Borrowers’ knowledge,
except as set forth on Schedule 6.20:  (i) no portion of the Real Estate has
been used as a landfill or for dumping or for the handling, processing, storage
or disposal of Hazardous Substances except in accordance with applicable
Environmental Laws, and no underground tank or other underground storage
receptacle for Hazardous Substances is located on any portion of the Real Estate
that is not in compliance with applicable Environmental Laws; (ii) in the course
of any activities conducted by the Borrowers, the Guarantors, the Restricted
Subsidiaries of any Borrower or the operators of any of their properties, no
Hazardous Substances have been generated or are being used on the Real Estate
except in the ordinary course of business and in accordance with applicable
Environmental Laws; (iii) there has been no past or present releasing, spilling,
leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping,
disposing or dumping (a “Release”) or threatened Release of Hazardous Substances
on, upon, into or from the Real Estate, which Release would have a material
adverse effect on the value of any of the Real Estate or adjacent properties or
the environment; (iv) there have been no Releases on, upon, from or into any
real property in the vicinity of any of the Real Estate which, through soil or
groundwater contamination, may have come to be located on, and which would have
a material adverse effect on the value of, the Real Estate; and (v) any
Hazardous Substances that have been generated on any of the Real Estate have
been transported off site only by carriers having an identification number
issued by the EPA or approved by a state or local environmental regulatory
authority having jurisdiction regarding the transportation of such substance and
treated or disposed of only by treatment or disposal facilities maintaining
valid permits as required under all applicable Environmental Laws, which
transporters and facilities have been and are, to the best of the Borrowers’
knowledge, operating in compliance with such permits and applicable
Environmental Laws.

 

(d)                                 None of the Borrowers, the Guarantors, the
Restricted Subsidiaries of any Borrower, nor any Real Estate is subject to any
applicable Environmental Law requiring the performance of Hazardous Substances
site assessments, or the removal or remediation of Hazardous Substances, or the
giving of notice to any governmental agency or the recording or delivery to
other Persons of an environmental disclosure document or statement by virtue of
the transactions set forth herein and contemplated hereby, or as a condition to
the recording of the Security Deed or to the effectiveness of any other
transactions contemplated hereby.

 

§6.21                 Subsidiaries.  Schedule 6.21 sets forth, as of the date
hereof, all of the Restricted Subsidiaries and Unrestricted Subsidiaries of the
Borrowers, the form and jurisdiction of organization of each of such
Subsidiaries, and the Borrowers’ ownership interest therein.

 

§6.22                 Loan Documents.  All of the representations and warranties
made by or on behalf of the Borrowers, Woodlands Operating, the Guarantors and
the Restricted Subsidiaries of any Borrower made in this Agreement and the other
Loan Documents or any document or instrument

 

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delivered to the Agent or the Lenders pursuant to or in connection with any of
such Loan Documents are true and correct in all material respects, and neither
of the Borrowers nor any Guarantor has failed to disclose such information as is
necessary to make such representations and warranties not misleading.  There is
no material fact or circumstance that has not been disclosed to the Agent and
the Lenders, and the written information, reports and other papers and data with
respect to the Borrowers and the Property (other than projections and estimates)
furnished to the Agent or the Lender in connection with this Agreement or the
obtaining of the commitments of the Lenders hereunder was, at the time so
furnished and when considered as a whole, complete and correct in all material
respects, or has been subsequently supplemented by other information, reports or
other papers or data, to the extent necessary to give in all material respects a
true and accurate knowledge of the subject matter in all material respects;
provided that such representation shall not apply to (a) the accuracy of any
engineering and environmental reports prepared by third parties or legal
conclusions or analysis provided by the Borrowers’ counsel (although Borrowers
have no reason to believe that the Agent and the Lenders may not rely on the
accuracy thereof), (b) misstatements or omissions actually known as such to the
loan officer of the Agent or a Lender responsible for the Loans prior to the
execution and delivery of the Loan Documents, or (c) budgets, projections and
other forward-looking speculative information prepared in good faith by
Borrowers (except to the extent the related assumptions are manifestly
unreasonable).

 

§6.23                 Property.  All of the Borrowers’ and their respective
Restricted Subsidiaries’ and the Guarantors’ improved Real Estate are in good
condition and working order subject to ordinary wear and tear, other than with
respect to deferred maintenance existing as of the date of acquisition of such
property which is being corrected or repaired in the ordinary course of business
and certain de minimis known and unknown repairs, none of which may have a
materially adverse effect on the business or financial condition of the
Borrowers.  Except as disclosed to Agent in writing as of the Closing Date,
there are no unpaid or outstanding real estate or other taxes or assessments on
or against any property of the Borrowers or any of their respective Restricted
Subsidiaries or of Guarantors which are payable by such Persons (except only
real estate or other taxes or assessments, that are not yet due and payable or
are being protested as permitted by this Agreement).  Except as disclosed to
Agent in writing, there are no pending eminent domain proceedings against any
property of the Borrowers or their respective Restricted Subsidiaries or the
Guarantors or any part thereof, and, to the knowledge of the Borrowers, no such
proceedings are presently threatened or contemplated by any taking authority
which in either case may individually or in the aggregate have any materially
adverse effect on the business or financial condition of either Borrower.  None
of the property of Borrowers or their respective Restricted Subsidiaries or the
Guarantors is now damaged as a result of any fire, explosion, accident, flood or
other casualty in any manner which individually or in the aggregate would have
any materially adverse effect on the business or financial condition as a whole
of either Borrower.

 

§6.24                 Material Agreements.  Borrowers have delivered or made
available to Agent true, correct and complete copies of the Material
Agreements.  To the best knowledge of the Borrowers, each of the Material
Agreements is in full force and effect in accordance with their respective
terms, and except as disclosed to the Agent in writing there are no material
claims or any basis for material claims by any party to any Material Agreement.

 

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§6.25                 Brokers.  None of the Borrowers nor any of their
respective Restricted Subsidiaries has engaged or otherwise dealt with any
broker, finder or similar entity in connection with this Agreement or the Loans
contemplated hereunder.

 

§6.26                 Partners.  As of the date hereof, (a) TWC Commercial
Properties and TWC Commercial Properties, LLC, a Texas limited liability company
are the sole general partners of TWCPC Holdings and together own a two percent
(2%) general partner interest in TWCPC Holdings, (b) TWCPC Holdings is the sole
member of TWCPC Holdings GP, (c) TWCPC Holdings and TWCPC Holdings GP are the
sole partners of Commercial Company, (d) TWC Land Development and TWC Land
Development, LLC, a Texas limited liability company are the sole general
partners of TWLDC Holdings and together own a forty-three and one-half percent
(43.5%) general partner interest in TWLDC Holdings, (e) TWLDC Holdings is the
sole member of TWLDC Holdings GP, and (f) TWLDC Holdings and TWLDC Holdings GP
are the sole partners of Land Company.  The Howard Hughes Group is in control of
at least 75% of the voting rights and ownership interests in each Borrower as of
the date hereof, and the Howard Hughes Group is directly, or indirectly, the
sole general partner of each Borrower.

 

§6.27                 Options to Acquire; Restrictions on Development.  None of
the Borrowing Base Assets are subject to any right of first refusal, right of
first offer or other options to purchase except as set forth on Schedule 6.27
hereto or except such rights of first refusal, rights of first offer or other
options to purchase that constitute arm’s-length agreements entered into in the
ordinary course of business which individually or in the aggregate do not have a
material adverse affect on the Collateral as a whole or restrict, limit or
materially adversely affect the ability to develop or the marketability or
financeability of the Borrowing Base Assets subject thereto.  None of the
Undeveloped Residential Land or the Undeveloped Commercial Land is subject to
any material agreement restricting or limiting its development except as set
forth on Schedule 6.27.

 

§6.28                 Restricted Subsidiaries.

 

(a)                                 As of August 8, 2013, all Restricted
Subsidiaries that are not guarantors of the Obligations are prohibited from
becoming guarantors of the Obligations pursuant to a document, instrument or
agreement evidencing secured Indebtedness of such Restricted Subsidiary
permitted by this Agreement or a provision of such Restricted Subsidiary’s
organizational documents entered into as a condition of the extension of such
secured Indebtedness.

 

(b)                                 As of August 8, 2013, all Restricted
Subsidiaries other than those subject to the Assignment of Interests as of such
date are prohibited from delivering to Agent on behalf of the Lenders a
collateral assignment of all of such Borrower’s right, title and interest in
such Restricted Subsidiary pursuant to a document, instrument or agreement
evidencing secured Indebtedness of such Restricted Subsidiary permitted by this
Agreement or a provision of such Restricted Subsidiary’s organizational
documents entered into as a condition of the extension of such secured
Indebtedness.

 

§6.29                 Fair Consideration.  The Borrowers and the Guarantors, by
receiving the benefits under this Agreement, are receiving “reasonably
equivalent value” within the meaning of §548

 

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of the Bankruptcy Code, Title 11, U.S.C.A., in exchange for the delivery of the
Security Documents to Agent.  The transaction evidenced by this Agreement and
the other Loan Documents is in the best interests of the Borrowers and the
Guarantors and the creditors of the Borrowers and the Guarantors.

 

§6.30                 Solvency.  As of the Closing Date and after giving effect
to the transactions contemplated by this Agreement and the other Loan Documents,
including all of the Loans made or to be made hereunder, none of the Borrowers
nor any of their respective Restricted Subsidiaries nor any Guarantor is
insolvent on a balance sheet basis, the sum of such Person’s assets exceeds the
sum of such Person’s liabilities, each of the Borrowers and their respective
Restricted Subsidiaries and the Guarantors is able to pay its debts as they
become due, and each of the Borrowers and their respective Restricted
Subsidiaries and the Guarantors has sufficient capital to carry on its
business.  Neither the Borrowers nor any Guarantor has entered into the Loan or
any Loan Document with the actual intent to hinder, delay or defraud any
creditor.

 

§6.31                 No Bankruptcy Filing.  None of the Borrowers, the
Guarantors nor any of the Restricted Subsidiaries of any Borrower is
contemplating either the filing of a petition by it under any state or federal
bankruptcy or insolvency laws or the liquidation of its assets or property, and
neither Borrower has any knowledge of any Person contemplating the filing of any
such petition against it or any of such other Persons.

 

§6.32                 Other Debt.  As of the Closing Date, none of the
Borrowers, the Guarantors nor any of their respective Restricted Subsidiaries is
in default (after giving effect to applicable grace periods) in the payment of
any Indebtedness or the terms of any agreement, mortgage, deed of trust,
security agreement, financing agreement, indenture or other lease to which any
of them is a party which relates to Indebtedness or other obligations which
individually or in the aggregate exceed $5,000,000.00.  None of the Borrowers
nor the Guarantors is a party to or bound by any agreement, instrument or
indenture that may require the subordination in right or time of payment of any
of the Obligations to any other indebtedness or obligation of any Borrower or
any Guarantor.  The Borrowers have provided to the Agent copies of or access to
all agreements, mortgages, deeds of trust, financing agreements or other
material agreements binding upon Borrowers or the Guarantors or their respective
properties and entered into by such Person as of the date of this Agreement with
respect to any Indebtedness of such Person.

 

§6.33                 OFAC.  None of the Borrowers or Guarantors are (and none
of the Borrowers or Guarantors will be) a Person with whom any Lender is
restricted from doing business under OFAC (including, those Persons named on
OFAC’s Specially Designated and Blocked Persons list) or under any statute,
executive order (including the September 24, 2001 Executive Order Blocking
Property and Prohibiting Transactions With Persons Who Commit, Threaten to
Commit, or Support Terrorism), or other governmental action and is not and shall
not engage in any dealings or transactions or otherwise be associated with such
persons.  In addition, Borrowers hereby agree to provide to the Lenders any
additional information that a Lender deems reasonably necessary from time to
time in order to ensure compliance with all applicable laws concerning money
laundering and similar activities.

 

§6.34                 Additional Land.  Stibbs has conveyed to Land Company all
real estate owned by Stibbs in his capacity as trustee for the benefit of Land
Company.

 

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§6.35                 Affiliate Leases; Management Agreements.

 

(a)                                 Except for the Lease Agreement, dated
March 26, 2001, between Land Company, as landlord, and Beverage
Operations, Inc., as tenant, pertaining to the provision of alcoholic beverage
services at The Club at Carlton Woods, as amended June 6, 2005 to include The
Club at Carlton Woods Creekside, none of the Mortgaged Property is leased to any
Affiliate of a Borrower or Woodlands Operating except for such Leases with
respect to which a subordination agreement acceptable to Agent has been executed
and delivered to Agent by the applicable Borrower and such Affiliate.

 

(b)                                 Except for the Management Service Agreement,
dated March 26, 2001, between Beverage Operations, Inc. and Woodlands Operating,
as amended June 4, 2001, pertaining to the service of alcoholic beverages at The
Club at Carlton Woods, and amended June 6, 2005 to add The Club at Carlton Woods
Creekside, and further amended October 4, 2005 to include the words “mixed
beverages”, none of the Mortgaged Property is subject to any Management
Agreement with any other Affiliate of a Borrower except for such Management
Agreements with respect to which an Assignment of Management Agreement and
Subordination has been executed and delivered to Agent.

 

§6.36                 Guarantor Contribution Agreement.  The Borrowers and the
Guarantors have executed and delivered the Guarantor Contribution Agreement, and
the Guarantor Contribution Agreement constitutes the valid and legally binding
obligations of such parties enforceable against them in accordance with the
terms and provisions thereof, except as enforceability is limited by bankruptcy,
insolvency, reorganization, moratorium or other laws relating to or affecting
generally the enforcement of creditors’ rights and except to the extent that
availability of the remedy of specific performance or injunctive relief is
subject to the discretion of the court before which any proceeding therefor may
be brought.

 

§6.37                 Borrowing Base Assets.  The Borrowers have granted to
Agent, for the benefit of the Lenders, a first priority lien in all Borrowing
Base Assets, including 1400 Woodloch.

 

§7.                               AFFIRMATIVE COVENANTS OF THE BORROWERS

 

The Borrowers covenant and agree that, so long as any Loan or Note is
outstanding or any Lender has any obligation to make any Loans:

 

§7.1                        Punctual Payment.  The Borrowers will duly and
punctually pay or cause to be paid the principal and interest on the Loans and
all interest and fees provided for in this Agreement, all in accordance with the
terms of this Agreement and the Notes as well as all other sums owing pursuant
to the Loan Documents.

 

§7.2                        Maintenance of Office.  Borrowers will maintain
their chief executive offices at c/o The Woodlands Operating Company, L.P., 24
Waterway Avenue, Suite 1100, The Woodlands, Texas 77380, or at such other place
in the United States of America as such Borrower shall designate upon prior
written notice to the Agent and the Lenders, where notices, presentations and
demands to or upon each Borrower in respect of the Loan Documents may be given
or made.

 

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§7.3                        Records and Accounts.  The Borrowers will (a) keep,
and cause each of their respective Restricted Subsidiaries to keep, true and
accurate records and books of account in which full, true and correct entries
will be made in accordance with Generally Accepted Accounting Principles, as
revised from time to time, and (b) maintain reasonably adequate accounts and
reserves for all taxes against their respective Real Estate and depreciation and
amortization of its properties and the properties of their respective Restricted
Subsidiaries, contingencies and other reserves.  Except as required by Generally
Accepted Accounting Principles and with prior written notice to Agent, none of
the Borrowers nor any of their respective Restricted Subsidiaries shall, without
the prior written consent of the Agent, make any material change to the
accounting procedures used by such Person in preparing the financial statements
and other information described in §6.4.  The Borrowers shall not, without the
prior written consent of the Agent, change their fiscal year which ends on
December 31 of each year.

 

§7.4                        Financial Statements, Certificates and Information. 
The Borrowers will deliver to the Agent with sufficient copies for each of the
Lenders:

 

(a)                                 as soon as practicable, but in any event not
later than one hundred twenty (120) days after the end of each fiscal year of
each Borrower, the audited consolidated balance sheet of each Borrower and its
subsidiaries and of the Borrowers collectively and their subsidiaries on a
combined basis at the end of such year, and the related audited consolidated
statements of income, changes in capital and cash flows for such year, each
setting forth in comparative form the figures for the previous fiscal year and
all such statements to be in reasonable detail, prepared in accordance with
Generally Accepted Accounting Principles, and accompanied by an auditor’s report
prepared without qualification by a nationally recognized accounting firm
reasonably acceptable to the Agent, and any other information the Agent may
reasonably require to complete a financial analysis of the Borrowers, together
with a written statement from such accountants to the effect that they have read
a copy of this Agreement, and that, in making the examination necessary to said
certification, they have obtained no knowledge of any Default or Event of
Default, or, if such accountants shall have obtained knowledge of any then
existing Default or Event of Default they shall disclose in such statement any
such Default or Event of Default; provided that such accountants shall not be
liable to the Agent or the Lenders for failure to obtain knowledge of any
Default or Event of Default;

 

(b)                                 as soon as practicable, but in any event not
later than forty-five (45) days after the end of each fiscal quarter of the
Borrowers (including the fourth fiscal quarter in each year), copies of the
unaudited consolidated balance sheet of each Borrower and its Consolidated
subsidiaries and of the Borrowers collectively and their Consolidated
subsidiaries on a combined basis as of the end of such quarter, and the related
unaudited consolidated statements of income, changes in capital and cash flows
for the portion of the Borrowers’ fiscal year then elapsed, all prepared in
accordance with Generally Accepted Accounting Principles (other than the
inclusion of footnotes) and in addition a calculation of Operating Cash Flow,
Excess Cash Flow, Total Debt Ratio, Hotel Net Operating Income and Net Operating
Income for all Properties Under Construction or otherwise subject to §8.9,
Woodlands Operating Payments, Woodlands Operating Distributions, Net Income of
Woodlands Operating and the Distributions to be made to the parties or other
beneficial owners of the Borrowers for such period (or if such amounts relate to
a prior period as permitted by §8.7(i)) and any other terms defined in this
Agreement, and showing any variations for such quarter and the year-to-date of
actual operations from the

 

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Budget, together with a certification by the Principal Financial Officer of each
Borrower that the information contained in such financial statements fairly
presents the financial position of the Borrowers and their respective
Consolidated subsidiaries on the date thereof (subject to year end adjustments);

 

(c)                                  contemporaneously with the delivery of the
financial statements referred to in clause (a) above, a statement of all
contingent liabilities in excess of $100,000.00 of each Borrower and their
respective Restricted Subsidiaries which are not reflected in such financial
statements or referred to in the notes thereto (including, without limitation,
all guarantees, endorsements and other contingent obligations in respect of
indebtedness of others, and obligations to reimburse the issuer in respect of
any letters of credit);

 

(d)                                 [Intentionally omitted].

 

(e)                                  not later than sixty (60) days after the
end of the first three fiscal quarters of the Borrowers and not later than one
hundred twenty (120) days after the end of each fiscal year of the Borrowers, a
statement (a “Compliance Certificate”) certified by the Principal Financial
Officer of each Borrower in the form of Exhibit E hereto setting forth in
reasonable detail computations evidencing compliance with the covenants
contained in §9 and the other covenants described therein, and (if applicable)
reconciliations to reflect changes in Generally Accepted Accounting Principles
since the Balance Sheet Date;

 

(f)                                   simultaneously with the delivery of the
financial statements referred to in subsections (a) and (b) above and the
Compliance Certificate referred to in subsection (e) above, a spreadsheet
listing each parcel of income-producing Real Estate and its location, whether
such Real Estate is owned by a Borrower or one of their respective Restricted
Subsidiaries, its size (square footage for office and retail assets; number of
apartments for multifamily; number of rooms for hotel/lodging/resort assets),
occupancy level as of the quarter most recently ended, current quarter net
income and partnership distributions and such other information as Agent may
reasonably request, a specific listing of any new Eligible Accounts Receivable
proposed to be included in the Borrowing Base, a listing of each Vertical
Commercial Improvements project under construction or development, the budgeted
cost of completing such project (on a fully developed basis including land) of
Commercial Company, Land Company and their respective Restricted Subsidiaries
and Unrestricted Subsidiaries, the amount expended and the remaining costs to be
incurred, whether each such project constitutes a Speculative Development, the
status of completion, the estimated completion date, the status of leasing and
the summary and breakdown of the sources of capital for such construction and
development;

 

(g)                                  not later than five (5) days after the end
of each calendar month, a statement certified by an Authorized Officer of each
Borrower that each sale of Undeveloped Residential Land or Developed Residential
Land for the preceding calendar month was for fair market value as a result of
an arm’s-length sale of such Property in the ordinary course of such Borrower’s
business to a party that was not an Affiliate of any Borrower, any General
Partner, any Second Tier Partner, any Third Tier Partner or any Guarantor, and
that any easements, subdivision plats, road dedications, restrictions or similar
agreements consented or subordinated to by the Title Insurance Company pursuant
to the Tri-Party Agreement during the preceding calendar month shall not have
any material negative impact to the Collateral;

 

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(h)                                 if requested by the Agent, copies of all
annual federal income tax returns and amendments thereto of the Borrowers;

 

(i)                                     [Intentionally omitted];

 

(j)                                    not later than forty-five (45) days after
the end of each fiscal quarter of the Borrowers (including the fourth fiscal
quarter in each year), a statement, certified as true and correct by the
Principal Financial Officer of each Borrower, of all recourse and Non-Recourse
Indebtedness of each Borrower and their respective Restricted Subsidiaries as of
the end of such fiscal quarter, including, with respect to each such
Indebtedness, the outstanding principal amount as of the end of such fiscal
quarter, the amount remaining undisbursed, if any, the maturity date and any
extension options, the required monthly payments of principal and interest, the
identity of the lender, the interest rate, the collateral for such Indebtedness
and whether such Indebtedness is recourse or non-recourse;

 

(k)                                 not later than ten (10) days after approval
by each Borrower’s executive committee, the Budget for the next calendar year. 
Such Budget shall be in form reasonably satisfactory to the Agent and shall be
submitted to the Agent together with a narrative description of the assumptions
upon which the Budget is based and such other information as the Agent may
request;

 

(l)                                     at such times as Agent shall determine
in its discretion (but, so long as no Event of Default has occurred and is
continuing, not more frequently than once each calendar year), Borrower shall
deliver to Agent such title updates, UCC searches or other evidence as Agent may
reasonably require to show that the Security Documents create a first lien and
security interest in the Collateral; and

 

(m)                             from time to time such other financial data and
information in the possession of the Borrowers, their respective Restricted
Subsidiaries or their respective Unrestricted Subsidiaries (including without
limitation auditors’ management letters, market comparable studies, property
inspection and environmental reports and information as to zoning and other
legal and regulatory changes affecting the Borrowers or their respective
Subsidiaries) as the Agent may reasonably request.

 

§7.5                        Notices.

 

(a)                                 Defaults.  The Borrowers will promptly
notify the Agent in writing of the occurrence of any Default or Event of
Default.  If any Person shall give any notice or take any other action in
respect of a claimed default (whether or not constituting an Event of Default)
under this Agreement or under any note, obligation or other evidence of
indebtedness to which or with respect to which any of the Borrowers, the
Guarantors or any of the Borrowers’ Restricted Subsidiaries or Unrestricted
Subsidiaries is a party or obligor, whether as principal or surety, and such
default would permit the holder of such note or obligation or other evidence of
indebtedness to accelerate the maturity thereof, which acceleration would have a
material adverse effect on any of such Persons or constitute a Default or Event
of Default, the Borrowers shall forthwith give written notice thereof to the
Agent, describing the notice or action and the nature of the claimed default.

 

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(b)                                 Environmental Events.  The Borrowers will
promptly give notice to the Agent (i) upon either of the Borrowers obtaining
knowledge of any potential or known Release, or threat of Release, of any
Hazardous Substances at or from any Real Estate, other than a de minimis Release
that is not reportable to any federal, state or local environmental agency;
(ii) of any violation of any Environmental Law that either of the Borrowers or
any of their respective Restricted Subsidiaries reports in writing or is
reportable by such Person in writing (or for which any written report
supplemental to any oral report is made) to any federal, state or local
environmental agency; and (iii) upon becoming aware thereof, of any inquiry,
proceeding, investigation, or other action, including a notice from any agency
of potential environmental liability, of any federal, state or local
environmental agency or board, that in either case involves the Real Estate or
has the potential to materially affect the assets, liabilities, financial
conditions or operations of either of the Borrowers or any Restricted Subsidiary
or the Agent’s liens on the Collateral pursuant to the Security Documents.

 

(c)                                  Notification of Claims Against Collateral. 
The Borrowers will, promptly upon becoming aware thereof, notify the Agent in
writing of any material setoff, claims (including, with respect to the Real
Estate, environmental claims), withholdings or other defenses to which any of
the Collateral, or the rights of the Agent or the Lenders with respect to the
Collateral, are subject.

 

(d)                                 Notice of Litigation and Judgments.  The
Borrowers will give notice to the Agent in writing within fifteen (15) days of
becoming aware of any litigation or proceedings threatened in writing or any
pending litigation and proceedings affecting any of the Borrowers, the
Guarantors or any of the Restricted Subsidiaries of any Borrower or to which any
of such persons is or is to become a party involving an uninsured claim against
any of such Persons that could reasonably be expected to have a materially
adverse effect on such Person and stating the nature and status of such
litigation or proceedings.  The Borrowers will give notice to the Agent, in
writing, in form and detail satisfactory to the Agent and each of the Lenders,
within ten (10) days of any judgment not covered by insurance, whether final or
otherwise, against any of the Borrowers, the Guarantors or any of the Restricted
Subsidiaries of any Borrower in an amount in excess of $1,000,000.00.

 

(e)                                  [Intentionally omitted].

 

(f)                                   Notice of Material Adverse Effect.  The
Borrowers will give notice to the Agent in writing within fifteen (15) days of
becoming aware of the occurrence of any event or circumstance which might have a
material adverse effect on the business, assets or financial condition of either
of the Borrowers or any Guarantor.

 

(g)                                  Notice of Designation of Restricted and
Unrestricted Subsidiaries.  The Borrowers will promptly give notice to the Agent
of any designation by a Borrower of Restricted Subsidiaries or Unrestricted
Subsidiaries as provided in the definition of same.  No designation of a
Restricted Subsidiary may be made unless a Borrower has sufficient interests and
other rights with respect to such Person to satisfy the requirements set forth
in the definition of Restricted Subsidiary to be a Restricted Subsidiary.  Any
such designation of a Restricted Subsidiary or Unrestricted Subsidiary may not
be changed.  Notwithstanding anything in this Agreement to the contrary, prior
to a Borrower designating a Person as an Unrestricted

 

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Subsidiary, the Borrower shall deliver to the Agent a certificate showing pro
forma compliance with §9.3 (Borrowing Base) after giving effect to such
designation.

 

§7.6                        Existence; Maintenance of Properties.

 

(a)                                 The Borrowers will do or cause to be done
all things necessary to preserve and keep in full force and effect their
existence as Texas limited partnerships.  Each Borrower will cause each of its
Restricted Subsidiaries to do or cause to be done all things necessary to
preserve and keep in full force and effect its legal existence.  The Borrowers
will do or cause to be done all things necessary to preserve and keep in full
force all of their material rights and franchises and those of their respective
Restricted Subsidiaries.  The Borrowers will, and will cause each of their
respective Restricted Subsidiaries to, continue to engage primarily in the
businesses now conducted by it and in related businesses.

 

(b)                                 Irrespective of whether proceeds of the
Loans are available for such purpose, the Borrowers (i) will cause all of their
respective properties and those of their respective Restricted Subsidiaries used
or useful in the conduct of its business or the business of their respective
Restricted Subsidiaries to be maintained and kept in good condition, repair and
working order (ordinary wear and tear excepted) and supplied with all necessary
equipment, and (ii) will cause to be made all necessary repairs, renewals,
replacements, betterments and improvements thereof in all cases in which the
failure so to do would have a material adverse effect on the condition of its
properties or on the financial condition, assets or operations of the Borrowers
and their respective Restricted Subsidiaries.

 

§7.7                        Insurance.

 

(a)                                 The Borrowers will, at their expense,
procure and maintain or cause to be procured and maintained for the benefit of
the Borrowers, the Agent and the Lenders, insurance policies issued by such
insurance companies, in such amounts, in such form and substance, and with such
coverages, endorsements, deductibles and expiration dates as are acceptable to
the Agent, providing the following types of insurance covering the Mortgaged
Property:

 

(i)                                     “All Risks” property insurance
(including broad form flood, broad form earthquake and comprehensive boiler and
machinery coverages) on the Buildings and the Golf Courses and the contents
therein in an amount not less than one hundred percent (100%) of the full
replacement cost of the improvements on the Mortgaged Property and the contents
therein of the Borrowers or an applicable Guarantor, with deductibles not to
exceed $500,000 for any one occurrence and with a replacement cost coverage
endorsement or an agreed amount endorsement.  Full replacement cost as used
herein means the cost of replacing the improvements (exclusive of the cost of
excavations, foundations and footings below the lowest grade) and the contents
therein of the Borrowers or an applicable Guarantor without deduction for
physical depreciation thereof;

 

(ii)                                  During the course of construction or
repair of any Buildings, the insurance required by clause (i) above shall be
written on a builders risk, completed value, non-reporting form, meeting all of
the terms required by clause (i) above, covering the total value of work
performed, materials, equipment, machinery and supplies furnished, existing
structures,

 

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and temporary structures being erected on or near the Mortgaged Property,
including coverage against collapse and damage during transit or while being
stored off-site, and containing a soft costs (including loss of rents) coverage
endorsement and a permission to occupy endorsement;

 

(iii)                               Flood insurance if at any time any Buildings
are located in any federally designated “special hazard area” (including any
area having special flood, mudslide and/or flood-related erosion hazards, and
shown on a Flood Hazard Boundary Map or a Flood Insurance Rate Map published by
the Federal Emergency Management Agency as Zone A, AO, AI-30, A99, AH, VO,
VI-30, VE, V, M or E) and the broad form flood coverage required by clause
(i) above is not available, in an amount equal to the full replacement cost or
the maximum amount then available under the National Flood Insurance Program;

 

(iv)                              Rent loss and/or business interruption
insurance in an amount sufficient to recover at least the total estimated gross
receipts from all sources of income, including without limitation, rental income
and income from the use or occupancy of rooms or other facilities, for the
Mortgaged Property for a twelve month period;

 

(v)                                 Commercial general liability insurance
against claims for personal injury (to include, without limitation, bodily
injury and personal and advertising injury) and property damage liability, all
on an occurrence basis, if commercially available, with such coverages as the
Agent may reasonably request (including, without limitation, contractual
liability coverage and completed operations coverage, and coverages equivalent
to an ISO broad form endorsement), with a general aggregate limit of not less
than $2,000,000, a completed operations aggregate limit of not less than
$2,000,000, and a combined single “per occurrence” limit of not less than
$1,000,000 for bodily injury, property damage and medical payments;

 

(vi)                              During the course of construction or repair of
any Buildings on the Mortgaged Property, owner’s contingent or protective
liability insurance covering claims not covered by or under the terms or
provisions of the insurance required by clause (v) above;

 

(vii)                           Umbrella liability insurance with limits of not
less than $25,000,000 to be in excess of the limits of the insurance required by
clauses (v) and (vi) above, with coverage at least as broad as the primary
coverages of the insurance required by clauses (v) and (vi) above, with any
excess liability insurance to be at least as broad as the coverages of the lead
umbrella policy.  All such policies shall be endorsed to provide defense
coverage obligations;

 

(viii)                        Automobile liability in such amounts as Agent may
reasonably require, and if any of the Mortgaged Property is a hotel, innkeeper’s
legal liability, liquor liability, safe deposit box liability, automobile
liability and garagekeeper liability in such amounts as Agent may reasonably
require;

 

(ix)                              Workers’ compensation insurance (including
employer’s liability insurance) for all employees of the Borrowers or the
applicable Guarantor engaged on or with respect to the Mortgaged Property; and

 

(x)                                 Such other insurance in such form and in
such amounts as may from time to time be reasonably required by the Agent
against other insurable hazards and

 

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casualties which at the time are commonly insured against in the case of
properties of similar character and location to the Mortgaged Property.

 

The Borrowers shall pay or cause to be paid all premiums on insurance policies. 
The insurance policies with respect to the Mortgaged Property provided for in
clauses (v), (vi), (vii) and (viii) above with respect to the Mortgaged Property
shall name the Agent and each Lender as an additional insured and shall contain
a cross liability/severability endorsement.  The insurance policies provided for
in clauses (i), (ii), (iii) and (iv) above shall name the Agent as mortgagee and
loss payee, shall be first payable in case of loss to the Agent, and shall
contain mortgage clauses and lender’s loss payable endorsements in form and
substance acceptable to the Agent.  The Borrowers shall promptly furnish to the
Agent all renewal notices and evidence that all premiums or portions thereof
then due and payable have been paid.  At least thirty (30) days prior to the
expiration date of the policies, the Borrowers shall deliver to the Agent
evidence of continued coverage, including a certificate of insurance, as may be
satisfactory to the Agent.

 

(b)                                 All policies of insurance required by this
Agreement shall contain clauses or endorsements to the effect that (i) no act or
omission of either Borrower or the applicable Guarantor or anyone acting for a
Borrower or the applicable Guarantor (including, without limitation, any
representations made in the procurement of such insurance), which might
otherwise result in a forfeiture of such insurance or any part thereof, no
occupancy or use of the Mortgaged Property for purposes more hazardous than
permitted by the terms of the policy, and no foreclosure or any other change in
title to the Mortgaged Property or any part thereof, shall affect the validity
or enforceability of such insurance insofar as the Agent or the Lenders are
concerned, (ii) the insurer waives any right of setoff, counterclaim,
subrogation, or any deduction in respect of any liability of the Borrowers, an
applicable Guarantor, the Agent and the Lenders, (iii) such insurance is primary
and without right of contribution from any other insurance which may be
available, (iv) such policies shall not be modified, cancelled or terminated
prior to the scheduled expiration date thereof without the insurer thereunder
giving at least 30 days’ prior written notice to the Agent by certified or
registered mail, and (v) that the Agent and the Lenders shall not be liable for
any premiums thereon or subject to any assessments thereunder, and shall in all
events be in amounts sufficient to avoid any coinsurance liability.

 

(c)                                  The insurance required by this Agreement
may be effected through a blanket policy or policies covering additional
locations and property of the Borrowers and other Persons not included in the
Mortgaged Property, provided that such blanket policy or policies comply with
all of the terms and provisions of this §7.7 and contain endorsements or clauses
assuring that any claim recovery will not be less than that which a separate
policy would provide, including, without limitation, a priority claim provision
with respect to property insurance and an aggregate limits of insurance
endorsement in the case of liability insurance.

 

(d)                                 All policies of insurance required by this
Agreement shall be issued by companies licensed to do business in the state
where the policy is issued to the extent so required by state law and also in
the states where the Mortgaged Property is located and having a rating in Best’s
Key Rating Guide of at least “A” and a financial size category of at least
“VIII”.

 

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(e)                                  The Borrowers shall not carry separate
insurance, concurrent in kind or form or contributing in the event of loss, with
any insurance required under this Agreement unless such insurance complies with
the terms and provisions of this §7.7.

 

(f)                                   In the event of any loss or damage to any
Building or other improvements covered by casualty insurance in excess of the
applicable deductible, the Borrowers shall give immediate written notice to the
insurance carrier and the Agent, or in the case of any loss or damage in excess
of $200,000.00, to the Agent, and the Agent shall furnish a copy of such notice
promptly to each of the Lenders.  The applicable Borrowers or Guarantor may make
proof of loss and adjust and compromise any claim under insurance policies which
is of an amount not more than $2,000,000.00 so long as no Event of Default has
occurred and is continuing and so long as such Borrower or Guarantor shall in
good faith diligently pursue such claim.  The Borrowers and Guarantors hereby
irrevocably authorize and empower the Agent, at the Agent’s option in the
Agent’s sole discretion, as attorney in fact for the Borrowers or Guarantor to
make proof of any loss except as provided in the preceding sentence, to adjust
and compromise any claim under insurance policies, to appear in and prosecute
any action arising from such insurance policies, to collect and receive
insurance proceeds, and to deduct therefrom the Agent’s reasonable expenses
incurred in the collection of such proceeds.  If a Mortgaged Property is
acquired by the Agent or any nominee through foreclosure, deed in lieu of
foreclosure or otherwise is acquired from a Borrower or Guarantor, all right,
title and interest of such Borrower or Guarantor in and to any insurance
policies and unearned premiums thereon and in and to the proceeds thereof
resulting from loss or damage to the Mortgaged Property prior to such sale or
acquisition shall pass to the Agent or any other successor in interest to such
Borrower or Guarantor or purchaser or grantee of the Mortgaged Property.

 

(g)                                  Subject to the terms of the following
sentence, the Borrowers and applicable Guarantor authorize the Agent, at the
Agent’s option, in its sole discretion, to (i) apply the balance of such
proceeds to the payment of the Obligations whether or not then due in accordance
with the terms of this Agreement, or (ii) if the Agent shall require the
reconstruction or repair of the Mortgaged Property, to hold the balance of such
proceeds to be used to pay all taxes, charges, sewer use fees, water rates and
assessments which may be imposed upon the Mortgaged Property and the Obligations
as they become due during the course of reconstruction or repair of the
Mortgaged Property and to reimburse the applicable Borrower or Guarantor, in
accordance with such terms and conditions as Agent may prescribe, for the cost
of such reconstruction or repair of the Mortgaged Property, and on completion of
such reconstruction or repair to apply any of the excess to the payment of the
Obligations.  Notwithstanding the foregoing, the Agent shall make such net
proceeds available to the applicable Borrower or Guarantor to reconstruct and
repair the Mortgaged Property, in accordance with such terms and conditions as
the Agent may prescribe for the disbursement of such proceeds to assure
completion of such reconstruction or repair provided that (A) the cost of such
reconstruction or repair is not estimated by the Agent to exceed fifty percent
(50%) of the fair market value of the specific building, structure or
improvement or such portion of the Mortgaged Property which is in need of repair
or reconstruction as reasonably determined by Agent, (B) no Default or Event of
Default shall have occurred and be continuing, (C) the applicable Borrower or
Guarantor shall have provided to Agent additional cash security (other than from
proceeds of the Loan) in an amount equal to the amount reasonably estimated by
the Agent to be the amount in excess of such proceeds which will be required to
complete such repair or restoration, (D) the Agent shall

 

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have approved (such approval not to be unreasonably withheld, conditioned or
delayed) the plans and specifications for such repair or restoration and
reasonably determined that the repaired or restored Mortgaged Property will
provide the Lenders with adequate security applicable for the Obligations at
least substantially identical in nature, quality and value to the security for
the Obligations existing prior to such casualty, (E) the applicable Borrower or
Guarantor shall have delivered to the Agent written agreements binding upon all
tenants or other parties having present or future rights to possession of any
portion of the Mortgaged Property or having any right to require repair,
restoration or completion of the Mortgaged Property or any portion thereof or
having any right to terminate any applicable management agreement, franchise
agreement or other material agreement relating to or affecting the Mortgaged
Property, agreeing upon a date for delivery of possession of the Mortgaged
Property or their respective portions thereof, or for such required repair,
restoration or completion, to permit time which is sufficient in the reasonable
judgment of the Agent for such repair or restoration and approving the plans and
specifications for such repair or restoration, or other evidence reasonably
satisfactory to the Agent that none of such tenants or other parties may
terminate their Leases or other agreements affecting or relating to the
Mortgaged Property as a result of such casualty or have a right to approve the
plans and specifications for such repair or restoration, and (F) the Agent shall
determine that such repair or reconstruction can be completed prior to the
Maturity Date.  Any excess of net proceeds over the amount necessary to complete
such repair and restoration may, so long as no Default or Event of Default is
continuing, be retained by the applicable Borrower or Guarantor or if a Default
or Event of Default is continuing be applied, at the Agent’s option, in its sole
discretion, to the payment of the Obligations, whether or not due, in accordance
with the terms of the Loan Agreement.

 

(h)                                 The Borrowers will procure and maintain or
cause to be procured and maintained such other insurance covering the Borrowers
and the Guarantors and the Restricted Subsidiaries of the Borrowers and their
respective properties (the cost of such insurance to be borne by the insured
thereunder) in such amounts and against such risks and casualties as are
customary for properties of similar character and location, due regard being
given to the type of improvements thereon, their construction, location, use and
occupancy.

 

§7.8                        Taxes.  The Borrowers and each Restricted Subsidiary
and Guarantor will duly pay and discharge, or cause to be paid and discharged,
before the same shall become overdue, all taxes, assessments and other private
or governmental charges imposed upon it and upon the Real Estate, sales and
activities, or any part thereof, or upon the income or profits therefrom, as
well as all claims for labor, materials, or supplies that if unpaid might by law
become a lien or charge upon any of its property; provided that any such tax,
assessment, charge, levy or claim need not be paid if the validity or amount
thereof shall currently be contested in good faith by appropriate proceedings
and if a Borrower or such Restricted Subsidiary or Guarantor shall have set
aside on its books reasonably adequate reserves with respect thereto; and
provided, further, that forthwith upon the commencement of proceedings to
foreclose any lien that may have attached as security therefor, the Borrowers
and each Restricted Subsidiary of the Borrowers or Guarantor either (i) will
provide a bond issued by a surety reasonably acceptable to the Agent and
sufficient to stay all such proceedings or (ii) if no such bond is provided,
will pay each such tax, assessment, charge, levy or claim.

 

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§7.9                        Inspection of Properties and Books.  The Borrowers
shall permit the Lenders to visit and inspect any of the properties of the
Borrowers or any of their respective Restricted Subsidiaries, to examine the
books of account of the Borrowers and their respective Restricted Subsidiaries
(and to make copies thereof and extracts therefrom) and to discuss the affairs,
finances and accounts of the Borrowers and their respective Restricted
Subsidiaries with, and to be advised as to the same by, its officers, all at
such reasonable times and intervals as the Agent or any Lender may reasonably
request, provided that the Borrowers shall only be responsible for the expense
of the Agent or any representative designated by the Agent.  The Agent shall use
good faith efforts to coordinate such visits and inspections so as to minimize
the interference with and disruption to the Borrowers’ normal business
operations and the expense to the Borrowers thereof.

 

§7.10                 Compliance with Laws, Contracts, Licenses, and Permits. 
The Borrowers will comply with, and will cause each of their respective
Restricted Subsidiaries and each Guarantor to comply in all respects with
(i) all applicable laws and regulations now or hereafter in effect wherever its
business is conducted, including all Environmental Laws, (ii) the provisions of
its corporate charter, partnership agreement or declaration of trust, as the
case may be, and other charter documents and bylaws, (iii)all agreements and
instruments to which it is a party or by which it or any of its properties may
be bound, (iv)all applicable decrees, orders, and judgments, and (v)all licenses
and permits required by applicable laws and regulations for the conduct of its
business or the ownership, use or operation of its properties, except when a
failure to so comply with the foregoing (i)-(v) would not have a material
adverse effect on the business, assets or financial condition of such Borrower,
such Restricted Subsidiary or such Guarantor (provided, further, that the
foregoing shall not limit any obligation to comply with terms of the Loan
Documents).  If at any time while any Loan or Note is outstanding or the Lenders
have any obligation to make Loans hereunder, any authorization, consent,
approval, permit or license from any officer, agency or instrumentality of any
government shall become necessary or required in order that the Borrowers or any
Guarantor may fulfill any of their obligations hereunder, the Borrowers will,
and will cause the Guarantors to, immediately take or cause to be taken all
steps necessary to obtain such authorization, consent, approval, permit or
license.

 

§7.11                 Use of Proceeds.  The Borrowers will use the proceeds of
the Loans solely (a) for working capital purposes in the acquisition, operation
and development of the Real Estate within the Woodlands Project or other Real
Estate acquired by Borrowers after the Closing Date in the vicinity of the
Woodlands Project which becomes part of the Woodlands Project in accordance with
§7.20, (b) for the payment of closing costs in connection with the Loans, and
(c) for such other purposes as the Majority Lenders in their discretion from
time to time may agree to in writing.

 

§7.12                 Further Assurances.  The Borrowers will cooperate with,
and will cause each of their respective Restricted Subsidiaries to cooperate
with the Agent and the Lenders and execute such further instruments and
documents as the Lenders or the Agent shall reasonably request to carry out to
their satisfaction the transactions contemplated by this Agreement and the other
Loan Documents.

 

§7.13                 Management.  The Borrowers shall not, nor shall the
Borrowers permit any Person to, enter into any Management Agreement relating to
all or any portion of the Conference

 

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Center or any other hospitality property included as a Borrowing Base Asset
without the prior written consent of the Agent, such consent not to be
unreasonably withheld.  Any such consent shall be conditioned upon the delivery
to Agent of an Assignment of Management Agreement and Subordination.  Any
management of the Conference Center or any other hospitality property included
as a Borrowing Base Asset shall be either:  (a) Commercial Company or an entity
affiliated with Commercial Company approved by Agent for so long as Commercial
Company or said affiliated entity is managing the Conference Center or other
hospitality property in a manner consistent with the operation of a first-class
hotel and, as applicable, resort; or (b) a professional property management
company approved by Agent, such approval not to be unreasonably withheld. 
Neither of the Borrowers shall terminate or replace any management agreement
approved by the Agent without the prior consent of the Agent, such consent not
to be unreasonably withheld (provided that if such agreement is to be replaced
by an agreement with an Affiliate of either Borrower, the Agent may require that
any payments to such party be treated as a “Hospitality Management Fee”, which
is included as part of “Woodlands Operating Payments” under this Agreement). 
The provisions of this §7.13 shall only apply if the Conference Center or other
hospitality property is included as a Borrowing Base Asset.

 

§7.14                 Leases; Development.  The Borrowers will take or cause to
be taken, and will cause any Guarantor which owns a Borrowing Base Asset to take
or cause to be taken, all reasonable steps within the power of the Borrowers or
such Guarantor to market and lease the saleable and leaseable area of the Real
Estate in accordance with sound and customary development, leasing and
management practices for similar properties.  Borrowers and Guarantors shall be
permitted to enter into Leases without the approval of the Agent to the extent
provided in the Security Deeds.

 

§7.15                 ERISA Compliance.  Neither of the Borrowers will permit
the present value of all employee benefits vested in all Employee Benefit Plans,
Multiemployer Plans and Guaranteed Pension Plans maintained by such Person and
any ERISA Affiliate thereof to exceed the present value of the assets allocable
to such vested benefits by an amount greater than $500,000.00 in the aggregate. 
Neither of the Borrowers nor any ERISA Affiliate thereof will at any time permit
any such Plan maintained by it to engage in any “prohibited transaction” as such
term is defined in §4975 of the Code or §406 of ERISA, incur any “accumulated
funding deficiency” as such term is defined in §302 of ERISA, whether or not
waived, or terminate any such Plan in any manner which could result in the
imposition of a lien on the property of such Borrower or any Guarantor pursuant
to §4068 of ERISA.  Neither of the Borrowers will permit any of the Borrowing
Base Assets to be “plan assets” within the meaning of ERISA or the Code.

 

§7.16                 Interest Cap.  From and after the date hereof, the
Borrowers shall at all times own and maintain in full force and effect the
Interest Cap as required by this Agreement.  The Borrowers shall upon the
request of the Agent provide to the Agent evidence that the Interest Cap is in
effect.

 

§7.17                 Partnership Pledge; Assignment of Notes; Additional Real
Estate.

 

(a)                                 In the event that after the date hereof a
Borrower acquires or forms an interest in a Restricted Subsidiary, Borrower
shall execute and deliver to the Agent on behalf of the Lenders a collateral
assignment of all of such Borrower’s right, title and interest in such

 

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Restricted Subsidiary, such assignment to be substantially in the form of the
Assignment of Interests, with such other changes thereto as may be reasonably
required by the Agent; provided that a collateral assignment shall not be
required if such Restricted Subsidiary is prohibited from allowing such
collateral assignment to be granted pursuant to any document, instrument or
agreement evidencing secured Indebtedness of such Restricted Subsidiary
permitted by this Agreement or a provision of such Restricted Subsidiary’s
organizational documents entered into as a condition of the extension of such
secured Indebtedness.

 

(b)                                 In the event that a Borrower shall have any
Investments of the type described in §8.3(k), then as a condition to a Borrower
having such Investment such Borrower shall execute and deliver to the Agent on
behalf of the Lenders a collateral assignment of all of such Borrower’s right,
title and interest in and to the loan documents and other rights and privileges
relating thereto, such assignment to be substantially in the form of the
Security Agreements, with such other changes thereto as may be reasonably
required by the Agent.

 

(c)                                  In the event that after the date hereof a
Borrower shall acquire any Real Estate or other Real Estate owned by it becomes
unencumbered, and in either event the Borrowers desire such Real Estate to be a
Borrowing Base Asset, such Borrower shall within thirty (30) days of such
acquisition deliver to Agent the Collateral Qualification Documents with respect
to such Real Estate unless and for so long as such Real Estate is collateral for
other Indebtedness permitted pursuant to §8.1(a)(viii) or §8.1(a)(xvi).

 

(d)                                 The Borrowers shall be permitted to acquire
additional Real Estate through a trustee or nominee acting on its behalf.  Any
indebtedness of such trustee or nominee, shall constitute Indebtedness of the
Borrowers for the purposes of §8.1(a).  Notwithstanding the foregoing, any such
Real Estate which is not collateral for other indebtedness permitted pursuant to
§8.1(a)(viii) or §8.1(a)(xvi) and which Borrowers desire to be included as a
Borrowing Base Asset shall be required to be pledged as Collateral as provided
in §7.17(c) above and shall be subject to the limitations of §7.19(b).  If a
Borrower shall desire to include within the Borrowing Base any Real Estate owned
by a trustee or nominee for such Borrower, such trustee or nominee shall be
required to become a Guarantor hereunder.  In such event, Borrowers shall also
enter into such amendments to the Loan Documents as Agent may reasonably require
to reflect the inclusion of such nominee or trustee as a Guarantor and as a
party to the applicable Security Documents.

 

§7.18                 Business Operations.  The Borrowers, the Guarantors and
the Borrowers’ Restricted Subsidiaries shall operate their respective businesses
generally in the same manner as operated since January 1, 2004 and in compliance
with the terms and conditions of this Agreement and the Loan Documents.

 

§7.19                 Borrowing Base Assets.

 

(a)                                 Each of the Borrowing Base Assets shall be
owned one hundred percent (100%) by a Borrower, or with respect to the Borrowing
Base Asset commonly known as 1400 Woodloch, a Guarantor, (in fee simple as to
Real Estate) and shall satisfy all of the following conditions:

 

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(i)                                     each of the Borrowing Base Assets shall
be free and clear of all Liens other than the Liens permitted in §8.2(i), (iii),
(iv) and (v);

 

(ii)                                  each of the Borrowing Base Assets shall be
encumbered by the Security Documents which shall be a first priority perfected
lien and security interest in such Borrowing Base Assets subject to the Liens
permitted by §7.19(a)(i);

 

(iii)                               to the best of the Borrowers’ knowledge and
belief, none of the Borrowing Base Assets shall have any material title, survey,
environmental or other defects that would give rise to a materially adverse
effect as to the value, use of or ability to sell or refinance such property;

 

(iv)                              [Intentionally Omitted];

 

(v)                                 the Borrowing Base Assets (including
Properties Under Construction) which are derived from or are intended to become
Income Producing Properties shall be utilized (or with respect to Properties
Under Construction upon completion will be utilized) principally for office,
retail, hotel or lodging facilities, research/industrial, office/warehouse,
warehouse/distribution or multifamily rental housing;

 

(vi)                              the Borrowing Base Assets (other than
Properties Under Construction) which are or derive from Income Producing
Properties shall be (1) fully operational; and (2) properties for which valid
certificates of occupancy or the equivalent for all buildings thereon have been
issued and are in full force and effect;

 

(vii)                           with respect to Properties Under Construction,
in the event that the aggregate estimated Project Costs for all Properties Under
Construction is at any time greater than $15,000,000.00, the Borrowers shall
have delivered to the Agent the Collateral Qualification Documents relating to
each of such Properties Under Construction (provided that in any event for any
Properties Under Construction with respect to which the aggregate estimated
Project Costs do not exceed $15,000,000.00 the Borrowers shall deliver the
Collateral Qualification Documents described in clauses(a), (b), (c), (d), (e),
(h) and (i) of the definition of Collateral Qualification Documents); and

 

(viii)                        each of such Borrowing Base Assets shall satisfy
each other condition in this Agreement and the other Loan Documents applicable
thereto.

 

For the avoidance of doubt, except as specifically provided in this §7.19(a), no
assets of Restricted Subsidiaries or Unrestricted Subsidiaries shall be included
in Borrowing Base Assets.

 

(b)                                 Notwithstanding the terms of §7.19(a),
Undeveloped Residential Land or Undeveloped Commercial Land may be owned by a
trustee or nominee for a Borrower approved by Agent, provided that the Real
Estate owned by such trustee or nominee included in the Borrowing Base shall not
exceed 375 acres in the aggregate or contribute more than $10,000,000.00 to the
Borrowing Base.

 

(c)                                  The Borrowers shall provide to the Agent as
of the date hereof and concurrently with the delivery of the financial
statements described in §7.4(a) or 7.4(b) (i) a list

 

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of the Borrowing Base Assets, (ii) the certification of the Principal Financial
Officer of each Borrower of the Adjusted Values and that such properties are in
compliance with this §7.19 and §9.3, and (iii) that the Borrowing Base Assets
comply with the terms of §§6.20 and 6.23.  In the event that all or any material
portion of a property within the Borrowing Base Assets shall be damaged or taken
by condemnation, then such property shall no longer be a part of the Borrowing
Base Assets unless and until any damage to such asset is repaired or restored,
such asset becomes fully operational and the Agent shall receive evidence
satisfactory to the Agent of the Appraised Value of such asset following such
repair or restoration.

 

§7.20                 Acquisition of Real Estate.  If the Borrowers acquire Real
Estate within the vicinity of the Woodlands Project after the Closing Date with
any proceeds from the Loans, then within thirty (30) days after the completion
of such acquisition, Borrowers shall cause such Real Estate to be included as
(a) a Borrowing Base Asset in compliance with §7.19 and the terms of this
Agreement and (b) part of the Woodlands Project, which shall include, but not be
limited to, amending the Master Plan as a result of the annexation of the Real
Property into the Woodlands Project and subjecting such Real Estate to
declarations applicable to the Woodlands Project.

 

§7.21                 Distribution of Income to the Borrowers.  The Borrowers
shall use reasonable and diligent efforts to cause all of their respective
Restricted Subsidiaries to, and shall use reasonable efforts to cause their
respective Unrestricted Subsidiaries to, promptly distribute to the Borrowers
(but not less frequently than once each fiscal quarter of the Borrowers),
whether in the form of dividends, distributions or otherwise, all profits,
proceeds or other income relating to or arising from such Person’s use,
operation, financing, refinancing, sale or other disposition of their respective
assets and properties after (a) the payment by each Person of its operating
expenses and scheduled debt service for such quarter and (b) the establishment
of reasonable reserves for the payment of operating expenses not paid on at
least a quarterly basis and capital improvements to be made to such Person’s
assets and properties approved by such Person in the ordinary course of business
consistent with its past practices.

 

§7.22                 More Restrictive Agreements.  Without limiting the terms
of §8.1, should a Borrower or a Guarantor enter into or modify any agreements or
documents pertaining to any existing or future Indebtedness or Equity Offering,
which agreements or documents include covenants (whether affirmative or
negative) which are individually or in the aggregate more restrictive against a
Borrower, a Guarantor or the Restricted Subsidiaries of any Borrower than those
set forth in §9, the Borrowers shall promptly notify the Agent and, if requested
by the Majority Lenders, the Borrowers, the Agent, and the Majority Lenders
shall (and if applicable, the Borrowers shall cause the Guarantors to) promptly
amend this Agreement and the other Loan Documents to include some or all of such
more restrictive provisions as determined by the Majority Lenders in their sole
discretion; provided that from and after the satisfaction of any such
Indebtedness the agreements for which may have contained a more restrictive
covenant as provided herein, the Agreement shall no longer be modified as a
result of such covenant contained in the agreement relating to such
Indebtedness.

 

§7.23                 Associations.  The Borrowers will comply, and will cause
any Guarantor that owns a Borrowing Base Asset to comply, in all respects with
the terms of all declarations, agreements and other instruments with respect to
the Associations, the failure to comply with would have a material adverse
effect on either Borrower or such Guarantor, and will cause the

 

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Associations to do all things necessary to preserve and keep in full force their
respective rights under such declarations, agreements and instruments.  Either
or both of the Borrowers will at all times maintain a controlling interest in
the Associations.

 

§7.24                 Acquisition of Interest Rate Protection.  The Borrowers
shall acquire and at all times maintain an interest rate cap, swap, collar or
other interest rate protection reasonably acceptable to Agent providing to the
Borrowers a cap on one month LIBOR Rate on a notional amount of not less than
$100,000,000.00, at a rate not to exceed five percent (5.0%) per annum (the
“Interest Cap”).  The term of the Interest Cap shall not expire before the
Maturity Date (without regard to any extension thereof); provided that with the
approval of Agent the maturity of the Interest Cap may expire prior to the
Maturity Date, and provided further that a replacement Interest Cap satisfying
the requirements of this Agreement is delivered to Agent at least fifteen (15)
days prior to the termination of the existing Interest Cap, and Borrower further
delivers to Agent such amendments to the Assignment of Hedge and consents to and
acknowledgments of such pledge by the provider of the Interest Cap as Agent may
reasonably require.  The Interest Cap shall be provided by any bank which is a
party to this Credit Agreement or a bank or other financial institution that has
unsecured, uninsured and unguaranteed long-term debt which is rated at least A-3
by Moody’s Investor Service, Inc. or at least A- by Standard & Poor’s
Corporation.  In connection with the Interest Cap, the Borrowers shall execute
and deliver to Agent for the benefit of the Lenders the Assignment of Hedge.

 

§7.25                 Condemnation.  If any Mortgaged Property or any portion
thereof shall be damaged or taken through condemnation (which term, when used in
this Agreement, shall include any damage or taking by any governmental
authority, quasi-governmental authority, any party having the power of
condemnation, or any transfer by private sale in lieu thereof), either
temporarily or permanently, then Borrowers promptly upon obtaining knowledge of
the institution of any proceeding therefor, shall notify Agent of the pendency
of such proceeding.  Borrowers and any applicable Guarantor authorize Agent at
Agent’s option (but in no event shall Agent be obligated to), as attorney in
fact for Borrowers or such Guarantor to commence, appear in and prosecute, in
Agent’s, a Borrower’s or an applicable Guarantor’s name, any action or
proceeding relating to any condemnation or other taking of the Mortgaged
Property and to settle or compromise any claim in connection with such
condemnation or other taking.  Except for condemnation proceeds which are
designated by a condemning authority or court of competent jurisdiction as
payable to a tenant of any portion of a Mortgaged Property (other than any
Affiliate of a Borrower) or an owner of any easement encumbering a Mortgaged
Property, the proceeds of any award or claim for damages, direct or
consequential, in connection with any condemnation, or other taking of a
Mortgaged Property, or part thereof, or for conveyances in lieu of condemnation,
are hereby assigned and shall be paid to Agent.  Borrowers and any applicable
Guarantor authorize Agent to apply such awards, proceeds or damages, after the
deduction of Agent’s expenses incurred in the collection of such amounts, at
Agent’s option, to restoration or repair of the Mortgaged Property or to payment
of the Obligations, whether or not then due (and in such order as Agent may
determine), with the balance (subject to the terms of this §7.25), if any, to
the applicable Borrower and any applicable Guarantor.  Notwithstanding anything
in this §7.25 to the contrary, if the Mortgaged Property subject to such
condemnation is Undeveloped Residential Land or Undeveloped Commercial Land,
then the applicable Borrower, so long as no Default or Event of Default shall
have occurred or be continuing, shall be entitled to settle or compromise any
claim in connection with such condemnation or other taking

 

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provided further that the aggregate amount involved in such claim is not excess
of $5,000,000.00 and that any award from such condemnation or other taking is
deposited in the Disbursement Account of the applicable Borrower. 
Notwithstanding anything in this §7.25 to the contrary, Agent shall make the net
condemnation award available to the applicable Borrower or Guarantor to restore
and repair a Mortgaged Property containing one or more Buildings, in accordance
with such terms and conditions as Agent may prescribe for the disbursement of
the condemnation award to assure completion of such restoration or repair,
provided that (a) no Default or Event of Default shall have occurred and be
continuing, (b) the applicable Borrower or Guarantor shall have provided to
Agent additional cash security (other than from proceeds of a Loan) in an amount
equal to the amount reasonably estimated by the Agent to be the amount in excess
of such award which would be required to complete such repair or restoration,
(c) Agent shall have approved (such approval not to be unreasonably withheld,
conditioned or delayed) the plans and specifications for such repair or
restoration, (d) the applicable Borrower or applicable Guarantor shall have
delivered to Agent written agreements binding upon all tenants or other parties
having present or future rights to possession of any portion of such Mortgaged
Property in excess of 1,000 square feet or having any right to require repair,
restoration or completion of the Property or any portion thereof or having any
right to terminate any applicable management agreement, franchise agreement or
other material agreement relating to or affecting such Mortgaged Property,
agreeing upon a date for delivery of possession of such Mortgaged Property or
their respective portions thereof, or for such required repair, restoration or
completion, to permit time which is sufficient in the judgment of Agent for such
repair or restoration and approving the plans and specifications for such repair
or restoration, or other evidence satisfactory to Agent that none of such
tenants or other parties may terminate their leases or other agreements
affecting or relating to such Mortgaged Property as a result of such
condemnation or taking or have a right to approve the plans and specifications
for such repair or restoration, (e) Agent shall determine that following such
repair or restoration there shall be no more than a ten percent (10%) reduction
in occupancy or in rental income or revenues (excluding any proceeds from rental
loss or business interruption insurance or proceeds for such award allocable to
rent or revenues from such Mortgaged Property), (f) Agent shall determine that
such repair or reconstruction can be completed prior to the Maturity Date, and
(g) Agent in its sole discretion shall have determined that such Mortgaged
Property can be restored to (i) not less than the fair market value of such
Mortgaged Property immediately prior to such taking as determined by Agent and
(ii) the utility and substantially similar condition existing immediately prior
to such taking, and any excess award may be applied by Agent in its discretion
to the Obligations in such order as Agent may determine.  Borrowers agree to
execute, and cause any applicable Guarantor to execute, such further assignment
of any awards, proceeds, damages or claims arising in connection with, such
condemnation or injury that Agent may reasonably require.

 

§8.                               CERTAIN NEGATIVE COVENANTS OF THE BORROWERS

 

The Borrowers covenant and agree that, so long as any Loan or Note is
outstanding or any of the Lenders has any obligation to make any Loans:

 

§8.1                        Restrictions on Indebtedness.

 

(a)                                 Subject to the provisions of §9, the
Borrowers will not, and will not permit any of their respective Restricted
Subsidiaries or any of the Guarantors to, create, incur, assume,

 

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guarantee or be or remain liable, contingently or otherwise, with respect to any
Indebtedness other than:

 

(i)                                     Indebtedness to the Lenders arising
under any of the Loan Documents and the Hedge Obligations;

 

(ii)                                  [Intentionally omitted];

 

(iii)                               Indebtedness in respect of taxes,
assessments, governmental charges or levies and claims for labor, materials and
supplies to the extent that payment therefor shall not at the time be required
to be made in accordance with the provisions of §7.8;

 

(iv)                              Indebtedness in respect of judgments or awards
that have been in force for less than the applicable period for taking an appeal
so long as execution is not levied thereunder or in respect of which the
applicable Borrower shall at the time in good faith be prosecuting an appeal or
proceedings for review and in respect of which a stay of execution shall have
been obtained pending such appeal or review;

 

(v)                                 endorsements for collection, deposit or
negotiation and warranties of products or services, in each case incurred in the
ordinary course of business;

 

(vi)                              [Intentionally Omitted];

 

(vii)                           Indebtedness in respect of reverse repurchase
agreements having a term of not more than one hundred eighty (180) days with
respect to Investments described in §8.3(a), (b) or (e);

 

(viii)                        recourse Indebtedness of Borrowers and Guarantors
not to exceed $125,000,000.00, which amount may be increased to $200,000,000.00
in the aggregate as a result of construction financing for the Waterway Project
if (1) Commercial Company or Land Company or one or more of their respective
Restricted Subsidiaries has commenced construction for the Waterway Project,
(2) the Waterway Project is at least thirty-five percent (35%) pre-leased
pursuant to Third Party Leases prior to commencement of development and at all
times thereafter and (3) construction financing secured by the Waterway Project
has not been fully repaid (excluding from the foregoing limits the Loans, the
Hedge Obligations, the Performance Obligations and Indebtedness under
§8.1(a)(i), any construction loans to develop and construct a Build-To-Suit
Property pursuant to §8.1(a)(ix), and §8.1(a)(xiv)(A) (but not exceeding
$95,000,000.00 with respect to the Conference Center) (but including, without
limitation, recourse Indebtedness incurred pursuant to §8.1(a)(xiv)(B),
§8.1(a)(xv) or §8.1(a)(xvi) (to the extent a claim has been made pursuant to any
guaranty or indemnity described therein)), provided that such Indebtedness does
not cause the Borrowers to fail to comply with the financial covenants contained
in §9.2 below after recalculating the interest coverage ratio for the most
recent Quarterly Measurement Date on a pro forma basis to give effect to such
Indebtedness, and the maximum Total Debt Ratio permitted by §9.1 is not
exceeded;

 

(ix)                              Indebtedness of the Borrowers and Restricted
Subsidiaries under a construction loan for development of a Build-To-Suit
Property provided such property is being built by a contractor pursuant to a
guaranteed maximum price construction contract;

 

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(x)                                 [Intentionally omitted];

 

(xi)                              [Intentionally omitted];

 

(xii)                           [Intentionally omitted];

 

(xiii)                        unsecured Indebtedness between Commercial Company
and Land Company pursuant to the Funding Agreement, which is subordinate to the
Obligations pursuant to the Funding Subordination and Standstill Agreement;

 

(xiv)                       Indebtedness secured by the Conference Center
(A) that may be recourse to Borrowers and Guarantors and shall not, up to a
maximum principal amount of $95,000,000.00, be included as recourse Indebtedness
for the purposes of §8.1(a)(viii) above; provided that (B) any readvance,
increase or refinancing of such Indebtedness that is recourse to either of
Borrowers or Guarantors in excess of $95,000,000.00 in principal amount shall be
included as recourse Indebtedness for the purposes of §8.1(a)(viii) above;

 

(xv)                          Indebtedness of Borrowers under guarantees or
indemnities with respect to customary non-recourse carve outs approved by Agent
relating to Indebtedness of its Unrestricted Subsidiaries permitted pursuant to
§8.1(b)(v) or Indebtedness of its Restricted Subsidiaries permitted under
§8.1(a)(xvi); and

 

(xvi)                       Indebtedness of the Borrowers or any of their
Restricted Subsidiaries, provided such Indebtedness:

 

(A)                               except with respect to any Indebtedness
otherwise permitted under §8.1(a)(viii), is incurred solely to finance:

 

a.                                      the acquisition of additional
undeveloped residential land or undeveloped commercial land to be added to the
Woodlands Project;

 

b.                                      the construction by a Borrower or such
Restricted Subsidiary of Vertical Commercial Improvements to the Commercial Land
or Residential Land, if applicable, or permanent refinancing thereof (it being
agreed that the proceeds of a permanent refinancing of such improvements may
exceed the amount of the applicable construction loan); or

 

c.                                       Municipal Utility District Contracts of
such Borrower or Restricted Subsidiary; and

 

(B)                               except with respect to any Indebtedness
otherwise permitted under §8.1(a)(viii), with respect to any property on which
Vertical Commercial Improvements are constructed, such Indebtedness does not
exceed seventy-five percent (75%) of the fair market value (on a stabilized
basis as determined by an appraisal acceptable to Agent) of such property;
provided that:

 

a.                                      with respect to the Speculative
Development of Vertical Commercial Improvements on any single parcel of
Commercial Land or Residential

 

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Land, if applicable, such Indebtedness incurred for the construction of such
Vertical Commercial Improvements does not exceed seventy-five percent (75%) of
the fair market value (on a stabilized basis as determined by an appraisal
acceptable to Agent) for such development (including the Appraised Value of the
subject Commercial Land or Residential Land, if applicable) (in each instance
the balance of the acquisition and development costs to be covered by equity),
and

 

b.                                      with respect to the development of
Build-To-Suit Properties, such Indebtedness does not exceed ninety percent (90%)
of the fair market value (on a stabilized basis as determined by an appraisal
acceptable to Agent) for such development (including the cost of the subject
Commercial Land or Residential Land, if applicable) (in each instance the
balance of the acquisition and development costs to be covered by equity).

 

(b)                                 The Borrowers will not permit any of their
respective Unrestricted Subsidiaries to create, incur, assume, guarantee or be
or remain liable, contingently or otherwise, with respect to any Indebtedness
other than:

 

(i)                                     Indebtedness in respect of taxes,
assessments, governmental charges or levies and claims for labor, materials and
supplies to the extent that payment therefor shall not at the time be required
to be made in accordance with the provisions of §7.8 (assuming for the purposes
hereof that §7.8 is applicable to Unrestricted Subsidiaries);

 

(ii)                                  Indebtedness in respect of judgments or
awards that have been in force for less than the applicable period for taking an
appeal so long as execution is not levied thereunder or in respect of which the
applicable Unrestricted Subsidiary shall at the time in good faith be
prosecuting an appeal or proceedings for review and in respect of which a stay
of execution shall have been obtained pending such appeal or review;

 

(iii)                               endorsements for collection, deposit or
negotiation and warranties of products or services, in each case incurred in the
ordinary course of business;

 

(iv)                              Indebtedness in respect of reverse repurchase
agreements having a term of not more than one hundred eighty (180) days with
respect to Investments described in §8.3(a), (b) or (e); and

 

(v)                                 Indebtedness of Unrestricted Subsidiaries
(including without limitation obligations under completion guaranties), provided
such Indebtedness:

 

(A)                               is incurred solely to finance (1) the
acquisition of additional undeveloped residential land or undeveloped commercial
land to be added to the Woodlands Project or (2) the construction by such
Unrestricted Subsidiary of Vertical Commercial Improvements to the Commercial
Land or Residential Land, if applicable, or permanent refinancing thereof (it
being agreed that the proceeds of a permanent refinancing of such improvements
may exceed the amount of the applicable construction loan) or (3) Municipal
Utility District Contracts of such Unrestricted Subsidiary; and

 

(B)                               with respect to any property on which Vertical
Commercial Improvements are constructed, does not exceed seventy-five percent
(75%) of the fair market

 

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value (on a stabilized basis as determined by an appraisal acceptable to Agent)
of such property; provided that (1) with respect to the Speculative Development
of Vertical Commercial Improvements on any single parcel of Commercial Land or
Residential Land, if applicable, such Indebtedness incurred for the construction
of such Vertical Commercial Improvements does not exceed seventy-five percent
(75%) of the fair market value (on a stabilized basis as determined by an
appraisal acceptable to Agent) for such development (including the Appraised
Value of the subject Commercial Land or Residential Land, if applicable) (in
each instance the balance of the acquisition and development costs to be covered
by equity), and (2) with respect to the development of Build-To-Suit Properties,
such Indebtedness does not exceed ninety percent (90%) of the fair market value
(on a stabilized basis as determined by an appraisal acceptable to Agent) for
such development (including the cost of the subject Commercial Land or
Residential Land, if applicable) (in each instance the balance of the
acquisition and development costs to be covered by equity).

 

§8.2                        Restrictions on Liens, Etc.  Each of the Borrowers
will not, and will not permit any of its Restricted Subsidiaries or Guarantors
to, (a) create or incur or suffer to be created or incurred or to exist any
lien, encumbrance, mortgage, pledge, negative pledge, charge, restriction or
other security interest of any kind upon any of its property or assets of any
character whether now owned or hereafter acquired, or upon the income or profits
therefrom; (b) transfer any of its property or assets or the income or profits
therefrom for the purpose of subjecting the same to the payment of Indebtedness
or performance of any other obligation in priority to payment of its general
creditors; (c) acquire, or agree or have an option to acquire, any property or
assets upon conditional sale or other title retention or purchase money security
agreement, device or arrangement; (d) suffer to exist for a period of more than
sixty (60) days after the same shall have been incurred any Indebtedness or
claim or demand against it that if unpaid might by law or upon bankruptcy or
insolvency, or otherwise, be given any priority whatsoever over its general
creditors; (e) pledge or otherwise encumber any accounts, contract rights,
general intangibles, chattel paper or instruments, with or without recourse; or
(f) incur or maintain any obligation to any holder of Indebtedness of such
Borrowers or such Restricted Subsidiary or Guarantor which prohibits the
creation or maintenance of any lien securing the Obligations (collectively the
“Liens”); provided that a Borrower and any Restricted Subsidiary of a Borrower
may create or incur or suffer to be created or incurred or to exist:

 

(i)                                     liens on properties to secure taxes,
assessments and other governmental and owner association charges and assessments
or claims for labor, material or supplies in respect of obligations not overdue
or which are being contested pursuant to §7.8;

 

(ii)                                  liens on properties other than the
Mortgaged Property or any interest therein (including the rents, issues, income
and profits therefrom) or any other Collateral in respect of judgments, awards
or indebtedness, the Indebtedness with respect to which is permitted by
§8.1(a)(iv), §8.1(a)(xiv) or §8.1(a)(xvi);

 

(iii)                               encumbrances on properties consisting of
easements, rights of way, zoning restrictions, mineral rights reservations,
restrictions on the use of real property, landlord’s or lessor’s liens under
leases to which a Borrower or a Restricted Subsidiary of a Borrower is a party,
rights of first refusal or rights of first offer consistent with §6.27, and
other minor non-monetary liens or encumbrances none of which interferes
materially with the use, marketability

 

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or development of the property affected in the ordinary conduct of the business
of such Borrower and its Restricted Subsidiaries, which encumbrances or liens do
not individually or in the aggregate have a materially adverse effect on the
business of a Borrower individually or of such Borrower and its Restricted
Subsidiaries on a consolidated basis;

 

(iv)                              liens in favor of the Agent and the Lenders
under the Loan Documents to secure the Obligations and the Hedge Obligations;
and

 

(v)                                 liens and encumbrances on a Mortgaged
Property expressly permitted under the terms of the Security Deed relating
thereto.

 

§8.3                        Restrictions on Investments.  Each of the Borrowers
will not, and will not permit any of its Restricted Subsidiaries to, make or
permit to exist or to remain outstanding any Investment except Investments in:

 

(a)                                 marketable direct or guaranteed obligations
of the United States of America that mature within one (1) year from the date of
purchase by such Borrower or its Restricted Subsidiary;

 

(b)                                 marketable direct obligations of any of the
following: Federal Home Loan Mortgage Corporation, Student Loan Marketing
Association, Federal Home Loan Banks, Federal National Mortgage Association,
Government National Mortgage Association, Bank for Cooperatives, Federal
Intermediate Credit Banks, Federal Financing Banks, Export Import Bank of the
United States, Federal Land Banks, or any other agency or instrumentality of the
United States of America;

 

(c)                                  demand deposits, certificates of deposit,
bankers acceptances and time deposits of United States banks having total assets
in excess of $100,000,000; provided, however, that the aggregate amount at any
time so invested with any single bank having total assets of less than
$1,000,000,000 will not exceed $200,000;

 

(d)                                 [Intentionally Omitted];

 

(e)                                  [Intentionally Omitted];

 

(f)                                   repurchase agreements having a term not
greater than ninety (90) days and fully secured by securities described in the
foregoing subsection (a), (b) or (e) with banks described in the foregoing
subsection (c) or with financial institutions or other corporations having total
assets in excess of $500,000,000;

 

(g)                                  shares of so called “money market funds”
registered with the SEC under the Investment Company Act of 1940 which maintain
a level per share value, invest principally in investments described in the
foregoing subsections (a) through (f) and have total assets in excess of
$50,000,000;

 

(h)                                 Investments in the Property (excluding
Partial Interests) and Restricted Subsidiaries of a Borrower.  With the approval
of the Majority Lenders, such Investments may be located other than in the
Woodlands Project;

 

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(i)                                     Investments in Unrestricted Subsidiaries
of a Borrower;

 

(j)                                    Subject to the terms of this
Agreement, Investments in the construction by Commercial Company or Land Company
of new Income Producing Properties; and

 

(k)                                 Investments in note receivables evidencing
seller financing provided by a Borrower in connection with the sale of Land
Assets; provided that in no event shall the aggregate principal amount of such
note receivables exceed $10,000,000.00.

 

§8.4                        Merger, Consolidation.  Each of the Borrowers will
not, and will not permit any of its Restricted Subsidiaries to, become a party
to any merger, consolidation or other business combination except (i) the merger
or consolidation of one or more of the Restricted Subsidiaries of a Borrower
with and into such Borrower and (ii) the merger or consolidation of two or more
Restricted Subsidiaries of a Borrower.

 

§8.5                        Sale and Leaseback.  Borrowers will not, and will
not permit any of their Restricted Subsidiaries to, enter into any arrangement,
directly or indirectly, whereby the Borrowers or any Restricted Subsidiary of a
Borrower shall sell or transfer any Real Estate owned by it individually or in
the aggregate in excess of $12,500,000.00 in order that then or thereafter a
Borrower or any Restricted Subsidiary of a Borrower shall lease back such Real
Estate.

 

§8.6                        Compliance with Environmental Laws.  Each of the
Borrowers will not, and will not permit any of its Restricted Subsidiaries or
any tenants or other occupants of any of the Real Estate, to do any of the
following:  (a) use any of the Real Estate or any portion thereof as a facility
for the handling, processing, storage or disposal of Hazardous Substances,
except for small quantities of Hazardous Substances used in the ordinary course
of business and in compliance with all applicable Environmental Laws, (b) cause
or permit to be located on any of the Real Estate any underground tank or other
underground storage receptacle for Hazardous Substances except in full
compliance with Environmental Laws, (c) generate any Hazardous Substances on any
of the Real Estate except in full compliance with Environmental Laws,
(d) conduct any activity at any Real Estate or use any Real Estate in any manner
so as to cause a Release of Hazardous Substances on, upon or into the Real
Estate or any surrounding properties or any threatened Release of Hazardous
Substances which might give rise to liability under CERCLA or any other
Environmental Law, or (e)directly or indirectly transport or arrange for the
transport of any Hazardous Substances (except in compliance with all
Environmental Laws).

 

The Borrowers shall:

 

(i)                                     in the event of any change in
Environmental Laws governing the assessment, release or removal of Hazardous
Substances, which change would lead a prudent lender to require additional
testing to avail itself of any statutory insurance or limited liability, take
all action (including, without limitation, the conducting of engineering tests
at the sole expense of the Borrowers) to confirm that no Hazardous Substances
are or ever were Released or disposed of on the Real Estate; and

 

(ii)                                  if any Release or disposal of Hazardous
Substances shall occur or shall have occurred on the Real Estate (including
without limitation any such Release or disposal

 

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occurring prior to the acquisition of such Real Estate by a Borrower or its
Restricted Subsidiary), cause the prompt containment and removal of such
Hazardous Substances and remediation of the Real Estate in full compliance with
all applicable laws and regulations and to the satisfaction of the Majority
Lenders; provided, that the Borrowers shall be deemed to be in compliance with
Environmental Laws for the purpose of this clause (ii) so long as it or a
responsible third party with sufficient financial resources is taking reasonable
action to remediate or manage any event of noncompliance to the satisfaction of
the Majority Lenders and no action shall have been commenced by any enforcement
agency.  The Majority Lenders may engage their own Environmental Engineer to
review the environmental assessments and the Borrowers’ compliance with the
covenants contained herein.

 

At any time after an Event of Default shall have occurred hereunder, or, whether
or not an Event of Default shall have occurred, at any time that the Agent or
the Majority Lenders shall have reasonable grounds to believe that a Release or
threatened Release of Hazardous Substances may have occurred, relating to any
Real Estate, or that any of the Real Estate is not in compliance with the
Environmental Laws, the Agent may at its election (and will at the request of
the Majority Lenders) obtain such environmental assessments of such Real Estate
prepared by an Environmental Engineer as may be necessary or advisable for the
purpose of evaluating or confirming (i) whether any Hazardous Substances are
present in the soil or water at or adjacent to such Real Estate and (ii) whether
the use and operation of such Real Estate comply with all Environmental Laws. 
Environmental assessments may include detailed visual inspections of such Real
Estate including, without limitation, any and all storage areas, storage tanks,
drains, dry wells and leaching areas, and the taking of soil samples, as well as
such other investigations or analyses as are necessary or appropriate for a
complete determination of the compliance of such Real Estate and the use and
operation thereof with all applicable Environmental Laws.  All such
environmental assessments shall be at the sole cost and expense of the
Borrowers.

 

The Agent may, but shall never be obligated to remove or cause the removal of
any Hazardous Substances from the Real Estate (or if removal is prohibited by
any Environmental Law, take or cause the taking of such other action as is
required by any Environmental Law) if the Borrowers fail to comply with their
obligation hereunder with respect thereto (without limitation of the Agent’s or
the Majority Lenders rights to declare a default under any of the Loan Documents
and to exercise all rights and remedies available by reason thereof); and the
Agent and its designees are hereby granted access to the Real Estate at any time
or times, upon reasonable notice, and a license which is coupled with an
interest and irrevocable, to remove or cause such removal or to take or cause
the taking of any such other action.  All costs, including, without limitation,
the reasonable costs incurred by the Agent in taking the foregoing action,
damages, liabilities, losses, claims, expenses (including attorneys’ fees and
disbursements) which are incurred by the Agent, as the result of the Borrowers’
failure to comply with the provisions of this §8.6, shall be paid by the
Borrowers to the Agent upon demand by the Agent and shall be additional
obligations secured by the Security Documents.

 

§8.7                        Distributions.

 

(a)                                 Neither of the Borrowers shall pay any
Distributions to the partners or other beneficial owners of such Borrower, and
no payments of Woodlands Operating Distributions shall be made, except as
permitted in this §8.7.

 

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(b)                                 Neither of the Borrowers shall pay any
Distribution, nor shall any Woodlands Operating Distributions be made, unless
and until Agent shall have received and approved the Compliance Certificate for
such period and the calculation of Excess Cash Flow for such period (which
Compliance Certificate, for the purposes of this §8.7, shall set forth the
amount of the proposed Distribution and/or Woodlands Operating Distributions to
be paid and also demonstrate compliance with the terms of §8.7(c) and pro forma
compliance with the terms of §8.7(c) after giving effect to such Distributions
and/or Woodlands Operating Distributions).  Agent shall be deemed to have
approved such statement in the event that Agent does not respond within five
(5) Business Days of confirmed receipt of such statement.

 

(c)                                  Notwithstanding the foregoing, no
Distributions may be made to any of the partners or other beneficial owners of a
Borrower, nor shall any Woodlands Operating Distributions be made, unless (i) no
Default or Event of Default shall have occurred and be continuing or would exist
after giving effect to such Distribution or Woodlands Operating Distribution, as
applicable and (ii) Borrower complies with all covenants set forth in §8.10.  If
the foregoing conditions are satisfied, then Borrowers shall be permitted to
make such Distributions, and/or Woodlands Operating Distributions may be made,
in an amount not to exceed 100% of the Excess Cash Flow for such prior quarterly
period, provided that after giving effect to any such Distribution or Woodlands
Operating Distribution, the Liquidity is greater than or equal to the sum of
(i) the remaining Project Costs of all Properties under Construction not
available from Indebtedness permitted pursuant to §8.1 (other than the Loans)
plus (ii) $10,000,000.00.  The Borrowers may distribute up to $57,000,000.00 at
Closing if after giving effect to such Distribution, the Liquidity is greater
than or equal to the sum of (x) the remaining Project Costs of all Properties
under Construction not available from Indebtedness permitted pursuant to §8.1
(other than the Loans) plus (y) $10,000,000.00

 

(d)                                 [Intentionally Omitted.]

 

(e)                                  [Intentionally Omitted.]

 

(f)                                   [Intentionally omitted.]

 

(g)                                  Notwithstanding the terms of §8.7, the
amounts available to be a Distribution to the partners or other beneficial
owners of the Borrowers during any period pursuant to §8.7 shall be reduced on a
dollar-for-dollar basis by the amount of the Woodlands Operating Payments during
such period.

 

(h)                                 The Agent acknowledges that Land Company
shall have the right to request a Revolving Credit Loan in accordance with the
terms of §2.6 to fund the Distributions permitted by §8.7(c) above.  In
addition, the Agent acknowledges and agrees that any funds retained by Borrowers
pursuant to this §8.7 may be used to repay any Secured Term Loan or Revolving
Credit Loan.

 

(i)                                     Any amounts available for Distribution
to a Borrower’s partners or other beneficial owners pursuant to this §8.7 may be
distributed within eighteen (18) months following a Quarterly Measurement Date
as provided herein, provided that the conditions in this Agreement to the making
of Distributions continue to be satisfied at such time.  Any amounts

 

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available for Distribution to a Borrower’s partners or other beneficial owners
which are not distributed within eighteen (18) months following a Quarterly
Measurement Date as provided herein shall be retained by such Borrower either in
the Disbursement Account of such Borrower or in a Permitted Excess Cash Flow
Investment and not used for a Distribution to a Borrower’s partners or other
beneficial owners, and such amounts shall otherwise be available for any other
use permitted under the terms of this Agreement.

 

(j)                                    Amounts retained by the Borrowers
pursuant to this Section may be applied by such Borrower toward the payment of
any Borrower expenditures permitted under the terms of this Agreement; provided,
however, that to the extent that any such expenditures so paid qualify as
Operating Expenses, such expenditures shall be deducted when computing Operating
Cash Flow for the period in which such expenditures were incurred.

 

(k)                                 Amounts paid under the Funding Agreement as
Distributions shall not be counted against the Distributions permitted by this
Agreement provided that such amounts are contributed to the other Borrower and
are deposited in the Disbursement Account of the Borrower receiving the same or
are invested in the Borrower receiving the same in Investments permitted
pursuant to §8.3(a)-(g) under the control of the Agent.

 

(l)                                     Borrowers shall cause any trustee or
nominee acting on behalf of such Borrower to deposit all income of such trustee
or nominee into a Disbursement Account of a Borrower.

 

§8.8                        Asset Sales.  None of the Borrowers or any of the
Restricted Subsidiaries of a Borrower or a Guarantor shall sell, transfer or
otherwise dispose of any asset (other than as the result of a condemnation or
casualty, the granting of Permitted Liens or the sale of lots for cash in the
ordinary course of business to parties other than any other Borrower, the
General Partners, the Second Tier Partners, the Third Tier Partners, a
Guarantor, any Restricted Subsidiary of any Borrower or any Affiliate of any of
such Persons) without the consent of the Majority Lenders except as follows:

 

(a)                                 any of such Persons may sell any asset
(including any asset which is not a Borrowing Base Asset or is not included in
the calculation of Total Market Value Capitalization) in the ordinary course of
business for all cash and for fair market value, except that to the extent
permitted by §8.3(k), Land Assets may be seller-financed in lieu of a sale for
all cash;

 

(b)                                 Commercial Company, Land Company or a
Guarantor may sell, transfer or otherwise dispose of Commercial Land or
Residential Land to Restricted Subsidiaries of a Borrower for the construction
of Vertical Commercial Improvements, provided such sales are (i) for all cash
and for fair market value or (ii)an equivalent equity interest in such
Restricted Subsidiary; and

 

(c)                                  Commercial Company, Land Company or a
Guarantor may sell or transfer Commercial Land or Residential Land to
Unrestricted Subsidiaries of a Borrower and Affiliates for the construction of
Vertical Commercial Improvements, provided the aggregate amount of such sales do
not exceed $50,000,000.00 in the aggregate in any fiscal year, such sales are
for

 

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(i) all cash and for fair market value or (ii)an equivalent equity interest in
such Unrestricted Subsidiary; and

 

(d)                                 the Borrowers may sell or transfer Income
Producing Property to their respective Restricted Subsidiaries or Unrestricted
Subsidiaries or Municipal Utility District Contracts to their respective
Unrestricted Subsidiaries, provided that such sales are (i) for all cash and for
fair market value or (ii) subject to §8.3(i), an equivalent equity interest in
such Person; and

 

(e)                                  the Borrowers may sell Property other than
Commercial Land, Residential Land, Income Producing Property or Municipal
Utility District Contracts (including other assets not included in the
calculation of Total Market Value Capitalization) to their respective Restricted
Subsidiaries or Unrestricted Subsidiaries, provided that (i) such sales are for
all cash and for fair market value or (ii) subject to §8.3(i), an equivalent
equity interest in such Person; and

 

(f)                                   transfers of assets for all cash and for
fair market value between the Borrowers or by Guarantors to Borrowers; provided
that the Golf Courses may be transferred between the Borrowers other than for
cash or for fair market value (provided further that such transfer shall not
entitle Borrowers to a release of such Golf Course from the lien of the Security
Documents).

 

Notwithstanding the foregoing, none of such Persons may sell, transfer or
dispose or permit the sale, transfer or disposition of any Material Asset or
such Person’s interest therein without the prior written consent of the Majority
Lenders.

 

§8.9                        Development.

 

(a)                                 Without the approval of the Majority
Lenders, none of the Borrowers nor any of their respective Restricted
Subsidiaries or Unrestricted Subsidiaries nor any Guarantor shall engage,
directly or indirectly, in the development or construction of real estate other
than (i) land development and the construction by Commercial Company or Land
Company of golf courses or (ii) the construction by Commercial Company or Land
Company and their respective Restricted Subsidiaries and Unrestricted
Subsidiaries of Vertical Commercial Improvements as to which costs (or the
allocable amount of Borrower’s Partial Interest in such costs) of completing
such Vertical Commercial Improvements on a fully developed basis including land
(from borrowings and equity) does not, in the aggregate of (i) and (ii) above
exceed (x) $350,000,000.00 at any time through and including August 8, 2015 and
(y) $250,000,000.00 at any time thereafter.

 

However, (a) office and retail developments which are at least sixty-five
percent (65%) pre-leased pursuant to Third Party Leases and subject to
guaranteed maximum price construction contracts, (b) multifamily projects that
are fifty percent (50%) leased pursuant to Third Party Leases and subject to
guaranteed maximum price construction contracts, (c) the Waterway Project, if
the Waterway Project is thirty-five percent (35%) pre-leased pursuant to Third
Party Leases and subject to a guaranteed maximum price construction contract,
(d) the redevelopment of the Conference Center from a 440 room key resort &
conference center into a four-star 406

 

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room key facility (10 two-story lodges shall be demolished and replaced with a
modern 184 room wing and rooms in two existing wings shall be remodeled with
amenities, including a lazy river) and (e) any hotel that has a certificate of
occupancy issued by applicable governmental authorities and a Hotel Debt Service
Coverage Ratio of not less than 1.0 to 1.0 shall not count towards the foregoing
$350,000,000.00 and $250,000,000.00, as applicable, limitations, provided the
Borrowers provide Agent with, and Agent approves of, written evidence that any
of the applicable foregoing terms and conditions set forth in (a) through
(e) above have been fully satisfied (provided further that such developments
shall count towards the covenants in §8.7(c) and §8.10).

 

(b)                                 Notwithstanding the foregoing, without the
approval of the Agent, neither Commercial Company nor Land Company, nor any of
their respective Restricted Subsidiaries or Unrestricted Subsidiaries, shall
engage directly or indirectly in any Vertical Commercial Improvements that would
constitute a Speculative Development; provided further that, subject to
compliance with the terms of §8.7 and §8.10, Borrowers and/or its respective
Restricted Subsidiaries or Unrestricted Subsidiaries may engage in Vertical
Commercial Improvements that are Speculative Developments of:

 

(i)                                     the redevelopment of the Conference
Center into a planned 406 room resort and conference center,

 

(ii)                                  the Waterway Square Hotel,

 

(iii)                               Millennium II Apartments,

 

(iv)                              Hughes Landing I Apartments,

 

(v)                                 The office building commonly known as “Two
Hughes Landing”, a 200,000 square foot office building,

 

(vi)                              Hughes Landing Hotel,

 

(vii)                           one other hotel which has not obtained both a
certificate of occupancy and not reached a Hotel Debt Service Coverage Ratio of
1.0 to 1.0 or greater,

 

(viii)                        one other office property which is less than sixty
percent (60%) pre-leased pursuant to Third Party Leases and has not reached a
Debt Service Coverage Ratio of 1.0 to 1.0 or greater (on an actual or pro forma
basis),

 

(ix)                              one other retail property which is less than
sixty percent (60%) pre-leased pursuant to Third Party Leases and has not
reached a Debt Service Coverage Ratio of 1.0 to 1.0 or greater (on an actual or
pro forma basis) and

 

(x)                                 two other multifamily projects which are
less than fifty percent (50%) leased pursuant to Third Party Leases and have not
reached a Debt Service Coverage Ratio of 1.0 to 1.0 or greater.

 

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For avoidance of doubt, once a project developed pursuant to §8.9(b)(vii) -
(x) is no longer a Speculative Development, the basket available under such
applicable subsection shall be available again for Speculative Development.

 

§8.10                 Sources of Capital.  The Borrowers shall, at all times
that a Borrower or any of their respective Restricted Subsidiaries or
Unrestricted Subsidiaries is engaging in any development as provided in §8.9 or
has entered into any agreement to provide funds with respect to a development,
maintain or have identified available sources of capital from the Borrowers’
Cash, the amount of Revolving Credit Loans available to be borrowed by Land
Company, and funds available under construction loans for such purpose equal to
the total cost to acquire and complete such developments and to satisfy such
funding obligations reasonably acceptable to Agent.

 

§8.11                 Restriction on Prepayment of Indebtedness.  None of the
Borrowers shall prepay the principal amount, in whole or in part, of any
Indebtedness other than the Obligations and the Hedge Obligations after the
occurrence and during the continuance of any Event of Default; provided,
however, that this §8.11 shall not prohibit the prepayment of Indebtedness which
is financed solely from the proceeds of a new loan which would otherwise be
permitted by the terms of §8.1.

 

§8.12                 Restrictions on Amendments; Transfers.  None of the
Borrowers shall (a) sell, convey, assign, option, mortgage, pledge, hypothecate,
encumber or dispose of any of the Material Agreements (except as permitted in
§5.4), except for Liens in favor of the Agent and the Lenders to secure the
Obligations, or (b) make a material modification or amendment to or terminate
prior to maturity any of the Material Agreements (other than the Master Plan to
comply with §7.20 upon Agent’s prior written approval), or (c) without the prior
written approval of the Agent, make a material modification or amendment to or
terminate the Master Plan (including any amendment as a result of an annexation
pursuant to §7.20).

 

§8.13                 Transfers.

 

(a)                                 None of the Borrowers shall consent to or
otherwise permit any pledge, mortgage, hypothecation or encumbering of any
direct or indirect interest in such Borrower except for such transfers or
pledges that (until foreclosed or transferred in lieu thereof) do not result in
a Change of Control.

 

(b)                                 A Borrower shall directly or indirectly
through another Guarantor own 100% of the legal, economic and beneficial
interest, free and clear of any lien or other adverse claims, of any Guarantor
which owns a Borrowing Base Asset until such time as such Borrowing Base Asset
has been released from the Collateral in accordance with this Agreement.

 

§9.                               FINANCIAL COVENANTS OF THE BORROWERS

 

The Borrowers covenant and agree that, so long as any Loan or Note is
outstanding or any Lender has any obligation to make any Loans it will comply
with the following:

 

§9.1                        Liabilities to Market Value Capitalization Ratio. 
The Borrowers will not, as of each Quarterly Measurement Date occurring on or
after the date hereof, permit the ratio of (a)

 

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the sum of (i) the aggregate amount of Indebtedness of the Borrowers and their
Restricted Subsidiaries (limited to each Borrowers’ allocable share thereof)
outstanding under notes, bonds, debentures or similar debt instruments plus all
guarantees, endorsements or similar contingent obligations individually or in
the aggregate in excess of $25,000,000.00 with respect to Indebtedness of other
Persons (excluding obligations under completion guaranties, Non-Recourse
Indebtedness that is secured by an asset in the event that the Non-Recourse
Indebtedness exceeds fifty-five percent (55%) of the Adjusted Value thereof (or
if the Adjusted Value of such asset is not determined under this Agreement, then
its historic cost (including land value)), Indebtedness permitted under
§8.1(a)(xiii)) (the aggregate amount of Indebtedness described by this clause
(a) being referred to collectively as the “Total Indebtedness”) minus (ii) the
amount of Unrestricted Cash and Cash Equivalents in excess of $10,000,000.00
reported in accordance with the terms of this Agreement as of such Quarterly
Measurement Date to (b) Total Market Value Capitalization of the Borrowers to
exceed forty percent (40%).

 

§9.2                        Interest Coverage.  The Borrowers will not, as of
any Quarterly Measurement Date, permit the sum of (a) the Operating Cash Flow of
the Borrowers minus (b) the Non-Recurring Amount for any period of four
consecutive fiscal quarters ending on a Quarterly Measurement Date (treated as a
single accounting period) (the “Test Period”) to be less than 2.25 times the
Interest Expense for the Test Period.

 

§9.3                        Borrowing Base.  The Borrowers will not at any time
permit (a) the outstanding principal balance of the Revolving Credit Loans and
the Secured Term Loans as of the date of determination to be greater than
(b) the Borrowing Base as determined as of the same date.

 

§9.4                        Market Value Net Worth.  Borrowers will not, as of
each Quarterly Measurement Date occurring on or after the date hereof, permit
their aggregate Market Value Net Worth to be less than $150,000,000.00.

 

§10.                        CLOSING CONDITIONS

 

The obligations of the Agent and the Lenders to make the initial Loans shall be
subject to the satisfaction of the following conditions precedent on or prior to
the Closing Date:

 

§10.1                 Loan Documents.  Each of the Loan Documents (including any
amendments to agreements securing or relating to the Original Credit Agreement)
shall have been duly executed and delivered by the respective parties thereto,
shall be in full force and effect and shall be in form and substance
satisfactory to the Agent.  The Agent shall have received a fully executed copy
of each such document, except that each Lender requesting a Note shall have
received a fully executed counterpart of its Note or Notes.  The Agent is
authorized on behalf of the Lenders and Agent, as applicable, to execute any
amendments to agreements securing or relating to the Original Credit Agreement
as Agent deems appropriate.

 

§10.2                 Certified Copies of Organizational Documents.  The Agent
shall have received from the Borrowers a copy, certified as of a recent date by
the appropriate officer of each State in which each Borrower, the General
Partners, the Second Tier Partners, Woodlands Operating or the Guarantors, as
applicable, is organized or in which the Real Estate is located and a duly
authorized partner or officer of such Borrower, the General Partners, the Second
Tier Partners,

 

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Woodlands Operating and the Guarantors, as applicable, to be true and complete,
of the partnership agreement, corporate charter or other organizational
documents of such Borrower, the General Partners, the Second Tier Partners,
Woodlands Operating and the Guarantors, as applicable (or a certification
satisfactory to Agent that there have been no changes to the foregoing items
from those provided to the Agent in connection with the execution of the
Original Credit Agreement), or its qualification to do business, as applicable,
as in effect on such date of certification.

 

§10.3                 Bylaws; Resolutions.  All action on the part of the
Borrowers, the General Partners, Woodlands Operating, and the Guarantors
necessary for the valid execution, delivery and performance by the Borrowers,
Woodlands Operating and the Guarantors of this Agreement and the other Loan
Documents to which such Person is or is to become a party shall have been duly
and effectively taken, and evidence thereof satisfactory to the Agent shall have
been provided to the Agent.  The Agent shall have received from the General
Partners and the Guarantors true copies of their respective bylaws (or a
certification satisfactory to Agent that there have been no changes to the
foregoing items from those provided to the Agent in connection with the
execution of the Original Credit Agreement) and the resolutions adopted by their
respective board of directors authorizing the transactions described herein,
each certified by its secretary as of a recent date to be true and complete.

 

§10.4                 Incumbency Certificate; Authorized Signers.  The Agent
shall have received from the General Partners, Woodlands Operating and the
Guarantors an incumbency certificate, dated as of the Closing Date, signed by a
duly authorized officer or partner of the General Partners, Woodlands Operating
and the Guarantors and giving the name and bearing a specimen signature of each
individual who shall be authorized to sign, in the name and on behalf of the
General Partners, Woodlands Operating and the Guarantors, each of the Loan
Documents to which such Person is or is to become a party.  The Agent shall have
also received from the Borrowers a certificate, dated as of the Closing Date,
signed by a duly authorized partner of each Borrower and giving the name and
specimen signature of each individual who shall be authorized to make Loan
Requests, and give notices and to take other action on behalf of such Borrower
under the Loan Documents.

 

§10.5                 Opinion of Counsel.  The Agent shall have received a
favorable opinion addressed to the Lenders and the Agent and dated as of the
Closing Date, in form and substance reasonably satisfactory to the Agent, from
counsel of the Borrowers, the General Partners, Woodlands Operating and the
Guarantors, and counsel in such other states as may be required by the Agent, as
to such matters as the Agent shall reasonably request.

 

§10.6                 Payment of Fees.  The Borrowers shall have paid to the
Agent the closing fee pursuant to §4.2.

 

§10.7                 [Intentionally omitted.]

 

§10.8                 [Intentionally Omitted.]

 

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§10.9                 Insurance.  The Agent shall have received certificates
evidencing that the Agent and the Lenders are named as loss payee and additional
insured on all policies of insurance as required by this Agreement or the other
Loan Documents.

 

§10.10          Performance; No Default.  The Borrowers shall have performed and
complied with all terms and conditions herein required to be performed or
complied with by any of them on or prior to the Closing Date, and on the Closing
Date there shall exist no Default or Event of Default.

 

§10.11          Representations and Warranties.  The representations and
warranties made by the Borrowers and the Guarantors in the Loan Documents or
otherwise made by or on behalf of the Borrowers, the Guarantors or the
Restricted Subsidiaries of the Borrowers in connection therewith or after the
date thereof shall have been true and correct in all material respects when made
and shall also be true and correct in all material respects on the Closing Date.

 

§10.12          Proceedings and Documents.  All proceedings in connection with
the transactions contemplated by this Agreement and the other Loan Documents
shall be reasonably satisfactory to the Agent and the Agent’s Special Counsel in
form and substance, and the Agent shall have received all information and such
counterpart originals or certified copies of such documents and such other
certificates, opinions or documents as the Agent and the Agent’s Special Counsel
may reasonably require.  No proceeding challenging or seeking to enjoin any of
the transactions contemplated by the Loan Documents shall be pending or shall
have been threatened.

 

§10.13          Collateral Qualification Documents.  The Collateral
Qualification Documents for each parcel of Mortgaged Property to be included in
the Collateral as of the Closing Date which is not collateral for the Original
Credit Agreement shall have been delivered to the Agent at the Borrowers’
expense.  Borrowers shall deliver to Agent such updated title reports as Agent
may reasonably request, but Borrowers shall not be required to deliver any
current surveys (as-built or otherwise) or title policies with respect to the
Mortgaged Property included in the Collateral as of the Closing Date.

 

§10.14          Compliance Certificate.  A Compliance Certificate dated as of
the date of the Closing Date demonstrating compliance with each of the covenants
calculated therein.

 

§10.15          Consents.  The Agent shall have received evidence satisfactory
to the Agent that all necessary partner consents and other consents required in
connection with the pledge of the Collateral to the Agent for the benefit of the
Lenders have been obtained.

 

§10.16          Other Documents.  To the extent requested by the Agent, the
Agent shall have received executed copies of all material agreements of any
nature whatsoever to which the Borrowers or any of their respective Restricted
Subsidiaries is a party affecting or relating to the use, operation,
development, construction or management of the Real Estate.

 

§10.17          No Condemnation/Taking.  The Agent shall have received written
confirmation from the Borrowers that no material condemnation proceedings are
pending or to the Borrowers’ knowledge threatened against any Real Estate or, if
any such material proceedings are pending or threatened, identifying the same
and the Real Estate affected thereby and the Agent shall have

 

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determined that none of such proceedings is or will be material to the Real
Estate affected thereby.

 

§10.18          Interest Cap.  The Agent shall have received evidence
satisfactory to Agent that the Borrowers have acquired the Interest Cap.

 

§10.19          Other.  The Agent shall have reviewed such other documents,
instruments, certificates, opinions, assurances, consents and approvals as the
Agent or the Agent’s Special Counsel may reasonably have requested.

 

§11.                        CONDITIONS TO ALL BORROWINGS

 

The obligations of the Lenders to make any Loan, whether on or after the Closing
Date, shall also be subject to the satisfaction of the following conditions
precedent:

 

§11.1                 Prior Conditions Satisfied.  All conditions set forth in
§10 shall continue to be satisfied as of the date upon which any Loan is to be
made.

 

§11.2                 Representations True; No Default.  Each of the
representations and warranties made by or on behalf of the Borrowers, the
Guarantors and the Borrowers’ Restricted Subsidiaries contained in this
Agreement, the other Loan Documents or in any document or instrument delivered
pursuant to or in connection with this Agreement shall be true as of the date as
of which they were made and shall also be true at and as of the time of the
making of such Loan, with the same effect as if made at and as of that time
(except to the extent of changes resulting from transactions contemplated or
permitted by this Agreement and the other Loan Documents and changes occurring
in the ordinary course of business that singly or in the aggregate are not
materially adverse, and except to the extent that such representations and
warranties relate expressly to an earlier date) and no Default or Event of
Default shall have occurred and be continuing.  The Agent shall have received a
certificate of the Borrowers signed by an authorized officer of each Borrower to
such effect.

 

§11.3                 No Legal Impediment.  No change shall have occurred in any
law or regulations thereunder or interpretations thereof that in the reasonable
opinion of any Lender would make it illegal for such Lender to make such Loan.

 

§11.4                 Governmental Regulation.  Each Lender shall have received
such statements in substance and form reasonably satisfactory to such Lender as
such Lender shall require for the purpose of compliance with any applicable
regulations of the Comptroller of the Currency or the Board of Governors of the
Federal Reserve System.

 

§11.5                 Proceedings and Documents.  All proceedings in connection
with the Loan shall be satisfactory in substance and in form to the Agent, and
the Agent shall have received all information and such counterpart originals or
certified or other copies of such documents as the Agent may reasonably request.

 

§11.6                 Borrowing Documents.  In the case of any request for a
Loan, the Agent shall have received a copy of the request for a Loan required by
§2.6 in the form of Exhibit C-1 or Exhibit C-2 hereto, as applicable, fully
completed.

 

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§11.7                 Future Advances Tax Payment.  As a condition precedent to
any Lender’s obligations to make any Revolving Credit Loans in excess of an
aggregate amount of $100,000,000 (calculated as the sum of all Revolving Credit
Loans advanced hereunder without deduction for any repayments of such Revolving
Credit Loans and regardless of whether such Revolving Credit Loans are
outstanding at the time of reference hereto), the Borrowers will pay to the
Agent any mortgage, recording, intangible, documentary stamp or other similar
taxes and charges which the Agent reasonably determines to be payable as a
result of such Revolving Credit Loan to any state or any county or municipality
thereof in which the Mortgaged Property is located and deliver to the Agent such
affidavits or other information which the Agent reasonably determines to be
necessary in connection with the payment of such tax, in order to insure that
the Security Deed secures the Borrowers’ obligation with respect to the
Revolving Credit Loans then being requested.  The provisions of this §11.7 shall
be without limitation of the Borrowers’ obligations under other provisions of
the Loan Documents, including without limitation §15 hereof.

 

§12.                        EVENTS OF DEFAULT; ACCELERATION; ETC.

 

§12.1                 Events of Default and Acceleration.  If any of the
following events (“Events of Default” or, if the giving of notice or the lapse
of time or both is required, then, prior to such notice or lapse of time,
“Defaults”) shall occur:

 

(a)                                 either of the Borrowers shall fail to pay
any principal of the Loans when the same shall become due and payable, whether
at the stated date of maturity or any accelerated date of maturity or at any
other date fixed for payment;

 

(b)                                 either of the Borrowers shall fail to pay
any interest on the Loans or any other sums due hereunder or under any of the
other Loan Documents, when the same shall become due and payable, whether at the
stated date of maturity or any accelerated date of maturity or at any other date
fixed for payment;

 

(c)                                  either of the Borrowers shall fail to
comply with any covenant contained in §7.13, §8.1, §8.2, §8.3 and §8.7;

 

(d)                                 either of the Borrowers shall fail to comply
with any covenant contained in §9, and such failure shall continue for twenty
(20) days after written notice thereof shall have been given to the Borrowers by
the Agent (provided that with respect to any failure to comply with §9.2, such
failure shall be cured by Borrowers prepaying the Loans as provided in §3.3 to
an amount which would have resulted in compliance on a pro forma basis with the
applicable covenant based on actual Operating Cash Flow for the Test Period and
the average interest payable with respect to the Loans during the Test Period);

 

(e)                                  either of the Borrowers or any of their
respective Restricted Subsidiaries or any Guarantor shall fail to perform any
other term, covenant or agreement contained herein or in any of the other Loan
Documents (other than those specified above in this §12);

 

(f)                                   any representation or warranty made by or
on behalf of any Borrower, any Guarantor or any of the Restricted Subsidiaries
of a Borrower in this Agreement or any other Loan Document, or in any report,
certificate, financial statement, request for a Loan, or in any

 

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other document or instrument delivered pursuant to or in connection with this
Agreement, any advance of a Loan or any of the other Loan Documents shall prove
to have been false in any material respect upon the date when made or deemed to
have been made or repeated;

 

(g)                                  any of the Borrowers, any Guarantor or any
of the Restricted Subsidiaries of a Borrower shall fail to pay at maturity, or
within any applicable period of grace, any obligation for borrowed money or
credit received or other Indebtedness, or fail to observe or perform any
material term, covenant or agreement contained in any agreement by which it is
bound, evidencing or securing any such borrowed money or credit received or
other Indebtedness for such period of time as would permit (assuming the giving
of appropriate notice if required) the holder or holders thereof or of any
obligations issued thereunder to accelerate the maturity thereof; provided that
the events described in this §12.1(g) shall not constitute an Event of Default
unless such failure to pay or perform, together with other failures to pay or
perform, involve singly or in the aggregate recourse obligations for borrowed
money or credit received or other Indebtedness totaling in excess of
$50,000,000.00 or, with respect to non-recourse obligations for borrowed money
or credit received or other Indebtedness totaling singly or in the aggregate in
excess of $150,000,000.00 (except that with respect to Non-Recourse Indebtedness
of a Restricted Subsidiary of a Borrower it shall not be an Event of Default
hereunder unless the Borrowers’ aggregate equity Investment in all of such
Restricted Subsidiaries exceeds $15,000,000.00);

 

(h)                                 any of the Borrowers, any Guarantor or any
of the Restricted Subsidiaries of a Borrower, (1) shall make an assignment for
the benefit of creditors, or admit in writing its general inability to pay or
generally fail to pay its debts as they mature or become due, or shall petition
or apply for the appointment of a trustee or other custodian, liquidator or
receiver of any of the Borrowers, any Guarantor or any of the Restricted
Subsidiaries of a Borrower or of any substantial part of the assets of any
thereof, (2) shall commence any case or other proceeding relating to any of the
Borrowers, any Guarantor or any of the Restricted Subsidiaries of a Borrower
under any bankruptcy, reorganization, arrangement, insolvency, readjustment of
debt, dissolution or liquidation or similar law of any jurisdiction, now or
hereafter in effect, or (3) shall take any action to authorize or in furtherance
of any of the foregoing;

 

(i)                                     a petition or application shall be filed
for the appointment of a trustee or other custodian, liquidator or receiver of
any of the Borrowers, any Guarantor or any of the Restricted Subsidiaries of a
Borrower or any substantial part of the assets of any thereof, or a case or
other proceeding shall be commenced against any of the Borrowers, any Guarantor
or any of the Restricted Subsidiaries of a Borrower under any bankruptcy,
reorganization, arrangement, insolvency, readjustment of debt, dissolution or
liquidation or similar law of any jurisdiction, now or hereafter in effect, and
any of the Borrowers, any Guarantor or any of the Restricted Subsidiaries of a
Borrower shall indicate its approval thereof, consent thereto or acquiescence
therein or such petition, application, case or proceeding shall not have been
dismissed within ninety (90) days following the filing or commencement thereof;

 

(j)                                    a decree or order is entered appointing
any such trustee, custodian, liquidator or receiver or adjudicating any of the
Borrowers, any Guarantor or any of the Restricted Subsidiaries of a Borrower
bankrupt or insolvent, or approving a petition in any such case or other
proceeding, or a decree or order for relief is entered in respect of any of the

 

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Borrowers, any Guarantor or any of the Restricted Subsidiaries of a Borrower, in
an involuntary case under federal bankruptcy laws as now or hereafter
constituted;

 

(k)                                 there shall remain in force, undischarged,
unsatisfied and unstayed, (i) for more than sixty (60) days, whether or not
consecutive, any uninsured final judgment against any of the Borrowers, any
Guarantor or any of the Restricted Subsidiaries of a Borrower that, with other
outstanding uninsured final judgments, undischarged, against any of the
Borrowers, any Guarantor or any of the Restricted Subsidiaries of a Borrower
exceeds in the aggregate $5,000,000.00, or (ii) for more than thirty (30) days,
whether or not consecutive, any uninsured final judgment against any of the
Borrowers, any Guarantor or any of the Restricted Subsidiaries of a Borrower
that, with other outstanding uninsured final judgments, undischarged, against
any of the Borrowers, any Guarantor or any of the Restricted Subsidiaries of a
Borrower exceeds in the aggregate $10,000,000.00;

 

(l)                                     if (i) any of the Loan Documents shall
be canceled, terminated, revoked or rescinded otherwise than in accordance with
the terms thereof or with the express prior written agreement, consent or
approval of the Lenders, or (ii) any action at law, suit in equity or other
legal proceeding to cancel, revoke or rescind any of the Loan Documents shall be
commenced by or on behalf of any of the Borrowers, any Guarantor or any of their
respective stockholders, partners or beneficiaries, or (iii) any court or any
other governmental or regulatory authority or agency of competent jurisdiction
shall make a determination that, or issue a judgment, order, decree or ruling to
the effect that, any one or more of the Loan Documents is illegal, invalid or
unenforceable in accordance with the terms thereof and, with respect to Defaults
under this clause (iii) Borrowers do not cure such illegality, invalidity or
unenforceability in a manner satisfactory to Agent within ten (10) days of such
determination, judgment, order, decree or ruling, as applicable;

 

(m)                             any dissolution, termination, partial or
complete liquidation, merger or consolidation of any of the Borrowers or any
Guarantor, or any sale, transfer or other disposition of the assets of any of
the Borrowers or any Guarantor, other than as permitted under the terms of this
Agreement or the other Loan Documents;

 

(n)                                 any suit or proceeding shall be filed
against any of the Borrowers, any Guarantor or any of their respective assets
which in the good faith business judgment of the Majority Lenders after giving
consideration to the likelihood of success of such suit or proceeding and the
availability of insurance to cover any judgment with respect thereto and based
on the information available to them, if adversely determined, would have a
materially adverse affect on the ability of any of the Borrowers or any
Guarantor to perform its obligations under and by virtue of the Loan Documents;

 

(o)                                 any of the Borrowers, any Guarantor or any
of the Restricted Subsidiaries of a Borrower shall be indicted for a federal
crime, a punishment for which could include the forfeiture of any assets of such
Person included in the Collateral or the Property;

 

(p)                                 (i) an ERISA Reportable Event shall occur
with respect to, or proceedings shall commence to have a trustee appointed, or a
trustee shall be appointed, to administer or to terminate, any Employee Benefit
Plan, which ERISA Reportable Event or institution of

 

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proceedings is, in the opinion of the Majority Lenders, likely to result in the
termination of such Plan for purposes of Title IV of ERISA, and, in the case of
an ERISA Reportable Event, the continuance of such ERISA Reportable Event
unremedied for thirty (30) days after notice of such ERISA Reportable Event
pursuant to §4043 of ERISA is given or, in the case of institution of
proceedings, the continuance of such proceedings for thirty (30) days after
commencement thereof, (ii) any Employee Benefit Plan shall terminate for
purposes of Title IV of ERISA, or (iii) any other event or condition shall occur
or exist with respect to an Employee Benefit Plan and in each case in clauses
(i) through (iii) above, such event or condition, together with all other such
events or conditions, if any, could subject any of the Borrowers or any of their
respective Restricted Subsidiaries or any Guarantor to any tax, penalty or other
liabilities in the aggregate material in relation to the business, operations,
property or financial or other condition of any of the Borrowers, any Guarantor
or of a Borrower and its Restricted Subsidiaries taken as a whole;

 

(q)                                 any Guarantor denies that such Guarantor has
any liability or obligation under the Guaranty or the Guarantor Contribution
Agreement, or shall notify the Agent or any of the Lenders of such Guarantor’s
intention to attempt to cancel or terminate the Guaranty or the Guarantor
Contribution Agreement, or shall fail to observe or comply with any term,
covenant, condition or agreement under the Guaranty or the Guarantor
Contribution Agreement;

 

(r)                                    a Change of Control shall occur without
the prior written approval of all of the Lenders (which consent may be withheld
by the Lenders in their sole and absolute discretion); or

 

(s)                                   any Event of Default, as defined in any of
the other Loan Documents, shall occur;

 

then, and in any such event, the Agent may, and upon the request of the Majority
Lenders shall, by notice in writing to the Borrowers declare all amounts owing
with respect to this Agreement, the Notes and the other Loan Documents to be,
and they shall thereupon forthwith become, immediately due and payable without
presentment, demand, protest or other notice of any kind, all of which are
hereby expressly waived by the Borrowers; provided that in the event of any
Event of Default specified in §12.1(h), §12.1(i) or §12.1(j), all such amounts
shall become immediately due and payable automatically and without any
requirement of notice from any of the Lenders or the Agent.

 

Notwithstanding the foregoing, it shall not be an Event of Default upon the
occurrence of any of the events described under §12.1(f), (h), (i) or (j) with
respect to a Restricted Subsidiary or Unrestricted Subsidiary unless the
Borrowers’ aggregate equity Investment in all of such Restricted Subsidiaries or
Unrestricted Subsidiaries exceeds $15,000,000.00.

 

§12.lA            Limitation of Cure Periods.

 

(a)                                 Notwithstanding anything contained in §12.1
to the contrary, (i) no Event of Default shall exist hereunder upon the
occurrence of any failure described in §12.1(a) or §12.1(b) in the event that
the Borrowers cure such Default within five (5) days following receipt of
written notice of such Default, provided, however, that Borrowers shall not be
entitled to receive more than two (2) notices in the aggregate pursuant to this
clause (i) in any period of

 

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three hundred sixty-five (365) days ending on the date of any such occurrence of
Default, and provided further that no such cure period shall apply to any
payments due upon the maturity of any of the Obligations, and (ii) no Event of
Default shall exist hereunder upon the occurrence of any failure described in
§12.1(e) or §12.1(f) in the event that the Borrowers cure such Default within
thirty (30) days following receipt of written notice of such Default, or if such
Default is of such a nature that it cannot be cured within such thirty (30) day
period, in the event that Borrowers commence such cure within such thirty (30)
day period and thereafter diligently, continuously and in good faith prosecute
such cure to completion, and in any event cure such Default within one hundred
twenty (120) days following receipt of such written notice of Default.  The
provisions of clause (ii) shall not pertain to Defaults consisting of a failure
to provide insurance as required by §7.7, to any Default consisting of a failure
to comply with §7.4(e), to any Default under §§7.13, 8.1, 8.2, 8.3, 8.7, and
§8.13 or to any Default excluded from any provision of cure of Defaults
contained in any other of the Loan Documents.

 

(b)                                 Notwithstanding anything in this Agreement
or any other Loan Document to the contrary, any reference in this Agreement or
any other Loan Document to “the continuance of a default” or “the continuance of
an Event of Default” or any similar phrase shall not create or be deemed to
create any right on the part of Borrowers or any other party to cure any default
following the expiration of any applicable grace or notice and cure period.

 

(c)                                  In the event that a Borrower obtains any
knowledge that any representation or warranty made by or on behalf of the
Borrowers, the Guarantors or any Restricted Subsidiaries of a Borrower in this
Agreement or any of the other Loan Documents to its knowledge and belief shall
be untrue or misleading, the Borrowers shall promptly notify the Agent in
writing of the same and shall, within thirty (30) days after learning such
representation or warranty is untrue or misleading, take such actions as are
required to cause such warranty or representation to be correct.

 

§12.2                 Termination of Commitments.  If any one or more Events of
Default specified in §12.1(h), §12.1(i) or §12.1(j) shall occur, then
immediately and without any action on the part of the Agent or any Lender any
unused portion of the credit hereunder shall terminate and the Lenders shall be
relieved of all obligations to make Revolving Credit Loans to Land Company.  If
any other Event of Default shall have occurred, the Agent, upon the election of
the Majority Lenders, may by notice to the Borrowers terminate the obligation to
make Revolving Credit Loans to Land Company.  No termination under this §12.2
shall relieve the Borrowers of their obligations to the Lenders arising under
this Agreement or the other Loan Documents.  Nothing in this §12.2 shall limit
or impair the terms of this Agreement (including §2.1) which provide that the
Lenders shall have no obligation to make Revolving Credit Loans upon the
occurrence of a Default or Event of Default.

 

§12.3                 Remedies.  In case any one or more of the Events of
Default shall have occurred and be continuing, and whether or not the Agent or
the Lenders shall have accelerated the maturity of the Loans pursuant to §12.1,
the Agent on behalf of the Lenders may, and upon the direction of the Majority
Lenders shall, proceed to protect and enforce their rights and remedies under
this Agreement, the Notes or any of the other Loan Documents by suit in equity,
action at law or other appropriate proceeding, whether for the specific
performance of any covenant or agreement contained in this Agreement and the
other Loan Documents or any instrument

 

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pursuant to which the Obligations are evidenced, including to the full extent
permitted by applicable law the obtaining of the ex parte appointment of a
receiver, and, if such amount shall have become due, by declaration or
otherwise, proceed to enforce the payment thereof or any other legal or
equitable right.  No remedy herein conferred upon the Agent or the holder of any
Note or Obligation is intended to be exclusive of any other remedy and each and
every remedy shall be cumulative and shall be in addition to every other remedy
given hereunder or now or hereafter existing at law or in equity or by statute
or any other provision of law.  In the event that all or any portion of the
Obligations is collected by or through an attorney-at-law, the Borrowers shall
pay all reasonable costs of collection including, but not limited to, reasonable
attorney’s fees.  Notwithstanding the provisions of this Agreement providing
that the Loans may be evidenced by multiple Notes in favor of the Lenders, the
Lenders acknowledge and agree that only the Agent may exercise any remedies
arising by reason of a Default or Event of Default.  In the event an Event of
Default shall have occurred and be continuing and the Loans shall have been
accelerated, Agent may require that Borrowers obtain a mortgagee’s title
insurance policy in the amount of the Outstanding Loans and in such form as the
Agent may reasonably require insuring the first priority of the Security Deeds
and that a Borrower holds good and indefeasible fee simple title to such parcel,
subject only to such encumbrances as shall be approved by the Agent and
containing such endorsements and reinsurance or co-insurance agreements as Agent
may require, and Borrowers shall pay upon demand all premiums and other charges
reasonably necessary in connection with the issuance of such title policy or
policies.  In the event that Borrowers shall fail to pay such amount, Agent or
the Lenders may advance such amount on behalf of the Borrowers and such amount
shall become a part of the Obligations, shall bear interest at the Default Rate
and shall be due and payable upon demand.

 

§12.4                 Distribution of Collateral Proceeds.  In the event that,
following the occurrence or during the continuance of any Event of Default, any
monies are received in connection with the enforcement of any of the Security
Documents, or otherwise with respect to the realization upon any of the
Collateral, such monies shall be distributed for application as follows:

 

(a)                                 First, to the payment of, or (as the case
may be) the reimbursement of, the Agent for or in respect of all reasonable
costs, expenses, disbursements and losses which shall have been incurred or
sustained by the Agent to protect or preserve the collateral or in connection
with the collection of such monies by the Agent, for the exercise, protection or
enforcement by the Agent of all or any of the rights, remedies, powers and
privileges of the Agent under this Agreement or any of the other Loan Documents
or in respect of the Collateral or in support of any provision of adequate
indemnity to the Agent against any taxes or liens which by law shall have, or
may have, priority over the rights of the Agent to such monies;

 

(b)                                 Second, to all other Obligations in such
order or preference as the Majority Lenders shall determine; provided, however,
that (i) distributions in respect of such other Obligations shall be made pari
passu among Obligations with respect to the Agent’s fee payable pursuant to §4.3
and all other Obligations, (ii) in the event that any Lender is a Defaulting
Lender, payments to such Lender shall be governed by §2C(c), and
(iii) Obligations owing to the Lenders with respect to each type of Obligation
such as interest, principal, fees and expenses shall be made among the Lenders,
pro rata; and provided further that the Majority Lenders may in their discretion
make proper allowance to take into account any Obligations not then due and
payable;

 

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(c)                                  Third, to the Hedge Obligations and

 

(d)                                 Fourth, the excess, if any, shall be
returned to the Borrowers or to such other Persons as are entitled thereto.

 

§13.                        SETOFF

 

Regardless of the adequacy of any collateral, during the continuance of any
Event of Default, any deposits (general or specific, time or demand, provisional
or final, regardless of currency, maturity, or the branch of where such deposits
are held) or other sums credited by or due from any of the Lenders to any of the
Borrowers or any Guarantor and any securities or other property of any of the
Borrowers or any Guarantor in the possession of such Lender may be applied to or
set off against the payment of Obligations and any and all other liabilities,
direct, or indirect, absolute or contingent, due or to become due, now existing
or hereafter arising, of the Borrowers to such Lender.  Each of the Lenders
agrees with each other Lender that if such Lender shall receive from any of the
Borrowers or any Guarantor, whether by voluntary payment, exercise of the right
of setoff, or otherwise, and shall retain and apply to the payment of the
Obligations owed to such Lender any amount in excess of its ratable portion of
the payments received by all of the Lenders with respect to the Obligations held
by all of the Lenders, such Lender will make such disposition and arrangements
with the other Lenders with respect to such excess, either by way of
distribution, pro tanto assignment of claims, subrogation or otherwise as shall
result in each Lender receiving in respect of the Obligations held by it its
proportionate payment as contemplated by this Agreement; provided that if all or
any part of such excess payment is thereafter recovered from such Lender, such
disposition and arrangements shall be rescinded and the amount restored to the
extent of such recovery, but without interest.  In the event that any Defaulting
Lender shall exercise any such right of setoff, (a) all amounts so set off shall
be paid over immediately to the Agent for further application in accordance with
the provisions of this Agreement and, pending such payment, shall be segregated
by such Defaulting Lender from its other funds and deemed held in trust for the
benefit of the Agent and the Lenders, and (b) the Defaulting Lender shall
provide promptly to the Agent a statement describing in reasonable detail the
Obligations owing to such Defaulting Lender as to which it exercised such right
of setoff.

 

§14.                        THE AGENT

 

§14.1                 Authorization.  The Agent is authorized to take such
action on behalf of each of the Lenders and to exercise all such powers as are
hereunder and under any of the other Loan Documents and any related documents
delegated to the Agent, together with such powers as are reasonably incident
thereto, provided that no duties or responsibilities not expressly assumed
herein or therein shall be implied to have been assumed by the Agent.  The
obligations of Agent hereunder are primarily administrative in nature, and
nothing contained in this Agreement or any of the other Loan Documents shall be
construed to constitute the Agent as a trustee for any Lender or to create any
agency or fiduciary relationship.  Agent shall act as the contractual
representative of the Lenders hereunder, and notwithstanding the use of the term
“Agent,” it is understood and agreed that the Agent shall not have any fiduciary
duties or responsibilities to any Lender by reason of this Agreement or any
other Loan Document and is acting as an independent contractor, the duties of
which are limited to those expressly set forth in this

 

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Agreement and the other Loan Documents.  The Borrowers and any other Person
shall be entitled to conclusively rely on a statement from the Agent that it has
the authority to act for and bind the Lenders pursuant to this Agreement and the
other Loan Documents.

 

§14.2                 Employees and Agents.  The Agent may exercise its powers
and execute its duties by or through employees or agents and shall be entitled
to take, and to rely on, advice of counsel concerning all matters pertaining to
its rights and duties under this Agreement and the other Loan Documents.

 

§14.3                 No Liability.  Neither the Agent nor any of its
shareholders, directors, officers or employees nor any other Person assisting
them in their duties nor any agent, or employee thereof, shall be liable for any
waiver, consent or approval given or any action taken, or omitted to be taken,
in good faith by it or them hereunder or under any of the other Loan Documents,
or in connection herewith or therewith, or be responsible for the consequences
of any oversight or error of judgment whatsoever, except that the Agent or such
other Person, as the case may be, shall be liable for losses due to its willful
misconduct or gross negligence.

 

§14.4                 No Representations.  The Agent shall not be responsible
for the execution or validity or enforceability of this Agreement, the Notes,
any of the other Loan Documents or any instrument at any time constituting, or
intended to constitute, collateral security for the Obligations, or for the
value of any such collateral security or for the validity, enforceability or
collectability of any such amounts owing with respect to the Obligations, or for
any recitals or statements, warranties or representations made herein, or any
agreement, instrument or certificate delivered in connection therewith or in any
of the other Loan Documents or in any certificate or instrument hereafter
furnished to it by or on behalf of any of the Borrowers, any of the General
Partners, any of the Second Tier Partners, any of the Third Tier Partners, any
of the Restricted Subsidiaries of a Borrower or any Guarantor, or be bound to
ascertain or inquire as to the performance or observance of any of the terms,
conditions, covenants or agreements herein or in any other of the Loan
Documents.  The Agent shall not be bound to ascertain whether any notice,
consent, waiver or request delivered to it by any of the Borrowers or any
Guarantor or any of the Restricted Subsidiaries of a Borrower or any holder of
any of the Obligations shall have been duly authorized or is true, accurate and
complete.  The Agent has not made nor does it now make any representations or
warranties, express or implied, nor does it assume any liability to the Lenders,
with respect to the creditworthiness or financial condition of any of the
Borrowers or any of their respective Restricted Subsidiaries or Unrestricted
Subsidiaries or any Guarantor.  Each Lender acknowledges that it has,
independently and without reliance upon the Agent or any other Lender, and based
upon such information and documents as it has deemed appropriate, made its own
credit analysis and decision to enter into this Agreement.  Each Lender also
acknowledges that it will, independently and without reliance upon the Agent or
any other Lender, based upon such information and documents as it deems
appropriate at the time, continue to make its own credit analysis and decisions
in taking or not taking action under this Agreement and the other Loan
Documents.  Agent’s Special Counsel has only represented Agent and KeyBank in
connection with the Loan Documents and the only attorney-client relationship is
between Agent’s Special Counsel and Agent or KeyBank.  Each Lender has been
independently represented by separate counsel on all matters regarding the Loan
Documents and the granting and perfecting of liens in the Collateral.

 

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§14.5                 Payments.

 

(a)                                 A payment by the Borrowers or the Guarantors
to the Agent hereunder or under any of the other Loan Documents for the account
of any Lender shall constitute a payment to such Lender.  The Agent agrees to
distribute to each Lender not later than one Business Day after the Agent’s
receipt of good funds, determined in accordance with the Agent’s customary
practices, such Lender’s pro rata share of payments received by the Agent for
the account of the Lenders except as otherwise expressly provided herein or in
any of the other Loan Documents.  In the event that the Agent fails to
distribute such amounts within one Business Day as provided above, the Agent
shall pay interest on such amount at a rate per annum equal to the Federal Funds
Effective Rate from time to time in effect.  Notwithstanding anything to the
contrary contained in this Agreement, if any Lender becomes a Defaulting Lender,
then, until such time as such Lender is no longer a Defaulting Lender, each
payment by the Borrower hereunder shall be applied in accordance with §2C(c).

 

(b)                                 If in the opinion of the Agent the
distribution of any amount received by it in such capacity hereunder, under the
Notes or under any of the other Loan Documents might involve it in liability, it
may refrain from making distribution until its right to make distribution shall
have been adjudicated by a court of competent jurisdiction.  If a court of
competent jurisdiction shall adjudge that any amount received and distributed by
the Agent is to be repaid, each Person to whom any such distribution shall have
been made shall either repay to the Agent its proportionate share of the amount
so adjudged to be repaid or shall pay over the same in such manner and to such
Persons as shall be determined by such court.

 

(c)                                  Notwithstanding anything to the contrary
contained in this Agreement or any of the other Loan Documents, any Lender that
fails (i) to make available to the Agent its pro rata share of any Loan or
(ii) to comply with the provisions of §13 with respect to making dispositions
and arrangements with the other Lenders, where such Lender’s share of any
payment received, whether by setoff or otherwise, is in excess of its pro rata
share of such payments due and payable to all of the Lenders, in each case as,
when and to the full extent required by the provisions of this Agreement, shall
be deemed delinquent (a “Delinquent Lender”) and shall be deemed a Delinquent
Lender until such time as such delinquency is satisfied.  A Delinquent Lender
shall be deemed to have assigned any and all payments due to it from the
Borrowers and the Guarantors, whether on account of outstanding Loans, interest,
fees or otherwise, to the remaining nondelinquent Lenders for application to,
and reduction of, their respective pro rata shares of all outstanding Loans in
accordance with the terms of this Agreement.  The Delinquent Lender hereby
authorizes the Agent to distribute such payments to the nondelinquent Lenders in
proportion to their respective pro rata shares of all outstanding Loans in
accordance with the terms of this Agreement.  A Delinquent Lender shall be
deemed to have satisfied in full a delinquency when and if, as a result of
application of the assigned payments to all outstanding Loans of the
nondelinquent Lenders or as a result of other payments by the Delinquent Lenders
to the nondelinquent Lenders, the Lenders’ respective pro rata shares of all
outstanding Loans have returned to those in effect immediately prior to such
delinquency and without giving effect to the nonpayment causing such
delinquency.  In addition to the rights and remedies that may be available to
the Agent at law and in equity, a Delinquent Lender’s right to participate in
the administration of the Loan Documents, including, without limitation, any
rights to consent to or direct any action or inaction of the Agent pursuant to
this Agreement or

 

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otherwise, or to be taken into account in the calculation of Majority Lenders,
Super-Majority Lenders or any matter requiring approval of all of the Lenders,
shall be suspended while such Lender is a Delinquent Lender.  The provisions of
this Section shall apply and be effective regardless of whether an Event of
Default occurs and is then continuing, and notwithstanding (i) any other
provision of this Agreement to the contrary or (ii) any instruction of Borrowers
as to its desired application of payments.  The Agent shall be entitled to
(i) withhold or set off, and to apply to the payment of the obligations of any
Delinquent Lender any amounts to be paid to such Delinquent Lender under this
Agreement, (ii) to collect interest from such Lender for the period from the
date on which the payment was due at the Federal Funds Effective Fate, for each
day during such period, and (iii) bring an action or suit against such
Delinquent Lender in a court of competent jurisdiction to recover the defaulted
obligations of such Delinquent Lender and, to the extent such recovery would not
fully compensate the Lenders for the Delinquent Lender’s breach of this
Agreement, to collect damages.  In addition, the Delinquent Lender shall
indemnify, defend and hold Agent and each of the other Lenders harmless from and
against any and all claims, actions, liabilities, damages, costs and expenses
(including attorneys’ fees and expenses), plus interest thereon at the Default
Rate, for funds advanced by Agent or any other Lender on account of the
Delinquent Lender or any other damages such Persons may sustain or incur by
reason of or as a direct consequence of the Delinquent Lender’s failure or
refusal to abide by its obligations under this Agreement.

 

§14.6                 Holders of Notes.  Subject to the terms of Article 18, the
Agent may deem and treat the payee of any Obligation and any Note as the
absolute owner or purchaser thereof for all purposes hereof until it shall have
been furnished in writing with a different name by such payee or by a subsequent
holder, assignee or transferee.

 

§14.7                 Indemnity.  THE LENDERS RATABLY AGREE HEREBY TO INDEMNIFY
AND HOLD HARMLESS THE AGENT FROM AND AGAINST ANY AND ALL CLAIMS, ACTIONS AND
SUITS (WHETHER GROUNDLESS OR OTHERWISE), LOSSES, DAMAGES, COSTS, EXPENSES
(INCLUDING ANY EXPENSES FOR WHICH THE AGENT HAS NOT BEEN REIMBURSED BY THE
BORROWERS AS REQUIRED BY §15), AND LIABILITIES OF EVERY NATURE AND CHARACTER
ARISING OUT OF OR RELATED TO THIS AGREEMENT, THE NOTES OR ANY OF THE OTHER LOAN
DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED OR EVIDENCED HEREBY OR THEREBY, OR
THE AGENT’S ACTIONS TAKEN HEREUNDER OR THEREUNDER, EXCEPT TO THE EXTENT THAT ANY
OF THE SAME SHALL BE DIRECTLY CAUSED BY THE AGENT’S WILLFUL MISCONDUCT OR GROSS
NEGLIGENCE.  LENDERS AGREE THAT THE INDEMNIFICATION OF AGENT BY LENDERS SET
FORTH IN THIS §14.7 INCLUDES INDEMNIFICATION IN THE EVENT OF ORDINARY NEGLIGENCE
ON THE PART OF AGENT BUT DOES NOT INCLUDE INDEMNIFICATION OF AGENT FOR AGENT’S
GROSS NEGLIGENCE OR WILLFUL MISCONDUCT.  THE PROVISIONS OF THIS §14.7 SHALL
SURVIVE THE REPAYMENT OF THE LOANS AND THE TERMINATION OF THE OBLIGATIONS OF THE
LENDERS HEREUNDER.

 

§14.8                 Agent as Lender.  In its individual capacity, KeyBank
shall have the same obligations and the same rights, powers and privileges in
respect to its Commitment and the

 

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Loans made by it, and as the holder of any of the Obligations and Notes, if any,
as it would have were it not also the Agent.

 

§14.9                 Resignation; Removal.  The Agent may resign at any time by
giving thirty (30) calendar days’ prior written notice thereof to the Lenders
and the Borrowers; provided, however, that unless a Default or Event of Default
shall have occurred and be continuing, no such resignation shall be permitted
without Borrowers’ consent, such consent not to be unreasonably conditioned,
withheld or delayed.  The Majority Lenders may remove the Agent in the event of
the Agent’s gross negligence or willful misconduct.  Upon any such resignation
or removal, the Majority Lenders, subject to the terms of §18.1, shall have the
right to appoint as a successor Agent any Lender or any bank whose senior debt
obligations are rated not less than “A3” or its equivalent by Moody’s Investors
Service, Inc. or not less than “A-” or its equivalent by Standard & Poor’s
corporation and which has a net worth of not less than $500,000,000.  Any such
resignation or removal shall be effective upon appointment and acceptance of a
successor agent selected by the Majority Lenders.  If no successor Agent shall
have been appointed and shall have accepted such appointment, then the retiring
Agent may, on behalf of the Lenders, appoint a successor Agent, which shall be a
bank whose debt obligations are rated not less than “A3” or its equivalent by
Moody’s Investors Service, Inc. or not less than “A-” or its equivalent by
Standard & Poor’s Corporation and which has a net worth of not less than
$500,000,000.  Unless a Default or Event of Default shall have occurred and be
continuing, such successor Agent shall be reasonably acceptable to the
Borrowers.  Upon the acceptance of any appointment as Agent hereunder by a
successor Agent, such successor Agent shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the retiring or
removed Agent, and the retiring or removed Agent shall be discharged from its
duties and obligations hereunder as Agent.  After any retiring Agent’s
resignation or the removal of any Agent, the provisions of this Agreement and
the other Loan Documents shall continue in effect for its benefit in respect of
any actions taken or omitted to be taken by it while it was acting as Agent.

 

§14.10          Duties in the Case of Enforcement.  In case one or more Events
of Default have occurred and shall be continuing, and whether or not
acceleration of the Obligations shall have occurred, the Agent may and shall, if
so requested by the Majority Lenders and the Lenders have provided to the Agent
such additional indemnities and assurances against expenses and liabilities as
the Agent may reasonably request, proceed to exercise all or any legal and
equitable and other rights or remedies as it may have.  The Majority Lenders may
direct the Agent in writing as to the method and the extent of any such
exercise, the Lenders hereby agreeing to indemnify and hold the Agent harmless
from all liabilities incurred in respect of all actions taken or omitted in
accordance with such directions, provided that the Agent need not comply with
any such direction to the extent that the Agent reasonably believes the Agent’s
compliance with such direction to be unlawful or commercially unreasonable in
any applicable jurisdiction.

 

§14.11          Reliance on Hedge Provider.  For purposes of applying payments
received in accordance with §12.4, the Agent shall be entitled to rely upon the
trustee, paying agent or other similar representative (each, a “Representative”)
or, in the absence of such a Representative, upon the holder of the Hedge
Obligations for a determination (which each holder of the Hedge Obligations
agrees (or shall agree) to provide upon request of the Agent) of the outstanding
Hedge Obligations owed to the holder thereof.  Unless it has actual knowledge
(including by way

 

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of written notice from such holder) to the contrary, the Agent, in acting
hereunder, shall be entitled to assume that no Hedge Obligations are
outstanding.

 

§14.12          Co-Agents.  The Lead Arranger shall not have any additional
rights or obligations under the Loan Documents, except for those rights, if any,
as a Lender.

 

§14.13          Request for Agent Action.  Agent and the Lenders acknowledge
that in the ordinary course of business of the Borrowers, (a) Borrowers may
enter into leases covering the Collateral that may require the execution of a
subordination, attornment and non-disturbance agreement in favor of the tenant
thereunder, (b) the Collateral may be subject to a condemnation or other taking,
(c) Borrower may desire to enter into easements or other agreements affecting
the Collateral, record a subdivision plat, dedicate roads or utilities, or take
other actions or enter into other agreements in the ordinary course of business
which similarly require the consent, approval or agreement of the Agent.  In
connection with the foregoing, the Lenders hereby expressly authorize the Agent
to (w) execute and deliver to the Borrower subordination, attornment and
non-disturbance agreements with any tenant under a lease upon such terms as
Agent in its good faith judgment determines are appropriate (Agent in the
exercise of its good faith judgment may agree to allow some or all of the
casualty, condemnation, restoration or other provisions of the applicable lease
to control over the applicable provisions of the Loan Documents), (x) execute
releases of liens of Mortgaged Property as permitted in this Agreement or in
connection with any condemnation or other taking, (y) execute consents or
subordinations in form and substance satisfactory to Agent in connection with
any easements, agreements, plats, dedications or similar matters affecting the
Collateral, or (z) execute consents, approvals, or other agreements in form and
substance satisfactory to the Agent in connection with such other actions or
agreements as may be necessary in the ordinary course of Borrowers’ business. 
Without limiting the foregoing, the Agent may delegate to the Title Insurance
Company pursuant to the Tri-Party Agreement the right to execute certain
consents on behalf of Agent and the Lenders as described in §5.5.

 

§14.14          [Intentionally omitted.]

 

§14.15          Bankruptcy.  In the event a bankruptcy or other insolvency
proceeding is commenced by or against any Borrower or Guarantor, the Agent shall
have the sole and exclusive right to file and pursue a joint proof claim on
behalf of all Lenders.  Each Lender irrevocably waives its right to file or
pursue a separate proof of claim in any such proceedings.

 

§14.16          Lender Intercreditor Agreement.  The Agent and the Lenders
acknowledge and agree that the Intercreditor Agreement (Senior Loan) dated
November 30, 2004 among Agent and the lenders a party thereto continues in
effect and that this Agreement constitutes the “Credit Agreement” referenced
therein.  To the extent there is any Lender which is not a party to such
Intercreditor Agreement, such Lender joins therein as a party thereto and
assumes all obligations of a Lender thereunder and confirms the representations
and warranties of a Lender thereunder.

 

§15.                        EXPENSES

 

The Borrowers agree to pay (a) the reasonable costs of producing and reproducing
this Agreement, the other Loan Documents and the other agreements and
instruments mentioned

 

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herein, (b) any taxes (including any interest and penalties in respect thereto)
payable by the Agent or any of the Lenders, including any recording, mortgage,
documentary or intangibles taxes in connection with the Security Deeds and other
Loan Documents, or other taxes payable on or with respect to the transactions
contemplated by this Agreement (other than taxes based upon the Agent’s or any
Lender’s gross or net income, except that the Agent and the Lenders shall be
entitled to indemnification for any and all amounts paid by them in respect of
taxes based on income or other taxes assessed by any State in which Mortgaged
Property or other Collateral is located, such indemnification to be limited to
taxes due solely on account of the granting of Collateral under the Security
Documents and to be net of any credit allowed to the indemnified party from any
other State on account of the payment or incurrence of such tax by such
indemnified party), including any such taxes payable by the Agent or any of the
Lenders after the Closing Date (the Borrowers hereby agreeing to indemnify the
Agent and each Lender with respect thereto), (c) all appraisal fees, engineer’s
fees, charges for commercial finance exams and engineering and environmental
reviews (provided that to the extent permitted under applicable laws and
regulations, the Lenders shall rely upon reports of engineering and
environmental consultants previously retained by Borrowers so that duplication
of consultant’s expenses is avoided where possible) and the reasonable fees,
expenses and disbursements of the counsel to the Agent, counsel for KeyBank and
any local counsel to the Agent incurred in connection with the performance of
due diligence and the preparation, negotiation, administration or interpretation
of the Loan Documents and other instruments mentioned herein, each closing
hereunder, and amendments, modifications, approvals, consents or waivers hereto
or hereunder, (d) the reasonable out-of-pocket fees, expenses and disbursements
of the Agent incurred by the Agent in connection with the performance of due
diligence, underwriting analysis, credit reviews, executing releases and
consents, and the preparation, negotiation, administration or interpretation of
the Loan Documents and other instruments mentioned herein, credit and collateral
evaluations, and the making of each advance hereunder, (e) all reasonable out of
pocket expenses (including reasonable attorneys’ fees and costs, which attorneys
may be employees of any Lender or the Agent and the fees and costs of
appraisers, engineers, investment bankers or other experts retained by any
Lender or the Agent) incurred by any Lender or the Agent in connection with
(i) the enforcement of or preservation of rights under any of the Loan Documents
against any of the Borrowers, any Guarantor or any other Person or the
administration thereof after the occurrence of a Default or Event of Default,
(ii) the sale of, collection from or other realization upon any of the
Collateral, (iii) the failure of any of the Borrowers or any Guarantor to
perform or observe any provision of the Loan Documents, and (iv) any litigation,
proceeding or dispute whether arising hereunder or otherwise, in any way related
to the Agent’s or any of the Lender’s relationship with any of the Borrowers or
any Guarantor, (f) all reasonable fees, expenses and disbursements of the Agent
incurred in connection with UCC searches, UCC filings, title rundowns, title
searches or mortgage recordings, and (g) all reasonable attorneys’ fees and
costs which may be incurred by KeyBank in connection with each and every
assignment of interests in the Loans pursuant to §18.1 or sale of participations
pursuant to §18.4.  The covenants of this §15 shall survive payment or
satisfaction of payment of the Obligations.

 

§16.                        INDEMNIFICATION

 

THE BORROWERS AGREE TO INDEMNIFY AND HOLD HARMLESS THE AGENT AND THE LENDERS AND
EACH DIRECTOR, OFFICER, EMPLOYEE,

 

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AGENT AND PERSON WHO CONTROLS THE AGENT OR ANY LENDER FROM AND AGAINST ANY AND
ALL CLAIMS, ACTIONS AND SUITS, WHETHER GROUNDLESS OR OTHERWISE, AND FROM AND
AGAINST ANY AND ALL LIABILITIES, LOSSES, DAMAGES AND EXPENSES OF EVERY NATURE
AND CHARACTER ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OF THE OTHER
LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY INCLUDING,
WITHOUT LIMITATION, (A) ANY LEASING FEES AND ANY BROKERAGE, FINDERS OR SIMILAR
FEES ASSERTED AGAINST ANY PERSON INDEMNIFIED UNDER THIS §16 BASED UPON ANY
AGREEMENT, ARRANGEMENT OR ACTION MADE OR TAKEN, OR ALLEGED TO HAVE BEEN MADE OR
TAKEN, BY ANY OF THE BORROWERS, ANY OF THE GENERAL PARTNERS, ANY OF THE SECOND
TIER PARTNERS, ANY OF THE THIRD TIER PARTNERS, ANY GUARANTOR OR ANY OF THE
RESTRICTED SUBSIDIARIES OF A BORROWER, (B) ANY CONDITION, USE, OPERATION OR
OCCUPANCY OF THE MORTGAGED PROPERTY OR OTHER COLLATERAL FIRST OCCURRING PRIOR TO
THE AGENT OR THE LENDERS OR THEIR NOMINEE ACQUIRING TITLE TO THE MORTGAGED
PROPERTY OR OTHER COLLATERAL BY THE EXERCISE OF ITS FORECLOSURE REMEDIES OR BY
DEED IN LIEU OF FORECLOSURE, (C) ANY ACTUAL OR PROPOSED USE BY A BORROWER OF THE
PROCEEDS OF ANY OF THE LOANS, (D) ANY ACTUAL OR ALLEGED INFRINGEMENT OF ANY
PATENT, COPYRIGHT, TRADEMARK, SERVICE MARK OR SIMILAR RIGHT OF ANY OF THE
BORROWERS, ANY OF THE GENERAL PARTNERS, ANY OF THE SECOND TIER PARTNERS, ANY OF
THE THIRD TIER PARTNERS, ANY GUARANTOR OR ANY OF THE RESTRICTED SUBSIDIARIES OF
A BORROWER COMPRISED IN THE COLLATERAL, (E) THE BORROWERS AND THE GUARANTORS
ENTERING INTO OR PERFORMING THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS,
(F) ANY ACTUAL OR ALLEGED VIOLATION OF ANY LAW, ORDINANCE, CODE, ORDER, RULE,
REGULATION, APPROVAL, CONSENT, PERMIT OR LICENSE RELATING TO THE MORTGAGED
PROPERTY OR THE OTHER COLLATERAL WHICH VIOLATION FIRST OCCURRED PRIOR TO THE
AGENT OR THE LENDERS OR THEIR NOMINEE ACQUIRING TITLE TO THE MORTGAGED PROPERTY
OR APPLICABLE COLLATERAL BY THE EXERCISE OF ITS FORECLOSURE REMEDIES OR BY DEED
IN LIEU OF FORECLOSURE, (G) ANY USE OF SYNDTRAK, INTRALINKS OR OTHER SERVICE FOR
THE DISSEMINATION OF DOCUMENTS OR INFORMATION, OR (H) WITH RESPECT TO EACH OF
THE BORROWERS, EACH OF THE GENERAL PARTNERS, EACH OF THE SECOND TIER PARTNERS,
EACH OF THE THIRD TIER PARTNERS, EACH OF THE GUARANTORS AND THE RESTRICTED
SUBSIDIARIES OF EACH BORROWER AND THEIR RESPECTIVE PROPERTIES AND ASSETS, THE
VIOLATION OF ANY ENVIRONMENTAL LAW, THE RELEASE OR THREATENED RELEASE OF ANY
HAZARDOUS SUBSTANCES OR ANY ACTION, SUIT, PROCEEDING OR INVESTIGATION BROUGHT OR
THREATENED WITH RESPECT TO ANY HAZARDOUS SUBSTANCES (INCLUDING, BUT NOT LIMITED
TO CLAIMS WITH RESPECT TO WRONGFUL DEATH, PERSONAL INJURY OR DAMAGE TO
PROPERTY), FIRST OCCURRING PRIOR TO THE AGENT OR THE LENDERS OR

 

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THEIR NOMINEE ACQUIRING TITLE TO THE MORTGAGED PROPERTY BY THE EXERCISE OF ITS
FORECLOSURE REMEDIES OR BY DEED IN LIEU OF FORECLOSURE, IN EACH CASE INCLUDING,
WITHOUT LIMITATION, THE REASONABLE FEES AND DISBURSEMENTS OF COUNSEL AND
ALLOCATED COSTS OF INTERNAL COUNSEL INCURRED IN CONNECTION WITH ANY SUCH
INVESTIGATION, LITIGATION OR OTHER PROCEEDING; PROVIDED, HOWEVER, THAT THE
BORROWERS SHALL NOT BE OBLIGATED UNDER THIS §16 TO INDEMNIFY ANY PERSON FOR
LIABILITIES ARISING FROM SUCH PERSON’S OWN GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT.  IN LITIGATION, OR THE PREPARATION THEREFOR, THE LENDERS AND THE
AGENT SHALL BE ENTITLED TO SELECT A SINGLE LAW FIRM AS THEIR OWN COUNSEL AND, IN
ADDITION TO THE FOREGOING INDEMNITY, THE BORROWERS AGREE TO PAY PROMPTLY THE
REASONABLE FEES AND EXPENSES OF SUCH COUNSEL.  IF, AND TO THE EXTENT THAT THE
OBLIGATIONS OF THE BORROWERS UNDER THIS §16 ARE UNENFORCEABLE FOR ANY REASON,
THE BORROWERS HEREBY AGREE TO MAKE THE MAXIMUM CONTRIBUTION TO THE PAYMENT IN
SATISFACTION OF SUCH OBLIGATIONS WHICH IS PERMISSIBLE UNDER APPLICABLE LAW.  THE
PROVISIONS OF THIS §16 SHALL SURVIVE THE REPAYMENT OF THE LOANS AND THE
TERMINATION OF THE OBLIGATIONS OF THE LENDERS HEREUNDER.  BORROWERS AGREE THAT
THE INDEMNIFICATION OF AGENT AND THE LENDERS BY BORROWERS SET FORTH IN THIS §16
INCLUDES INDEMNIFICATION IN THE EVENT OF ORDINARY NEGLIGENCE ON THE PART OF
AGENT AND THE LENDERS BUT DOES NOT INCLUDE INDEMNIFICATION OF AGENT AND THE
LENDERS FOR AGENT’S OR SUCH LENDER’S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT, OR
AGENT’S OR LENDER’S BREACH OF THE TERMS OF THE LOAN DOCUMENTS.

 

§17.                        SURVIVAL OF COVENANTS, ETC.

 

All covenants, agreements, representations and warranties made herein, in the
Notes, in any of the other Loan Documents or in any documents or other papers
delivered by or on behalf of any of the Borrowers, any Guarantor or any of the
Restricted Subsidiaries of a Borrower pursuant hereto or thereto shall be deemed
to have been relied upon by the Lenders and the Agent, notwithstanding any
investigation heretofore or hereafter made by any of them, and shall survive the
making by the Lenders of any of the Loans, as herein contemplated, and shall
continue in full force and effect so long as any amount due under this Agreement
or the Notes or any of the other Loan Documents remains outstanding or any
Lender has any obligation to make any Loans.  The indemnification obligations of
the Borrowers provided herein and the other Loan Documents shall survive the
full repayment of amounts due and the termination of the obligations of the
Lenders hereunder and thereunder to the extent provided herein and therein.  All
statements contained in any certificate or other paper delivered to any Lender
or the Agent at any time by or on behalf of any of the Borrowers or any
Guarantor or any of the Restricted Subsidiaries of a Borrower pursuant hereto or
in connection with the transactions contemplated hereby shall constitute
representations and warranties by the Borrowers, the Guarantors or such
Restricted Subsidiary hereunder.

 

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§18.                        ASSIGNMENT AND PARTICIPATION

 

§18.1                 Conditions to Assignment by Lenders.  Except as provided
herein, each Lender may assign to one or more banks or other entities all or a
portion of its interests, rights and obligations under this Agreement (including
all or a portion of its Commitment Percentage and Commitment and the same
portion of the Loans at the time owing to it, and the Notes, if any, held by
it); provided that (a) the Agent and the Borrowers shall have given their prior
written consent to such assignment, which consent shall not be unreasonably
withheld (provided that such consent shall not be required for any assignment to
another Lender, to the parent of such Lender, to a wholly-owned subsidiary of
such Lender, or to a Related Fund of such Lender, provided that such assignee
shall remain a parent, a wholly-owned subsidiary or Related Fund of such Lender,
as applicable, and provided further Borrowers shall be deemed to have consented
thereto unless they shall have objected in writing thereto no later than five
(5) Business Days after notice thereof, and provided further that the consent of
Borrowers shall not be required if a Default or Event of Default has occurred
and is continuing), (b) each such assignment shall be of a constant, and not a
varying, percentage of all the assigning Lender’s rights and obligations under
this Agreement, (c) the parties to such assignment shall execute and deliver to
the Agent, for recording in the Register (as hereinafter defined), a notice of
such assignment, together with any Notes subject to such assignment, (d) such
assignee shall be an Eligible Assignee, (e) in no event shall any assignment be
to any Person controlling, controlled by or under common control with, or which
is not otherwise free from influence or control by the Borrower or any Guarantor
or be to a Defaulting Lender or an Affiliate of a Defaulting Lender, (f) such
assignee of a portion of the Revolving Credit Loans shall have a net worth or
unfunded capital commitments as of the date of such assignment of not less than
$200,000,000.00 unless such requirement is waived in writing by the Borrowers
and the Agent, (g) such assignment is subject to the terms of any intercreditor
agreement among the Lenders and the Agent, (h) such assignee shall acquire an
interest in the Revolving Credit Loans of not less than $5,000,000.00 or in the
Secured Term Loans of not less than $5,000,000.00, as applicable unless such
assignment is to another Lender or a Related Fund of such Lender or, if less,
such assignment represents the entire remaining Revolving Credit Commitment or
Secured Term Loan Commitment, as applicable, of the assigning Lender, or unless
such requirement is waived by the Borrowers and Agent, (i) such assignment shall
be of an equal percentage of such assignee’s Revolving Credit Commitment, in the
event an interest in the Revolving Credit Loans is assigned, and an equal
percentage of such assignee’s Commercial Company Secured Term Loan Commitment
and Land Company Secured Term Loan Commitment, in the event an interest in the
Secured Term Loans is assigned, and (j) the assignee and assignor execute and
deliver to Agent an Assignment and Acceptance Agreement in the form of Exhibit F
attached hereto and made a part hereof.  The Lenders shall endeavor to assign
Commitments only to Lenders that are not subject to withholding as provided in
§4.4(b).  Upon such execution, delivery, acceptance and recording, of such
notice of assignment, (i) the assignee thereunder shall be a party hereto and
all other Loan Documents executed by the Lenders and, to the extent provided in
such assignment, have the rights and obligations of a Lender hereunder, (ii) the
assigning Lender shall, to the extent provided in such assignment and upon
payment to the Agent of the registration fee referred to in §18.2, be released
from its obligations under this Agreement, and (iii) the Agent may unilaterally
amend Schedule 1.1 to reflect such assignment.  In connection with each
assignment, the assignee shall represent and warrant to the Agent, the assignor
and each other Lender as to whether such assignee is an Eligible Assignee.  In
connection with each assignment, the assignee shall

 

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represent and warrant to the Agent, the assignor and each other Lender as to
whether such assignee is controlling, controlled by, under common control with
or is not otherwise free from influence or control by, the Borrowers and/or any
Guarantor and whether such assignee is a Defaulting Lender or an Affiliate of a
Defaulting Lender.  In connection with any assignment of rights and obligations
of any Defaulting Lender, no such assignment shall be effective unless and
until, in addition to the other conditions thereto set forth herein, the parties
to the assignment shall make such additional payments to the Agent in an
aggregate amount sufficient, upon distribution thereof as appropriate (which may
be outright payment, purchases by the assignee of participations or actions,
including funding, with the consent of the Borrower and the Agent, the
applicable pro rata share of Loans previously requested but not funded by the
Defaulting Lender to each of which the applicable assignee and assignor hereby
irrevocably consent), to (x) pay and satisfy in full all payment liabilities
then owed by such Defaulting Lender to the Agent or any Lender hereunder (and
interest accrued thereon) and (y) acquire (and fund as appropriate) its full pro
rata share of all Loans in accordance with its Commitment Percentage. 
Notwithstanding the foregoing, in the event that any assignment of rights and
obligations of any Defaulting Lender hereunder shall become effective under
applicable law without compliance with the provisions of this paragraph, then
the assignee of such interest shall be deemed to be a Defaulting Lender for all
purposes of this Agreement until such compliance occurs.  Notwithstanding
anything herein to the contrary, in the event that any Lender acting as Agent
shall assign all or any portion of its Commitment and as a result thereof its
Commitment is less than $15,000,000.00, then such Lender shall promptly provide
written notice thereof to the Lenders and the Majority Lenders (excluding the
Lender acting as Agent) shall have the right, to be exercised within fifteen
(15) days of delivery of such notice by such Lender acting as Agent, to elect to
remove such Lender as Agent and replace such Lender as Agent, subject to the
terms of §14.9.

 

§18.2                 Register.  The Agent for itself and on behalf of the
Borrowers shall maintain a copy of each assignment delivered to it and a
register or similar list (the “Register”) for the recordation of the names and
addresses of the Lenders and the Commitment Percentages of, and principal amount
of the Loans owing to the Lenders from time to time.  Transfers of any
Commitment shall be effective upon recording in the Register.  The entries in
the Register shall be conclusive, in the absence of manifest error, and the
Borrowers, the Agent and the Lenders may treat each Person whose name is
recorded in the Register as a Lender hereunder for all purposes of this
Agreement.  The Register shall be available for inspection by the Borrowers and
the Lenders at any reasonable time and from time to time upon reasonable prior
notice.  Upon each such recordation, the assigning Lender agrees to pay to the
Agent a registration fee in the sum of $5,000.00.  Contemporaneous assignments
by a Lender to multiple assignees will be treated as a single assignment for the
purposes of such registration fee.

 

§18.3                 New Notes.  Upon its receipt of an assignment executed by
the parties to such assignment, together with each Note, if any, subject to such
assignment, the Agent shall (a) record the information contained therein in the
Register, and (b) give prompt notice thereof to the Borrowers and the Lenders
(other than the assigning Lender).  Within five (5) Business Days after receipt
of such notice, the Borrowers, at their own expense, shall, if requested by the
assignee or assignor as provided below, execute and deliver to the Agent, in
exchange for each surrendered Note, a new Note to the order of such assignee in
an amount equal to the amount assumed by such assignee pursuant to such
assignment and, if the assigning Lender has retained some portion of its
obligations hereunder, a new Note to the order of the assigning Lender in an

 

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amount equal to the amount retained by it hereunder.  Such new Notes shall
provide that they are replacements for the surrendered Notes, shall be in an
aggregate principal amount equal to the aggregate principal amount of the
surrendered Notes, shall be dated the effective date of such assignment and
shall otherwise be in substantially the form of the assigned Notes.  The
surrendered Notes, if any, shall be canceled and returned to the Borrowers.

 

§18.4                 Participations.  Each Lender may sell participations to
one or more banks or other entities in all or a portion of such Lender’s rights
and obligations under this Agreement and the other Loan Documents; provided that
(a) any such sale or participation shall not affect the rights and duties of the
selling Lender hereunder to the Borrowers, (b) such participation shall not
entitle such participant to any rights or privileges under this Agreement or the
Loan Documents, including, without limitation, the right to approve waivers,
amendments or modifications, (c) such participant shall have no direct rights
against any of the Borrowers or any Guarantor except the rights granted to the
Lenders pursuant to §13, (d) such sale is effected in accordance with all
applicable laws, and (e) such participant shall not be a Person controlling,
controlled by or under common control with, or which is not otherwise free from
influence or control by, any of the Borrowers or any Guarantor and shall not be
a Defaulting Lender or an Affiliate of a Defaulting Lender.

 

§18.5                 Pledge by Lender.  Any Lender may at any time pledge all
or any portion of its interest and rights under this Agreement (including all or
any portion of its Note) to any of the twelve Federal Reserve Banks organized
under §4 of the Federal Reserve Act, 12 U.S.C. §341 or to any Federal Home Loan
Bank.  Any Secured Term Loan Lender may with the consent of the Agent pledge all
or any portion of its interests and rights under this Agreement (including all
or any portion of its Note) to a Person approved by the Agent.  No such pledge
or the enforcement thereof shall release the pledgor Lender from its obligations
hereunder or under any of the other Loan Documents.

 

§18.6                 No Assignment by Borrowers.  Neither of the Borrowers
shall assign or transfer any of its rights or obligations under any of the Loan
Documents without the prior written consent of each of the Lenders.

 

§18.7                 Cooperation; Disclosure.  The Borrowers agree to promptly
cooperate with any Lender in connection with any proposed assignment or
participation of all or any portion of its Commitment.  The Borrowers agree that
in addition to disclosures made in accordance with standard banking practices
any Lender may disclose information obtained by such Lender pursuant to this
Agreement to assignees or participants and potential assignees or participants
hereunder, provided that any potential assignee or participant hereunder shall
execute and deliver to Agent and the Borrowers a confidentiality agreement in
substantially the form of Exhibit G hereto as a condition to the receipt of any
financial statements or other reports delivered by the Borrowers to the Agent
hereunder.  In addition, the Lenders may make disclosure of such information to
any contractual counterparty in swap agreements or such contractual
counterparty’s professional advisors (so long as such contractual counterparty
or professional advisors to such contractual counterparty agree to be bound by
the provisions of this §18.7).

 

§18.8                 Mandatory Assignment.  In the event Borrowers request that
certain amendments, modifications or waivers be made to this Agreement or any of
the other Loan Documents which

 

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request is approved by Agent but is not approved by one or more of the Lenders
(any such non-consenting Lender shall hereafter be referred to as the
“Non-Consenting Lender”), then, within thirty (30) days after Borrowers’ receipt
of notice of such disapproval by such Non-Consenting Lender, Borrowers shall
have the right as to such Non-Consenting Lender, to be exercised by delivery of
written notice delivered to the Agent and the Non-Consenting Lender within
thirty (30) days of receipt of such notice, to elect to cause the Non-Consenting
Lender to transfer its Commitment.  The Agent shall promptly notify the
remaining Lenders that each of such Lenders shall have the right, but not the
obligation, to acquire a portion of the Commitment, pro rata based upon their
relevant Commitment Percentages, of the Non-Consenting Lender (or if any of such
Lenders does not elect to purchase its pro rata share, then to such remaining
Lenders in such proportion as approved by the Agent).  In the event that the
Lenders do not elect to acquire all of the Non-Consenting Lender’s Commitment,
then the Agent shall endeavor to find a new Lender or Lenders to acquire such
remaining Commitment.  Upon any such purchase of the Commitment of the
Non-Consenting Lender, the Non-Consenting Lender’s interests in the Obligations
and its rights hereunder and under the Loan Documents shall terminate at the
date of purchase, and the Non-Consenting Lender shall promptly execute and
deliver any and all documents reasonably requested by Agent to surrender and
transfer such interest, including, without limitation, an assignment and
acceptance agreement in the form attached hereto as Exhibit F and such
Non-Consenting Lender’s original Note, if any.  The purchase price to be paid by
the acquiring Lenders for the Non-Consenting Lender’s Commitment shall equal the
principal owed to such Non-Consenting Lender, and the Borrowers shall pay to
such Non-Consenting Lender in addition thereto and as a condition to such sale
any and all other amounts outstanding and owed by Borrowers to the
Non-Consenting Lender, including all accrued and unpaid interest or fees, which
would be owed to such Non-Consenting Lender if the Loans were to be repaid in
full on the date of such purchase of the Non-Consenting Lender’s Commitment
(provided that the Borrowers may pay such interest, fees and other amounts
(other than principal)).  No registration fee under §18.2 shall be required in
connection with such assignment.

 

§19.                        NOTICES

 

Each notice, demand, election or request provided for or permitted to be given
pursuant to this Agreement (hereinafter in this §19 referred to as “Notice”),
but specifically excluding to the maximum extent permitted by law any notices of
the institution or commencement of foreclosure proceedings, must be in writing
and shall be deemed to have been properly given or served by personal delivery
or by sending same by overnight courier or by depositing same in the United
States Mail, postpaid and registered or certified, return receipt requested, or
by sending same by facsimile with receipt by the party giving the Notice of an
acknowledgment generated by the machine from which the facsimile was sent
indicating that the facsimile was sent in its entirety to the addressee’s
facsimile number, in each case addressed as follows:

 

If to the Agent or any Lender, at the address set forth on the signature
page for the Agent or such Lender; and

 

If to the Borrowers:

 

The Woodlands Commercial Properties Company, L.P.

 

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The Woodlands Land Development Company, L.P.

c/o The Woodlands Operating Company, L.P.

24 Waterway Avenue, Suite 1100

The Woodlands, Texas  77380

Attn:  President

Facsimile:  (281) 719-7388

 

With a copy to:

 

The Woodlands Commercial Properties Company, L.P.

The Woodlands Land Development Company, L.P.

c/o The Woodlands Operating Company, L.P.

24 Waterway Avenue, Suite 1100

The Woodlands, Texas  77380

Attn:  Chief Financial Officer

Facsimile:  (281) 719-7331

 

and to:

 

The Howard Hughes Corporation

13355 Noel Road, Suite 2200

Dallas, Texas  75240

Attn:  President

Facsimile:  (214) 741-3021

 

and to:

 

The Howard Hughes Corporation

13355 Noel Road, Suite 2200

Dallas, Texas  75240

Attn:  General Counsel

Facsimile:  (214) 741-3021

 

and to each other Lender which may hereafter become a party to this Agreement at
such address as may be designated by such Lender.  Each Notice shall be
effective upon being personally delivered or upon being sent by overnight
courier or upon being deposited in the United States Mail as aforesaid, or if
transmitted by facsimile, upon being sent and confirmation of receipt.  The time
period in which a response to such Notice must be given or any action taken with
respect thereto (if any), however, shall commence to run from the date of
receipt if personally delivered or sent by overnight courier or facsimile (or if
sent by facsimile, next Business Day if received after 5:00 p.m. (Atlanta time)
or on a day that is not a Business Day), or if so deposited in the United States
Mail, the earlier of three (3) Business Days following such deposit or the date
of receipt as disclosed on the return receipt.  Rejection or other refusal to
accept or the inability to deliver because of changed address for which no
notice was given shall be deemed to be receipt of the Notice sent.  By giving at
least fifteen (15) days prior Notice thereof, a Borrower, a Lender or Agent
shall have the right from time to time and at any time during the term of this
Agreement to change their respective addresses and each shall have the right to
specify as its address any other address within the United States of America.

 

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§20.                        RELATIONSHIP

 

Neither the Agent nor any Lender has any fiduciary relationship with or
fiduciary duty to any of the Borrowers arising out of or in connection with the
Agreement or the other Loan Documents or the transactions contemplated hereunder
and thereunder, and the relationship between each Lender and each Borrower is
solely that of a lender and borrower, and nothing contained herein or in any of
the other Loan Documents shall in any manner be construed as making the parties
hereto partners, joint venturers or any other relationship other than lender and
borrower.

 

§21.                        GOVERNING LAW; CONSENT TO JURISDICTION AND SERVICE

 

THIS AGREEMENT AND EACH OF THE OTHER LOAN DOCUMENTS EXCEPT AS OTHERWISE
SPECIFICALLY PROVIDED THEREIN, ARE CONTRACTS UNDER THE LAWS OF THE STATE OF
TEXAS AND SHALL FOR ALL PURPOSES BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY
THE LAWS OF SUCH STATE (EXCLUDING THE LAWS APPLICABLE TO CONFLICTS OR CHOICE OF
LAW).  THE BORROWERS AGREE THAT ANY SUIT FOR THE ENFORCEMENT OF THIS AGREEMENT
OR ANY OF THE OTHER LOAN DOCUMENTS MAY BE BROUGHT IN THE COURTS OF THE STATE OF
TEXAS OR ANY FEDERAL COURT SITTING THEREIN AND CONSENTS TO THE NONEXCLUSIVE
JURISDICTION OF SUCH COURT AND THE SERVICE OF PROCESS IN ANY SUCH SUIT BEING
MADE UPON THE BORROWERS BY MAIL AT THE ADDRESS SPECIFIED IN §19.  THE BORROWERS
HEREBY WAIVE ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE VENUE OF ANY
SUCH SUIT OR ANY SUCH COURT OR THAT SUCH SUIT IS BROUGHT IN AN INCONVENIENT
COURT.

 

§22.                        HEADINGS

 

The captions in this Agreement are for convenience of reference only and shall
not define or limit the provisions hereof.

 

§23.                        COUNTERPARTS

 

This Agreement and any amendment hereof may be executed in several counterparts
and by each party on a separate counterpart, each of which when so executed and
delivered shall be an original, and all of which together shall constitute one
instrument.  In proving this Agreement it shall not be necessary to produce or
account for more than one such counterpart signed by the party against whom
enforcement is sought.

 

§24.                        ENTIRE AGREEMENT, ETC.

 

The Loan Documents and any other documents executed in connection herewith or
therewith express the entire understanding of the parties with respect to the
transactions contemplated hereby.  Neither this Agreement nor any term hereof
may be changed, waived, discharged or terminated, except as provided in §27.

 

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§25.                        WAIVER OF JURY TRIAL AND CERTAIN DAMAGE CLAIMS

 

EACH OF THE BORROWERS, THE AGENT AND THE LENDERS HEREBY WAIVES ITS RIGHT TO A
JURY TRIAL WITH RESPECT TO ANY ACTION OR CLAIM ARISING OUT OF ANY DISPUTE IN
CONNECTION WITH THIS AGREEMENT, ANY NOTE OR ANY OF THE OTHER LOAN DOCUMENTS, ANY
RIGHTS OR OBLIGATIONS HEREUNDER OR THEREUNDER OR THE PERFORMANCE OF SUCH RIGHTS
AND OBLIGATIONS.  EXCEPT TO THE EXTENT EXPRESSLY PROHIBITED BY LAW, EACH OF THE
BORROWERS HEREBY WAIVES ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY SUCH
LITIGATION ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES OR ANY
DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL DAMAGES.  EACH OF THE BORROWERS
(A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY LENDER OR THE
AGENT HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH LENDER OR THE AGENT
WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVERS AND
(B) ACKNOWLEDGES THAT THE AGENT AND THE LENDERS HAVE BEEN INDUCED TO ENTER INTO
THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS TO WHICH THEY ARE PARTIES BY, AMONG
OTHER THINGS, THE WAIVERS AND CERTIFICATIONS CONTAINED IN THIS §25.

 

§26.                        DEALINGS WITH THE BORROWERS

 

The Agent, the Lenders and their affiliates may accept deposits from, extend
credit to, invest in, act as trustee under indentures of, serve as financial
advisor of, and generally engage in any kind of banking, trust or other business
with the each Borrower, their respective Restricted Subsidiaries or Unrestricted
Subsidiaries or any of their affiliates regardless of the capacity of the Agent
or the Lender hereunder.  The Lenders acknowledge that, pursuant to such
activities, KeyBank or its Affiliates may receive information regarding such
Persons (including information that may be subject to confidentiality
obligations in favor of such Person) and acknowledge that the Agent shall be
under no obligation to provide such information to the Lenders.

 

§27.                        CONSENTS, AMENDMENTS, WAIVERS, ETC.

 

Except as otherwise expressly provided in this Agreement, any consent or
approval required or permitted by this Agreement may be given, and any term of
this Agreement or of any other instrument related hereto or mentioned herein may
be amended, and the performance or observance by the Borrowers or the Guarantors
of any terms of this Agreement or such other instrument or the continuance of
any Default or Event of Default may be waived (either generally or in a
particular instance and either retroactively or prospectively) with, but only
with, the written consent of the Majority Lenders.  Notwithstanding the
foregoing, none of the following may occur without the written consent of the
Super-Majority Lenders: a modification or waiver of any of the covenants set
forth in §8.7, §9.1, §9.2, §9.3 and §9.4 or with respect to the Borrowing Base
(including any definitions relating to such provisions).  Notwithstanding the
foregoing, none of the following may occur without the written consent of each
Lender directly

 

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affected thereby: (a) a decrease in the rate of interest on any Loan (but
excluding interest at the default rate); (b) an increase in the amount of the
Commitments of the Lenders; (c) a reduction or waiver of the principal of any
unpaid Loan or any interest thereon; a change in the amount of any fee payable
to a Lender hereunder; (d) any extension, postponement or waiver of the date on
which any fees are payable to a Lender hereunder; except as provided in §4.15 an
extension of the Maturity Date; (e) the release of the Borrowers or the
Guarantor which has executed any of the Loan Documents or any of the Collateral
except as otherwise provided herein; (f) any modification to require a Lender to
fund a pro rata share of a request for an advance of the Loans made by the
Borrowers other than based on its Commitment Percentage; a change to this §27;
(g) any postponement of any date fixed for any payment of principal of or
interest on the Loan; (h) any change in the manner of distribution of any
payments to the Lenders or Agent; or (i) or an amendment of the definition of
Majority Lenders or Super-Majority Lenders or of any requirement for consent by
all of the Lenders.  The amount of the Agent’s fee payable for the Agent’s
account and the provisions of §14 may not be amended without the written consent
of the Agent.  The provisions of §14 may not be amended nor any change made in
the amount of any fee payable to the Agent without the written consent of the
Agent.  The Borrowers agree to enter into such modifications or amendments of
this Agreement or the other Loan Documents as reasonably may be requested by
KeyBank in connection with the assignment of Commitments provided that no such
amendment or modification materially affects or increases any of the obligations
of the Borrowers hereunder.  Notwithstanding anything to the contrary herein, no
Defaulting Lender shall have any right to approve or disapprove any amendment,
waiver or consent hereunder (and any amendment, waiver or consent which by its
terms requires the consent of all Lenders or each affected Lender may be
effected with the consent of the applicable Lenders other than Defaulting
Lenders, except that (x) the Commitment of any Defaulting Lender may not be
increased without the consent of such Lender and (y) any waiver, amendment or
modification requiring the consent of all Lenders that by its terms affects any
Defaulting Lender more adversely than other affected Lenders shall require the
consent of such Defaulting Lender.  No waiver shall extend to or affect any
obligation not expressly waived or impair any right consequent thereon.  No
course of dealing or delay or omission on the part of the Agent or any Lender in
exercising any right shall operate as a waiver thereof or otherwise be
prejudicial thereto.  No notice to or demand upon the Borrowers shall entitle
the Borrowers to other or further notice or demand in similar or other
circumstances.

 

§28.                        SEVERABILITY

 

The provisions of this Agreement are severable, and if any one clause or
provision hereof shall be held invalid or unenforceable in whole or in part in
any jurisdiction, then such invalidity or unenforceability shall affect only
such clause or provision, or part thereof, in such jurisdiction, and shall not
in any manner affect such clause or provision in any other jurisdiction, or any
other clause or provision of this Agreement in any jurisdiction.

 

§29.                        [INTENTIONALLY OMITTED.]

 

§30.                        REPLACEMENT OF NOTES

 

Upon receipt of evidence reasonably satisfactory to a Borrower of the loss,
theft, destruction or mutilation of any Note, and in the case of any such loss,
theft or destruction, upon

 

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delivery of an indemnity agreement reasonably satisfactory to such Borrower or,
in the case of any such mutilation, upon surrender and cancellation of the
applicable Note, such Borrower will execute and deliver, in lieu thereof, a
replacement Note, identical in form and substance to the applicable Note and
dated as of the date of the applicable Note and upon such execution and delivery
all references in the Loan Documents to such Note shall be deemed to refer to
such replacement Note.

 

§31.                        TIME OF THE ESSENCE

 

Time is of the essence with respect to each and every covenant, agreement and
obligation of the Borrowers under this Agreement and the other Loan Documents.

 

§32.                        NONRECOURSE OBLIGATIONS

 

Anything contained in this Agreement or the other Loan Documents to the contrary
notwithstanding (except as provided below), Agent’s and the Lenders’ recourse
against Borrowers for the payment and performance of all of the Obligations of
Borrowers under this Agreement or the other Loan Documents shall be limited
solely to the interest of Borrowers in the Collateral and all of the other
assets, whether now owned or hereafter acquired, of any of the Borrowers, and no
partner of any of the Borrowers shall be personally liable for the performance
of any of the Obligations; provided, however, that (a) the foregoing limitation
on the personal liability of the General Partners described above shall not
impair the validity of any lien, pledge, security interest or other encumbrance
created by the Loan Documents, or the right of Agent to foreclose and/or enforce
any of its rights or remedies against a Guarantor, in and to the Collateral or
any other assets of any Borrower or a Guarantor upon the occurrence of an Event
of Default as provided in this Agreement or the other Loan Documents or be
deemed to be a release or impairment of the Obligations, and (b)the foregoing
limitation shall not limit Agent and Lenders, in the case of actual fraud,
misapplication or misappropriation of insurance proceeds, condemnation proceeds,
tenant security deposits, rents, issues, profits, accounts, revenues, payments
and any other funds which are not applied in accordance with the terms of the
Loan Documents, or intentional misrepresentation committed against, or made to,
the Agent or any Lender by any of the Borrowers, any of their respective
Restricted Subsidiaries, any Guarantor or any of its members, partners,
officers, agents, employees or other person authorized or apparently authorized
to make statements or representations on behalf of such Person, from instituting
any proceeding or making any claim they may otherwise have against Borrowers,
but not against any direct or indirect owner of Borrowers, in respect thereof. 
Nothing herein shall be deemed to be a waiver of any right which Agent may have
under §506(a), 506(b), 1111(b) or any other provision of the Bankruptcy Code or
any successor thereto or similar provisions under applicable state law to file a
claim for the full amount of the Obligations or to require that all the
Collateral shall continue to secure all of the Obligations in accordance with
this Agreement and the other Loan Documents.  Nothing herein shall relieve,
reduce or impair any obligation of Guarantors under the Guaranty.

 

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§33.                        JOINT AND SEVERAL LIABILITY

 

Each of the Borrowers covenants and agrees that each and every covenant and
obligation of any Borrower hereunder and under the other Loan Documents shall be
the joint and several obligations of each Borrower.

 

§34.                        ADDITIONAL AGREEMENTS CONCERNING OBLIGATIONS OF
BORROWERS

 

§34.1                 Waiver of Automatic or Supplemental Stay.  Each of the
Borrowers represents, warrants and covenants to the Lenders and Agent that in
the event of the filing of any voluntary or involuntary petition in bankruptcy
by or against the other of the Borrowers at any time following the execution and
delivery of this Agreement, neither of the Borrowers shall seek a supplemental
stay or any other relief, whether injunctive or otherwise, pursuant to §105 of
the Bankruptcy Code or any other provision of the Bankruptcy Code, to stay,
interdict, condition, reduce or inhibit the ability of the Lenders or Agent to
enforce any rights it has by virtue of this Agreement, the Loan Documents, or at
law or in equity, or any other rights the Lenders or Agent has, whether now or
hereafter acquired, against the other Borrower or against any property owned by
such other Borrower.

 

§34.2                 Consideration.  The Borrowers hereby represent and warrant
to the Lenders and Agent that each of them has received good and valuable
consideration for the division of the assets described in the Division
Agreement, and the Borrowers hereby acknowledge the adequacy and sufficiency of
such consideration.

 

§34.3                 Waiver of Defenses.  Each of the Borrowers hereby waives
and agrees not to assert or take advantage of any defense based upon: (a) any
incapacity, lack of authority, death or disability of the other Borrower or any
other Person; (b) any failure of the Lenders or Agent to commence an action
against the other Borrower or any other Person or to file or enforce a claim
against the estate (either in administration, bankruptcy, or any other
proceeding) of the other Borrower or any other Person, whether or not demand is
made upon the Lenders or Agent to file or enforce such claim; (c) any failure of
the Lenders or Agent to give notice of the existence, creation or incurring of
any new or additional indebtedness or other obligation or of any action or
nonaction on the part of any other Person in connection with the Loan Documents,
including the waiver of any conditions to the making of any advance of proceeds
of any Loan; (d) any failure on the part of the Lenders or Agent to ascertain
the extent or nature of the Collateral or any insurance or other rights with
respect thereto, or the liability of any party liable for the Loan Documents or
the obligations evidenced or secured thereby, or any failure on the part of the
Lenders or Agent to disclose to the Borrowers any facts any of them may now or
hereafter know regarding the Borrowers, the Collateral, or such other parties;
(e) except as specifically required in the Loan Documents, any notice of
intention to accelerate any of the Obligations or any notice of acceleration of
the Obligations; (f) any lack of acceptance or notice of acceptance of this
Agreement by Lenders or Agent; (g) except as specifically required in the Loan
Documents, any lack of presentment, demand, protest, or notice of demand,
protest or nonpayment with respect to any indebtedness or obligations under any
of the Loan Documents; (h) any lack of notice of disposition or of manner of
disposition of any Collateral; (i) except as specifically required in the Loan
Documents, any lack of other notices to which the Borrowers, or either of them,
might

 

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otherwise be entitled; (j) failure to properly record any document or any other
lack of due diligence by the Lenders or Agent in creating or perfecting a
security interest in or collection, protection or realization upon any
Collateral or in obtaining reimbursement or performance from any person or
entity now or hereafter liable for the Loan Documents or any obligation secured
thereby; (k) any invalidity or irregularity, in whole or in part, of any one or
more of the Loan Documents; (l) the inaccuracy of any representation or other
provision contained in any Loan Document; (m) any sale or assignment of the Loan
Documents, in whole or in part; (n) any sale or assignment by any of the
Borrowers of the Collateral, or any portion thereof, whether or not consented to
by the Lenders or Agent; and (o) any lack of commercial reasonableness in
dealing with any of the Collateral now or hereafter owned by the other of the
Borrowers.

 

§34.4                 Waiver.  Each of the Borrowers waives, to the fullest
extent that each may lawfully so do, the benefit of all appraisement, valuation,
stay, extension, homestead, exemption and redemption laws which such Person may
claim or seek to take advantage of in order to prevent or hinder the enforcement
of any of the Loan Documents or the exercise by Lenders or Agent of any of their
respective remedies under the Loan Documents and, to the fullest extent that the
Borrowers may lawfully so do, such Person waives any and all right to have the
assets comprised in the security intended to be created by the Security
Documents (including, without limitation, those assets owned by the other of the
Borrowers) marshaled upon any foreclosure of the lien created by such Security
Documents.  Each of the Borrowers further agrees that the Lenders and Agent
shall be entitled to exercise their respective rights and remedies under the
Loan Documents or at law or in equity in such order as they may elect.  Without
limiting the foregoing, each of the Borrowers further agrees that upon the
occurrence of an Event of Default, the Lenders and Agent may exercise any of
such rights and remedies without notice to either of the Borrowers except as
required by law or the Loan Documents and agrees that neither the Lenders nor
Agent shall be required to proceed against the other of the Borrowers or any
other person or to proceed against or to exhaust any other security held by the
Lenders or Agent at any time or to pursue any other remedy in Lender’s or
Agent’s power or under any of the Loan Documents before proceeding against a
Borrower or its assets under the Loan Documents.

 

§34.5                 Subordination.  Each of the Borrowers hereby expressly
waives any right of contribution from or indemnity against the other, whether at
law or in equity, arising from any payments made by such Person pursuant to the
terms of this Agreement or the Loan Documents, and each of the Borrowers
acknowledges that it has no right whatsoever to proceed against the other for
reimbursement of any such payments.  In connection with the foregoing, each of
the Borrowers expressly waives any and all rights of subrogation to the Lenders
or Agent against the other of the Borrowers, and each of the Borrowers hereby
waives any rights to enforce any remedy which the Lenders or Agent may have
against the other of the Borrowers and any rights to participate in any
Collateral or any other assets of the other Borrower.  Notwithstanding the
foregoing, the Borrowers shall be entitled to the rights and benefits set forth
in the Contribution Agreement and the Funding Agreement.  In addition to and
without in any way limiting the foregoing, each of the Borrowers hereby
subordinates any and all indebtedness it may now or hereafter owe to such other
Borrower to all indebtedness of the Borrowers to the Lenders and Agent, and
agrees with the Lenders and Agent that neither of the Borrowers shall claim any
offset or other reduction of such Borrower’s obligations hereunder because of
any such indebtedness and shall not take any action to obtain any of the
Collateral or any other assets of the other Borrower.

 

126

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§35.                        RIGHTS OF THIRD PARTIES

 

This Agreement and the other Loan Documents are made and entered into for the
sole protection and legal benefit of the Borrowers, the Lenders, the Agent and
the holders of the Hedge Obligations, and their permitted successors and
assigns, and no other Person shall be a direct or indirect legal beneficiary of,
or have any direct or indirect cause of action or claim in connection with, this
Agreement or any of the other Loan Documents.  All conditions to the performance
of the obligations of the Agent and the Lenders under this Agreement, including
the obligation to make Loans, are imposed solely and exclusively for the benefit
of the Agent and the Lenders and no other Person shall have standing to require
satisfaction of such conditions in accordance with their terms or be entitled to
assume that the Agent and the Lenders will refuse to make Loans in the absence
of strict compliance with any or all thereof and no other Person shall, under
any circumstances, be deemed to be a beneficiary of such conditions, any and all
of which may be freely waived in whole or in part by the Agent and the Lenders
at any time if in their sole discretion they deem it desirable to do so.  In
particular, the Agent and the Lenders make no representations and assume no
obligations as to third parties concerning the quality of the construction by
the Borrowers or any of their Restricted Subsidiaries or Unrestricted
Subsidiaries, as applicable, of the Vertical Commercial Improvements or other
development or the absence therefrom of defects.

 

§36.                        PATRIOT ACT

 

Each Lender and the Agent (for itself and not on behalf of any Lender) hereby
notifies the Borrowers and Guarantors that, pursuant to the requirements of the
Patriot Act, it is required to obtain, verify and record information that
identifies each Borrower, which information includes names and addresses and
other information that will allow such Lender or the Agent, as applicable, to
identify each Borrower in accordance with the Patriot Act.

 

[REMAINDER OF PAGE LEFT BLANK]

 

127

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NOTICE OF FINAL AGREEMENT.

 

THIS WRITTEN LOAN AGREEMENT AND THE LOAN DOCUMENTS EXECUTED IN CONNECTION
HEREWITH REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS
OF THE PARTIES.

 

THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

 

IN WITNESS WHEREOF, the undersigned have duly executed this Agreement as a
sealed instrument the date first set forth above.

 

 

BORROWERS:

 

 

 

THE WOODLANDS COMMERCIAL PROPERTIES COMPANY, L.P., a Texas limited partnership

 

 

 

 

 

By:

/s/ Grant Herlitz

 

Name:

Grant Herlitz

 

Title:

Authorized Representative

 

 

 

 

 

THE WOODLANDS LAND DEVELOPMENT COMPANY, L.P., a Texas limited partnership

 

 

 

 

 

By:

/s/ Grant Herlitz

 

Name:

Grant Herlitz

 

Title:

Authorized Representative

 

128

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KEYBANK NATIONAL ASSOCIATION,

 

individually and as Agent

 

 

 

By:

/s/ Meredith H. Houseworth

 

Name:

Meredith H. Houseworth

 

Title:

Vice President

 

 

 

 

KeyBank National Association

 

1200 Abernathy Road, N.E.

 

Suite 1550

 

Atlanta, Georgia 30328

 

Attn: Dan Silbert

 

Facsimile: 770-510-2195

 

 

 

and

 

 

 

KeyBank National Association

 

1675 Broadway, Suite 400

 

Mail Code CO-02-WT-0401

 

Denver, Colorado 80202

 

Attn: Cheryl F. VanKlompenberg

 

Facsimile: (720) 904-4430

 

 

129

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COMPASS BANK,

 

an Alabama banking corporation

 

 

 

 

 

By:

/s/ Todd M. Fuller

 

Name:

Todd M. Fuller

 

Title:

Senior Vice President

 

 

 

 

Compass Bank

 

8333 Douglas Avenue

 

Suite 505

 

Dallas, Texas 75225

 

Attn: Todd M. Fuller

 

Facsimile:

 

 

130

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JPMORGAN CHASE BANK, N.A.

 

 

 

 

 

By:

/s/ Diane M. Chavez

 

Name:

Diane M. Chavez

 

Title:

REB Credit Banker

 

 

 

 

JPMorgan Chase Bank, N.A.

 

2200 Ross Avenue, 9th Floor, TX1-2953

 

Dallas, TX 75201-2787

 

Attn: Diane M. Chavez

 

Facsimile: (214) 965-3127

 

 

131

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AMEGY BANK, NATIONAL ASSOCIATION

 

 

 

 

 

By:

/s/ Eric Wojner

 

Name:

Eric Wojner

 

Title:

Senior Vice President

 

 

 

 

Amegy Bank, N.A.

 

4400 Post Oak Parkway

 

Houston, TX 77002

 

Attn: Eric Wojner

 

Facsimile: (281) 465-6494

 

 

132

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TEXAS CAPITAL BANK, N.A., a national banking association

 

 

 

By:

/s/ Richard W. Earthman

 

Name:

Richard W. Earthman

 

Title:

Senior Vice President

 

 

Texas Capital Bank, N.A.

 

One Riverway

 

Suite 2100

 

Houston, Texas 77019

 

Attn: Angie Hill

 

Facsimile: (832) 308-7042

 

 

133

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WOODFOREST NATIONAL BANK

 

 

 

By:

/s/ Ashley Naquin

 

Name:

Ashley Naquin

 

Title:

Vice President

 

 

Woodforest National Bank

 

1330 Lake Robbins Drive

 

Suite 100

 

The Woodlands, Texas 77380

 

Attn: Ashley Naquin

 

Facsimile: (832) 375-3712

 

 

134

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CAPITAL ONE, NATIONAL ASSOCIATION

 

 

 

By:

/s/ Ryan Matthews

 

Name:

Ryan Matthews

 

Title:

Vice President

 

 

 

 

Capital One, N.A.

 

5718 Westheimer

 

Suite 600

 

Houston, Texas 77057

 

Attn: Ryan Matthews

 

Facsimile: (713) 435-5117

 

 

135

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PNC BANK, NATIONAL ASSOCIATION

 

 

 

By:

/s/ Michael Catalano

 

Name:

Michael Catalano

 

Title:

Senior Vice President

 

 

 

 

PNC Bank, National Association

 

13355 Noel Road

 

Suite 1770

 

Dallas, TX 75240

 

Attn: Michael Catalano

 

Facsimile: (972) 490-6018

 

 

136

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GREEN BANK, N.A.

 

 

 

By:

/s/ J. Cory LeBouf

 

Name:

J. Cory LeBouf

 

Title:

Senior Vice President

 

 

 

 

Green Bank, N.A.

 

c/o CDC Group (Linda Salcido & Oanh

Solomon

 

2900 N. Loop West

 

Suite 200

 

Houston, Texas 77092

 

Attn: J. Cory LeBouf

 

Facsimile: (713) 316-3665

 

 

137

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TRUSTMARK NATIONAL BANK

 

 

 

By:

/s/ Amy Walp

 

Name:

Amy Walp

 

Title:

Vice President

 

 

 

 

Trustmark National Bank

 

945 Bunker Hill

 

Suite 200

 

Houston, TX 77024

 

Attn: Amy Walp

 

Facsimile: (713) 365-0890

 

 

138

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THE F&M BANK & TRUST COMPANY

 

 

 

By:

/s/ Dave McCarthy

 

Name:

Dave McCarthy

 

Title:

Senior Vice President

 

 

 

 

The F&M Bank & Trust Company.

 

1330 South Harvard Street

 

Tulsa, OK 74159

 

Attn: Dave McCarthy

 

Facsimile: (918) 743-6256

 

 

139

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CADENCE BANK, NA

 

 

 

 

 

By:

/s/ Mary Katherine Franklin

 

Name:

Mary Katherine Franklin

 

Title:

Vice President

 

 

 

 

Cadence Bank, NA

 

17 N. 20th Street

 

Birmingham, Alabama 35203

 

Attn:

 

Facsimile:

 

 

140

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EXHIBIT A-1

 

[RESERVED]

 

1

--------------------------------------------------------------------------------

 

EXHIBIT A-2

 

FORM OF REVOLVING CREDIT NOTE

 

$

 

, 2013

 

FOR VALUE RECEIVED, the undersigned THE WOODLANDS LAND DEVELOPMENT COMPANY,
L.P., a Texas limited partnership, and THE WOODLANDS COMMERCIAL PROPERTIES
COMPANY, L.P., a Texas limited partnership, hereby jointly and severally promise
to pay to
                                                                              
or order, in accordance with the terms of that certain Third Amended and
Restated Master Credit Agreement dated August 8, 2013 (the “Credit Agreement”),
as from time to time in effect, among the undersigned, KeyBank National
Association, for itself and as Agent, and such other Lenders as may be from time
to time named therein, to the extent not sooner paid, on or before the Maturity
Date, the principal sum of
                                                                                          
DOLLARS ($                            ), or such amount as may be advanced by
the payee hereof to Land Company under the Credit Agreement as Revolving Credit
Loans with daily interest from the date hereof, computed as provided in the
Credit Agreement, on the principal amount hereof from time to time unpaid, at a
rate per annum on each portion of the principal amount which shall at all times
be equal to the rate of interest applicable to such portion in accordance with
the Credit Agreement, and with interest on overdue principal and, to the extent
permitted by applicable law, on overdue installments of interest and late
charges at the rates provided in the Credit Agreement.  Interest shall be
payable on the dates specified in the Credit Agreement, except that all accrued
interest shall be paid at the stated or accelerated maturity hereof or upon the
prepayment in full hereof.  Capitalized terms used herein and not otherwise
defined herein shall have the meanings set forth in the Credit Agreement.

 

Payments hereunder shall be made to KeyBank National Association, as Agent for
the payee hereof, at 127 Public Square, Cleveland, Ohio  44114-1306 or at such
other address as Agent may designate.

 

This Note is one of one or more Revolving Credit Notes evidencing borrowings by
Land Company under and is entitled to the benefits and subject to the provisions
of the Credit Agreement.  The principal of this Note may be due and payable in
whole or in part prior to the maturity date stated above and is subject to
mandatory prepayment in the amounts and under the circumstances set forth in the
Credit Agreement, and may be prepaid in whole or from time to time in part, all
as set forth in the Credit Agreement.

 

Notwithstanding anything in this Note or the other Loan Documents to the
contrary, it is the intent of the Agent, the Lenders and the Borrowers to
conform to and contract in strict compliance with all applicable usury laws from
time to time in effect.  All agreements (including the Loan Documents) between
Agent, the Lenders and the Borrowers (or any other party liable with respect to
any indebtedness under the Loan Documents) are hereby limited by the provisions
of this Section which shall override and control all such agreements, whether
now existing or hereafter arising and whether written or oral.  In no way, nor
in any event or contingency (including but not limited to prepayment, default,
demand for payment, or acceleration of the maturity of any obligation), shall
the interest taken, reserved, contracted for, charged or received under this
Note, any other Loan Document, or otherwise, exceed the

 

1

--------------------------------------------------------------------------------

 

maximum nonusurious amount permissible under applicable law.  If, from any
possible construction of this Note, any other Loan Document, or any other
document, interest would otherwise be taken, reserved, contracted for, charged
or payable in excess of the maximum nonusurious amount, any such construction
shall be subject to the provisions of this Section and this Note, such other
Loan Document, and such other document shall be automatically reformed and the
interest taken, reserved, contracted for, charged or payable shall be
automatically reduced to the maximum nonusurious amount permitted under
applicable law, without the necessity of execution of any amendment or new
document.  If any Lender shall ever receive anything of value which is interest
or characterized as interest under applicable law and which would apart from
this provision be in excess of the maximum lawful nonusurious amount, an amount
equal to the amount which would have been excessive interest shall, without
penalty, be applied to the reduction of the principal amount owing on the Loans
to it (in inverse order of maturity) and not to the payment of interest, or
refunded to the Borrowers if and to the extent such amount which would have been
excessive exceeds such unpaid principal.  The right to accelerate maturity of
the Loans and the other Obligations does not include the right to accelerate any
interest which has not otherwise accrued on the date of such acceleration, and
the Agent and the Lenders do not intend to charge or receive any unearned
interest in the event of acceleration.  All interest paid or agreed to be paid
to the Lenders on the Loans shall, to the extent permitted by applicable law, be
amortized, prorated, allocated and spread throughout the full stated term
(including any renewal or extension) of the Loans so that the amount of interest
on account of the Loans does not exceed the maximum nonusurious amount permitted
by applicable law.  As used in this Section, the term “applicable law” shall
mean such laws as they now exist or may be changed or amended or come into
effect in the future.  As used in this Section, the term “interest” includes all
amounts that constitute, are deemed, or are characterized as interest under
applicable law.

 

If at any time the interest rate (the “Stated Rate”) called for under this Note
or any other Loan Document exceeds or would exceed the Highest Lawful Rate, the
rate at which interest shall accrue hereunder or thereunder shall automatically
be limited to the Highest Lawful Rate, and shall remain at the Highest Lawful
Rate until the total amount of interest accrued equals the total amount of
interest which would have accrued but for the operation of this sentence. 
Thereafter, interest shall accrue at the Stated Rate unless and until the Stated
Rate would again exceed the Highest Lawful Rate, in which case the immediately
preceding sentence shall apply.

 

Borrowers hereby agree that as a condition precedent to any claim seeking usury
penalties against a Lender, Borrowers will provide written notice to Agent,
advising Agent in reasonable detail of the nature and amount of the violation,
and such Lender shall have sixty (60) days after receipt of such notice in which
to correct such usury violation, if any, by either refunding such excess
interest to Borrowers or crediting such excess interest against the Loans and/or
any other indebtedness then owing by Borrowers to such Lender.  To the extent
that Lenders are relying on Chapter 303, as amended, of the Texas Finance Code
to determine the Highest Lawful Rate, Lenders will utilize the weekly rate
ceiling from time to time in effect as provided in such Chapter 303, as
amended.  To the extent United States federal law permits a greater amount of
interest than is permitted under Texas law, Lenders will rely on United States
federal law instead of such Chapter 303, as amended, for the purpose of
determining the Highest Lawful Rate.  Additionally, to the extent permitted by
applicable law now or hereafter in effect, Lenders may, at Lenders’ option and
from time to time, implement any other method of

 

2

--------------------------------------------------------------------------------

 

computing the maximum lawful rate under such Chapter 303, as amended, or under
other applicable law by giving notice, if required, to Borrowers as provided by
applicable law now or hereafter in effect.  These provisions will control all
agreements between Borrowers, Agents and Lenders.

 

The undersigned and Lenders expressly agree that 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 this
Note or to any advance made pursuant to the terms of this Note.

 

In case an Event of Default shall occur, the entire principal amount of this
Note may become or be declared due and payable in the manner and with the effect
provided in said Credit Agreement.

 

This Note shall be governed by and construed in accordance with the laws of the
State of Texas (without giving effect to the conflict of laws rules of any
jurisdiction).

 

The undersigned maker and all guarantors and endorsers, hereby waive
presentment, demand, notice, protest, notice of intention to accelerate the
indebtedness evidenced hereby, notice of acceleration of the indebtedness
evidenced hereby and all other demands and notices in connection with the
delivery, acceptance, performance and enforcement of this Note, except as
specifically otherwise provided in the Credit Agreement, and assent to
extensions of time of payment or forbearance or other indulgence without notice.

 

This Note, together with the other Revolving Credit Notes executed pursuant to
the Credit Agreement contemporaneously with the execution hereof, are executed
in amendment and restatement of the “Revolving Credit Notes” under the Original
Credit Agreement.

 

THE LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT
BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES.

 

THERE ARE NO ORAL AGREEMENTS BETWEEN THE PARTIES.

 

3

--------------------------------------------------------------------------------

 

IN WITNESS WHEREOF the undersigned have by their duly authorized officers,
executed this Note under seal as of the day and year first above written.

 

 

THE WOODLANDS COMMERCIAL PROPERTIES COMPANY, L.P., a Texas limited partnership

 

 

 

 

 

By:

 

 

Name:

Grant Herlitz

 

Title:

Authorized Representative

 

 

 

 

 

 

THE WOODLANDS LAND DEVELOPMENT COMPANY, L.P., a Texas limited partnership

 

 

 

 

 

By:

 

 

Name:

Grant Herlitz

 

Title:

Authorized Representative

 

4

--------------------------------------------------------------------------------

 

EXHIBIT B-1

 

FORM OF COMMERCIAL COMPANY SECURED TERM LOAN NOTE

 

$

 

, 2013

 

FOR VALUE RECEIVED, the undersigned THE WOODLANDS COMMERCIAL PROPERTIES COMPANY,
L.P., a Texas limited partnership, and THE WOODLANDS LAND DEVELOPMENT COMPANY,
L.P., a Texas limited partnership, hereby jointly and severally promise to pay
to
                                                                              
or order, in accordance with the terms of that certain Third Amended and
Restated Master Credit Agreement dated August 8, 2013 (the “Credit Agreement”),
as from time to time in effect, among the undersigned, KeyBank National
Association, for itself and as Agent, and such other Lenders as may be from time
to time named therein, to the extent not sooner paid, on or before the Maturity
Date, the principal sum of
                                                                                                    
DOLLARS ($                            ), with daily interest from the date
hereof, computed as provided in the Credit Agreement, on the principal amount
hereof from time to time unpaid, at a rate per annum on each portion of the
principal amount which shall at all times be equal to the rate of interest
applicable to such portion in accordance with the Credit Agreement, and with
interest on overdue principal and, to the extent permitted by applicable law, on
overdue installments of interest and late charges at the rates provided in the
Credit Agreement.  Interest shall be payable on the dates specified in the
Credit Agreement, except that all accrued interest shall be paid at the stated
or accelerated maturity hereof or upon the prepayment in full hereof. 
Capitalized terms used herein and not otherwise defined herein shall have the
meanings set forth in the Credit Agreement.

 

Payments hereunder shall be made to KeyBank National Association, as Agent for
the payee hereof, at 127 Public Square, Cleveland, Ohio 44114-1306 or at such
other address as Agent may designate.

 

This Note is one of one or more Commercial Company Secured Term Loan Notes
evidencing borrowings by Commercial Company under and is entitled to the
benefits and subject to the provisions of the Credit Agreement.  The principal
of this Note may be due and payable in whole or in part prior to the maturity
date stated above and is subject to mandatory prepayment in the amounts and
under the circumstances set forth in the Credit Agreement, and may be prepaid in
whole or from time to time in part, all as set forth in the Credit Agreement.

 

Notwithstanding anything in this Note or the other Loan Documents to the
contrary, it is the intent of the Agent, the Lenders and the Borrowers to
conform to and contract in strict compliance with all applicable usury laws from
time to time in effect.  All agreements (including the Loan Documents) between
Agent, the Lenders and the Borrowers (or any other party liable with respect to
any indebtedness under the Loan Documents) are hereby limited by the provisions
of this Section which shall override and control all such agreements, whether
now existing or hereafter arising and whether written or oral.  In no way, nor
in any event or contingency (including but not limited to prepayment, default,
demand for payment, or acceleration of the maturity of any obligation), shall
the interest taken, reserved, contracted for, charged or received under this
Note, any other Loan Document, or otherwise, exceed the maximum nonusurious
amount permissible under applicable law.  If, from any possible construction of
this Note, any other Loan Document, or any other document, interest would

 

1

--------------------------------------------------------------------------------

 

otherwise be taken, reserved, contracted for, charged or payable in excess of
the maximum nonusurious amount, any such construction shall be subject to the
provisions of this Section and this Note, such other Loan Document, and such
other document shall be automatically reformed and the interest taken, reserved,
contracted for, charged or payable shall be automatically reduced to the maximum
nonusurious amount permitted under applicable law, without the necessity of
execution of any amendment or new document.  If any Lender shall ever receive
anything of value which is interest or characterized as interest under
applicable law and which would apart from this provision be in excess of the
maximum lawful nonusurious amount, an amount equal to the amount which would
have been excessive interest shall, without penalty, be applied to the reduction
of the principal amount owing on the Loans to it (in inverse order of maturity)
and not to the payment of interest, or refunded to the Borrowers if and to the
extent such amount which would have been excessive exceeds such unpaid
principal.  The right to accelerate maturity of the Loans and the other
Obligations does not include the right to accelerate any interest which has not
otherwise accrued on the date of such acceleration, and the Agent and the
Lenders do not intend to charge or receive any unearned interest in the event of
acceleration.  All interest paid or agreed to be paid to the Lenders on the
Loans shall, to the extent permitted by applicable law, be amortized, prorated,
allocated and spread throughout the full stated term (including any renewal or
extension) of the Loans so that the amount of interest on account of the Loans
does not exceed the maximum nonusurious amount permitted by applicable law.  As
used in this Section, the term “applicable law” shall mean such laws as they now
exist or may be changed or amended or come into effect in the future.  As used
in this Section, the term “interest” includes all amounts that constitute, are
deemed, or are characterized as interest under applicable law.

 

If at any time the interest rate (the “Stated Rate”) called for under this Note
or any other Loan Document exceeds or would exceed the Highest Lawful Rate, the
rate at which interest shall accrue hereunder or thereunder shall automatically
be limited to the Highest Lawful Rate, and shall remain at the Highest Lawful
Rate until the total amount of interest accrued equals the total amount of
interest which would have accrued but for the operation of this sentence. 
Thereafter, interest shall accrue at the Stated Rate unless and until the Stated
Rate would again exceed the Highest Lawful Rate, in which case the immediately
preceding sentence shall apply.

 

Borrowers hereby agree that as a condition precedent to any claim seeking usury
penalties against a Lender, Borrowers will provide written notice to Agent,
advising Agent in reasonable detail of the nature and amount of the violation,
and such Lender shall have sixty (60) days after receipt of such notice in which
to correct such usury violation, if any, by either refunding such excess
interest to Borrowers or crediting such excess interest against the Loans and/or
any other indebtedness then owing by Borrowers to such Lender.  To the extent
that Lenders are relying on Chapter 303, as amended, of the Texas Finance Code
to determine the Highest Lawful Rate, Lenders will utilize the weekly rate
ceiling from time to time in effect as provided in such Chapter 303, as
amended.  To the extent United States federal law permits a greater amount of
interest than is permitted under Texas law, Lenders will rely on United States
federal law instead of such Chapter 303, as amended, for the purpose of
determining the Highest Lawful Rate.  Additionally, to the extent permitted by
applicable law now or hereafter in effect, Lenders may, at Lenders’ option and
from time to time, implement any other method of computing the maximum lawful
rate under such Chapter 303, as amended, or under other applicable law by giving
notice, if required, to Borrowers as provided by applicable law now or

 

2

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hereafter in effect.  These provisions will control all agreements between
Borrowers, Agents and Lenders.

 

In case an Event of Default shall occur, the entire principal amount of this
Note may become or be declared due and payable in the manner and with the effect
provided in said Credit Agreement.

 

This Note shall be governed by and construed in accordance with the laws of the
State of Texas (without giving effect to the conflict of laws rules of any
jurisdiction).

 

The undersigned maker and all guarantors and endorsers, hereby waive
presentment, demand, notice, protest, notice of intention to accelerate the
indebtedness evidenced hereby, notice of acceleration of the indebtedness
evidenced hereby and all other demands and notices in connection with the
delivery, acceptance, performance and enforcement of this Note, except as
specifically otherwise provided in the Credit Agreement, and assent to
extensions of time of payment or forbearance or other indulgence without notice.

 

This Note, together with the other Commercial Company Secured Term Loan Notes
executed pursuant to the Credit Agreement contemporaneously with the execution
hereof, are executed in amendment and restatement of the “Commercial Company
Secured Term Loan Notes” under the Original Credit Agreement.

 

THE LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT
BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES.

 

THERE ARE NO ORAL AGREEMENTS BETWEEN THE PARTIES.

 

IN WITNESS WHEREOF the undersigned has by its duly authorized officers, executed
this Note under seal as of the day and year first above written.

 

 

THE WOODLANDS COMMERCIAL PROPERTIES COMPANY, L.P., a Texas limited partnership

 

 

 

 

 

By:

 

 

Name:

Grant Herlitz

 

Title:

Authorized Representative

 

[CONTINUED ON NEXT PAGE]

 

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THE WOODLANDS LAND DEVELOPMENT COMPANY, L.P., a Texas limited partnership

 

 

 

 

 

By:

 

 

Name:

Grant Herlitz

 

Title:

Authorized Representative

 

4

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EXHIBIT B-2

 

FORM OF LAND COMPANY SECURED TERM LOAN NOTE

 

$                                                          

, 2013

 

FOR VALUE RECEIVED, the undersigned THE WOODLANDS LAND DEVELOPMENT COMPANY,
L.P., a Texas limited partnership, and THE WOODLANDS COMMERCIAL PROPERTIES
COMPANY, L.P., a Texas limited partnership, hereby jointly and severally promise
to pay to
                                                                              
or order, in accordance with the terms of that certain Third Amended and
Restated Master Credit Agreement dated August 8, 2013 (the “Credit Agreement”),
as from time to time in effect, among the undersigned, KeyBank National
Association, for itself and as Agent, and such other Lenders as may be from time
to time named therein, to the extent not sooner paid, on or before the Maturity
Date, the principal sum of                           
                                                                            
DOLLARS ($                            ), with daily interest from the date
hereof, computed as provided in the Credit Agreement, on the principal amount
hereof from time to time unpaid, at a rate per annum on each portion of the
principal amount which shall at all times be equal to the rate of interest
applicable to such portion in accordance with the Credit Agreement, and with
interest on overdue principal and, to the extent permitted by applicable law, on
overdue installments of interest and late charges at the rates provided in the
Credit Agreement.  Interest shall be payable on the dates specified in the
Credit Agreement, except that all accrued interest shall be paid at the stated
or accelerated maturity hereof or upon the prepayment in full hereof. 
Capitalized terms used herein and not otherwise defined herein shall have the
meanings set forth in the Credit Agreement.

 

Payments hereunder shall be made to KeyBank National Association, as Agent for
the payee hereof, at 127 Public Square, Cleveland, Ohio  44114-1306 or at such
other address as Agent may designate.

 

This Note is one of one or more Land Company Secured Term Loan Notes evidencing
borrowings by Land Company under and is entitled to the benefits and subject to
the provisions of the Credit Agreement.  The principal of this Note may be due
and payable in whole or in part prior to the maturity date stated above and is
subject to mandatory prepayment in the amounts and under the circumstances set
forth in the Credit Agreement, and may be prepaid in whole or from time to time
in part, all as set forth in the Credit Agreement.

 

Notwithstanding anything in this Note or the other Loan Documents to the
contrary, it is the intent of the Agent, the Lenders and the Borrowers to
conform to and contract in strict compliance with all applicable usury laws from
time to time in effect.  All agreements (including the Loan Documents) between
Agent, the Lenders and the Borrowers (or any other party liable with respect to
any indebtedness under the Loan Documents) are hereby limited by the provisions
of this Section which shall override and control all such agreements, whether
now existing or hereafter arising and whether written or oral.  In no way, nor
in any event or contingency (including but not limited to prepayment, default,
demand for payment, or acceleration of the maturity of any obligation), shall
the interest taken, reserved, contracted for, charged or received under this
Note, any other Loan Document, or otherwise, exceed the maximum nonusurious
amount permissible under applicable law.  If, from any possible

 

1

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construction of this Note, any other Loan Document, or any other document,
interest would otherwise be taken, reserved, contracted for, charged or payable
in excess of the maximum nonusurious amount, any such construction shall be
subject to the provisions of this Section and this Note, such other Loan
Document, and such other document shall be automatically reformed and the
interest taken, reserved, contracted for, charged or payable shall be
automatically reduced to the maximum nonusurious amount permitted under
applicable law, without the necessity of execution of any amendment or new
document.  If any Lender shall ever receive anything of value which is interest
or characterized as interest under applicable law and which would apart from
this provision be in excess of the maximum lawful nonusurious amount, an amount
equal to the amount which would have been excessive interest shall, without
penalty, be applied to the reduction of the principal amount owing on the Loans
to it (in inverse order of maturity) and not to the payment of interest, or
refunded to the Borrowers if and to the extent such amount which would have been
excessive exceeds such unpaid principal.  The right to accelerate maturity of
the Loans and the other Obligations does not include the right to accelerate any
interest which has not otherwise accrued on the date of such acceleration, and
the Agent and the Lenders do not intend to charge or receive any unearned
interest in the event of acceleration.  All interest paid or agreed to be paid
to the Lenders on the Loans shall, to the extent permitted by applicable law, be
amortized, prorated, allocated and spread throughout the full stated term
(including any renewal or extension) of the Loans so that the amount of interest
on account of the Loans does not exceed the maximum nonusurious amount permitted
by applicable law.  As used in this Section, the term “applicable law” shall
mean such laws as they now exist or may be changed or amended or come into
effect in the future.  As used in this Section, the term “interest” includes all
amounts that constitute, are deemed, or are characterized as interest under
applicable law.

 

If at any time the interest rate (the “Stated Rate”) called for under this Note
or any other Loan Document exceeds or would exceed the Highest Lawful Rate, the
rate at which interest shall accrue hereunder or thereunder shall automatically
be limited to the Highest Lawful Rate, and shall remain at the Highest Lawful
Rate until the total amount of interest accrued equals the total amount of
interest which would have accrued but for the operation of this sentence. 
Thereafter, interest shall accrue at the Stated Rate unless and until the Stated
Rate would again exceed the Highest Lawful Rate, in which case the immediately
preceding sentence shall apply.

 

Borrowers hereby agree that as a condition precedent to any claim seeking usury
penalties against a Lender, Borrowers will provide written notice to Agent,
advising Agent in reasonable detail of the nature and amount of the violation,
and such Lender shall have sixty (60) days after receipt of such notice in which
to correct such usury violation, if any, by either refunding such excess
interest to Borrowers or crediting such excess interest against the Loans and/or
any other indebtedness then owing by Borrowers to such Lender.  To the extent
that Lenders are relying on Chapter 303, as amended, of the Texas Finance Code
to determine the Highest Lawful Rate, Lenders will utilize the weekly rate
ceiling from time to time in effect as provided in such Chapter 303, as
amended.  To the extent United States federal law permits a greater amount of
interest than is permitted under Texas law, Lenders will rely on United States
federal law instead of such Chapter 303, as amended, for the purpose of
determining the Highest Lawful Rate.  Additionally, to the extent permitted by
applicable law now or hereafter in effect, Lenders may, at Lenders’ option and
from time to time, implement any other method of computing the maximum lawful
rate under such Chapter 303, as amended, or under other

 

2

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applicable law by giving notice, if required, to Borrowers as provided by
applicable law now or hereafter in effect.  These provisions will control all
agreements between Borrowers, Agents and Lenders.

 

In case an Event of Default shall occur, the entire principal amount of this
Note may become or be declared due and payable in the manner and with the effect
provided in said Credit Agreement.

 

This Note shall be governed by and construed in accordance with the laws of the
State of Texas (without giving effect to the conflict of laws rules of any
jurisdiction).

 

The undersigned maker and all guarantors and endorsers, hereby waive
presentment, demand, notice, protest, notice of intention to accelerate the
indebtedness evidenced hereby, notice of acceleration of the indebtedness
evidenced hereby and all other demands and notices in connection with the
delivery, acceptance, performance and enforcement of this Note, except as
specifically otherwise provided in the Credit Agreement, and assent to
extensions of time of payment or forbearance or other indulgence without notice.

 

This Note, together with the other Land Company Secured Term Loan Notes executed
pursuant to the Credit Agreement contemporaneously with the execution hereof,
are executed in amendment and restatement of the “Land Company Secured Term Loan
Notes” under the Original Credit Agreement.

 

THE LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT
BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES.

 

THERE ARE NO ORAL AGREEMENTS BETWEEN THE PARTIES.

 

3

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IN WITNESS WHEREOF the undersigned has by its duly authorized officers, executed
this Note under seal as of the day and year first above written.

 

 

THE WOODLANDS COMMERCIAL PROPERTIES COMPANY, L.P., a Texas limited partnership

 

 

 

 

 

By:  

 

 

Name:

Grant Herlitz

 

Title:

Authorized Representative

 

 

 

 

 

 

 

THE WOODLANDS LAND DEVELOPMENT COMPANY, L.P., a Texas limited partnership

 

 

 

 

 

 

 

By:

 

 

Name:

Grant Herlitz

 

Title:

Authorized Representative

 

4

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EXHIBIT C-1

 

[RESERVED]

 

1

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EXHIBIT C-2

 

FORM OF REQUEST FOR LOAN

 

(LAND COMPANY)

 

KeyBank National Association,

for itself and as Agent

1200 Abernathy Road, N.E.

Suite 1550

Atlanta, Georgia 30328

Attn:  Dan Silbert

 

Ladies and Gentlemen:

 

Pursuant to the provisions of §2.6 of the Third Amended and Restated Master
Credit Agreement dated August 8, 2013, as from time to time in effect (the
“Credit Agreement”), among The Woodlands Commercial Properties Company, L.P. and
The Woodlands Land Development Company, L.P. (individually a “Borrower” and
collectively the “Borrowers”), KeyBank National Association, for itself and as
Agent, and the other Lenders from time to time party thereto, the undersigned
Borrower hereby requests and certifies as follows:

 

1.             Revolving Credit Loan.  The undersigned Borrower hereby requests
a Revolving Credit Loan under §2.1 of the Credit Agreement:

 

Principal Amount:  $

 

Type (LIBOR Rate, Base Rate):

 

Interest Period:

 

Drawdown Date:                              , 20

 

by credit to the general account of the undersigned Borrower with the Agent at
the Agent’s Head Office.

 

2.             Use of Proceeds.  Such Revolving Credit Loan shall be used for
the following purposes permitted by §7.11 of the Credit Agreement:

 

[Describe]

 

3.             No Default.  The undersigned Principal Financial Officer of the
Borrower certifies that the Borrower is and will be in compliance with all
covenants under the Loan Documents after giving effect to the making of the
Revolving Credit Loan requested hereby.  No condemnation proceedings are pending
or to the Borrower’s knowledge threatened against any Mortgaged Property.

 

1

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4.             Representations True.  Each of the representations and warranties
made by or on behalf of any of the Borrowers, the Guarantors and the Restricted
Subsidiaries of a Borrower contained in the Credit Agreement, in the other Loan
Documents or in any document or instrument delivered pursuant to or in
connection with the Credit Agreement was true as of the date as of which it was
made and shall also be true at and as of the Drawdown Date for the Revolving
Credit Loan requested hereby, with the same effect as if made at and as of such
Drawdown Date (except to the extent of changes resulting from transactions
contemplated or permitted by the Credit Agreement and the other Loan Documents
and changes occurring in the ordinary course of business that singly or in the
aggregate are not materially adverse, and except to the extent that such
representations and warranties relate expressly to an earlier date) and no
Default or Event of Default has occurred and is continuing.

 

5.             Other Conditions.  All other conditions to the making of the
Revolving Credit Loan requested hereby set forth in §11 of the Credit Agreement
have been satisfied. (Reference title update, if applicable.)

 

6.             Drawdown Date.  Except to the extent, if any, specified by notice
actually received by the Agent prior to the Drawdown Date specified above, the
foregoing representations and warranties shall be deemed to have been made by
the Borrowers on and as of such Drawdown Date.

 

7.             Definitions.  Terms defined in the Credit Agreement are used
herein with the meanings so defined.

 

IN WITNESS WHEREOF, I have hereunto set my hand this            day of
                              , 20    .

 

 

THE WOODLANDS LAND DEVELOPMENT COMPANY, L.P., a Texas limited partnership

 

 

 

By:

 

 

Name:

Grant Herlitz

 

Title:

Authorized Representative

 

2

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EXHIBIT D

 

FORM OF REQUEST FOR EXTENSION OF LOANS

 

KeyBank National Association,

for itself and as Agent

1200 Abernathy Road, N.E.

Suite 1550

Atlanta, Georgia  30328

Attn:  Dan Silbert

 

Ladies and Gentlemen:

 

Pursuant to the provisions of §4.15 of the Third Amended and Restated Master
Credit Agreement dated August 8, 2013, as from time to time in effect (the
“Credit Agreement”), among The Woodlands Commercial Properties Company, L.P. and
The Woodlands Land Development Company, L.P. (collectively the “Borrowers”),
KeyBank National Association, for itself and as Agent, and the other Lenders
from time to time party thereto, the Borrowers hereby request and certify as
follows:

 

1.             Extension Request.  The Borrowers hereby irrevocably request that
the Maturity Date be extended to [insert date as permitted by §4.15].

 

2.             No Default.  The undersigned Principal Financial Officers of the
Borrowers certify that no Default or Event of Default has occurred and is
continuing.

 

3.             Other Conditions.  All other conditions to the extension to the
Maturity Date requested hereby set forth in §4.15 of the Credit Agreement have
been satisfied.

 

4.             Definitions.  Terms defined in the Credit Agreement are used
herein with the meanings so defined.

 

[CONTINUED ON NEXT PAGE]

 

1

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IN WITNESS WHEREOF, I have hereunto set my hand this            day of
                            , 20      .

 

 

THE WOODLANDS COMMERCIAL PROPERTIES COMPANY, L.P., a Texas limited partnership

 

 

 

 

 

By:

 

 

Name:

Grant Herlitz

 

Title:

Authorized Representative

 

 

 

 

 

THE WOODLANDS LAND DEVELOPMENT COMPANY, L.P., a Texas limited partnership

 

 

 

 

 

By:

 

 

Name:

Grant Herlitz

 

Title:

Authorized Representative

 

2

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EXHIBIT E

 

FORM OF

 

COMPLIANCE CERTIFICATE

 

KeyBank National Association, for itself and as Agent

1200 Abernathy Road, N.E.

Suite 1550

Atlanta, Georgia  30328

Attn:  Dan Silbert

 

Ladies and Gentlemen:

 

Reference is made to the Third Amended and Restated Master Credit Agreement
dated August 8, 2013 (the “Credit Agreement”) by and among The Woodlands
Commercial Properties Company, L.P. and The Woodlands Land Development Company,
L.P. (collectively the “Borrowers”), KeyBank National Association, for itself
and as Agent, and the other Lenders from time to time party thereto.  Terms
defined in the Credit Agreement and not otherwise defined herein are used herein
as defined in the Credit Agreement.

 

Pursuant to the Credit Agreement, the Borrowers are furnishing to you herewith
(or have most recently furnished to you) the financial statements of the
Borrowers and their respective subsidiaries for the fiscal period ended
                               (the “Balance Sheet Date”).  Such financial
statements have been prepared in accordance with generally accepted accounting
principles (other than the inclusion of footnotes with respect to quarterly
reports) and present fairly the financial position of the Borrowers and the
subsidiaries covered thereby at the date thereof and the results of their
operations for the periods covered thereby, subject in the case of interim
statements only to normal year end audit adjustments.

 

This certificate is submitted in compliance with requirements of §5.5,
§7.4(e) or §10.14 of the Credit Agreement.  If this certificate is provided
under a provision other than §7.4(e), the calculations provided below are made
using the financial statements of the Borrowers and their respective Restricted
Subsidiaries as of the Balance Sheet Date adjusted in the best good faith
estimate of the Borrowers to give effect to the making of a Revolving Credit
Loan, extension of the Maturity Date, acquisition or disposition of property or
other event that occasions the preparation of this certificate; and the nature
of such event and the Borrowers’ estimate of its effects are set forth in
reasonable detail in an attachment hereto.  The undersigned officers of the
Borrowers are its Principal Financial Officers.

 

The undersigned officers have caused the provisions of the Credit Agreement to
be reviewed and have no knowledge of any Default or Event of Default. (Note: If
the signer does have knowledge of any Default or Event of Default, the form of
certificate should be revised to specify the Default or Event of Default, the
nature thereof, the actions taken, being taken or proposed to be taken by the
Borrowers with respect thereto in order to cure such Default or Event of Default
and the time period required to cure such Default or Event of Default.)

 

1

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The Borrowers are providing the following information to demonstrate compliance
as of the date hereof with the following covenants:

 

[SEE ATTACHED EXHIBIT 1]

 

[Remainder of page intentionally left blank]

 

2

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IN WITNESS WHEREOF, I have hereunto set my hand this            day of
                        , 20      .

 

 

THE WOODLANDS COMMERCIAL PROPERTIES COMPANY, L.P., a Texas limited partnership

 

 

 

 

 

By:

 

 

Name:

Grant Herlitz

 

Title:

Authorized Representative

 

 

 

 

 

THE WOODLANDS LAND DEVELOPMENT COMPANY, L.P., a Texas limited partnership

 

 

 

 

 

By:

 

 

Name:

Grant Herlitz

 

Title:

Authorized Representative

 

3

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EXHIBIT F

 

FORM OF ASSIGNMENT AND ACCEPTANCE AGREEMENT

 

THIS ASSIGNMENT AND ACCEPTANCE AGREEMENT (this “Agreement”) dated
                          ,           , by and between
                                                                   (“Assignor”),
and                                                          (“Assignee”).

 

W I T N E S E T H:

 

WHEREAS, Assignor is a party to that certain Third Amended and Restated Master
Credit Agreement, dated August 8, 2013, by and among The Woodlands Commercial
Properties Company, L.P., a Texas limited partnership (“Commercial Company”),
The Woodlands Land Development Company, L.P., a Texas limited partnership (“Land
Company”; Commercial Company and Land Company are hereinafter referred to
collectively as the “Borrowers”), KeyBank National Association, the other
lenders that are or may become a party thereto, and KeyBank National
Association, as Agent (the “Loan Agreement”); and

 

WHEREAS, Assignor desires to transfer to Assignee [Describe assigned
Commitments] under the Loan Agreement and its rights with respect to the
Commitment assigned and its Outstanding Loans with respect thereto;

 

NOW, THEREFORE, for and in consideration of the sum of Ten and No/100 Dollars
($10.00) and other good and valuable considerations, the receipt and sufficiency
of which are hereby acknowledged, Assignor and Assignee hereby agree as follows:

 

1.             Definitions.  Terms defined in the Loan Agreement and used herein
without definition shall have the respective meanings assigned to such terms in
the Loan Agreement.

 

2.             Assignment.

 

(a)           Subject to the terms and conditions of this Agreement and in
consideration of the payment to be made by Assignee to Assignor pursuant to
Paragraph 5 of this Agreement, effective as of the “Assignment Date” (as defined
in Paragraph 7 below), Assignor hereby irrevocably sells, transfers and assigns
to Assignee, without recourse, (i) a $                               Commercial
Company Secured Term Loan Commitment, (ii) a $                         Land
Company [Describe assigned Commitments] Commitment, and a
                                   percent (      %) Land Company [Describe
assigned Commitments] Commitment Percentage, and a corresponding interest in and
to all of the other rights and obligations under the Loan Agreement and the
other Loan Documents (the assigned interests being hereinafter referred to as
the “Assigned Interests”), including Assignor’s share of all outstanding
Commercial Company [Describe assigned Loan] Loans and Land Company [Describe
assigned Loan] Loans with respect to the Assigned Interests and the right to
receive interest and principal on and all other fees and amounts with respect to
the Assigned Interests, all from and after the Assignment Date, all as if
Assignee were an original Lender under and signatory to the Loan Agreement
having a Commercial Company [Describe assigned Commitment] Commitment Percentage
and Land Company [Describe assigned Commitment] Commitment Percentage equal to
the amount of the respective Assigned Interests.

 

1

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(b)           Assignee, subject to the terms and conditions hereof, hereby
assumes all obligations of Assignor with respect to the Assigned Interests from
and after the Assignment Date as if Assignee were an original Lender under and
signatory to the Loan Agreement and the “Bank Intercreditor Agreement” (as
hereinafter defined), which obligations shall include, but shall not be limited
to, the obligation to make [Describe assigned Loan] Loans to the Borrowers with
respect to the Assigned Interests and to indemnify the Agent as provided therein
(such obligations, together with all other obligations set forth in the Loan
Agreement and the other Loan Documents are hereinafter collectively referred to
as the “Assigned Obligations”).  Assignor shall have no further duties or
obligations with respect to, and shall have no further interest in, the Assigned
Obligations or the Assigned Interests.

 

3.             Representations and Requests of Assignor.

 

(a)           Assignor represents and warrants to Assignee (i) that it is
legally authorized to, and has full power and authority to, enter into this
Agreement and perform its obligations under this Agreement; (ii) that as of the
date hereof, before giving effect to the assignment contemplated hereby the
amount of Assignor’s Commercial Company Secured Term Loan Commitment is
$                         and the aggregate outstanding principal balance of the
Commercial Company Secured Term Loans made by it equals
$                        , (iii) that it has forwarded to the Agent the
Commercial Company Secured Term Loan Note held by Assignor, if any, (iv) that as
of the date hereof, before giving effect to the assignment contemplated hereby
the amount of Assignor’s Land Company [Describe assigned Commitment] Commitment
is $                         and the aggregate outstanding principal balance of
the Land Company [Describe assigned Commitment] Loans made by it equals
$                        , (v) that it has forwarded to the Agent the Land
Company [Describe assigned Note] Note held by Assignor, if any.  Assignor makes
no representation or warranty, express or implied, and assumes no responsibility
with respect to any statements, warranties or representations made in or in
connection with the Loan Documents or the execution, legality, validity,
enforceability, genuineness or sufficiency of any Loan Document or any other
instrument or document furnished pursuant thereto or in connection with the
Loan, the collectability of the Loans, the continued solvency of the Borrowers
or the Guarantors or the continued existence, sufficiency or value of the
Collateral or any assets of the Borrowers or the Guarantors which may be
realized upon for the repayment of the Loans, or the performance or observance
by the Borrowers or the Guarantors of any of their respective obligations under
the Loan Documents to which it is a party or any other instrument or document
delivered or executed pursuant thereto or in connection with the Loan; other
than that it is the legal and beneficial owner of, or has the right to assign,
the interests being assigned by it hereunder and that such interests are free
and clear of any adverse claim.

 

(b)           If the applicable box is checked below, Assignor requests that the
Agent obtain replacement notes for each of Assignor and Assignee as provided in
the Loan Agreement.

 

¨            Replacement Note Requested for Assignor

 

¨            Replacement Note Requested for Assignee

 

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4.             Representations of Assignee.  Assignee makes and confirms to the
Agent, Assignor and the other Lenders all of the representations, warranties and
covenants of a Lender under Articles 14 and 18 of the Loan Agreement and
Paragraph 4 of the Bank Intercreditor Agreement.  Without limiting the
foregoing, Assignee (a) represents and warrants that it is legally authorized
to, and has full power and authority to, enter into this Agreement and perform
its obligations under this Agreement; (b) confirms that it has received copies
of such documents and information as it has deemed appropriate to make its own
credit analysis and decision to enter into this Agreement; (c)agrees that it has
and will, independently and without reliance upon Assignor, any other Lender or
the Agent and based upon such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in evaluating
the Loans, the Loan Documents, the creditworthiness of the Borrowers and the
Guarantors and the value of the assets of the Borrowers and the Guarantors, and
taking or not taking action under the Loan Documents and any intercreditor
agreement among the Lenders and the Agent (the “Bank Intercreditor Agreement”);
(d)appoints and authorizes the Agent to take such action as agent on its behalf
and to exercise such powers as are reasonably incidental thereto pursuant to the
terms of the Loan Documents and the Bank Intercreditor Agreement; (e) agrees
that, by this Assignment, Assignee has become a party to and will perform in
accordance with their terms all the obligations which by the terms of the Loan
Documents and the Bank Intercreditor Agreement are required to be performed by
it as a Lender; (f) represents and warrants that Assignee is an Eligible
Assignee; (g) agrees that if Assignee is not incorporated under the laws of the
United States of America or any State, it has on or prior to the date hereof
delivered to Borrowers and Agent certification as to its exemption from
deduction or withholding of any United States federal income taxes; (h) if
Assignee is an assignee of a portion of the Revolving Credit Loans, it has a net
worth or unfunded capital commitment as of the date hereof of not less than
$200,000,000.00 unless waived in writing by Borrowers and Agent; and
(i) represents and warrants that Assignee does not control, is not controlled
by, is not under common control with and is otherwise free from influence or
control by, any Borrower or the Guarantors and is not a Defaulting Lender or an
Affiliate of a Defaulting Lender.

 

5.             Payments to Assignor.  In consideration of the assignment made
pursuant to Paragraph 1 of this Agreement, Assignee agrees to pay to Assignor on
the Assignment Date, an amount equal to $                         representing
the aggregate principal amount outstanding of the [Described assigned Loans]
Loans owing to Assignor under the Loan Agreement and the other Loan Documents
with respect to the Assigned Interests.

 

6.             Payments by Assignor.  Assignor agrees to pay the Agent on the
Assignment Date the registration fee required by §18.2 of the Loan Agreement.

 

7.             Effectiveness.

 

(a)           The effective date for this Agreement shall be
                               (the “Assignment Date”).  Following the execution
of this Agreement, each party hereto shall deliver its duly executed counterpart
hereof to the Agent for acceptance and recording in the Register by the Agent.

 

(b)           Upon such acceptance and recording and from and after the
Assignment Date, (i) Assignee shall be a party to the Loan Agreement and the
Bank Intercreditor Agreement

 

3

--------------------------------------------------------------------------------

 

and, to the extent of the Assigned Interests, have the rights and obligations of
a Lender thereunder, and (ii) Assignor shall, with respect to the Assigned
Interests, relinquish its rights and be released from its obligations under the
Loan Agreement and the Bank Intercreditor Agreement.

 

(c)           Upon such acceptance and recording and from and after the
Assignment Date, the Agent shall make all payments in respect of the rights and
interests assigned hereby accruing after the Assignment Date (including payments
of principal, interest, fees and other amounts) to Assignee.

 

(d)           All outstanding LIBOR Rate Loans shall continue in effect for the
remainder of their applicable Interest Periods and Assignee shall accept the
currently effective interest rates on its Assigned Interest of each LIBOR Rate
Loan.

 

8.             Notices.  Assignee specifies as its address for notices and its
Lending Office for all assigned Loans, the offices set forth below:

 

Notice Address:

                                        

 

                                        

 

 

 

Attn:

                                 

 

Facsimile:

                                

 

 

Domestic Lending Office:

Same as above

 

 

LIBOR Lending Office:

Same as above

 

9.             Payment Instructions.  All payments to Assignee under the Loan
Agreement shall be made as provided in the Loan Agreement in accordance with the
following instructions:

 

                                   

 

10.          Governing Law.  THIS AGREEMENT IS INTENDED TO TAKE EFFECT AS A
SEALED INSTRUMENT FOR ALL PURPOSES AND TO BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS (WITHOUT REFERENCE TO CONFLICT
OF LAWS).

 

11.          Counterparts.  This Agreement may be executed in any number of
counterparts which shall together constitute but one and the same agreement.

 

12.          Amendments.  This Agreement may not be amended, modified or
terminated except by an agreement in writing signed by Assignor and Assignee,
and consented to by Agent.

 

4

--------------------------------------------------------------------------------

 

13.          Successors.  This Agreement shall inure to the benefit of the
parties hereto and their respective successors and assigns as permitted by the
terms of Loan Agreement and the Bank Intercreditor Agreement.

 

[signatures on following page]

 

5

--------------------------------------------------------------------------------

 

IN WITNESS WHEREOF, intending to be legally bound, each of the undersigned has
caused this Agreement to be executed on its behalf by its officers thereunto
duly authorized, as of the date first above written.

 

 

ASSIGNEE:

 

 

 

 

 

 

 

By:

 

 

Title:

 

 

 

 

ASSIGNOR:

 

 

 

 

 

 

 

By:

 

 

Title:

 

 

RECEIPT ACKNOWLEDGED AND

ASSIGNMENT CONSENTED TO BY:

KEYBANK NATIONAL ASSOCIATION,

as Agent

 

By:

 

 

Title:

 

 

 

6

--------------------------------------------------------------------------------

 

ASSIGNMENT APPROVED BY:(1)

 

THE WOODLANDS COMMERCIAL

 

PROPERTIES COMPANY, L.P.,

 

a Texas limited partnership

 

 

 

 

 

By:

 

 

Name:

Grant Herlitz

 

Title:

Authorized Representative

 

 

 

 

 

THE WOODLANDS LAND DEVELOPMENT

 

COMPANY, L.P., a Texas limited partnership

 

 

 

 

 

By:

 

 

Name:

Grant Herlitz

 

Title:

Authorized Representative

 

 

--------------------------------------------------------------------------------

(1)  Include to the extent required by the Credit Agreement.

 

7

--------------------------------------------------------------------------------

 

EXHIBIT G

 

FORM OF CONFIDENTIALITY AGREEMENT

 

[Letterhead of Assignee or Participant]

 

[Date]

 

KeyBank National Association, as Agent

1200 Abernathy Road, N.E.

Suite 1550

Atlanta, Georgia 30328

 

The Woodlands Commercial Property Company, L.P.

c/o The Woodlands Operating Company, L.P.

2201 Timberloch Place

The Woodlands, Texas  77380

 

The Woodlands Land Development Company, L.P.

c/o The Woodlands Operating Company, L.P.

2201 Timberloch Place

The Woodlands, Texas  77380

 

RE:                          $250,000,000 Revolving Credit and Secured Term Loan
Facility to The Woodlands Commercial Properties Company, L.P. and The Woodlands
Land Development Company, L.P. (collectively the “Borrowers”)

 

Ladies and Gentlemen:

 

We are interested in acquiring [describe interest] (the “Interest”) in that
certain $250,000,000 revolving credit, and/or secured term loan (the “Loan”)
made by KeyBank National Association, individually and as Agent, and the other
“Lenders” (collectively, the “Lenders”) which are a party to that certain Third
Amended and Restated Master Credit Agreement dated August 8, 2013, among the
Lenders, the Agent and the Borrowers (the “Credit Agreement”) and in connection
therewith we have requested certain information which is not available to the
general public.  Capitalized terms used herein that are not otherwise defined
herein shall have the meanings set forth in the Credit Agreement.

 

As used herein, “Confidential Information” means all financial certificates,
data, reports, interpretations, forecasts, records and other information of a
financial nature concerning or relating to the Borrowers which is not available
to the general public and which you, your affiliates or representatives may
provide to us in the course of our consideration of a possible acquisition of
the Interest, together with financial analyses, compilations, studies or other
documents, whether or not prepared by you or any of the Lenders which contain or
otherwise reflect such financial information.  Notwithstanding the foregoing,
Confidential Information shall not include (i) information which was already in
our possession prior to our consideration

 

1

--------------------------------------------------------------------------------

 

of a possible acquisition of the Interest or (ii ) information which is obtained
by us from a third person who is not prohibited from transmitting the
information to us.

 

We agree that all Confidential Information will be held and treated by us and
our agents, directors, officers, employees, investment advisors, partners,
contractual counterparties in any swap agreement or such contractual
counterparty’s professional advisors (collectively, “Representatives”) in
confidence and will not, except as hereinafter provided, without your prior
consent, be disclosed by us or our Representatives other than in connection with
our consideration of a possible acquisition of the Interest or in connection
with a further transfer of the Interest.  Moreover, we further agree (i) to
disclose Confidential Information only to our Representatives who need to know
the Confidential Information for purposes of our consideration of a possible
acquisition of the Interest and who will be advised by us of this agreement or
to others in connection with a potential transfer of the interest (provided that
such potential assignee or participant shall execute a confidentiality agreement
as required by the Credit Agreement), and (ii) that we shall be responsible for
any breach of this agreement by our Representatives.  The written Confidential
Information will be promptly returned to you or destroyed as and when you may
request, if we do not acquire the Interest.

 

In the event that we are requested or required (by oral questions,
interrogatories, requests for information or documents, subpoena, “civil
investigative demand” or other process) to disclose any Confidential
Information, we will provide you with prompt notice of any such request or
requirement so that you (or the Borrowers or other Lenders, as appropriate) may
seek an appropriate protective order or waive our compliance with the provisions
of this agreement.  If a protective order or the receipt of a waiver hereunder
has not been obtained, or if prior notice is not possible, and we are, in the
opinion of our counsel, compelled to disclose Confidential Information, we may
disclose that portion of the Confidential Information which our counsel advises
us that we are compelled to disclose.  In any event, we will not oppose action
by you (or the Borrowers or the Lenders) to obtain an appropriate protective
order or other reliable assurance that confidential treatment will be accorded
the Confidential Information.  Nothing herein shall prevent the disclosure of
the Confidential Information to the extent necessary to enforce the Loan
Documents (provided that reasonable efforts shall be used to cause the
Confidential Information to remain confidential).

 

We agree to indemnify and hold you harmless from any damage, loss, cost or
liability, (including attorneys’ fees and court costs) arising or resulting from
our breach of the agreement.

 

Neither party hereto shall be under any obligation to the other not expressly
contained herein, including any obligation to proceed with a transaction, until
definitive transaction documentation has been executed and delivered.  This
agreement will be governed by and construed in accordance with the internal laws
of the State of Texas and may only be amended by a writing.

 

2

--------------------------------------------------------------------------------

 

If the foregoing reflects your agreement, kindly sign and return the duplicate
copy of this agreement to us.

 

 

Very truly yours,

 

 

 

[Name of Assignee or Participant]

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

AGREED AND ACCEPTED THE

FIRST DAY WRITTEN ABOVE

 

[Name]

 

 

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

 

3

--------------------------------------------------------------------------------

 

EXHIBIT H

 

FORM OF JOINDER AGREEMENT

 

THIS JOINDER AGREEMENT (“Joinder Agreement”) is executed as of
                          , 20    , by
                                                                , a
                                             (“Joining Party”), and delivered to
KeyBank National Association, as Agent, pursuant to §5.6 of the Third Amended
and Restated Master Credit Agreement dated as of August 8, 2013, as from time to
time in effect (the “Credit Agreement”), among The Woodlands Commercial
Properties Company, L.P. and The Woodlands Land Development Company, L.P. (the
“Borrowers”), KeyBank National Association, for itself and as Agent, and the
other Lenders from time to time party thereto.  Terms used but not defined in
this Joinder Agreement shall have the meanings defined for those terms in the
Credit Agreement.

 

RECITALS

 

A.                                    Joining Party is required, pursuant to
§5.6 of the Credit Agreement, to become an additional Guarantor under the
Guaranty and the Guarantor Contribution Agreement.

 

B.                                    Joining Party expects to realize direct
and indirect benefits as a result of the availability to Borrower of the credit
facilities under the Credit Agreement.

 

NOW, THEREFORE, Joining Party agrees as follows:

 

AGREEMENT

 

1.                                      Joinder.  By this Joinder Agreement,
Joining Party hereby becomes a “Subsidiary Guarantor” and a “Guarantor” under
the Guaranty and the Guarantor Contribution Agreement and the Indemnity
Agreement, and the other Loan Documents with respect to all the Obligations of
Borrower now or hereafter incurred under the Credit Agreement and the other Loan
Documents.  Joining Party agrees that Joining Party is and shall be bound by,
and hereby assumes, all representations, warranties, covenants, terms,
conditions, duties and waivers applicable to a Subsidiary Guarantor and
Guarantor under the Guaranty, the Guarantor Contribution Agreement, the
Indemnity Agreement and the other Loan Documents.  Without limiting the
foregoing, Joining Party hereby unconditionally guarantees the payment and
performance of the Obligations as defined in the Guaranty, as required
thereunder.

 

2.                                      Representations and Warranties of
Joining Party.  Joining Party represents and warrants to Agent that, as of the
Effective Date (as defined below), except as disclosed in writing by Joining
Party to Agent on or prior to the date hereof and approved by the Agent in
writing, the representations and warranties contained in the Credit Agreement
and the other Loan Documents are true and correct in all material respects as
applied to Joining Party as a Subsidiary Guarantor and a Guarantor on and as of
the Effective Date as though made on that date.  As of the Effective Date, all
covenants and agreements in the Loan Documents of the Subsidiary Guarantor are
true and correct with respect to Joining Party and no Default or Event of
Default shall exist or might exist upon the Effective Date in the event that
Joining Party becomes a Subsidiary Guarantor.

 

1

--------------------------------------------------------------------------------

 

3.                                      Joint and Several.  Joining Party hereby
agrees that, as of the Effective Date, the Guaranty, the Guarantor Contribution
Agreement, the Indemnity Agreement and the other Loan Documents heretofore
delivered to the Agent and the Lenders shall be a joint and several obligation
of Joining Party to the same extent as if executed and delivered by Joining
Party, and upon request by Agent, will promptly become a party to the Guaranty,
the Guarantor Contribution Agreement, the Indemnity Agreement and the other Loan
Documents to confirm such obligation.

 

4.                                      Further Assurances.  Joining Party
agrees to execute and deliver such other instruments and documents and take such
other action, as the Agent may reasonably request, in connection with the
transactions contemplated by this Joinder Agreement.

 

5.                                      GOVERNING LAW.  THIS AGREEMENT SHALL BE
DEEMED TO BE A CONTRACTUAL OBLIGATION UNDER, AND SHALL BE GOVERNED BY AND
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS.

 

6.                                      Counterparts.  This Agreement may be
executed in any number of counterparts which shall together constitute but one
and the same agreement.

 

7.                                      The effective date (the “Effective
Date”) of this Joinder Agreement is                                   , 20    .

 

IN WITNESS WHEREOF, Joining Party has executed this Joinder Agreement under seal
as of the day and year first above written.

 

 

“JOINING PARTY”

 

 

 

                                                                                                     ,

 

a                                                                  

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

 

 

 

 

[SEAL]

 

ACKNOWLEDGED:

KEYBANK NATIONAL ASSOCIATION, as Agent

By:

 

 

 

 

 

Its:

 

 

[Printed Name and Title]

 

 

2

--------------------------------------------------------------------------------

 

SCHEDULE 1.1

LENDERS AND COMMITMENTS

 

 

 

 

 

Commitment
Percentage

 

Term Facility

 

Revolver
Facility

 

 

 

Lenders 

 

Total
Commitment

 

(of Total
Loans)

 

Total Term
Loan

 

Land

 

% Land

 

Commercial

 

Commercial %

 

Land only

 

Revolver
Loan %

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

KeyBank National Association
1200 Abernathy Road, N.E.
Suite 1550
Atlanta, Georgia 30328
Attn: Dan Silbert

 

LIBOR Lending Office

Same as above

 

$

33,000,000.00

 

13.2

%

$

16,500,000.00

 

$

15,180,000.00

 

13.20000000

%

$

1,320,000.00

 

13.20000000

%

$

16,500,000.00

 

13.20

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Compass Bank
8333 Douglas Ave, Suite 505
Dallas, Texas 75225
Attn: Todd Fuller

 

LIBOR Lending Office

Same as above

 

$

23,000,000.00

 

9.20

%

$

11,500,000.00

 

$

10,580,000.00

 

9.20000000

%

$

920,000.00

 

9.20000000

%

$

11,500,000.00

 

9.20

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

JPMorgan Chase Bank, N.A.
2200 Ross Avenue, 9th Floor
TX1-2953
Dallas, TX 75201-2787
Attn: Diane M. Chavez

 

LIBOR Lending Office

Same as above

 

$

26,000,000.00

 

10.40

%

$

13,000,000.00

 

$

11,960,000.00

 

10.40000000

%

$

1,040,000.00

 

10.40000000

%

$

13,000,000.00

 

10.40

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amegy Bank, N.A.
4400 Post Oak Parkway
Houston, TX 77002
Attn: Eric Wojner

 

LIBOR Lending Office

Same as above

 

$

23,000,000.00

 

9.20

%

$

11,500,000.00

 

$

10,580,000.00

 

9.20000000

%

$

920,000.00

 

9.20000000

%

$

11,500,000.00

 

9.20

%

 

1

--------------------------------------------------------------------------------

 

 

 

 

 

Commitment
Percentage

 

Term Facility

 

Revolver
Facility

 

 

 

Lenders 

 

Total
Commitment

 

(of Total
Loans)

 

Total Term
Loan

 

Land

 

% Land

 

Commercial

 

Commercial %

 

Land only

 

Revolver
Loan %

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Texas Capital Bank, N.A.

One Riverway

Suite 2100

Houston, Texas 77019

Attn: Angie Hill

 

LIBOR Lending Office

Same as above

 

$

23,000,000.00

 

9.20

%

$

11,500,000.00

 

$

10,580,000.00

 

9.20000000

%

$

920,000.00

 

9.20000000

%

$

11,500,000.00

 

9.20

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Woodforest National Bank

1330 Lake Robbins Drive

Suite 100

The Woodlands, Texas 77380

Attn: Ashley Naquin

 

LIBOR Lending Office

Same as above

 

$

28,000,000.00

 

11.20

%

$

14,000,000.00

 

$

12,880,000.00

 

11.20000000

%

$

1,120,000.00

 

11.20000000

%

$

14,000,000.00

 

11.20

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Capital One, N.A.

5718 Westheimer

Suite 600

Houston, Texas 77057

Attn: Ryan Matthews

 

LIBOR Lending Office

Same as above

 

$

19,000,000.00

 

7.60

%

$

9,500.000.00

 

$

8,740,000.00

 

7.60000000

%

$

760,000.00

 

7.60000000

%

$

9,500,000.00

 

7.60

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PNC Bank, National Association

13355 Noel Road

Suite 1770

Dallas, Texas 75240

Attn: Michael Catalano

 

LIBOR Lending Office

Same as above

 

$

19,000,000.00

 

7.60

%

$

9,500.000.00

 

$

8,740,000.00

 

7.60000000

%

$

760,000.00

 

7.60000000

%

$

9,500,000.00

 

7.60

%

 

2

--------------------------------------------------------------------------------

 

 

 

 

 

Commitment
Percentage

 

Term Facility

 

Revolver
Facility

 

 

 

Lenders 

 

Total
Commitment

 

(of Total
Loans)

 

Total Term
Loan

 

Land

 

% Land

 

Commercial

 

Commercial %

 

Land only

 

Revolver
Loan %

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Green Bank, N.A.

c/o CDC Group (Linda Salcido
& Oanh Solomon
2900 N. Loop West
Suite 200
Houston, Texas 77092
Attn: J. Cory LeBouf

 

LIBOR Lending Office

Same as above

 

$

14,000,000.00

 

5.60

%

$

7,000,000.00

 

$

6,440,000.00

 

5.60000000

%

$

560,000.00

 

5.60000000

%

$

7,000,000.00

 

5.60

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Trustmark National Bank

945 Bunker Hill

Suite 200

Houston, Texas 77024

Attn: Amy Walp

 

LIBOR Lending Office

Same as above

 

$

18,000,000.00

 

7.20

%

$

9,000,000.00

 

$

8,280,000.00

 

7.20000000

%

$

720,000.00

 

7.20000000

%

$

9,000,000.00

 

7.20

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The F&M Bank & Trust Company

1330 South Harvard Street

Tulsa, OK 74159

Houston, Texas 74112

Attn: Dave McCarthy

 

LIBOR Lending Office

Same as above

 

$

9,000,000.00

 

3.60

%

$

4,500,000.00

 

$

4,140,000.00

 

3.60000000

%

$

360,000.00

 

3.60000000

%

$

4,500,000.00

 

3.60

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cadence Bank, NA

17 N. 20th Street

Birmingham, Alabama 35203

 

LIBOR Lending Office

Same as above

 

$

15,000,000.00

 

6.00

%

$

7,500,000.00

 

$

6,900,000.00

 

6.00000000

%

$

600,000.00

 

6.00000000

%

$

7,500,000.00

 

6.00

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

250,000,000.00

 

100.00

%

$

125,000,000.00

 

$

115,000,000.00

 

100.00

%

$

10,000,000.00

 

100.00

%

$

125,000,000.00

 

100.00

%

 

3

--------------------------------------------------------------------------------

 

SCHEDULE 1.2

 

BORROWING BASE

 

1

--------------------------------------------------------------------------------

 

SCHEDULE 1.3

 

QUALIFYING INCOME PROPERTIES

 

A.            100% Owned Properties

a.              WCA Building, 2201 Lake Woodlands Drive

b.              Carlton Woods Clubhouse, One Carlton Woods Drive

c.               Fazio Clubhouse, One Carlton Woods Creekside Drive

d.              Homefinder Center, 2000 Woodlands Parkway

e.               Waterway Square Garage, 1505 Lake Robbins Drive

f.                MUD Houses

i.                       7553 Creekside Green Dr., The Woodlands, TX 77389

ii.                    25710 Zion Lutheran Cemetery Rd, Tomball, TX 77375

iii.                 28040 Dry Creek Road, Magnolia, TX 77387

 

B.            Properties Owned by Partnerships/LLCs in which Borrowers Own 50%
or More

 

Property

 

Partnership

 

% Owned

 

10201 Woodloch Forest garage

 

Town Center Development Company, LP

 

100

%

Millennium Woodlands Phase II

 

Millennium Woodlands Phase II, LLC

 

81.19

%

1400 Woodloch

 

Woodlands Office Equities-95, LLC

 

100

%

 

C.            Not Included, as owned by partnerships with less than 50% interest
owned by Borrowers

 

Property

 

Partnership

 

% Owned

 

Lake Front Circle

 

Woodlands Sarofim #1, Ltd

.

20

%

1440-1442 Lake Front Circle

 

 

 

 

 

9186 Six Pines

 

 

 

 

 

 

1

--------------------------------------------------------------------------------

 

SCHEDULE 1.4

 

PARTIAL INTERESTS

 

Woodlands Sarofim #1, Ltd.

Buildings

Millennium Woodlands Phase II, LLC

Apartments

 

1

--------------------------------------------------------------------------------

 

SCHEDULE 1.5

 

PARTNERSHIPS

 

Woodlands Sarofim #1, Ltd.

Buildings

Millennium Woodlands Phase II, LLC

Apartments

 

1

--------------------------------------------------------------------------------

 

SCHEDULE 1.6

 

NOTE RECEIVABLES

 

1.              Promissory Note dated December 31, 2010, in the original
principal amount of $1,394,381.17 made by The Woodlands Community Facilities
Development Corporation in favor of The Woodlands Land Development Company, L.P.

 

2.              Promissory Note dated December 31, 2011, in the original
principal amount of $1,903,390.83 made by The Woodlands Community Facilities
Development Corporation in favor of The Woodlands Land Development Company, L.P.

 

3.              Promissory Note dated December 31, 2012, in the original
principal amount of $2,901,570.51 made by The Woodlands Community Facilities
Development Corporation in favor of The Woodlands Land Development Company, L.P.

 

1

--------------------------------------------------------------------------------

 

SCHEDULE 6.3

 

TITLE TO PROPERTIES; LEASES

 

I.                                        LEASES

 

A.                                    WICO KG - 1.309 acres - Lease dated
3/31/99 for 25 years (Landry’s parking area) Restaurant parking located off the
Mall Ring Road

 

·

Lessor:

 

The Woodland Commercial Properties Company, L.P.

·

Lessee:

 

WICO KF

 

B.                                    American Tower (Cell Tower) - Term 20
years with extension options

 

·

Lessor:

 

The Woodlands Land Development Company, L.P.

·

Lessee:

 

American Tower, LP — Date of Leases June 9, 2000; effective date 5/1/99

 

(1)                                 Village of Alden Bridge - 0.2300 acres -
South side of FM 1488, west of SH242 in the John N. Thomas Svy. A549

 

(2)                                 Village of Sterling Ridge - 0.2300 acres -
South of Woodlands Parkway, west of Kuykendahl Rd. in the A. Smith Svy. A499

 

C.                                    American Tower (Cell Tower) — Term 20
years with extension options

 

·

Lessor:

 

The Woodlands Commercial Properties Company, L.P. (successor to The Woodlands
Corporation)

·

Lessee:

 

ATC Tower Corp. — Effective Date of Leases 2/14/97

 

(1)                                 Village of Indian Springs - 0.2300 acres -
South of Flintridge Drive in the Caddo Allen Svy. A-45

 

(2)                                 Village of Panther Creek - 0.2330 acres -
East of Glen Loch Drive in the G. W. Wagers & J.A. Knight Survey A-765John
Taylor Svy. A-547

 

(3)                                 Research Forest - 0.2300 acres - North of
Research Forest on Grogan’s Mill Rd. in the Village of Grogan’s Forest
Section in the F. D. May Svy. A-388

 

(4)                                 Town Center - 0.2300 acres - South of
Research Forest, east of Grogan’s Mill Rd. west of Six Pines in the Montgomery
County School Land Svy. A-350

 

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D.                                    Village of Cochran Crossing - 0.2490 acres
— Term commenced 1/5/1998; expires 4/15/2017

 

·

Lessor:

 

The Woodlands Land Development Company, L.P.

·

Lessee:

 

ATC Tower Corp. — Effective Date of Lease 2/14/97

·

Location:

 

Southwest of The Woodlands High School in the Henry Dunham and Blanch & Foley
Svy. A-797

 

E.                                     Sprint Tower (Cell Tower) - College Park
- (Gosling Rd by Metro Mini Storage) - 0.0689 acres - Date of Lease 9/17/03 -
Effective 9/15/03 for 20 years with extension options

 

·

Lessor:

 

The Woodlands Land Development Company, L.P.

·

Lessee:

 

Sprintcom, Inc.

·

Location:

 

East of Gosling Rd. south of SH 242 in the F. D. May Svy. A-388

 

F.                                      The Woodlands Township - RV Storage Lot
- 4.0471 acres - Date of Lease 7/27/84 - automatically renews successive one
year periods

 

·

Lessor:

 

The Woodlands Corporation

·

Lessee:

 

The Woodlands Community Association

·

Location:

 

Pruitt Rd. south of Sawdust Rd. in the Walker County School Land Svy. A-599

 

G.                                    YMCA - Village of Cochran’s Crossing -
12.2993 acres - Date of Lease: 5/16/83, expires: 99 years from commencement

 

·

Lessor:

 

Woodlands Land Development Company, L.P.

·

Lessee:

 

The Young Men’s Christian Association of the Greater Houston Area

·

Location:

 

Shadowbend Dr. west of Research Forest Dr. in the Henry Dunman Svy. A-163 & H.
G. Roach Svy. A-687

 

H.                                   Montgomery County - Oak Ridge Little League
- 27.327 acres - Date of Lease 3/18/88, expires 3/17/2013

 

·

Lessor:

 

The Woodlands Land Development Company, L.P.

·

Lessee:

 

Montgomery County

·

Location:

 

Pruitt Rd. south of Sawdust in the Walker County School Land Svy. A-599

 

I.                                        Lake Woodlands Property Owners’ Assoc.
- Lake Woodlands - 201.3838 acres - Date of Lease 4/23/86, expires 3/31/2016
with 10 5-yr. automatic extensions

 

·

Lessor:

 

The Woodlands Land Development Company, L.P.

·

Lessee:

 

Lake Woodlands Property Owners’ Association, Inc.

 

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·

Location:

 

North of Woodlands Parkway, west of Grogan’s Mill Rd. & East of Panther Creek
Dr.

 

J.                                        Exxon Mobil Learning Center — Lease
dated 1/1/2011 — expires 12/31/2013

 

·

Lessor:

 

WRCC Holdings, LLC

·

Lessee:

 

Exxon Mobil

 

K.                                   MUD Houses — MUD 387 — 7553 Creekside Green
Dr. — Date of Lease 3/01/2011, expires 2/29/2012 — month to month thereafter

 

L.                                     John Gilman - House 28040 Dry Creek Drive
- Date of lease 11/1/04, expires 12/01/04 — month to month thereafter

 

·

Lessor:

 

The Woodlands Land Development Company, L.P.

·

Lessee:

 

John Gilman

·

Location:

 

East of FM2978, south of Bear Branch Crossing in the James Brown Svy. A-78

 

M.                                 Beverage Operations, Inc.

 

·

Lease Agreement dated as of March 26, 2001 by and between the Woodlands Land
Development Company, L.P. and Beverage Operations, Inc. pertaining to the
provision of alcoholic beverage services at The Club at Carlton Woods, as
amended June 6, 2005.

 

N.                                    T-Mobile Texas, LP (Cell Tower) — Village
of Sterling Ridge — 0.039 acres — Date of Lease 5/10/2007 for 10 years with
extension options (6/01/2017).

 

·

Lessor:

 

The Woodlands Land Development Company, L.P.

·

Lessee:

 

T-Mobile Texas, LP

·

Location:

 

South of Woodlands Parkway, parcel 5I-1a., James Brown Survey A-78.

 

O.                                    T-Mobile West Corporation (Cell Tower) —
College Park — 0.127 acres — Date of Lease 5/15/2008 for 10 years with extension
options (May 1, 2017).

 

·

Lessor:

 

The Woodlands Land Development Company, L.P.

·

Lessee:

 

T-Mobile West Corporation

·

Location:

 

College Park, parcel 1CEa., George Taylor Survey A-555.

 

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II.                                   OBLIGATIONS/RESTRICTIONS

 

Mutual Benefit Agreement
Date of Agreement: March 1, 1992

 

Obligation to impose The Woodlands Association, Inc. (TWA) or Woodlands
Community Association, Inc. (WCA) covenants on land in The Woodlands as outlined
in Exhibit “A” of First Amended Mutual Benefit Agreement.

 

 

 

WCOA
Declaration dated: 10/26/93

 

3 tracts of land totaling 3.851 acres identified in these covenants must be
retained by TWLDC until the company rights are assigned per covenants & deeds.
Imposes The Woodlands Commercial Owners Association covenants on certain
commercial areas in The Woodlands.

 

 

 

ARC Holding Ltd (Fox Network) (29.76 acres) Parcel 7J-3

 

Declaration dated: 7/22/05

 

For a period of twenty-four months (24) from the effective date of the
declaration, no portion of the Restricted Tract (46.99 acres) may:

 

(a)              exceed sixty feet (60’) in height ;

(b)              be used for hotel, motel, residential purposes or for hospital,
or residential health care facility; or

(c)               if Fox completes construction and begins operation of the
“Satellite Farm” on the Benefited Tract by the end of twenty-four months period,
then the declaration shall continue in force.

 

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SCHEDULE 6.7

 

LITIGATION

 

1

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SCHEDULE 6.15

 

TRANSACTIONS OF AFFILIATES

 

None.

 

1

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SCHEDULE 6.16

 

ERISA COMPLIANCE

 

None.

 

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SCHEDULE 6.17

 

ERISA MATTERS

 

None.

 

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SCHEDULE 6.20

 

ENVIRONMENTAL MATTERS

 

1.                                      U.S. Fish and Wildlife Service: 
Threatened and Endangered Species Permit TE-048649-1.  This permit concerns the
existing bald eagle nest located near Lake Woodlands.  The permit allows
development within 350 feet of the nest with timing limitations to accommodate
nesting activity.  Within the 300 foot area is a nest protection zone around the
nest tree where no development can occur until abandonment of the nest.

 

2.                                      Lone Star Groundwater Conservation
District:  HUP Permit 246 is for an existing irrigation well used to irrigate
the Nicklaus golf owned by TWLDC in Montgomery County.  This is a relatively new
regulatory agency in Montgomery County, which is issuing Historic Use Permits
for wells existing before 12/03, and Operating Permits for wells drilled after
that date.

 

3.                                      Harris-Galveston County Subsidence
District:  Permit 9599 is for the Fazio Golf Course Irrigation Well. 
Permit 112750 is for the Village Seven community water supply well located at
water plant site #1.

 

4.                                      TCEQ Construction Stormwater Permits: 
Almost all construction jobs are required to file notice of intent for coverage
under the State/Federal construction stormwater general permit.  A routine
procedure is in place to comply with this requirement in the Land Development
Department.

 

5.                                      U.S. Army Corps of Engineers: 
Permit SWG-2007-00866 authorizes construction of the final phase of the Village
of Creekside Park stormwater detention pond.  Certain mitigation requirements of
the Permit are completed and/or underway.

 

1

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SCHEDULE 6.21

 

SUBSIDIARIES

 

Restricted Subsidiaries of
Commercial Company

 

Type of Property
Owned

 

Equity Type

 

Percent
Ownership

 

Ownership
Type

Woodlands Sarofim #1, Ltd.

 

Buildings

 

Texas LP

 

20

%

GP

 

Restricted Subsidiaries of Land
Company

 

Type of Property
Owned

 

Equity Type

 

Percent
Ownership

 

Ownership
Type

Town Center Development Company, L.P.

 

Office/retail

 

Texas LP

 

99

%

LP

Town Center Development Company GP, L.L.C.

 

 

 

Texas LLC

 

100

%

Member

4 Waterway Holdings, LLC

 

Office

 

Del LLC

 

100

%

Member

One Hughes Landing, LLC

 

Office

 

Texas LLC

 

100

%

Member

3 Waterway Holdings, LLC

 

Office

 

Texas LLC

 

100

%

Member

20 and 25 Waterway Holdings, LLC

 

Retail

 

Del LLC

 

100

%

Member

Millennium Phase II Member, LLC

 

Apartment

 

Del LLC

 

100

%

Member

9303 New Trails Holdings, LLC

 

Office

 

Del LLC

 

100

%

Member*

Waterway Ave Partners, LLC

 

Apartment

 

Texas LLC

 

100

%

Member*

Woodlands Office Equities 95, LLC

 

Office

 

Texas LLC

 

100

%

Member

 

--------------------------------------------------------------------------------

* Member is Town Center Development Company, L.P.

 

Unrestricted Subsidiaries

 

Unrestricted Subsidiaries of Commercial Company

None

 

Unrestricted Subsidiaries of Land Company

 

Equity Type

 

Percent Ownership

 

Stewart Title of Montgomery County, Inc.

 

Texas Corp

 

50

%

Woodlands Custom Sales, L.P.

 

Texas LP

 

99

%

Woodlands Custom Residential Sales, LLC

 

Texas LLC

 

100

%

Woodlands Community Facilities Development
Corporation

 

Texas Corp

 

N/A

 

 

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SCHEDULE 6.27

 

RIGHT OF FIRST REFUSALS, PURCHASE OPTIONS, ETC.

 

A.                                    Rights of First Refusal

 

Eckerd’s Drugs (CVS) has a perpetual right to purchase or lease, install and
operate the first drug store in Town Center and in one-half of all future
shopping center sites in The Woodlands controlled by The Woodlands Land
Development Company, L.P.

 

B.                                    See also Obligations/Restrictions set
forth in Schedule 6.3 and incorporated herein by reference.

 

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SCHEDULE 7.19

 

UNPLEDGED PARTIAL INTERESTS

 

Woodlands Sarofim #1, Ltd.

 

Millennium Woodlands Phase II, LLC

 

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