Exhibit 10.101


 


CONSTRUCTION LOAN AGREEMENT


 


between


 


FRISCO SQUARE F1-1, LTD.


 


and


 


COMPASS BANK


 


Lender


 


EFFECTIVE DATE: March 8, 2007


 





















 


CONSTRUCTION LOAN AGREEMENT


 


THIS AGREEMENT is made to be effective March 8, 2007, by and between FRISCO SQUARE F1-1, LTD.,  a Texas limited partnership (“Borrower”),  and COMPASS BANK (“Lender”).  In consideration of the mutual promises contained in this
Agreement and of other valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, Borrower and Lender agree as follows:


 


ARTICLE 1     DEFINITIONS


 


As used in this Agreement, the following terms shall have the meanings
shown:


 


1.1                 “Additional Funding Conditions” is defined
in Section 6.9.


 


1.2                 “Architect” means the architect(s) who
prepare any of the Plans and Specifications for the construction of the
Improvements.


 


1.3                 “Borrower’s Deposit” is defined in Section
6.5(b).


 


1.4                 “Borrower’s Equity” means funds in the
amount of $2,222,109.00, which is to be applied to the payment of the
acquisition cost of the Land in the amount of $705,600.00 and other Project
Costs in accordance with the Project Budget.


 


1.5                 “Borrower’s General Partner” means Fairways
FS Fl-1, LLC, a Texas limited liability company.


 


1.6                 “Change in Control” means the occurrence of
any one or more of the following: (i) Borrower’s General Partner shall cease to
own, directly, all of the general partner interest of Borrower; or (ii)
Guarantors shall cease to own, directly, all of the membership interests of
Borrower’s General Partner.


 


1.7                 “Commencement Deadline” means the date that
is forty five (45) days after the date of this Agreement.


 


1.8                 “Completion Deadline” means the date that is
nine (9) months after the date of this Agreement.


 


1.9                 “Construction Contract” means the agreement
between Borrower and Contractor providing for the furnishing of labor or
materials to be used in the construction or installation of the Improvements,
including all additions, changes and other amendments thereto.


 


1.10           “Construction Documents” is defined in Section
4.7.


 


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1.11           “Contractor” means HCBeck Ltd., or such
other party or parties who, with the prior written approval of Lender, enters
into a Construction Contract with Borrower.


 


1.12           “Debt” means all indebtedness outstanding
from time to time under the Note and the other Loan Documents.


 


1.13           “Debt Coverage Ratio” means a fraction, the
numerator of which is the Net Operating Income from the Project for the
applicable three (3) month period, and the denominator of which is an amount
equal to Debt Service for such three (3) month period.


 


1.14           “Debt Service” means the hypothetical
monthly installment of principal and interest for each month in the three (3)
month period in question (determined as of the beginning of the first such
month) that would be payable on the outstanding principal balance of the Loan,
assuming an interest rate equal to the greater of (i) seven percent (7%) per
annum, or (ii) the Treasury Note Rate plus two percent (2%) per annum, and
which monthly payments would fully amortize the outstanding principal balance
of the Loan, over a twenty five (25) year period.


 


1.15           “Deed of Trust” means the Deed of Trust,
Security Agreement, Fixture Filing and Assignment Leases and Rents of even date
herewith, conveying the Premises to Lee Q. Vardaman, Trustee to secure the
payment of the Note.


 


1.16           “Default” means the occurrence of an event
or the existence of any circumstance which, with the passage of time or the
giving of notice or both, would constitute an Event of Default under this
Agreement or any other Loan Document.


 


1.17           “Engineer” means (i) Millett Engineering;
and (ii) JJA.


 


1.18           “Extension Period” means a period of twelve
(12) months, commencing on the first day after the Maturity Date.


 


1.19           “Frisco” means Frisco Square Land, Ltd., a
Texas limited partnership.


 


1.20           “Frisco Square Property” means the Land and
the property in the general vicinity of the Land which is a part of the planned
development district PD-153 in the City of Frisco, Texas.


 


1.21           “Funding Limit” means $1,000,000.00.


 


1.22           “Good Accounting Practice” means such
accounting practice as, in the opinion of independent accountants of recognized
national standing regularly retained by Borrower or Guarantor (as the case may
be) and acceptable to and approved by


 


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Lender, conforms at the
time to generally accepted accounting principles, consistently applied.
Generally accepted accounting principles means those principles and practices
(a) which are recognized as such by the Financial Accounting Standards Board,
(b) applied after the date of Borrower’s or Guarantor’s (as the case may be)
most recent financial statements furnished to Lender in a manner consistent
with the manner in which such principles and practices were applied to such
statements, and (c) consistently applied for all periods after the date of such
most recent financial statements so as to reflect properly the financial
condition, and results of operations and changes in financial position, of
Borrower or Guarantor. If any change in any accounting principle or practice is
required by the Financial Accounting Standards Board in order for such
principle or practice to continue as a generally accepted accounting principle,
all reports and financial statements required hereunder may be prepared in
accordance with such change only after written notice of such change is given
to Lender.


 


1.23           “Governmental Authority”  means the United States, the State, the
county, the city, and any other political subdivision in which the Land is
located, and any other political subdivision, agency or instrumentality
exercising jurisdiction over Borrower, Guarantor or the Premises.


 


1.24           “Governmental Requirements”. All laws, ordinances, statutes,
codes, rules, regulations, orders and decrees of any Governmental Authority
applicable to Borrower, Guarantor or the Premises.


 


1.25           “Guaranty” means the Guaranty of even date
herewith made by James C. Leslie, Cathy R. Sweeney, A. Brant Bryan and David F.
Stringfield (each and collectively, according to the context, “Guarantor”) unconditionally guaranteeing the payment of the Note and the
performance by Borrower of its obligations under the Deed of Trust, this
Agreement and the other Loan Documents.


 


1.26           “Improvements”  means the improvements to be constructed on the Land in
accordance with the Plans and Specifications, as provided in and contemplated
by this Agreement.


 


1.27           “Initial Advance”  means the first amount of the Loan funded by Lender.


 


1.28           “Initial Appraisal”  is defined in Section 7.1(1).


 


1.29           “Inspecting Architect”  means any architect, engineer or other
representative of Lender designated to inspect the construction of the
Improvements on behalf of Lender.


 


1.30           “Interest Reserve Account”  is defined in Section 6.6.


 


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1.31           “Land” means the real property described in Exhibit
A attached hereto.


 


1.32           “Loan” is defined in Section 2.


 


1.33           “Loan  Documents”
means this Agreement, the Note, the Deed of Trust and all other documents
executed or accepted by Lender as security for or in connection with the Loan
or any other Debt; the Guaranty; the Borrower’s Certificate dated of even date
with the Note executed by Borrower setting forth certain facts relating to the
Premises, the Borrower and the Loan; the No Oral Agreements dated of even date
with the Note executed by Borrower and Lender pursuant to Subsection 26.02 of
the Texas Business and Commerce Code; the Collateral Assignment of Contracts
and Plans and Other Agreements required by Section 7.1(h); the
Contractor/Lender Agreement executed by Contractor as required by Section
7.1(j); and the Design Professional/Lender Agreement executed by the
Architect as required by Section 7.1(k).


 


1.34           “Loan-To-Cost Ratio means the ratio of (i)
the amount of the Loan to (ii) the total Project Costs for the construction and
development of the Project.


 


1.35           “Loan-To-Value Ratio means the ratio of (i)
the amount of the Loan to (ii) the fair market value of the Premises, as
determined by Lender based on the most recent of the Initial Appraisal obtained
by Lender or other appraisal of the Premises as obtained by Lender pursuant to Section
4.22 or Section 9.l(h) below.


 


1.36           “Management Agreement” means the written agreement
between Borrower and Manager pursuant to which Manager shall manage the Project
and which shall be subject to the prior approval of Lender.


 


1.37           “Manager” means Frisco Square Development,
Ltd., a Texas limited partnership, and any successor manager of the Project
approved by Lender in writing.


 


1.38           “Maturity Date” means March 8, 2009.


 


1.39           “Mortgagee Title Policy” is defined in Section
4.1.


 


1.40           “Net Operating Income” means the gross
income actually received by Borrower from the operation of the Project for the
preceding three (3) month period on an annualized basis, less expenses actually
incurred and/or paid by Borrower in connection with the operation and
maintenance of the Project (including accruals for taxes and insurance and
reasonable reserves for structural repairs and replacements) during such three
(3) month period, on an annualized basis, computed without regard to
depreciation or debt service, but otherwise in accordance with Good Accounting
Practice, provided, however, such expenses not to be less than the expenses
used in the Initial Appraisal or any appraisal obtained by Lender as a
condition to an extension of the Maturity Date as


 


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provided in Section
9.1(h).


 


1.41           “Note” means the promissory note of even
date herewith payable to the order of Lender in the stated principal amount of
EIGHT MILLION EIGHT HUNDRED EIGHT-NINE THOUSAND AND NO/100 DOLLARS
($8,889,000.00), executed by Borrower to evidence the Loan.


 


1.42           “Parking Garage” is defined in Section
6.8.


 


1.43           “Parking Agreement”  is defined in Section 6.8.


 


1.44           “Parking Land”  is defined in Section 6.8.


 


1.45           “Plans and Specifications”  means the plans and specifications
prepared by the Architect and any Engineer for the construction of the
Improvements, as listed in the Collateral Assignment of Contracts and Plans and
Other Agreements required by Section 7.1(h), and all additions, changes
and other amendments thereto.


 


1.46           “Premises”
means the Land and the Improvements.


 


1.47           “Project”  means
a Class A four story office/retail building containing approximately 62,487
square feet of space to be constructed upon the Land, with 14,906 rentable
square feet of ground floor retail space and 47,581 rentable square feet of
office space.


 


1.48           “Project Budget”  is defined in Section 4.6.


 


1.49           “Project Costs”  is defined in Section 4.6.


 


1.50           “Project Revenues”  is defined in Section 4.6.


 


1.51           “Request for Advance”  is defined in Section 6.1(a).


 


1.52           “Required Lease”  means that certain lease agreement dated May 18, 2006 by and
between Frisco Square Bl-7, Fl-10, Ltd., as landlord (as assigned to Borrower),
and Frisco’s LP, d/b/a Mattito’s Tex-Mex Cocina, as tenant, covering
approximately 8,474 rentable square feet of the retail space in the Premises.


 


1.53           “SNDA”  is
defined in Section 4.25(c).


 


1.54           “Title Company”  means Chicago Title Insurance Company, or other title
insurance company acceptable to Lender in its sole and absolute discretion.


 


1.55           “Treasury Note Rate”  means the Treasury Constant Maturity
Series yields


 


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reported, for the latest
day for which such yields shall have been so reported as of the applicable
business day, in Federal Reserve statistical Release H.15 (519) (or any
comparable successor publication) for actively traded U.S. Treasury securities
having a constant maturity equal to ten (10) years. Such implied yield shall be
determined, if necessary, by (i) converting U.S. Treasury bill quotations
to bond-equivalent yields in accordance with accepted financial practice and
(ii) interpolating linearly between reported yields.


 


ARTICLE 2     THE LOAN


 


Subject to and
upon the terms and conditions of this Agreement and the other Loan Documents,
and relying on the representations and warranties made to Lender in this
Agreement and the other Loan Documents, Lender agrees to make a loan (the “Loan”) in the principal amount of EIGHT
MILLION EIGHT HUNDRED EIGHTY-NINE THOUSAND AND NO/100 DOLLARS ($8,889,000.00),
or so much thereof as is advanced pursuant to this Agreement, secured by a lien
on the Premises, for the acquisition of the Land and for the construction of
the Improvements to the Land. Borrower agrees to borrow and take down the Loan,
subject to and upon the terms and conditions of this Agreement and the other
Loan Documents. All proceeds of the Loan shall be advanced against the Note as
provided in Article 6 hereof and shall be used by Borrower to pay for
Project Costs incurred within the constraints of the Project Budget. The
principal amount actually owing on the Note from time to time shall be the
aggregate of all advances of Loan proceeds theretofore made by the Lender
against the Note (including advances made to pay interest accrued on the Note)
less all payments theretofore made on the principal of the Note.


 


ARTICLE 3     REPRESENTATIONS AND WARRANTIES OF BORROWER


 


Reference is made to the representations and warranties of Borrower in
the Deed of Trust and the other Loan Documents, and without limiting such
warranties and representations Borrower hereby further represents and warrants
to and covenants with Lender that:


 


3.1       Availability of
Utilities.  All utility and municipal
services necessary for the proper operation of the Improvements for their
intended purpose are available at the Premises, including water supply, storm
and sanitary sewer facilities, gas, electricity and telephone facilities, or
will be available at the Premises when constructed or installed as part of the
Improvements, and written permission has been or will be obtained from the
applicable utility companies or municipalities to connect the Improvements into
each of the services. If Borrower has not already done so, Borrower shall
supply evidence of such permission satisfactory to Lender. All of such utility
and municipal services will comply with all Governmental Requirements.


 


3.2       Roads.  All roads necessary for the full utilization
of the Improvements for their intended purposes have been completed or the
necessary rights-of-way therefor have either been acquired by the appropriate
governmental authorities or have been dedicated to the public use


 


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and
accepted by such Governmental Authority, and all necessary steps have been
taken by Borrower and any such Governmental Authority to assure the complete
construction and installation thereof.


 


3.3       Building Permits.  All zoning, utility, building, health and
operating permits required for the construction and operation of the
Improvements have been obtained or will be obtained prior to time required by
any applicable Governmental Authority with respect to the construction of the
Improvements. Borrower shall deliver copies of such permits to Lender if
Borrower has not already done so.


 


3.4       Compliance with Laws
and Restrictions.  Borrower has
examined, is familiar with, and is able to comply with all conditions,
covenants, restrictions, easements, reservations, rights, or rights-of-way,
laws, ordinances, and all applicable administrative rules and regulations of
any Governmental Authority affecting the Premises, compliance with which is
necessary for completion of the Improvements in substantial conformance with
the Plans and Specifications or for issuance of a certificate of occupancy for
the Improvements. When the Improvements are complete, design and as-built
conditions of the Premises will be such that no drainage or surface or other
water will drain across or rest upon either the Premises or land of others in
any manner that could render the owner of the Premises liable for damages to an
owner of other land.


 


3.5       Construction Contract.
 Borrower has entered into no contracts
or agreements with third parties (either written or oral) providing for the
furnishing of labor or materials to be used in the construction or installation
of the Improvements, other than a Construction Contract with Contractor and
contracts with the Architect which are covered by Loan Documents required by Sections 7.1(h)
through 7.1(k) below. Nor will Borrower enter into any such contracts or
agreements in the future, other than with respect to tenant improvements,
except in such form and upon such terms as shall be approved in advance and in
writing by Lender.


 


3.6       No Prior Work.  No work or construction has been commenced on
the Land and no materials have been delivered to the Land which could, in
either case, result in the imposition of a mechanic’s or materialmen’s lien on
the Premises prior to or on parity with the lien and security interest created
by the Deed of Trust.


 


3.7       Sufficiency of Funds.
Sufficient funds are available to Borrower in addition to proceeds of the Loan
to pay all Project Costs. Upon request of Lender, Borrower shall demonstrate to
Lender that such funds are available.


 


3.8       Brokerage Commissions.
 Any brokerage commissions due in
connection with the Loan contemplated hereby have been paid in full and any
such commissions coming due in the future shall be promptly paid by Borrower.
Borrower agrees to and shall indemnify Lender from any liability, claims or
losses arising by reason of any such brokerage commissions. This provision
shall survive the repayment of the Loan and shall continue in full force and
effect so long as the possibility of such liability, claims or losses exists.


 


3.9       Pending Litigation.
 Except for the lawsuit disclosed in Schedule
1 attached to this


 


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Agreement
(the “Existing Lawsuit”),
there are no actions, suits or proceedings pending, or to the knowledge of
Borrower or the Guarantor threatened, against or affecting Borrower or the
Guarantor or the Premises, and there are no suits pending against or affecting
Borrower or the Guarantor or the Premises which might result in any material
adverse change in the financial condition, operations or prospects of Borrower
or the Project or involving the validity or enforceability of any of the Loan
Documents or the priority of the lien thereof, at law or in equity, or before
or by any Governmental Authority, except actions, suits and proceedings which
are fully covered by insurance or which, if adversely determined, would not
substantially impair the ability of Borrower or Guarantor to perform each and
every one of its obligations under and by virtue of the Loan Documents; and to
the Borrower’s knowledge it is not in default with respect to any order, writ,
injunction, decree or demand of any court or any Governmental Authority. The
parties to the Existing Lawsuit have entered into a settlement agreement
resolving all claims under the Existing Lawsuit, and the Existing Lawsuit has
been or will be dismissed pursuant to such settlement agreement. There are no
proceedings pending, or to the knowledge of Borrower or Guarantor, threatened,
to acquire through the exercise of any power of condemnation, eminent domain,
or similar proceeding any part of the Premises, the Improvements or any
interest therein, or to enjoin or similarly prevent or restrict the use of the
Premises or the operation of the Project thereon.


 


3.10     Violations of
Governmental Requirements.  Borrower
has no knowledge of any violations or notices of violations of any Governmental
Requirements. The Project, when constructed, and its operations and the
Premises will comply in all material respects with all covenants and
restrictions of record and all Government Requirements, including, without
limitation, the Americans with Disabilities Act and the regulations thereunder,
and there are no waivers of any building codes currently contemplated for the
Project.


 


3.11     Management Agreement.
 Borrower shall provide a copy of the
proposed Management Agreement to Lender for Lender’s prior written approval
prior to Borrower entering into the same, which approval may be in the sole and
absolute discretion of Lender.


 


ARTICLE 4     COVENANTS OF BORROWER


 


Reference is made to the covenants of Borrower in the Deed of Trust and
the other Loan Documents, and without limiting such covenants Borrower hereby
further covenants with Lender as follows:


 


4.1       Title Insurance.  Borrower shall furnish to Lender, at Borrower’s
expense, a mortgagee title insurance policy (“Mortgagee Title Policy”) showing Lender as the insured
thereunder, in the full amount of the Loan proceeds that may be advanced
hereunder and in form and substance satisfactory to Lender. The Mortgagee Title
Policy shall be written by the Title Company on behalf of an underwriter
satisfactory to Lender and shall insure a valid first lien upon the Premises by
virtue of the Deed of Trust, subject only to exceptions specifically approved
in writing by Lender. If the underwriter issuing the Mortgagee Title Policy
becomes insolvent or is placed in receivership or for any other reason such
Policy becomes unenforceable, Borrower shall furnish Lender, at Borrower’s
expense, another mortgagee title insurance policy


 


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in the amount and in
substitution for the original Mortgagee Title Policy and meeting the above
requirements.


 


4.2       Liability and Casualty Insurance.  Borrower shall obtain and maintain such
insurance and evidence of insurance as Lender may reasonably require, including
but not limited to the following:


 


(a)       Builder’s Risk Insurance - Builder’s
completed value risk and such other hazard insurance as Lender may require
against all risks of physical loss including collapse and transit coverage,
with deductibles in such amount approved by Lender, with noncontributing
mortgagee clauses and standard subrogation clauses and a mortgagee’s loss
payable endorsement making loss payable to Lender, such insurance to be in such
amounts covering the total value of work performed and equipment, supplies and
materials furnished and in such form and by such companies as shall be approved
by Lender, and the certificates of insurance evidencing such policies (together
with appropriate endorsements thereto, evidence of payment of premiums thereon
and written agreement by the insurer or insurers therein to give Lender thirty
(30) days prior written notice of modification or intention to cancel) shall be
promptly delivered to Lender; said insurance coverage to be kept in full force
and effect at all times until the completion of construction of the
Improvements.


 


(b)       Hazard Insurance - Upon completion
of construction of the Improvements and before any portion of the Premises is
occupied by Borrower or any tenant of Borrower, comprehensive “all risk”
insurance (including, without limitation, riot and civil commotion, vandalism,
malicious mischief, water, fire, burglary and theft) on the Improvements and in
each case (A) in an amount equal to the greater of (x) 100% of the “Full
Replacement Cost,” which for purposes of this Agreement shall mean actual
replacement value (exclusive of costs of excavations, foundations, underground
utilities and footings) with a waiver of depreciation, or (y) the amount of the
Loan; (B) containing an agreed amount endorsement with respect to the
Improvements waiving all co-insurance provisions; (C) containing such available
endorsements as reasonably required by Lender and (d) providing permanent
coverage on an All Risk basis.


 


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(c)       General Liability and Excess Liability
Insurance - commercial general liability insurance against claims for
personal injury, bodily injury, death or property damage occurring upon, in or
about the Premises, such insurance (A) to be on the so-called “occurrence” form
with a combined single limit of not less than $1,000,000.00 and an aggregate
coverage limit acceptable to Lender; (B) to continue at not less than the
aforesaid limit until required to be changed by Lender in writing by reason of
changed economic conditions making such protection inadequate in Lender’s
reasonable determination; (C) to cover at least the following hazards: (1)
premises and operations; (2) independent contractors; (3) blanket contractual
liability for all written and oral contracts; and (4) contractual liability
covering the indemnities contained in the Loan Documents to the extent the same
is available; and (D) with a deductible acceptable to Lender. In addition,
Borrower shall provide excess liability coverage of not less than $5,000,000,
naming Lender as an additional insured.


 


(d)       Worker’s Compensation Insurance -
workers’ compensation insurance, with an “All States” endorsement, subject to
the statutory limits of the state in which the Premises is located, and
employer’s liability insurance with limits acceptable to Lender.


 


(e)       Loss of Rents Insurance - upon
completion of construction of the Improvements, business interruption or loss
of rents insurance (A) with loss payable to Lender; (B) covering losses of
income and rents derived from the Premises resulting from any risk or casualty
whatsoever; (C) containing an extended period of indemnity endorsement which
provides that after the physical loss to the Improvements has been repaired,
the continued loss of income will be insured until such income either returns
to the same level it was at prior to the loss, or the expiration of twelve (12)
months from the date of the loss, whichever first occurs, and notwithstanding that
the policy may expire prior to the end of such period; and (D) in an amount
equal to 100% of the projected gross income from the Premises for a period of
twelve (12) months. All insurance proceeds payable to Lender pursuant to this Subsection
4.2(e) shall be held by Lender and shall be applied to the obligations
secured by the Deed of Trust from time to time due and payable under the Loan
Documents; provided, however, that nothing herein contained shall
be deemed to relieve Borrower of its obligations to pay the obligations secured
hereunder on the respective dates of payment provided for in the Note except to
the extent such amounts are actually paid out of the proceeds of such business
income insurance.


 


(f)        Boiler and Machinery Insurance -
if applicable, comprehensive boiler and machinery insurance (without exclusion
for explosion), in amounts as shall be reasonably required by Lender and
covering all boilers or other pressure vessels, machinery and equipment located
at or about the Premises (including, without limitation, electrical equipment,
sprinkler systems, heating and air conditioning equipment, refrigeration
equipment and piping).


 


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(g)                     Auto
Liability Insurance - if applicable, automobile liability insurance, in an
amount not less than $1,000,000, which insurance shall be written on an “occurrence”
basis (as opposed to a “claims made” basis), and naming Lender as an additional
insured.


 


(h)                     Flood
Insurance - flood hazard insurance if any portion of the Improvements is
currently or at any time in the future located in a federally designated “special
flood hazard area,” flood hazard insurance in an amount equal to the lesser of
(a) the outstanding principal balance of the Note, (b) the Full Replacement
Cost, or (c) the maximum amount of such insurance available under the National
Flood Insurance Act of 1968, the Flood Disaster Protection Act of 1973 or the
National Flood Insurance Reform Act of 1994, as each may be amended.


 


(i)                         Other
Insurance - such other insurance and in such amounts as Lender from time to
time may reasonably request against such other insurable hazards which at the
time are commonly insured against for property similar to the Premises located
in or around the region in which the Premises is located, including, without
limitation, earthquake insurance (in the event the Premises is located in an
area with a high degree of seismic activity).


 


4.3                    General
Insurance Requirements.


 


(i)                         All
insurance policies shall be obtained under valid and enforceable policies, in
such forms and in such amounts as set forth herein or as may from time to time
be satisfactory to Lender, issued by insurance companies authorized to do
business in the state in which the Premises is located and which have been
approved by Lender and which have a rating of A:VIII or better by A.M. Best Co.
in Best’s Rating Guide.


 


(ii)                      Borrower
shall deliver to Lender certificates evidencing such insurance coverage on “Acord
25” form for liability insurance and “Acord 27” form for special cause of loss
insurance and, if requested by Lender, copies of the policies evidencing such
insurance. Borrower shall further deliver to Lender receipts evidencing the
payment of all insurance premiums, and will deliver certificates evidencing
renewals of all such policies of insurance to Lender at least fifteen (15) days
before any such insurance shall expire. In addition, the insurance policies
shall provide for a thirty (30) day cancellation notice to Lender.


 


(iii)                   Lender shall be
named as mortgagee and loss payee on all casualty policies and as additional
insured on all liability policies. The policy endorsement should read “Compass
Bank: 1. mortgagee and loss payee or 2. additional insured (as applicable)
and/or its assigns”. In the event of foreclosure of the Deed of Trust, or other
transfer of title to the Premises in extinguishment in whole or in part of the
Debt, all right, title and interest of Borrower in and to such policies then in
force concerning the Premises, including any right to unearned premiums and all
proceeds payable thereunder, shall thereupon vest in the purchaser at such


 


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foreclosure or Lender or
other transferee in the event of such other transfer of title.


 


4.4                    Use of Insurance Proceeds.  In
the event any of the Premises covered by such insurance is destroyed or damaged
by fire, explosion, windstorm, hail or by any other casualty against which
insurance shall have been required hereunder, (i) Lender may, but shall not be
obligated to, make proof of loss if not made promptly by Borrower; (ii) each
insurance company concerned is hereby authorized and directed to make payment
for such loss directly to Lender instead of to Borrower; and (iii) Lender shall
have the right to apply the insurance proceeds as follows:


 


(a)                      first, to reimburse Lender for all costs and
expenses, including reasonable attorney’s fees, incurred in connection with the
collection of such proceeds; and


 


(b)                     second, the remainder of said proceeds shall
be applied, at the sole discretion of Lender, in payment (without premium or
penalty) of the Debt, either in whole or in part, in the order determined by
Lender in its sole discretion, or to the repair, restoration or replacement,
either partly or entirely, of the Premises so destroyed or damaged, provided
that, any insurance proceeds held by Lender to be applied to the repair,
restoration or replacement of the Premises shall be so held without payment or
allowance of interest thereon and shall be paid out from time to time upon
compliance by Borrower with such terms, conditions and requirements as may be
imposed by Lender; provided, however, if (1) in the judgment of Lender, the
restoration, repair and replacement of the Premises can be completed prior to
the earlier of (x) the Maturity Date or (y) the date by which the Premises must
be completely repaired and restored under the terms of the Required Lease, (2)
no Event of Default or Default is then existing, (3) the insurance proceeds,
together with any funds made available by Borrower, are sufficient to rebuild
and restore the Premises to its condition existing immediately prior to such
casualty, (4) the amount of the damage or loss is less than $1,000,000, (5) the
Required Lease requires that Borrower use the insurance proceeds to repair,
restore and rebuild the Premises, and (6) the tenant under the Required Lease
does not have the right to terminate the Required Lease on account of such casualty
(or if such tenant has the right to terminate the Required Lease on account of
such casualty, such tenant has waived in writing to Lender such right and has
confirmed to Lender that such tenant will continue to occupy the Premises under
the remaining term of the Required Lease upon the completion of the repair,
restoration and replacement of the Premises), then the proceeds received by
Lender shall be made available to Borrower for the restoration, repair and
replacement of the Premises in accordance with the terms and conditions to
funding the loan proceeds set forth in this Agreement, as such restoration,
repair and replacement work is performed by Borrower.


 


In any event the unpaid
portion of the Debt shall remain in full force and effect and Borrower shall
not be excused in the payment thereof. If any act or occurrence of any kind or
nature (including any casualty on which insurance was not obtained or
obtainable) shall result in damage to or loss or destruction of the Premises,
Borrower


 


12

















 


shall
give immediate written notice thereof to Lender and, unless otherwise so
instructed by Lender, shall promptly, at Borrower’s sole cost and expense and
regardless of whether the insurance proceeds, if any, shall be sufficient for
the purpose, restore, repair, replace and rebuild the Premises as nearly as
possible to its value, condition and character immediately prior to such
damage, loss or destruction in accordance with plans and specifications
submitted to and approved by Lender.


 


4.5                    Collection
of Insurance Proceeds.  Borrower
shall cooperate with Lender in obtaining for Lender the benefits of any
insurance or other proceeds lawfully or equitably payable to Lender in
connection with the transactions contemplated hereby and the collection of any
indebtedness or obligation of Borrower to Lender incurred in connection with
the Loan (including the payment by Borrower of the expense of an independent
appraisal on behalf of Lender in case of a fire or other casualty affecting the
Premises).


 


4.6                    Project
Budget and Application of Loan Proceeds.  Attached to this Agreement as Exhibit B
is a “Project Budget”
(herein so called) that includes all Project Costs (as defined below) as “uses
of funds”, including a category for contingencies, and designates all “sources
of funds”, including proceeds of the Loan, Project Revenues and Borrower’s
Equity. “Project Costs”
shall mean all costs incurred in connection with the acquisition of the Land
and the construction, leasing and operation of the Improvements until maturity
of the Loan, including without limitation interest expense. “Project Revenues” shall mean all
receipts and revenues generated by or in connection with the Premises,
including without limitation rents, interest income, insurance proceeds,
condemnation awards and payments received from interest rate hedging or similar
agreements. Borrower agrees to give Lender prompt written notice of any changes
that should be made in the Project Budget to cause the same to accurately and
realistically represent the amount and timing of the sources and uses of funds
for the Premises. In addition, Lender may notify Borrower that, in Lender’s
judgment, changes need to be made in the Project Budget. If, after consultation
and consideration of the view of Borrower and supporting documentation,
Borrower and Lender do not agree as to what modifications need to be made in
the Project Budget, the determination of Lender shall govern. Borrower shall
use the proceeds of the Loan solely for the purpose of paying for the Project
Costs as set forth in the Project Budget and shall in no event use any of the
Loan proceeds for any other purpose.


 


4.7                    Construction
Documents.  If Borrower has not
already done so, Borrower shall deliver to Lender a copy of the Construction
Contract executed by Borrower and the Contractor, copies of any contracts
executed by Borrower and the Architect or Engineer and executed copies of any
other contracts by Borrower and architects or engineers. Borrower shall also
furnish Lender with a complete list of all persons, firms or entities which the
Contractor proposes to engage to furnish labor or materials in constructing the
Improvements (other than in connection with tenant improvements under future
leases) and shall furnish Lender with true copies of all written agreements
(including contracts, subcontracts and purchase orders) therefor and the terms
of all verbal agreements therefor. All such contracts shall be in form and
content satisfactory to Lender. If, in the judgment of Lender, such contracts
and subcontracts do not cover all of the work necessary for completion of
construction of the Improvements (exclusive of tenant improvements under future
leases), including the installation of such fixtures and equipment as


 


13

















 


are
required for the operation of the Improvements and including all work required
by any leases then in effect or to make any portion of the Improvements
rentable (whether to be done and paid for by Borrower or by lessees under
leases), Borrower shall obtain firm bids from responsible parties, or estimates
and other information satisfactory to Lender, for the work not so covered, to
enable Lender to ascertain the total estimated cost of all work done and to be
done. The Construction Contract and other contracts, subcontracts, lists,
agreements and terms of verbal agreements described in this Section are herein
called the “Construction Documents”.


 


4.8                    Construction Contract.  Borrower shall not, without the prior written
consent of Lender (i) default under the terms of the Construction Contract,
(ii) waive any of the obligations of the Contractor thereunder, (iii) do
anything which would relieve Contractor from its obligations to construct the
Improvements according to the Plans and Specifications, and (iv) make any
amendments to, or change orders with respect to, the Construction Contract or
any other Construction Document.


 


4.9                    Construction Status Reports.  Borrower
shall also submit to Lender from time to time, if requested by Lender, a status
report concerning construction of the Improvements, containing such information
as Lender may request, including but not limited to: the latest total projected
cost of construction; a description of all contracts let or to be let by
Borrower for the design, engineering, construction and equipping of the
Improvements, setting forth the name or names of the contractor or contractors,
the date of the contracts and of any supplements or amendments thereto, the
scope of the work covered thereby, and the aggregate amounts payable to the
contractors thereunder; and a statement whether such contract or contracts
embrace all of the work required to be done and all of the material necessary
for completion of construction, and, if not, setting forth sufficient
information to enable Lender to determine the estimated cost of any work or
materials not so covered.


 


4.10              Construction Schedule.  Borrower
shall furnish a construction schedule to Lender showing the timing of
construction of the Improvements with a breakdown by trade, if Borrower has not
already done so.


 


4.11              Commencement and Completion of Construction.  Borrower
shall not cause or permit the commencement of construction of the Improvements
or delivery of materials to the Land until after the Deed of Trust has been
filed for recording with the county clerk of the county where the Land is
located and Borrower has obtained all requisite permits and approvals from
Governmental Authorities and all approvals from any other entity required for
construction of the Improvements. Borrower shall commence construction of the
Improvements (such commencement to be evidenced by the completion of footings
and foundations) no later than the Commencement Deadline. Borrower shall
diligently pursue such construction to completion, supplying such moneys and
performing such duties as is necessary to complete the construction of the
Improvements (including any tenant improvements required by any leases then in
effect but excluding future tenant improvements) pursuant to and in conformity
with the Plans and Specifications, in accordance with good building practice
and in full compliance with all terms and conditions of the Loan Documents.
Borrower shall cause such completion to be accomplished on or before the
Completion Deadline, without liens, claims or assessments (actual


 


14

















 


or
contingent) asserted against the Premises for any material, labor or other
items furnished in connection therewith, and in full compliance with all
Governmental Requirements, including construction, use, building, zoning,
health and environmental laws. Borrower shall provide to Lender upon request
evidence of satisfactory compliance with all of the foregoing.


 


4.12              Evidence Regarding Commencement of
Construction.  Borrower shall furnish Lender with evidence
required by Lender, which may include but may not be limited to photographic
evidence or an affidavit executed by the Inspecting Architect or by another
person approved by Lender, that at the time and immediately after the
recordation of the Deed of Trust there was no commencement of construction of
improvements (as that term is defined in § 53.001(2) of the Texas Property
Code) on the Land or delivery of materials (as that term is defined in §
53.001(4) of the Texas Property Code) to the Land, including without limitation
the demolition or removal of any preexisting improvement, site work, clearing,
grading, the drilling of test holes, the excavation for or the laying of the foundation
of any building or structure and the delivery of any lumber or other building
materials, equipment, tools or fuel, whether or not intended to be incorporated
in the construction of improvements.


 


4.13              Affidavit of Commencement of Construction.  Borrower
and Contractor shall jointly file an Affidavit of Commencement of construction
using a form satisfactory to Lender with the county clerk of the county in
which the Land is located not later than the thirtieth day after the date of
actual commencement of construction of the Improvements or delivery of
materials to the Land. Such affidavit shall contain the information required by
§ 53.124(c) of the Texas Property Code, shall not be filed prior to approval
thereof in writing by Lender and shall be filed showing a date of commencement
of construction which is after the filing of the Deed of Trust with the county
clerk of the county where the Land is located.


 


4.14              Right of Lender to Inspect Premises.  Borrower shall permit Lender and its
representatives and agents (including the Inspecting Architect) to enter upon
the Premises and to inspect the Improvements and all materials to be used in
the construction thereof and all books, records, contracts, statements,
invoices, bills, plans and specifications, shop drawings, appraisals, title and
other insurance, reports, lien waivers, initial surveys, footing or foundation
surveys, architect’s certificates, and all other instruments and documents of
any kind relating to the construction, leasing and operation of the
Improvements; shall cooperate and cause the Architect, the Engineer and the
Contractor to cooperate with Lender and its representatives and agents during
such inspections and shall maintain all of the foregoing for such inspections;
shall permit the photographing of any portions of the Premises or any materials
thereon; and shall, if requested by Lender or its representatives or agents,
move, remove or uncover such materials or portions of the Improvements as shall
be reasonably necessary to fully and completely inspect the Premises; provided,
however, nothing in this Agreement shall be construed to impose upon Lender any
duty or obligation whatsoever to undertake such inspections, to correct any
defects in the Improvements or to notify any person with respect thereto.


 


4.15              Correction of Defects.  Borrower shall promptly correct any structural
or other significant defect in the Improvements or any departure from the Plans
and Specifications not previously approved by Lender and any violation of any
Governmental Requirements.


 


15

















 


4.16              Off-Site Work.  To
the extent required by the Plans and Specifications, Borrower shall promptly
commence and complete any off-site improvements (including public streets,
walks and like areas adjoining the Improvements) as required and provide any
utilities and other facilities required, all in accordance with Governmental
Requirements. Unless otherwise provided herein or in other Loan Documents, such
off-site improvements shall be deemed part of the work of construction of the
Improvements. Borrower expressly agrees to indemnify Lender and to hold Lender
harmless against any claim of surety furnishing a bond for such work to the
Governmental Authorities having jurisdiction, whether such claims be founded
upon existing or future liability, and whether such liability be expressed or
implied.


 


4.17              Storage of Materials.  Borrower shall cause all materials supplied
for or intended to be used in the construction of the Improvements but not
affixed to or incorporated into the Premises to be stored on the Premises or at
another location approved by Lender in writing, with adequate safeguards to
prevent loss, theft, damage or commingling with other materials not intended to
be used in the construction of the Improvements.


 


4.18              Vouchers.  Borrower shall deliver to
Lender, upon request, any contracts, bills of sale, statements, receipted
vouchers or agreements under which Borrower claims title to any materials,
fixtures or articles incorporated in the Improvements or otherwise subject to
the lien of the Deed of Trust.


 


4.19              Encroachments.  To
assure Lender that encroachments will not reduce the value of the security
provided for the Loan (i) the Improvements shall be constructed entirely on the
Land; (ii) such construction will not encroach upon or overhang any easement or
right-of-way upon the land of others; (iii) the Improvements when erected shall
be wholly within building setback lines however established; (iv) until the
Loan is discharged, no conveyances of any portion of or interest in the
Premises will be made by Borrower which will cause any encroachment above, on,
or under the surface of the Premises; and (v) upon request Borrower shall, from
time to time, furnish satisfactory evidence of the foregoing to Lender.


 


4.20              Liens.  Borrower shall not install nor
otherwise incorporate in the Improvements any materials, equipment or fixtures
under any conditional sales agreements or security agreement whereby the right
is reserved or accrued to anyone to remove or repossess any such items.
Borrower shall not cause or permit any lien or claim for lien for any labor or
material to be filed or to become valid or effective against the Premises;
provided, however, that the existence of any unperfected and unrecorded
mechanic’s lien shall not constitute a violation of this Section if payment is
not yet due for the work giving rise to the lien. Notwithstanding the
foregoing, Borrower may in good faith, by appropriate proceedings, contest the
validity, applicability or amount of any asserted mechanic’s or materialmen’s
lien and pending such contest Borrower shall not be deemed in default hereunder
if Borrower provides Lender with security reasonably satisfactory to Lender
(which may include, at Lender’s option, an indemnity bond complying with the
requirements of Tex. Property Code §§ 53.171 et. seq.) and if
Borrower promptly causes to be paid any amount adjudged by a court of competent
jurisdiction to be due, with all costs and interest thereon, promptly after
such judgment; provided, however, that in any event each such contest shall be
concluded and the lien, interest and costs shall be paid, bonded


 


16

















 


around
or otherwise no later than thirty (30) days after the completion of
construction of the Improvements or after the Completion Deadline, whichever
occurs first.


 


4.21              Inspecting Architect.  Borrower shall cooperate with the Inspecting
Architect and shall cause the Architect, the Engineer, the Contractor and the
employees of each of them to cooperate with the Inspecting Architect and, upon
request, shall furnish the Inspecting Architect whatever he may consider
necessary or useful in connection with the performance of his duties including
but not limited to permits, subcontracts, purchase orders, lien waivers and
other documents relating to the construction of the Improvements. Borrower
acknowledges that the duties of the Inspecting Architect run solely to Lender
and that the Inspecting Architect shall have no obligations or responsibilities
whatsoever to Borrower, the Architect, the Engineer, the Contractor or to any
of their respective agents or employees.


 


4.22              Appraisals.


 


(a)                      On the date of this Agreement, (i) the
Loan-To-Cost Ratio shall be less than or equal to eighty percent (80%), and
(ii) the Loan-To-Value Ratio shall be less than or equal to seventy-five
percent (75%), in each case as reflected by the Initial Appraisal.


 


(b)                     From time to time, if either an Event of
Default has occurred hereunder or Lender is otherwise required to obtain a new
appraisal of the Premises by a governmental authority or regulatory agency
having jurisdiction over Lender, Borrower shall submit to Lender, within thirty
(30) days following written request of Lender, an MAI appraisal of the Premises
and the proposed Improvements by a licensed appraiser satisfactory to Lender,
such appraisal to be in the form and amount satisfactory to Lender. In lieu of
obtaining an appraisal from Borrower hereunder, Lender may itself obtain the
appraisal and Borrower shall pay the cost thereof to Lender within thirty days
following written request of Lender.


 


(c)                      If at any time after the date of this
Agreement Lender obtains a new appraisal of the Premises pursuant to Section
4.22(b), and such appraisal reflects that either (i) the Loan-To-Cost Ratio
exceeds eighty percent (80%), or (ii) the Loan-To-Value Ratio exceeds
seventy-five percent (75%), Borrower shall make a mandatory prepayment of
principal under the Note in an amount necessary to reduce the Loan-To-Cost
Ratio to eighty percent (80%), and/or the Loan-To-Value Ratio to seventy-five
percent (75%), as applicable, which payment shall be due within thirty (30)
days after Lender delivers to Borrower a written request therefor.


 


4.23              Estoppel Certificate.  Borrower shall deliver to Lender, promptly
after a request therefor by Lender, an Estoppel Certificate, duly acknowledged,
stating the amount advanced to Borrower under this Agreement and the amounts
due on the Note and whether any offsets or defenses exist under or against the
Note.


 


4.24              Cooperation Regarding Financial Condition.  Borrower
shall cooperate with Lender and its representatives to the end that Lender
shall be fully apprised regarding the continuing financial condition of Borrower
and, upon the request of Lender or any of its representatives, shall furnish
Lender or such representatives such documents, instruments,


 


17

















 


financial
statements or other information considered necessary or useful by Lender or its
representatives in connection with the review and understanding of the
financial condition of Borrower as it may exist from time to time.


 


4.25              Leases.


 


(a)                      Borrower shall deliver to Lender quarterly
leasing reports and monthly rent rolls of all executed leases covering any part
of the Premises. Borrower shall furnish to Lender for its approval as soon as
possible after the date of this Agreement a lease schedule (hereinafter called
the “Lease Schedule”)
showing proposed rent (including escalations), term and other material
provisions as requested by Lender, which Borrower intends to incorporate into
leases of space within the Premises. Any modified Lease Schedule intended to be
used by Borrower shall be similarly furnished to Lender. Prior to the execution
of any lease covering the Premises or any part thereof, Borrower will obtain
the prior written approval of the Lender of the form, rate and term of such
lease; provided, however, that the prior written approval of Lender shall not
be required for leases that (i) cover 3,000 or less square feet of rentable
area, (ii) provide for rent of not less than (x) with respect to retail leases,
$25 per square foot on a triple net basis, and (y) with respect to office
leases, $23 per square foot plus electricity, (iii) provide for tenant
improvements of not more than $20 per square foot for retail leases, or $22 per
square foot for office leases and (iv) are on arm’s length market terms and
conditions with third parties unrelated to Borrower or Guarantor, and on
substantially the lease form for the Premises approved by Lender.


 


(b)                     Borrower has delivered true, correct and
complete copies of all leases affecting any portion of the Premises as of the
date of this Agreement and Borrower shall promptly deliver to Lender copies of
all leases hereafter executed covering any part of the Premises.


 


(c)                      Borrower shall obtain and deliver to Lender
subordination, non-disturbance and attornment agreements (each a “SNDA”) in form acceptable to Lender for
each lease covering 3,000 square feet or more of rentable area.


 


4.26              Additional Expenditures by Lender.  Borrower agrees that all sums paid or expended
by Lender under the terms of this Agreement in excess of the amount of the Loan
shall be considered to be an additional loan to Borrower and the repayment
thereof, together with interest thereon at the rate of interest payable on
matured but unpaid principal of or interest on the Note, shall be secured by
the Deed of Trust and the other Loan Documents and shall be immediately due and
payable without notice, and Borrower agrees to pay such sum upon demand.
Nothing contained herein, however, shall obligate Lender to make such advances.


 


4.27              Expenses and Approval of Documents.  Without
limiting Borrower’s obligations under the Deed of Trust for costs and expenses
incurred by Lender in connection with the Loan, Borrower shall pay all costs of
closing the Loan and all expenses of Lender with respect thereto, including but
not limited to, legal fees (including legal fees incurred by Lender subsequent
to the closing of the Loan but incurred in connection with the disbursement,
administration or


 


18

















 


collection
of the Loan), title insurance premiums and other charges of the title company
issuing the Mortgagee Title Policy, appraisal fees, consulting architect fees,
consulting inspection fees, advances, recording expenses, surveys, intangible
taxes, expenses of foreclosure (including attorneys’ fees) and similar items,
and shall allow all closing papers, Loan Documents and other legal matters to
be subject to the approval of Lender’s attorneys.


 


4.28              Sign Regarding Construction Financing.  Borrower
shall include on any sign erected at or near the Premises setting forth the
names of the Contractor or any subcontractors of the construction of the
Improvements a statement in conspicuous lettering that construction financing
is being provided by Lender, all to the reasonable satisfaction of Lender. If
such sign is not erected, Borrower shall, upon request by Lender, erect and
maintain on a suitable site on the Premises a sign indicating that construction
financing is being provided by Lender, all to the reasonable satisfaction of
Lender.


 


4.29              Further Assurances.  Borrower
shall do and execute all and such further lawful and reasonable acts,
conveyances and assurances for the better and more effective carrying out of
the intents and purposes of this Agreement as Lender shall reasonably require
from time to time.


 


4.30              Debt Coverage Ratio.  Borrower
shall provide whatever information is requested by Lender to enable Lender to
verify on a quarterly basis the Debt Coverage Ratio of the Project commencing
after tenants have begun taking occupancy of the Premises.


 


4.31              Indemnity of Lender.  Borrower
shall indemnify and hold harmless Lender (for purposes of this subsection, the
term “Lender” shall include the directors, officers, employees and agents of
Lender and any persons or entities owned or controlled by, owning or
controlling, or under common control or affiliated with Lender) from and
against, and reimburse them for, all claims, demands, liabilities, losses,
damages, causes of action, judgments, penalties, costs and expenses (including,
without limitation, reasonable attorney’s fees) which may be imposed upon,
asserted against or incurred or paid by them by reason of, on account of or in
connection with any bodily injury or death or property damage occurring in or
upon or in the vicinity of the Premises through any cause whatsoever or
asserted against them on account of any act performed or omitted to be
performed hereunder or on account of any transaction arising out of or in any
way connected with the Premises or with this Agreement or any other Loan
Document. WITHOUT LIMITATION, IT IS THE
INTENTION OF BORROWER AND BORROWER AGREES THAT THE FOREGOING INDEMNITIES SHALL
APPLY TO EACH INDEMNIFIED PARTY WITH RESPECT TO CLAIMS, DEMANDS, LIABILITIES,
LOSSES, DAMAGES, CAUSES OF ACTION, JUDGMENTS, PENALTIES, COSTS AND EXPENSES
(INCLUDING, WITHOUT LIMITATION, REASONABLE ATTORNEY’S FEES) WHICH IN WHOLE OR
IN PART ARE CAUSED BY OR ARISE OUT OF THE NEGLIGENCE OF SUCH (AND/OR ANY OTHER)
INDEMNIFIED PARTY OR ANY STRICT LIABILITY. HOWEVER, SUCH INDEMNITIES SHALL NOT
APPLY TO ANY INDEMNIFIED PARTY TO THE EXTENT THE SUBJECT OF THE INDEMNIFICATION
IS CAUSED BY OR ARISES OUT OF THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF
SUCH INDEMNIFIED PARTY. The foregoing indemnities shall survive the
termination of this


 


19

















 


Agreement,
the foreclosure of the Deed of Trust or conveyance in lieu of foreclosure and
the repayment of the Loan and the discharge and release of the Loan Documents.
Any amount to be paid hereunder shall be subject to and governed by the provisions
of Section 4.32 hereof.


 


4.32              Failure to Perform.  If
Borrower fails to perform any act or to take any action or to pay any amount
provided to be paid by it under the provisions of any of the covenants and
agreements contained in this Agreement or any other Loan Document, Lender may
but shall not be obligated to perform or cause to be performed such act or take
such action or pay such money, and any expenses so incurred by Lender and any
money so paid by Lender shall be an advance against the Note and shall bear
interest from the date of making such payment until paid at the rate of
interest payable on matured but unpaid principal of or interest on the Note and
shall be part of the Debt secured by the Deed of Trust, and Lender upon making
any such payment shall be subrogated to all rights of the person, corporation
or body politic receiving such payment.


 


4.33              Financial and Other Information.  Borrower
agrees to deliver to Lender, during the term of the Loans and until the Loans
have been fully paid and satisfied, the following statements and reports:


 


(a)                      As soon as available and in any event within
ninety (90) days after the end of each fiscal year of Borrower, annual
financial statements and all notes thereto, including a balance sheet and
statements of income, retained earnings and cash flows for such fiscal year and
the immediately preceding fiscal year in comparative form, all prepared in
conformity with Good Accounting Practice applied on a basis consistent with
that of the preceding fiscal year, and without expressing any doubt as to such
Borrower’s ability to continue as a going concern, and accompanied by a report
and opinion of independent certified public accountants reasonably satisfactory
to Lender stating that such accountants have conducted audits of such financial
statements in accordance with generally accepted auditing standards and that,
in their opinion, such financial statements present fairly, in all material
respects, Borrower’s financial cash flow for the period they cover in conformity
with Good Accounting Practice.


 


(b)                     As soon as available and in any event within
ninety (90) days after the date that is one (1) year after the prior such
annual financial statement furnished to Lender, annual financial statements for
each of the Guarantors, including statements of assets and liabilities and cash
flow.


 


(c)                      As soon as available and in any event within
forty five (45) days after the end of each of the first three quarters of each
fiscal year of Borrower, Borrower’s unaudited financial statements, including
Borrower’s balance sheet as at the close of such quarter, Borrower’s income
statement and a statement of Borrower’s cash flow for such quarter and for the
period from the beginning of such fiscal year to the end of such quarter, each
setting forth in comparative form the corresponding figures for the same
quarter of the preceding fiscal year and prepared in accordance with Good
Accounting Practice applied on a basis consistent with that of the preceding
fiscal year, and certified by an appropriate officer of Borrower.


 


20

















 


(d)                     Within ten
(10) days of such returns being filed with the Internal Revenue Service or
applicable state authority, copies of Borrower’s and Guarantor’s state and
federal tax returns.


 


(e)                      Within ten
(10) days of such documents being filed with the Internal Revenue Service or
applicable state authority, copies of extension requests or similar documents
with respect to Borrower’s or Guarantor’s federal or state income tax filings.


 


(f)                        Within
thirty (30) days after the end of each calendar quarter, certificates of
compliance executed by an authorized agent of Borrower and certifying to Lender
that each and every representation and warranty in this Agreement and the other
Loan Documents continues to be accurate in all material respects as of the date
of such certificates and that all covenants contained in this Agreement or in
any other Loan Document have been fully and completely complied with by
Borrower to the date of such quarterly certificates.


 


(g)                     Prior to or
at the execution of this Agreement and within thirty (30) days after the end of
each calendar quarter, a current compliance certificate executed and certified
to be true and complete by each Guarantor, certifying the compliance with the
financial covenants of Guarantor set forth in the Guaranty.


 


(h)                     During
construction of the Improvements, once each calendar quarter within forty five
(45) days after the end of each calendar quarter, quarterly marketing and
leasing reports containing such information as Lender requires, certified by an
officer of Borrower to be true and correct to the best of such officer’s
knowledge and belief.


 


(i)                         Following
completion of the Improvements, issuance of the certificate of occupancy for
the Improvements, and acceptance of possession of any portion of the Premises
by tenants under leases approved by Lender, thereafter once each month within
forty five (45) days after month end, unaudited monthly operating statements of
the operations of the Project, prepared in accordance with Good Accounting
Practices, which statements shall include a balance sheet and statement of
income and expenses for the month then ended, together with a rent roll
containing such information as Lender requires, in each case certified by an
officer of Borrower to be true and correct to the best of such officer’s
knowledge and belief.


 


Lender further
reserves the right to require such other financial information of Borrower, any
Guarantor, Manager, and/or the Project, in such form and at such other times
(including monthly or more frequently) as Lender shall deem necessary, and
Borrower agrees promptly to provide or to cause to be provided, such
information to Lender. All financial statements must be in the form and detail
as Lender may from time to time reasonably request.


 


4.34              Books and Records.
 Borrower shall keep and maintain at all
times at the Project’s offices, and upon Lender’s request shall make available
at the Project, complete and accurate books of account and records (including
copies of supporting bills and invoices) adequate to reflect correctly the
results of the operation of the Project, and copies of all written contracts,
leases (if any), and other instruments which affect the Premises, which books, records,
contracts,


 


21

















 


leases (if any) and other
instruments shall be subject to examination and inspection at any reasonable
time by Lender (upon reasonable advance notice, which for such purposes only
may be given orally, except in the case of an emergency or following an Event
of Default, in which case no advance notice shall be required), provided,
however, if an Event of Default has occurred and is continuing, Borrower shall
deliver to Lender upon written demand all books, records, contracts, leases and
other instruments relating to the Project or its operation and Borrower
authorizes Lender to obtain a credit report on Borrower at any time.


 


4.35              Management
Agreement.  After execution of the
Management Agreement, Borrower shall maintain the Management Agreement in full
force and effect and timely perform all of Borrower’s obligations thereunder
and enforce performance of all obligations of the Manager thereunder and not
permit the termination, amendment or assignment of the Management Agreement
unless the prior written consent of Lender is first obtained, which consent may
be in the sole and absolute discretion of Lender. Borrower will enter and cause
the Manager to enter into a Subordination Agreement in form and substance
acceptable to Lender, subordinating the Management Agreement to the lien of the
Deed of Trust. Borrower will not change the Manager or enter into any other
management agreement without Lender’s prior written consent, which may be in
the sole and absolute discretion of Lender.


 


4.36              Comply with
Covenants and Laws.  Borrower shall
comply, in all material respects, with all applicable covenants and
restrictions of record and all laws, ordinances, rules and regulations and keep
the Premises in compliance with all Governmental Requirements, including,
without limitation, the Americans with Disabilities Act and regulations
promulgated thereunder, and laws, ordinances, rules and regulations relating to
zoning, health, building codes, setback requirements.


 


4.37              Assignment of
Licenses and Permits.  Borrower shall
not assign or transfer any of its interest in any licenses and permits
pertaining to the Project, or assign, transfer, or remove or permit any other
person to assign, transfer, or remove any records pertaining to the Project
without Lender’s prior written consent, which consent may be granted or refused
in Lender’s sole discretion.


 


4.38              Transfer of
Ownership Interests.  Borrower shall
not permit a change in the ownership interests in the Borrower (whether direct
or indirect), unless the written consent of the Lender is first obtained, which
consent may be granted or refused in Lender’s sole discretion; provided,
however that a transfer of the limited partner interests of CMP Family Limited
Partnership and Fairways Frisco, L.P. shall not require Lender’s consent;
provided, further, that in any event, and notwithstanding any such transfer,
the group comprising Guarantor shall at all times retain voting control and
management of the development of the Project and the day to day operations and
affairs of Borrower.


 


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ARTICLE 5      PLANS AND SPECIFICATIONS


 


5.1                    Plans and
Specifications.  If Borrower has not
already done so, Borrower shall furnish to Lender for Lender’s approval (which
approval shall be subject to such conditions and qualifications as Lender in
its sole and absolute discretion may prescribe) the Plans and Specifications
for construction of the Improvements, which include engineering plans, complete
architectural plans, specifications and work drawings, projected costs and
related information, site plans, any proposed plat dedications and any proposed
development restrictions and conditions. Borrower shall also furnish Lender
with a detailed listing of the Plans and Specifications and all requisite
building permits authorizing construction of the Improvements. All Plans and
Specifications and the Improvements constructed in accordance therewith must
comply with all applicable restrictive covenants and Governmental Requirements
and all standards and regulations of appropriate supervising boards of fire underwriters
and similar agencies. The Plans and Specifications, as approved by Lender,
shall not be modified or supplemented in any respect without the prior written
approval of Lender pursuant to Section 5.2 hereof except as otherwise
expressly permitted in Section 5.2 hereof.


 


5.2                    Changes in
Plans.  All requests for approval of
changes in the Plans and Specifications must be in writing, signed by Borrower,
and shall be conditioned upon approval by Lender, which approval shall be
subject to such conditions and qualifications as Lender in its sole and
absolute discretion may prescribe. Notwithstanding the foregoing, Lender’s
approval shall not be required if all of the following conditions are
satisfied:


 


(a)                      Such changes
do not have a material effect on the structural portions or the exterior
appearance of the Improvements or the architectural design concept or
functionality thereof;


 


(b)                     No one such
change increases the cost of construction by more than $10,000;


 


(c)                      The
aggregate of all of such changes does not increase the cost of construction by
more than $25,000;


 


(d)                     such changes
do not extend and are not likely to extend (in the judgment of Lender) the time
for completion of the Project beyond the Completion Date; and


 


(e)                      At the end
of each month Borrower submits to Lender copies of all change orders effecting
such changes made in such month.


 


5.3                    Tenant
Improvement Plans.  At Lender’s
request, Borrower shall submit tenant improvement plans to Lender for Lender’s
approval prior to commencing construction of the tenant improvements in
question.


 


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ARTICLE 6      DISBURSEMENTS OF LOAN
PROCEEDS


 


6.1                    Disbursement Procedure.  Subject to the conditions set forth in Article
7 and the other provisions of this Agreement, disbursement of the proceeds
of the Loan shall be made by Lender to Borrower in the offices of Lender or at
such other place as Lender may designate from time to time in accordance with
the following procedures:


 


(a)                      Request for Advance.  At
such time as Borrower shall desire to obtain, subject to the requirements
contained herein, a disbursement of any portion of the Loan proceeds, Borrower
shall complete, execute and deliver to Lender a request for an advance in the
form attached hereto as Exhibit C (a “Request for Advance”).


 


(b)                     Evidence of Progress of Construction.  The
Request for Advance shall be accompanied by copies of all bills or statements
for expenses for which the advance is requested and shall, upon the request of
Lender, be accompanied by evidence in form and content satisfactory to Lender,
including but not limited to certificates and affidavits of Borrower, the
Architect, the Engineer, the Contractor or such other person as Lender may
require, showing:


 


(i)                         the value of that portion of the Improvements
completed at that time, as certified to by the Architect on AIA Form G-702 or
such other form is reasonably acceptable to Lender;


 


(ii)                      that all lien waivers and releases have been received, and all
outstanding claims for labor, materials and fixtures have been paid, and
Borrower shall provide executed lien waivers to Lender substantially in the
form attached hereto as Exhibit D executed by each contractor or
subcontractor performing work or providing materials to be paid from such advance;


 


(iii)                   that there are no liens outstanding against the Premises, except for
Lender’s lien and security interest evidenced by the Deed of Trust, other than
inchoate liens for property taxes not yet due and mechanic’s and materialmen’s
liens which are being contested as provided in Section 4.20 hereof;


 


(iv)                  that
Borrower has performed all of its covenants, agreements and obligations to be
performed by Borrower pursuant to this Agreement or any other Loan Document, as
of the date thereof;


 


(v)                     that all construction prior to the date of the
Request for Advance has been performed and completed in a good and workmanlike
manner and in accordance with the Plans and Specifications;


 


(vi)                  that
all Loan proceeds previously disbursed by Lender have been applied directly to
the payment of Project Costs, as set forth in the Project Budget or otherwise
as Lender shall have approved in writing;


 


24

















 


(vii)               that
all change orders in any amount whatsoever shall have been approved in writing
by Lender, any surety and any Guarantor, except as provided in Section 5.2;


 


(viii)          in reasonable detail, any tangible personal property installed in or
appurtenant to the Improvements, but not considered to be fixtures, and the
value thereof;


 


(ix)                    that the amount of undisbursed Loan proceeds is sufficient to pay the
cost of completing the Improvements in accordance with the Plans and
Specifications;


 


(x)                       that the location of the Improvements will not
encroach upon any adjoining properties or interfere with any easement;


 


(xi)                    that all of Borrower’s representations and warranties contained herein
or in any other Loan Document remain true and correct as of the date of such
advance;


 


(xii)                 that,
if payments are to be made on account of materials or equipment not
incorporated in the work but delivered and suitably stored on the Premises, or
at some other location, Borrower has title to, and Lender has first priority
lien against and security interest in, such materials or equipment and safeguards
as required by Lender have been established to protect Lender’s interest
therein; and


 


(xiii)              that
neither the Premises nor the Improvements are the subject of any litigation
which adversely affects or could adversely affect the title thereof or the validity
or priority of the Deed of Trust or the right of the Borrower to construct the
Improvements.


 


(c)                      Certificate of Inspecting Architect.  Each
Request for Advance shall be accompanied by written certification from Lender’s
Inspecting Architect indicating the status of construction, compliance with the
Plans and Specifications, and approval of the disbursement request. Borrower
shall pay all fees and expenses of such Inspecting Architect for monthly
inspections, or more frequently if such inspections result from more frequent
disbursement requests from Borrower.


 


(d)                     Continuation of Title Insurance Coverage.  Each
Request for Advance shall, at the request of Lender, be accompanied by a
satisfactory down date endorsement to the previously delivered Mortgagee Title
Policy which endorsement shall (i) extend the effective date of the Mortgagee
Title Policy to the date of advancement and show that since the effective date
of the Policy (or the effective date of the last such endorsement, if any)
there has been no change in the status of the title to the Premises and no new
encumbrance thereon and (ii) state the amount of coverage then existing under
the


 


25

















 


Mortgagee
Title Policy which shall be the total of all disbursements of the Loan
including the disbursement which is made concurrently with the down date
endorsement.


 


6.2                    Notice, Frequency and Dates of Disbursements.  The
Request for Advance shall be submitted to Lender at least ten (10) business
days prior to the date of the requested advance. Disbursements shall be made no
more frequently than once per month and in amounts of not less than Twenty-Five
Thousand Dollars ($25,000).


 


6.3                    Deposit of Funds Advanced.  Upon
the request of Lender, Borrower shall immediately deposit all Loan proceeds
advanced by Lender from time to time under this Agreement in a separate and
exclusive account, to be withdrawn and used solely for the purposes permitted
under the provisions of this Agreement, and shall promptly furnish Lender with
evidence thereof.


 


6.4                    Advances to Contractor.  At
its option Lender may make any or all advances of the Loan directly to
Contractor for deposit in an appropriately designated special bank account and
the execution of this Agreement by the Borrower shall, and hereby does,
constitute an irrevocable direction and authorization to so advance the funds.
No further direction or authorization from Borrower shall be necessary to
warrant such direct advances to Contractor and all such advances shall satisfy pro
tanto the obligations of Lender hereunder and shall be secured by the
Deed of Trust and the other Loan Documents as fully as if made to Borrower,
regardless of the disposition thereof by Contractor.


 


6.5                    Balancing of Loan and Borrower’s Deposit.


 


(a)                      For purposes
of this Agreement the Loan shall be deemed to be “in balance” only at such time as Borrower has paid a
sufficient amount of Project Costs from its own funds (after applying all of
the Borrower’s Equity to the payment of Project Costs) so that the undisbursed
portion of the Loan, together with projected Project Revenues as set forth in
the Project Budget approved by Lender, and together with any Borrower’s Deposit
which Lender is then holding, are sufficient to pay all Project Costs and any
payments required on the Loan prior to the final maturity of the Loan. In the
absence of clear and demonstrable error, any determination by Lender of whether
the Loan is in balance shall be binding and conclusive for purposes of this
Agreement. For purposes of determining whether the Loan is in balance, Lender
may consider, among other things, whether the amounts allocated for each
category of Project Costs in the Project Budget are sufficient and whether the
timing of receipts and expenditures anticipated by Borrower are realistic and
achievable. Also, for the purposes of determining whether the Loan is in
balance, the amount remaining to be disbursed under the Loan shall be reduced
by any portion of the Loan that Borrower is not entitled to borrow by virtue of
Section 7.5 hereof.


 


(b)                     Within ten days after written notice from
Lender to Borrower that the Loan is not in balance (which notice shall only be
given after all of the Borrower’s Equity has been applied to the payment of
Project Costs), Borrower shall deposit with Lender


 


26

















 


sufficient
funds (“Borrower’s Deposit”)  to bring the Loan in balance. Any Borrower’s
Deposit will be held by Lender in a non-interest bearing account collaterally
assigned to secure the Loan and will be disbursed by Lender to pay Project
Costs pursuant to this Agreement, prior to the disbursement of any additional
proceeds of the Loan. Upon the occurrence of an Event of Default under this
Agreement, Lender may apply Borrower’s Deposit against the unpaid Debt
evidenced by the Note, principal, accrued interest or attorney’s fees, in such
order as Lender may determine. Upon the payment in full of the Loan and all
other obligations of Borrower to Lender hereunder, Lender shall return the remaining
balance of Borrower’s Deposit, if any, to Borrower.


 


(c)                      Borrower shall use all Project Revenues for
payments of Project Costs and shall provide Lender with satisfactory evidence
of such payments. To the extent Project Revenues are available, they will be
used to pay Project Costs prior to the use of Loan proceeds or any Borrower’s
Deposit. Project Revenues may not be distributed to partners or shareholders of
Borrower, or used for anything other than Project Costs, prior to completion of
the Improvements.


 


(d)                     Borrower shall provide Lender with draw
request documents, satisfactory title endorsements and other information
required hereunder with respect to funds used to pay Project Costs under
subsections (b) and (c) above, on a monthly basis, as if such funds were
disbursements of the Loan.


 


6.6                    Interest
Reserve Account.


 


(a)                      The amount of the Loan was determined on the
basis of the Borrower’s projection of the interest that will accrue on the
disbursed principal of the Note during the construction phase of the Loan,
which interest has been estimated not to exceed $415,000 (such amount being
referred to as the “Interest Reserve
Account”). Subject to the conditions set forth in this Article
6, Lender will disburse on the first day of each calendar month (regardless
of whether Borrower submits a Request for Advance to Lender for a disbursement
from the Interest Reserve to pay accrued interest on the Loan) a portion of the
Loan sufficient to pay accrued interest then due and payable on the Note during
the construction phase, and the amount thereof shall increase the principal
outstanding under the Note and shall reduce the balance of the Interest Reserve
Account.


 


(b)                     Under no circumstances shall any undisbursed
proceeds of the Loan be disbursed to pay accrued interest thereon upon
depletion of the balance of the Interest Reserve Account except at the sole
discretion of Lender. In addition, Borrower may not reallocate funds to other
line items of the Project Budget from the Interest Reserve line item of the
Project Budget without Lender’s prior written consent.


 


(c)                      Borrower hereby agrees to apply Project
Revenues to Project Costs actually incurred (but not to exceed the amount of
Project Costs set forth in the Project Budget unless Lender approves such additional
Projects Costs), including payment of interest on the Loan, regardless of the
existence of any remaining balance of the Interest


 


27

















 


Reserve.
After the construction phase, Borrower may only request a disbursement from the
Interest Reserve Account for accrued interest to the extent that Project
Revenues (after payment of Project Costs as provided in the preceding sentence)
are insufficient to pay accrued interest on the Loan. Notwithstanding anything to
the contrary contained in this Section 6.6 or elsewhere in this
Agreement, Lender shall have no obligation to disburse any portion of the Loan
to pay accrued interest then due and payable on the Note to the extent that
Project Revenues are available (after payment of Project Costs as provided
above) for payment thereof. At its option, Lender may disburse on the first day
of a calendar month (regardless of whether Borrower submits a Request for
Advance to Lender for a disbursement from the Interest Reserve to pay accrued
interest on the Loan) a portion of the Loan sufficient to pay accrued interest
then due and payable on the Note after the construction phase, and the amount
thereof shall increase the principal of the Note and shall reduce the balance
of the Interest Reserve Account.


 


(d)                     In lieu of disbursing Loan proceeds to
Borrower for payment of accrued interest as provided in subsections (a) and (c)
above, Lender may handle such disbursement and payment by making appropriate
entries on the books and records of Lender, whereupon a statement summarizing
such entries shall be furnished to Borrower.


 


(e)                      In no event shall the amount of the Interest
Reserve Account in any way limit or affect Borrower’s obligations to pay any
interest due on the Loan and to the extent proceeds from the Interest Reserve
Account are not disbursed for, or are insufficient for, such purpose, Borrower
shall pay interest on the Loan with funds derived from sources other than the
Loan.


 


6.7                    Tenant
Improvements.  The amount of the Loan
was determined on the basis of the Borrower’s projection of the cost of the
tenant improvements that will be required in the Premises and the Project
Budget includes allocations for the anticipated Project Costs for tenant
improvements under each of the two existing leases and anticipated future
leases (the “TI Allocation”).
Disbursements of the Loan for Project Costs associated with tenant improvements
will reduce the TI Allocation accordingly. Borrower may only request a
disbursement of proceeds of the Loan for tenant improvements under a particular
lease after Borrower has provided evidence satisfactory to Lender that there
are sufficient funds in the TI Allocation to cover all Project Costs relating
to the lease in question and all other unsatisfied tenant improvement costs
under any other then existing leases. If Bank determines in its discretion that
unadvanced funds remaining under the TI Allocation are not sufficient to cover
all of the anticipated Project Costs attributable to tenant improvements, Bank
may require Borrower to deposit amounts into the Borrower’s Deposit as provided
in Section 6.5 to cover such deficiency.


 


6.8                    Parking.
 The parking for the Project will
initially be on a surface lot (the “Parking
Land”) located to the east of the Land, which lot is currently
owned by the City of Frisco, Texas (the “City”),
and which is described in Exhibit C to the Exchange Agreement (as
hereinafter defined). The Parking Land is presently owned by the City; however,
Frisco Square B1-6F1-11, Ltd., a Texas limited partnership, an affiliate of
Borrower (the “Parking Owner Affiliate”)
has entered into that certain First Supplement to Frisco Square Development


 


28

















 


Agreement,
dated February 12, 2007, with the City (the “Exchange Agreement”),  pursuant
to which the Parking Owner Affiliate will swap a tract of land owned by the
Parking Owner Affiliate, or its affiliate, in exchange for the Parking Land.
Upon the consummation of the transaction contemplated by the Exchange
Agreement, the Parking Owner Affiliate shall execute a parking agreement in
form and substance acceptable to the City and Lender covering the Parking Land
(the “Parking Agreement”),  pursuant to which the Parking Owner
Affiliate shall grant Borrower and the tenants and occupants of the Premises
and their respective employees, customers, licensees and invitees the right to
utilize the Parking Land for surface parking, as more particularly set forth
herein. As of the date hereof, until the transactions contemplated by the
Exchange Agreement close and the Parking Agreement is executed and filed of
record in the Real Property Records of Collin County, Texas, upon completion
the Project may not have sufficient dedicated parking rights to comply with
applicable Governmental Requirements. Accordingly, Borrower hereby represents,
warrants, covenants and agrees with Lender as follows:


 


(a)                      Borrower has delivered a true, correct and
complete copy of the Exchange Agreement to Lender, the Exchange Agreement is in
full force and effect, and there are no defaults presently existing under the
Exchange Agreement.


 


(b)                     At such time as the Parking Owner Affiliate
acquires the Parking Land, Borrower shall cause the Parking Owner Affiliate to
execute the Parking Agreement and file the Parking Agreement of record in the
Real Property Records of Collin County, Texas. The acquisition of the Parking
Land by the Parking Owner Affiliate pursuant to the Exchange Agreement and the
execution and recording of the Parking Agreement shall occur within ninety (90)
days of the date of this Agreement. Notwithstanding anything to the contrary
contained herein, the Parking Agreement shall provide that (i) sufficient
parking shall be provided on the Parking Land at all times for the benefit of
the Premises at no cost to the owner of the Premises, so that the Premises
complies with all applicable Governmental Requirements pertaining to the
required parking for the Project, (ii) the owner of the Project and the tenants
and occupants of the Premises and their respective employees, customers,
licensees and invitees shall have an easement over the Parking Land to use the
parking on the Parking Land, (iii) the City shall have consented to and
approved the form of the Parking Agreement, and confirmed that the Parking
Agreement satisfies the parking requirement for the Project, and (iv) the
Parking Agreement may not be amended or modified without the prior written
approval of the owner of the Project and any mortgagee holding a first mortgage
lien on the Project (including without limitation, Lender).


 


(c)                      The Parking Agreement shall provide that the
Parking Owner Affiliate shall construct a multi-story parking garage on the
Parking Land (the “Parking Garage”)  within five (5) years after the
acquisition of the Parking Land from the City, which Parking Garage may be
utilized at no charge by the tenants and occupants of the Project and their
employees, customers, licensees and invitees, as well as by the tenants and
occupants of other buildings included within the Frisco Square Property, and
their respective employees, customers, licensees and invitees. Notwithstanding
anything to the


 


29

















 


contrary contained
herein, the construction of the Parking Garage shall not (i) affect the rights
of the owner of the Project and its tenants and occupants of the Project and
their employees, customers, licensees and invitees to park on the Parking Land,
except as required to facilitate construction of the Parking Garage, in which
case, free public parking is and shall be available on the parking lot on the
west side of Coleman Boulevard pursuant to the Exchange Agreement or (ii)
result in any cost or expense to Borrower, Lender or any other owner of the
Project. The failure to construct the Parking Garage shall not constitute a
default under any lease of the Premises.


 


(d)                     Borrower and
the Parking Owner Affiliate shall not modify or terminate the Parking Agreement
without Lender’s prior written consent; and Borrower and the Parking Owner
Affiliate will not enter into any other agreements relating to the Exchange
Agreement, the Parking Garage, the Parking Land or otherwise relating to
parking for the Project without Lender’s prior written consent.


 


6.9                    Funding
Limit; Default.  Borrower
acknowledges and agrees that Lender has agreed to close the Loan and fund Loan
proceeds up to (but not in excess of) the Funding Limit, based on the Borrower’s
representations that the Parking Owner Affiliate will acquire the Parking Land
and that the Parking Agreement will be executed and filed of record within
ninety (90) days of the date of this Agreement. Accordingly, Borrower agrees
that (i) Lender shall not have any obligation to fund any proceeds of the Loan
in excess of the Funding Limit until such time as (x) the Parking Owner
Affiliate acquires the Parking Land and (y) Lender receives a copy of the
Parking Agreement filed of record in the Real Property Records of Collin
County, Texas, as required by the provisions of Section 6.8 hereof
(the conditions set forth in clauses (x) and (y) are collectively called the “Additional Funding Conditions”)  and (ii) the failure to satisfy the
Additional Funding Conditions within ninety (90) days of the date of this
Agreement, or such later date as Lender may agree in writing, shall constitute
an Event of Default hereunder. Borrower further acknowledges and agrees that no
proceeds of the Loan have been allocated to pay any costs relating to the
Parking Garage.


 


6.10              Advances Do Not
Constitute a Waiver.  No advance of
Loan proceeds hereunder shall constitute a waiver of any of the conditions of
Lender’s obligation to make further advances nor, in the event Borrower is
unable to satisfy any such condition, shall any such advance have the effect of
precluding Lender from thereafter declaring such inability to be an Event of
Default hereunder.


 


ARTICLE 7      CONDITIONS TO LOAN FUNDING


 


7.1                    Conditions
Precedent to Initial Funding.  In
addition to the conditions and requirements specified for all disbursements in Sections
7.2 and 7.6, the following shall be conditions precedent to Lender’s
obligations to make the Initial Advance and any other funding or disbursal of
the Loan proceeds:


 


(a)                      Due
Execution and Recording of Loan Documents.  Borrower shall have delivered to Lender
resolutions, consents, certificates, affidavits, legal opinions and other


 


30

















 


evidence, all as shall be
satisfactory to Lender, that the Loan Documents have each been duly executed
and constitute valid, binding documents, enforceable in accordance with their
respective terms and have been filed or recorded, as appropriate, in all proper
offices.


 


(b)                     Mortgagee
Title Policy.  Except for the Initial
Advance, Borrower shall have furnished Lender with the Mortgagee Title Policy.


 


(c)                      Insurance.
 Borrower shall have obtained the
insurance and delivered the certificates to Lender as required by Sections
4.2 and 4.3 above.


 


(d)                     Project
Budget.  Lender shall have approved
the Project Budget and all changes thereto.


 


(e)                      Final
Plans and Specifications.  Lender
shall have approved the final Plans and Specifications.


 


(f)                        Construction
Contract and Other Construction Documents.  Lender shall have approved the Construction
Contract and all other Construction Documents and all changes to any thereof.


 


(g)                     Construction
Schedule. Lender shall have approved the construction schedule required by Section
4.10 and all changes thereto.


 


(h)                     Collateral
Assignment of Contracts and Plans and Other Agreements.  Borrower shall have furnished Lender with an
executed Collateral Assignment of Contracts and Plans and Other Agreements in
the form required by Lender.


 


(i)                         Commencement
of Construction.  Except for the
Initial Advance, Lender shall have received the recorded Affidavit of
Commencement of construction required by Section 4.13 and such other
evidence regarding commencement of construction as is required by Lender
pursuant to Section 4.12.


 


(j)                         Contractor/Lender
Agreement.  Borrower shall have
furnished Lender with a Contractor/Lender Agreement executed by Contractor in
the form required by Lender.


 


(k)                      Design
Professional/Lender Agreement.  Borrower
shall have furnished Lender with a Design Professional/Lender Agreement
executed by the Architect and any Engineer with whom Borrower has contracted in
the form required by Lender.


 


(1)                      Appraisal.
 Borrower shall have furnished Lender or
paid Lender’s cost of obtaining an MAI appraisal of the Premises and the
proposed Improvements by a licensed appraiser satisfactory to Lender, such
appraisal to be in the form and amount


 


31

















 


satisfactory to Lender
(the “Initial Appraisal”).


 


(m)                   Survey.  Borrower shall have furnished to Lender a
certified plat of survey of the Premises made by a licensed surveyor or civil
engineer satisfactory to Lender meeting the requirements contained in or
attached to the Pre-Closing Document List funished Borrower by Lender with
respect to the Loan.


 


(n)                     Zoning and
Compliance With Laws.  Borrower shall
have delivered to Lender evidence, in form satisfactory to Lender, that the
Premises are zoned for the use for which the proposed Improvements are designed
and are otherwise in compliance with all Governmental Requirements, including,
if applicable, all provisions of environmental laws and platting statutes and
ordinances.


 


(o)                     Utilities.
 Borrower shall have furnished Lender
with evidence satisfactory to Lender that all utilities (including such
utilities as are necessary to secure a certificate of occupancy or equivalent)
will in a timely manner be supplied to the Premises upon completion of
construction, including commitment letters from the agencies or entities
supplying such services.


 


(p)                     Permits.
 Except for the Initial Advance, Borrower
shall have furnished Lender (A) two complete and true copies of the building
permits and any other permits, licenses or certificates which are required in
connection with construction of the Improvements in accordance with the Plans
and Specifications, issued by the appropriate Governmental Authorities, and (B)
a verified statement that no proceedings of any kind are pending or threatened
by any person, firm, corporation or public agency with respect to the
revocation or suspension of any permits, licenses or certificates.


 


(q)                     Soils
Report.  Borrower shall have
furnished Lender a soils report, prepared by a licensed soil engineer, showing
that the condition of the soil of the land is adequate to support the
Improvements, which soils report shall have been approved by Lender.


 


(r)                        Leases.
 Lender shall have received and approved
all executed leases of any portion of the Premises (including without
limitation, the Required Lease) and shall have received any SNDA required to be
delivered pursuant to Section 4.25(c).


 


(s)                      Environmental
Assessment.  Lender shall have
received and approved a Phase 1 Environmental Site Assessment of the Premises.


 


(t)                        Balance
Sheet.  Except for the Initial
Advance, Borrower shall have furnished Lender a current balance sheet and
income statement for Borrower, or Borrower’s parent company if a consolidated
accounting format is used.


 


(u)                     Other
Documents.  Borrower shall have
delivered to Lender such other documents and certificates as were specified in
any Pre-Closing Document List


 


32

















 


previously furnished to
Borrower by Lender or Lender’s counsel and such other documents and
certificates as Lender or Lender’s counsel may reasonably request.


 


(v)                     Commitment
Fee.  Borrower shall have paid to
Lender the commitment fee of $44,655 for the Loan.


 


(w)                   Borrower’s
Equity.  Borrower shall have applied
Borrower’s Equity to pay for Project Costs included in the Project Budget, and
Borrower shall have furnished Lender with a schedule showing the payment of
such funds for Project Costs and evidence of such payment.


 


(x)                       Texas
Architectural Barriers Act.  Except
for the Initial Advance, no disbursement shall be made by Lender until such
time as Borrower has furnished to Lender a copy of the application to the Texas
Department of Licensing and Regulation requesting a certification that the
Plans and Specifications which are subject to Texas Rev. Civ. Stat. Ann. art. §
9102 and the regulations promulgated thereunder are in compliance with said
statute and regulations or a certificate from said Department that the
Improvements are not subject to Article § 9102.


 


(y)                     Financing
Statement Search.  Borrower shall
have delivered to Lender a financing statement search covering all owners of
the Premises within the last five years.


 


(z)                       Exchange
Agreement.  Borrower shall have
delivered to Lender a fully executed copy of the Exchange Agreement.


 


7.2                    Conditions
to Each Disbursement.  At no time and
in no event shall Lender be obligated to disburse proceeds of the Loan:


 


(a)                      if any of
the representations and warranties made by Borrower or Guarantor contained
herein, in the Deed of Trust or in any other Loan Document shall no longer be
true or, with respect to any such representations or warranties which may be
limited to the knowledge of Borrower or Guarantor or any of their
representatives, would no longer be true if all relevant facts and
circumstances were known to Borrower and Guarantor and such representatives;


 


(b)                if
Borrower or Guarantor shall have breached any covenant or other provision to be
performed by Borrower or Guarantor in this Agreement, in the Deed of Trust or
in any other Loan Document;


 


(c)                      in excess of
the amount recommended by the Inspecting Architect;


 


(d)                     if the
Project Costs requested in such disbursement shall be significantly different
than as projected in the Project Budget and the reason for the difference shall
not have been explained to Lender’s reasonable satisfaction;


 


33

















 


(e)                      if any
condition specified in Section 7.1 for the first disbursement has not
been satisfied, even if Lender shall have elected to waive such condition for
the first or any prior disbursement of Loan proceeds;


 


(f)                        if any
event described in Section 7.6 hereof shall have occurred;


 


(g)                     if any Event
of Default as described in Section 8.1 hereof shall have occurred;


 


(h)                     if Lender in
its reasonable discretion is not satisfied that the construction of the
Improvements will be completed on or before the Completion Deadline;


 


(i)                         If
Borrower shall not have complied with the procedures and requirements of Section
6.1;


 


(j)                         if the
Loan is not “in balance” as provided in Section 6.5 or if Borrower shall
not have collaterally assigned any Borrower’s Deposit furnished to put the Loan
in balance by executing an assignment satisfactory to Lender; or


 


(k)                      if the
Premises shall have been damaged by fire or other casualty and Lender shall not
have received insurance proceeds sufficient in the sole judgment of Lender to
effect the restoration of the Improvements in accordance with the Plans and
Specifications and to permit the completion of the Improvements on or before
the Completion Deadline set forth herein.


 


In addition to the
foregoing, Lender shall not be obligated to fund any portion of the Loan in
excess of the Funding Limit unless and until all of the Additional Funding
Conditions are satisfied.


 


7.3                    Retainage
and Final Disbursement.  Ten percent
(10%) of each Loan disbursement for costs of construction of the Improvements
shall be withheld by Lender, which ten percent (10%) shall be disbursed only
upon compliance with the following requirements (in addition to the
requirements for all other disbursements):


 


(a)                      receipt by
Lender of satisfactory evidence of the completion of the Improvements in
accordance with Plans and Specifications and approval of such completion by
Governmental Authorities having jurisdiction and by the Inspecting Architect;


 


(b)                     receipt by
Lender of a satisfactory “as-built” blueprint or survey reflecting the location
of the Improvements on the Land in accordance with the Plans and
Specifications;


 


(c)                      receipt by
Lender of either (i) lien waivers and releases from all


 


34

















 


contractors,
subcontractors, laborers and materialmen employed in furnishing labor or
materials in connection with the construction of the Improvements substantially
in the form attached hereto as Exhibit E; and (ii) an endorsement to the
Mortgagee Title Policy with no exception with respect to liens arising by
reason of unpaid bills or claims for work performed or materials furnished in
connection with the Improvements or to remove any such exception from the
Mortgagee Title Policy covering the Premises previously issued to Lender;


 


(d)                     receipt by
Lender of evidence that the all-risk insurance covering the Improvements
required by Section 4.2(b) is in full force and effect;


 


(e)                      a period of
thirty days shall have elapsed after the later of (i) the date of completion of
construction of the Improvements or (ii) the date of filing with the County
Clerk of the county where the Land is located of an Affidavit and Certificate
of Completion by Borrower in the form attached hereto as Exhibit F and
otherwise meeting the requirements of § 53.106 of the Texas Property Code,
provided that a copy of the affidavit is sent to the parties and within the
time periods required by § 53.106; and


 


(f)                        receipt by
Lender of such other certificates, assurances and opinions as Lender shall
reasonably require.


 


7.4                    Advances of
Interest.  Notwithstanding anything
to the contrary contained in Section 6.6 or elsewhere in this Agreement,
Lender shall have no obligation to disburse any portion of the Loan to pay
accrued interest then due and payable on the Note to the extent that Project
Revenues are available, after application of the same to the normal operating
expenses of the Premises, for payment thereof. Borrower hereby agrees to apply
all such Project Revenues to payment of accrued interest due and payable on the
Note to the full extent that such Project Revenues are not exhausted by payment
of normal operating expenses of the Premises, regardless of the existence of
any remaining balance of the Interest Reserve Account.


 


7.5                    Funding
Limit.  No portion of the Loan
proceeds shall be advanced in excess of the Funding Limit unless and until all
of the Additional Funding Conditions have been satisfied.


 


7.6                    Termination
of Lender’s Funding Obligations.  Notwithstanding
anything to the contrary herein contained, Lender shall be excused from the
obligation to make any further advances of proceeds of the Loan, including
advances for interest accrued on the Note, if:


 


(a)                      the first
disbursement of Loan proceeds shall not take place on or before the
Commencement Deadline for any reason other than Lender’s breach of this
Agreement;


 


(b)                     prior to the
Commencement Deadline (i) Borrower shall not have obtained all governmental
approvals, including curb cut and access to all adjoining public streets and
ways, required for the construction of the Improvements or (ii) Borrower shall
not have delivered all items then required by Section 7.1;


 


35
















 


(c)                      the
Improvements shall be materially damaged or destroyed (i) as a result of the
negligence or willful misconduct of Borrower or anyone acting for Borrower,
(ii) by any cause that is not fully covered by insurance maintained by Borrower
in accordance with the requirements of this Agreement and the Deed of Trust or
other funds available to Borrower acceptable to Lender other than the Loan,
(iii) by any cause that is fully covered by such insurance, but after which
Borrower shall not have commenced the repair of such damage or destruction
within sixty days from the occurrence thereof or shall not have diligently
pursued such repair to completion in a good and workmanlike manner; or


 


(d)                     after
commencement of construction of the Improvements, for any reason Borrower shall
fail to cause such construction to continue without any significant
interruption, except an unavoidable interruption caused by damage to or the
destruction of the Improvements by fire or other casualty or other events of
force majeure.


 


ARTICLE 8      DEFAULTS AND REMEDIES


 


8.1                    Event of
Default.  An “Event of Default”  shall be deemed to have occurred hereunder
if:


 


(a)                      Default
Under Loan Documents.  Any default or
event of default occurs under any of the Loan Documents, including without limitation,
the Guaranty (taking into account any applicable grace periods expressly
provided therein); or


 


(b)                     Failure to
Obtain an Advance.  Borrower is
unable to satisfy all conditions to its right to receive any advance hereunder
needed for Project Costs then due and unpaid within fifteen days after such
Project Costs first became due; or


 


(c)                      Breach of
Covenant.  (i) Borrower or Guarantor
shall fail, refuse, or neglect to pay, in full, any installment or portion of
the indebtedness evidenced by the Loan Documents within five (5) days after the
same shall become due and payable, whether at the due date thereof stipulated
in the Loan Documents, upon acceleration or otherwise; or (ii) Borrower or
Guarantor fails to timely submit any certificate of compliance, report or other
item required under Section 4.33, if such failure continues for five (5)
days after Borrower is sent written notice and demand for the same; or (iii)
Borrower or Guarantor breaches or fails timely and properly to observe, keep or
perform any other covenant, agreement, warranty or condition herein required to
be observed, kept or performed, other than those referred to in any other
subsection of this Section 8.1, if such failure continues for 30 days
after Borrower is sent written notice and demand for the performance of such
covenant, agreement, warranty or condition; unless Borrower commences such cure
within such 30 day period and thereafter diligently and continuously prosecutes
such cure to completion within no later than 60 days after such notice from
Lender; or


 


(d)                     Breach of
Representation.  Any representation
made to Lender herein or in


 


36

















 


any other Loan Documents
is false or misleading in any material respect; or


 


(e)                      Filing of
Liens Against the Premises.  Any lien
for labor, material, taxes or otherwise shall be filed against the Premises and
shall not be removed within twenty days after such filing, except for any lien
being contested as provided in Section 4.20 hereof or any lien which is
bonded around in accordance with the requirements set forth in Tex. Property
Code §§ 53.171 et. seq. to the satisfaction of Lender; or


 


(f)                        Litigation
Against Borrower; Judgments.  (i) Any
action, suit or proceeding against or affecting Borrower or any one of the
Guarantors under the Guaranty or the Premises, or involving the validity or
enforceability of the Loan Documents or the priority of the liens created
thereby, at law or in equity, or before any Governmental Authority, which in
the reasonable judgment of Lender, impairs or would impair its interest in a
substantial portion of the Premises, the enforceability of the Loan Documents
or Lender’s ability to collect the Debt evidenced by the Loan Documents when
due; or (ii) any final judgment for the payment of money shall be rendered
against Borrower or any one of the Guarantors and the same shall remain
unstayed or undischarged for a period of 30 days; or


 


(g)                     Levy Upon
the Premises.  A levy be made under
any process on, or a receiver be appointed for, the Premises or any other
property of Borrower or any Guarantor; or


 


(h)                     Acceleration
of Other Debts.  Borrower or any
Guarantor does, or omits to do, any act, or any event occurs, as a result of
which any material obligation of Borrower or such Guarantor, not arising
hereunder, may be declared immediately due and payable by the holder thereof;
or


 


(i)                         Noncompliance
with Laws.  The Improvements are not
constructed in compliance with all governmental use and building restrictions,
laws, statutes, and ordinances and regulations of appropriate supervising
boards of fire underwriters and similar agencies; or


 


(j)                         Deviation
from Plans and Specifications.  There
is any substantial deviation in construction of the Improvements from the Plans
and Specifications without the prior written approval of Lender, or there is
incorporated in the Improvements any substantially defective workmanship or
materials, which deviation or defect is not commenced to be corrected within
ten days after written notice thereof and such correction diligently continued
to its conclusion within thirty (30) days after written notice from Lender; or


 


(k)                      Encroachments.
 There appears on any survey required
hereunder encroachments which have occurred without the approval of Lender and which
Borrower fails to commence to remove or correct within ten days after Borrower
is notified thereof or fails to pursue such removal or correction diligently to
its conclusion; or


 


37

















 


(l)                         Cessation
of Work.  There occurs cessation of
the work of construction prior to completion of the Improvements for a
continuous period of ten days or more for causes other than those beyond the
control of Borrower or consented to in writing by Lender; or


 


(m)                   Injunction.
 Any person obtains an order or decree in
any court of competent jurisdiction enjoining the construction of the
Improvements or enjoining or prohibiting Borrower or Lender from performing
this Agreement, and such proceedings are not properly contested or such decree
is not vacated within sixty days after the granting thereof; or


 


(n)                     Lapse of
Permit.  Borrower neglects, fails, or
refuses to keep in full force and effect any required permit or approval with
respect to the construction of the Improvements and such permit or approval is
not reinstated within 30 days; or


 


(o)                     Change of
Ownership.  There is any change in
the ownership interests in the Borrower (whether direct or indirect), unless
the written consent of the Lender is first obtained, which consent, may be
granted or refused in Lender’s sole discretion; provided, however that a
transfer of the limited partner interests expressly permitted pursuant to Section
4.38 hereof of shall not require Lender’s consent or constitute an Event of
Default hereunder; or


 


(p)                     Management
Agreement.  Once executed, the
Management Agreement shall be terminated without the prior written approval of
Lender; or


 


(q)                     Material
Adverse Change.  There shall occur
any materially adverse change in the financial condition or prospects of
Borrower or any Guarantor, or the existence of any other condition which, in
Lender’s reasonable determination, constitutes a material impairment of any
such person’s ability to operate the Project or of such person’s ability to
perform their respective obligations under the Loan Documents, and if such
condition is capable of being cured, is not remedied within thirty (30) days
after written notice; or


 


(r)                        Borrower’s
Deposit.  Borrower fails to make a
Borrower’s Deposit upon the written request of Lender within the time period
required under this Agreement; or


 


(s)                      Required
Lease.  Borrower defaults in the
performance of its obligations under the Required Lease; or


 


(t)                        Change
in Control.  Any Change in Control
shall occur; or


 


(u)                     Debt
Coverage Ratio.  If the Debt Coverage
Ratio falls below 1.25:1.0 during the Extension Period, unless the Debt
Coverage Ratio is increased (by Borrower making a prepayment of principal or
otherwise) to at least 1.25:1.0 within forty-five (45) after Borrower’s receipt
of written notice from Lender that the Debt Coverage Ratio is


 


38

















 


not
in compliance; or


 


(v)                     Additional Funding Conditions.  The
failure to satisfy the Additional Funding Conditions within ninety (90) days of
the date of this Agreement, or such later date as Lender may agree in writing.


 


8.2                    Remedies.  Upon the occurrence of any one
or more of the Events of Default set out in Section 8.1 hereof, Lender
shall at its option be entitled to proceed to exercise any of the following
remedies:


 


(a)                      Borrower agrees that the occurrence of such
Event of Default shall constitute a default under each of the Loan Documents,
thereby entitling Lender (i) to exercise any of the various remedies therein
provided including the acceleration of the Debt evidenced by the Note and the
foreclosure of the Deed of Trust and (ii) cumulatively to exercise all other
rights, options and privileges provided by law.


 


(b)                     Lender shall have the right:


 


(i)                         to take whatever action is necessary or
appropriate by the use of legal proceedings or otherwise (A) to cause Borrower
to vacate the Premises and (B) to take possession of the Premises;


 


(ii)                      to perform or cause to be performed any and all work and labor necessary
to complete the Improvements in accordance with Plans and Specifications;


 


(iii)                   to employ security watchmen at Borrower’s expense to protect the
Premises; and


 


(iv)                  to
disburse that portion of the Loan proceeds not previously disbursed (including
any retainage) and any Borrower’s Deposit to the extent Lender considers
necessary to complete construction of the Improvements in accordance with the
Plans and Specifications, and if the completion requires a larger sum than any
Borrower’s Deposit held by Lender and the remaining undisbursed portion of the
Loan, to disburse such additional funds, all of which funds so disbursed by
Lender shall be deemed to have been disbursed to Borrower and shall be secured
by the Deed of Trust and the other Loan Documents. For this purpose, Borrower
agrees that Lender shall be entitled to take any action necessary or helpful to
complete the construction of the Improvements, including but not limited to the
following: to use any funds of Borrower including any Borrower’s Deposit and
any balance which may be held in escrow and any Loan or other funds which may
remain unadvanced hereunder for the purpose of completing the Improvements
substantially in accordance with the Plans and Specifications; to make such
additions and changes and corrections in the Plans and Specifications which
Lender shall consider necessary or desirable to complete


 


39

















 


the
Improvements in substantially the manner contemplated by the Plans and
Specifications; to employ such contractors, subcontractors, agents, architects
and inspectors as Lender shall consider necessary or appropriate for such
purposes; to pay, settle or compromise all existing or future bills and claims
which are or may be liens against the Premises or as Lender considers necessary
or desirable for the completion of the Improvements or the clearance of title
to the Premises; to execute any applications and certificates which may be
required by any construction contract and to do any and every act with respect
to the construction of the Improvements which Borrower may do itself. It is
understood and agreed that Lender’s rights to take any action necessary or
helpful to complete construction shall be deemed to be a power coupled with an
interest which cannot be revoked by death or otherwise. Such rights shall also
include the power to prosecute and defend all actions or proceedings in
connection with the construction of the Improvements. In accordance therewith
Borrower hereby grants and assigns to Lender a lien against and security
interest in, and the rights to hold and use, any and all sums which may have
from time to time have been advanced hereunder, and any retainage and Borrower’s
Deposit hereunder, and any other sums in held from time to time in escrow
hereunder, for the completion of the Improvements. LENDER SHALL HAVE NO OBLIGATION TO UNDERTAKE ANY OF THE FOREGOING ACTIONS
AND IF LENDER SHALL DO SO, IT SHALL HAVE NO LIABILITY TO BORROWER (EVEN IF
LENDER IS NEGLIGENT) FOR THE SUFFICIENCY OR ADEQUACY OF ANY SUCH ACTIONS TAKEN
BY LENDER.


 


(c)                      Lender may declare all indebtedness secured by
the Deed of Trust immediately due and payable, and thereupon Lender shall be
released from all obligations to Borrower under this Agreement.


 


(d)                     Lender shall have the right at any time and
from time to time, without notice to Borrower (any such notice being expressly
waived), to set-off and apply any and all deposits (general or special, time or
demand, provisional or final) at any time held, and any other indebtedness at
any time owing by Lender to or for the credit or the account of Borrower,
against any and all of the indebtedness of Borrower evidenced by the Note or
secured by the Deed of Trust, irrespective of whether or not Lender shall have
made any demand under this Agreement or the Note and although such indebtedness
may be unmatured. Lender agrees to notify Borrower promptly after any such
set-off and application, provided that the failure to give such notice shall
not affect the validity of such set-off and application. The rights of Lender
under this subsection are in addition to any other rights and remedies
(including, without limitation, other rights of set-off) which Lender may have
under the Note or the other Loan Documents or otherwise.


 


40

















 


ARTICLE 9
     EXTENSIONS; PRINCIPAL PAYMENTS; INTEREST RATE
REDUCTION


 


9.1                    Extension.  Borrower shall have the right
and option to extend the Maturity Date one (1) time for a period of twelve (12)
months (the “Extension Period”)
to March 8, 2010, such extension being subject to the conditions that:


 


(a)                      Construction of the Improvements shall have
been completed in substantial accordance with the Plans and Specifications, all
bills and invoices in connection with such work shall have been paid in full,
and Borrower shall have delivered to Lender final lien waivers and releases for
all work performed in connection with such work.


 


(b)                     All certificates of occupancy for the building
and all occupied tenant spaces within the Project shall have been issued and
remain in full force and effect.


 


(c)                      The Project has achieved and maintained a Debt
Coverage Ratio of not less than 1.25:1.0 for the three (3) month period
immediately preceding the commencement of the Extension Period.


 


(d)                     There shall have been no material adverse
change in the condition of the Premises or in the financial condition of
Borrower or any Guarantor since the date of this Agreement.


 


(e)                      On the date of such written notice and on the
date of commencement of the Extension Period, there shall exist no Event of
Default or Default under this Agreement.


 


(f)                        Borrower shall have notified Lender in writing
of its exercise of the extension of the Maturity Date at least thirty (30) days
prior to the commencement of the Extension Period.


 


(g)                     On or before the commencement of the Extension
Period, Borrower shall have paid to Lender a fee in the amount of $22,222.50.


 


(h)                     Lender, at Lender’s option, and at Borrower’s
expense, shall have the right to require a new MAI appraisal of the Project complying
with the requirements of Section 4.22 hereof, which appraisal shall show
that the Loan-To-Value Ratio does not exceed seventy-five percent (75%) and
that the Net Operating Income from the Project is sufficient to continue to
maintain a Debt Coverage Ratio of not less than 1.25:1.0.


 


(i)                         Upon such extension, Borrower and Guarantors
shall have executed such documents as Lender deems reasonably appropriate to
evidence such extensions.


 


41

















 


(j)                         Borrower shall maintain a Debt Coverage Ratio
of not less than 1.25:1.0 during the entire Extension Period.


 


9.2                    Principal Payments.  In
the event that the Maturity Date is extended as provided in Section 9.1
above, Borrower shall commence making monthly principal payments on the
outstanding principal balance of the Note in a monthly amount equal to l/12th
of the aggregate principal payable during the first twelve (12) months of a
principal amortization schedule which would fully amortize the outstanding
principal balance of the Loan, at an assumed interest rate equal to the actual
rate of interest in effect under the Note as of the commencement of the
Extension Period, over a level mortgage amortization schedule of three hundred
(300) equal monthly payments of principal and interest. Said installments of
principal shall commence on the tenth (10th) day of the first month
after the commencement of the Extension Period, and shall be due and payable
each month thereafter on the same dates as, and in addition to, accrued interest
due each month during the Extension Period. All accrued and unpaid interest and
unpaid principal shall be due and payable on the expiration of the Extension
Period. Any determination by Lender of the amount of principal payments to be
made by Borrower pursuant to this Section 9.2 will, absent manifest
error, be conclusive and binding upon Borrower.


 


ARTICLE
10      GENERAL CONDITIONS


 


10.1              Rights of Third Parties.  All
conditions to the obligations of Lender hereunder, including the obligation to
make advances, are imposed solely and exclusively for the benefit of Lender and
its successors and assigns and no other person shall have standing to require
satisfaction of such conditions in accordance with their terms or be entitled
to assume that Lender will make advances or refuse to make advances 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 Lender at any time
if in its sole discretion it deems it desirable to do so. In particular, Lender
makes no representations and assumes no duties or obligations as to third
parties concerning the quality of the construction by Borrower of the
Improvements or the absence therefrom of defects. Failure to inspect the
construction of the Improvements or any part thereof or inspection not followed
by notice of default shall not constitute a waiver of any of Lender’s rights
hereunder nor shall it constitute a representation that there has been
compliance with the Plans and Specifications or that the construction of the
Improvements is free from defective materials or workmanship. In this
connection Borrower agrees to and shall indemnify Lender (EVEN IF LENDER IS NEGLIGENT)  from any liability, claims or losses
resulting from the disbursement of the Loan proceeds or from the condition of
the Premises whether related to the quality of construction or otherwise and
whether arising during or after the term of the Loan. This provision shall
survive the repayment of the Loan and shall continue in full force and effect
so long as the possibility of such liability, claims or losses exists.


 


10.2              Waivers.  No waiver of or consent to any
departure from any provision hereof shall be effective unless in writing and
signed by Lender and shall be effective only in the specific instance for the
purpose for which given and to the extent specified in such writing. No advance
of Loan proceeds hereunder shall constitute a waiver of any of the conditions
to


 


42

















 


Lender’s
obligation to make further advances nor, in the event Borrower fails to satisfy
any such condition, shall any advance have the effect of precluding Lender from
thereafter declaring such failure to be an Event of Default. No waiver of any
Event of Default hereunder shall affect or constitute a waiver of any later
Event of Default. No delay or omission of Lender to exercise any right or
remedy upon the happening of any Event of Default shall impair any such right
or remedy or be deemed to be a waiver of such Event of Default.


 


10.3              Evidence of Satisfaction of Conditions.  Any
condition of this Agreement which requires the submission of evidence of the
existence or nonexistence of a specified fact or facts implies as a condition
the existence or nonexistence, as the case may be, of such fact or facts, and
Lender shall, at all times, be free independently to establish to its
satisfaction and in its absolute discretion such existence or nonexistence.


 


10.4              Assignment by Borrower.  Anything
to the contrary herein notwithstanding, Borrower shall have no right to assign
its rights hereunder or the proceeds of the Loan without the written consent of
Lender and any such assignment or purported assignment shall, at Lender’s
option, relieve Lender from all further obligations hereunder and shall
constitute an Event of Default under this Agreement.


 


10.5              Successors and Assigns Included in Parties.  Whenever
in this Agreement one of the parties to this Agreement is named or referred to,
the heirs, legal representatives, successors and assigns of such party shall be
included and all covenants and agreements contained in this Agreement by or on
behalf of the Borrower or by or on behalf of Lender shall bind and inure to the
benefit of their respective heirs, legal representatives, successors and
assigns, whether so expressed or not.


 


10.6              Exercise of Rights and Remedies.  All
rights and remedies of Lender hereunder or under the Note or under the Deed of
Trust or under any other Loan Document shall be separate, distinct and
cumulative and no single, partial or full exercise of any right or remedy shall
exhaust the same or preclude Lender from thereafter exercising in full or in
part the same right or remedy or from concurrently or thereafter exercising any
other right or remedy which Lender may have hereunder, under the Note or Deed
of Trust or any other Loan Document, or at law or in equity, and each and every
such right and remedy may be exercised at any time or from time to time.


 


10.7              Headings.  The headings of the sections
and subsections of this Agreement are for the convenience of reference only,
are not to be considered a part hereof and shall not limit or otherwise affect
any of the terms hereof.


 


10.8              Supplement to Deed of Trust.  This
Agreement is not intended to supersede the Deed of Trust but shall be construed
as supplemental thereto. In the event of any inconsistency between the
provisions hereof and the Deed of Trust, it is intended that, during the
applicability of this Agreement, this Agreement shall be controlling.


 


10.9              Usury.  It is the intent of Lender and
Borrower in the execution of the Note, this Agreement and all other instruments
now or hereafter securing the Note or executed in


 


43

















 


connection
therewith or under any other written or oral agreement by Borrower in favor of
Lender to contract in strict compliance with applicable usury law. In
furtherance thereof, Lender and Borrower stipulate and agree that none of the
terms and provisions contained in the Note, this Agreement or any other
instrument securing the Note or executed in connection herewith, or in any
other written or oral agreement by Borrower in favor of Lender, shall ever be
construed to create a contract to pay for the use, forbearance or detention of
money, interest at a rate in excess of the maximum interest rate permitted to
be charged by applicable law; neither Borrower nor any guarantors, endorsers or
other parties now or hereafter becoming liable for payment of the Note or the
other indebtedness secured by the Loan Documents shall ever be obligated or
required to pay interest on the Note or on indebtedness arising under any
instrument securing the Note or executed in connection therewith, or in any
other written or oral agreement by Borrower in favor of Lender, at a rate in
excess of the maximum interest that may be lawfully charged under applicable
law, and the provisions of this Section shall control over all other provisions
of the Note, this Agreement and any other instruments now or hereafter securing
the Note or executed in connection herewith or any other oral or written
agreements which may be in apparent conflict herewith. Lender expressly disavows
any intention to charge or collect excessive unearned interest or finance
charges in the event the maturity of the Note is accelerated. If the maturity
of the Note shall be accelerated for any reason or if the principal of the Note
is paid prior to the end of the term of the Note, and as a result thereof the
interest received for the actual period of existence of the Loan exceeds the
applicable maximum lawful rate, Lender shall, at its option, either refund to
Borrower the amount of such excess or credit the amount of such excess against
the principal balance of the Note then outstanding and thereby shall render
inapplicable any and all penalties of any kind provided by applicable law as a
result of such excess interest. In the event that Lender shall contract for,
charge or receive any amount or amounts and/or any other thing of value which
are determined to constitute interest and which would increase the effective
interest rate on the Note or the other indebtedness secured by the Loan
Documents to a rate in excess of that permitted to be charged by applicable
law, all such amounts determined to constitute interest in excess of the lawful
rate shall, following such determination, at the option of Lender, be either
immediately returned to Borrower or credited against the principal balance of
the Note then outstanding, in which event any and all penalties of any kind
under applicable law as a result of such excess interest shall be inapplicable.
If Lender shall not actually receive, but shall contract for, request or
demand, a payment of money (or anything else) which is determined to constitute
interest and which would increase the effective interest rate contracted for or
charged on the Note or the other indebtedness secured by the Loan Documents to
a rate in excess of that permitted by applicable law, Lender shall be entitled,
following such determination, to waive or rescind the contractual claim,
request or demand for the amount determined to constitute interest in excess of
the lawful rate, in which event any and all penalties of any kind under
applicable law as a result of such excess interest shall be inapplicable. By
execution of this Agreement, Borrower acknowledges that it believes the Loan to
be non-usurious and agrees that if, at any time, Borrower should have reason to
believe, that the Loan is in fact usurious, it will give Lender notice of such
condition and Borrower agrees that Lender shall have ninety days in which to
make appropriate refund or other adjustment in order to correct such condition
if in fact such exists. The term “applicable
law”  as used in this
Section shall mean the laws of the State of Texas or the laws of the United
States, whichever laws allow the greater rate of interest, as such laws now
exist or may be changed or amended or come into


 


44

















 


effect
in the future.


 


10.10           Invalid Provisions to Affect No Others.  If
fulfillment of any provision hereof or any transaction related to the Loan at
the time performance of such provisions shall be due, shall involve
transcending the limit of validity prescribed by law, then ipso  facto,
the obligation to be fulfilled shall be reduced to the limit of such validity;
and if any clause or provisions herein contained operates or would prospectively
operate to invalidate this Agreement in whole or in part, then such clause or
provision only shall be held for naught, as though not herein contained, and
the remainder of this Agreement shall remain operative and in full force and
effect.


 


10.11           Number
and Gender.  Whenever the singular or plural number,
masculine or feminine or neuter gender is used herein, it shall equally include
the other.


 


10.12             Amendments.  Neither
this Agreement nor any provision hereof may be changed, waived, discharged or terminated
orally, but only by an instrument in writing signed by the party against whom
enforcement of the change, waiver, discharge or termination is sought.


 


10.13           Notice.  Any notice or communication
required or permitted hereunder shall be given in writing, sent by (a) personal
delivery, or (b) expedited delivery service with proof of delivery, or (c)
United States Mail, postage prepaid, registered or certified mail, addressed as
follows:


 


To
Lender:


 


Compass
Bank

8080 N. Central Expressway, Suite
370
 Dallas, Texas 75206
 Attention: Commercial Real Estate
Lending, Craig Davis


 


With
a copy to:


 


Thompson
& Knight L.L.P.

1700 Pacific Avenue, Suite 3300 

Dallas, Texas 75201 

Attention: Mark M. Sloan


 


To
Borrower:


 


16250
Dallas Parkway, Suite 102 

Dallas, Texas 75248 

Attention: Cathy R. Sweeney


 


45

















 


With
a copy to:


 


Winstead
Sechrest & Minick P.C.

5400 Renaissance Tower

1201 Elm Street

Dallas, Texas 75270

Attention: William R. Weinberg


 


or
to such other address or to the attention of such other person as hereafter
shall be designated in writing by the applicable party sent in accordance
herewith. Any such notice or communication shall be deemed to have been given
either at the time of personal delivery or, in the case of delivery service or
mail, as of the date of first attempted delivery at the address and in the
manner provided herein.


 


10.14           Legal
Proceedings.  Lender shall have the right to commence,
appear in, or to defend any action or proceeding purporting to affect the
rights or duties of the parties hereunder or the payment of any funds, and in
connection therewith pay necessary expenses, employ counsel and pay its
reasonable fees. Any such expenditures shall be considered additional advances
hereunder, shall bear interest at the rate payable under the Note for past due
payments, shall be secured by the Loan Documents and shall be paid by Borrower
to Lender upon demand.


 


10.15           Assignment
by Lender.  Lender shall have the right to assign any
portion of this Agreement and the Loan to an institutional lender and to
disseminate to such lender any information it has pertaining to the Loan,
including without limitation, complete and current credit information on
Borrower, any of its principals and any Guarantor. In the event of such an
assignment, Borrower shall agree to such modifications to this Agreement as
will facilitate such assignment, provided that such modifications will not
materially add to the obligations of Borrower. It is understood that any
assignment by Lender will not result in additional cash expense to Borrower.
Neither the shareholders, nor the trustees of a real estate investment trust
assignee shall be personally liable for the obligations of such trust and
Borrower shall look solely to the trust property for the payment of any claim
hereunder.


 


10.16           Lender
Not a Joint Venturer.  Notwithstanding anything to the contrary
herein contained, Lender, by entering into this Agreement or by any action
taken pursuant to this Agreement, will not be deemed a partner or joint
venturer with Borrower, and Borrower shall indemnify and hold Lender harmless
from any and all damages resulting from such a construction of the parties and
their relationship.


 


10.17           Survival
of Covenants.  All covenants of either party contained herein
shall continue and survive until the Loan has been fully paid and discharged.


 


10.18           Time Is of the Essence.  Time
is of the essence of this Agreement.


 


10.19           Loan
Participation.  Borrower acknowledges and agrees that Lender
may, from time to time, sell or offer to sell interests in the Loan and Loan
Documents to one or more


 


46

















 


participants.
Borrower authorizes Lender to disseminate to such participant or prospective
participant, any information it has pertaining to the Loan, including without
limitation, complete and current credit information on the Borrower, any of its
principals and any Guarantor.


 


10.20           Counterparts.  To
facilitate execution, this Agreement may be executed in as many counterparts as
may be convenient or required. It shall not be necessary that the signature of,
or on behalf of, each party, or that the signature of all persons required to
bind any party, appear on each counterpart. All counterparts shall collectively
constitute a single document. It shall not be necessary in making proof of this
document to produce or account for more than a single counterpart containing
the respective signatures of, or on behalf of, each of the parties hereto. Any
signature page to any counterpart may be detached from such counterpart without
impairing the legal effect of the signatures thereon and thereafter attached to
another counterpart identical thereto except having attached to it additional
signature pages.


 


10.21            Waiver
of Jury Trial.  BORROWER AND
LENDER, BY ACCEPTANCE OF THIS AGREEMENT, ACKNOWLEDGE THAT THE RIGHT TO TRIAL BY
JURY IS A CONSTITUTIONAL ONE, BUT THAT IT MAY BE WAIVED. EACH PARTY, AFTER
CONSULTING (OR HAVING HAD THE OPPORTUNITY TO CONSULT) WITH COUNSEL OF THEIR
CHOICE, KNOWINGLY AND VOLUNTARILY, AND FOR THEIR MUTUAL BENEFIT, WAIVES ANY
RIGHT TO TRIAL BY JURY IN THE EVENT OF LITIGATION REGARDING THE PERFORMANCE OR
ENFORCEMENT OF, OR IN ANY WAY RELATED TO, THIS AGREEMENT OR THE INDEBTEDNESS. Nothing
in this section shall prevent or prohibit Borrower from instituting or
maintaining a separate action against Lender with respect to any asserted
claim.


 


10.22             Applicable
Law.  THIS
AGREEMENT AND THE OTHER LOAN DOCUMENTS AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HEREUNDER AND THEREUNDER SHALL IN ALL RESPECTS BE GOVERNED BY, AND
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS
(WITHOUT GIVING EFFECT TO TEXAS’ PRINCIPLES OF CONFLICTS OF LAW) AND THE LAW OF
THE UNITED STATES APPLICABLE TO TRANSACTIONS IN SUCH STATE. BORROWER HEREBY
IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY TEXAS OR FEDERAL
COURT SITTING IN DALLAS, TEXAS (AND ANY COUNTY IN TEXAS WHERE ANY PORTION OF
THE PREMISES IS LOCATED) OVER ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO ANY OF THE LOAN DOCUMENTS, AND BORROWER HEREBY AGREES AND CONSENTS
THAT, IN ADDITION TO ANY METHODS OF SERVICE OF PROCESS PROVIDED FOR UNDER
APPLICABLE LAW, ALL SERVICE OF PROCESS IN ANY SUCH SUIT, ACTION OR PROCEEDING
IN ANY TEXAS OR FEDERAL COURT SITTING IN DALLAS, TEXAS (AND SUCH OTHER COUNTY
IN TEXAS) MAY BE MADE BY CERTIFIED OR REGISTERED MAIL, RETURN RECEIPT
REQUESTED, DIRECTED TO BORROWER AT THE ADDRESS INDICATED BELOW, AND SERVICE SO
MADE SHALL BE COMPLETE FIVE DAYS AFTER THE SAME SHALL HAVE BEEN SO MAILED.


 


47
















 


IN WITNESS WHEREOF, this Agreement is executed by the undersigned as of
March 8, 2007.


 


	
   

  	
   

  	
  BORROWER:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  FRISCO SQUARE F1-1, LTD.,

  a Texas limited
  partnership

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  Fairways
  FS F1-1, LLC, a Texas limited

  liability company, its General Partner

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
  /s/ Cathy R. Sweeney

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	
  Cathy R. Sweeney

  	
   

  
	
   

  	
   

  	
   

  	
  Title:

  	
  Manager

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  LENDER:  

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  COMPASS BANK

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
												



 


 


[Signature Page to Construction Loan Agreement]


 

















 


IN WITNESS WHEREOF, this Agreement is executed by the undersigned as of
March 8, 2007.


 


	
   

  	
   

  	
  BORROWER:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  FRISCO SQUARE F1-1, LTD.,

  a Texas limited
  partnership

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  Fairways
  FS F1-1, LLC, a Texas limited

  liability company, its General Partner

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  LENDER:  

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  COMPASS BANK

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Craig Davis

  	
   

  
	
   

  	
  Name:

  	
  Craig Davis

  	
   

  
	
   

  	
  Title:

  	
  Vice President

  	
   

  
													



 


 


[Signature Page to Construction Loan Agreement]


 

















 


Schedule 1


 


CMP Family Limited
Partnership v. Fairways Frisco, Ltd., et. al., Case No. 06-03384 in the 192nd
Judicial District Court of Dallas County, Texas.


 

















 


Exhibit A

LEGAL DESCRIPTION


 


Lot 1, Block Fl of FRISCO SQUARE PHASE 2, an
addition to the City of Frisco, as recorded in Cabinet P, Page 724, Deed
Records, Collin County, Texas.


 

















 


Exhibit B 

PROJECT BUDGET


 





















 


Frisco Square

Project Budget


 


	
   

  	
   

  	
  Total Cost

  	
   

  	
  Per SF

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Land

  	
   

  	
  $

  	
  705,600

  	
   

  	
  $

  	
  34.46

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Hard
  Costs

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Units =

  	
   

  	
  105

  	
   

  
	
  Buildings &
  Site

  	
   

  	
  6,841,649

  	
   

  	
  108.88

  	
   

  	
  Square Feet =

  	
   

  	
  20,473

  	
   

  
	
  Tenant Finish

  	
   

  	
  1,352,580

  	
   

  	
  21.53

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Contingency

  	
   

  	
  183,723

  	
   

  	
  2.92

  	
   

  	
  Acres =

  	
   

  	
  0.00

  	
   

  
	
  Subtotal

  	
   

  	
  $

  	
  8,377,952

  	
   

  	
  $

  	
  133.33

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Soft
  Costs

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  A&E

  	
   

  	
  $

  	
  387,316

  	
   

  	
  $

  	
  6.16

  	
   

  	
  retail & office

  	
   

  	
  62836

  	
   

  
	
  Taxes

  	
   

  	
  86,700

  	
   

  	
  $

  	
  1.38

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Legal

  	
   

  	
  50,000

  	
   

  	
  $

  	
  0.80

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Title &
  Closing

  	
   

  	
  67,450

  	
   

  	
  $

  	
  1.07

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Financing Fees

  	
   

  	
  197,660

  	
   

  	
  $

  	
  3.15

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Marketing/Advertising

  	
   

  	
  30,388

  	
   

  	
  $

  	
  0.48

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Leasing
  Commissions

  	
   

  	
  555,386

  	
   

  	
  $

  	
  8.84

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Development Fee

  	
   

  	
  187,011

  	
   

  	
  $

  	
  2.98

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Contingency

  	
   

  	
  50,646

  	
   

  	
  $

  	
  0.81

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Interest Carry

  	
   

  	
  415,000

  	
   

  	
  $

  	
  6.60

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Subtotal

  	
   

  	
  $

  	
  2,027,557

  	
   

  	
  $

  	
  32.27

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Total Project
  Cost

  	
   

  	
  $

  	
  11,111,109

  	
   

  	
  $

  	
  176.83

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Equity
  (20%)

  	
   

  	
  $

  	
  2,222,109

  	
   

  	
  $

  	
  35.36

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Loan Amount

  	
   

  	
  $

  	
  8,889,000

  	
   

  	
  $

  	
  141.46