Document:

ex10-3.htm

Exhibit 10.3

 

PROFITS INTEREST AGREEMENT

THIS PROFITS INTEREST AGREEMENT (this “Agreement”) is made and entered into as of March __, 2010 (the “Effective Date”), between CJUF II STRATUS BLOCK 21 LLC, a Delaware limited liability company (“Borrower”), and HUNTER’S GLEN/FORD INVESTMENTS I LLC, a Texas limited liability company (“Lender”).

R E C I T A L S

1.           Lender has, contemporaneously herewith, made a loan (the “Loan”) to Borrower in the original principal amount of $30,000,000, pursuant to that certain Loan Agreement of even date herewith (as modified, amended, renewed, extended, and restated from time to time, the “Loan Agreement”) and as evidenced by that certain Promissory Note of even date herewith executed by Borrower and payable to the order of Lender (as modified, amended, renewed, extended, and restated from time to time, the “Note”).

2.           The Loan is made for the purpose of financing the construction by Borrower of certain buildings and improvements on the real property that is located in Travis County, Texas and is more particularly described on Exhibit “A” attached hereto (the “Land;” together with all buildings and improvements now or hereafter located thereon are hereinafter referred to as the “Property”).

3.           The Note and the obligations of Borrower under the Loan Agreement and the other Loan Documents are secured by, among other things, a second priority lien and security interest on the Property.

4.           As part of the consideration for Lender’s agreement to make the Loan, Borrower has agreed to grant to Lender the Lender’s Profits Interest (as herein defined) upon the terms and conditions set forth herein.

A G R E E M E N T

NOW, THEREFORE, KNOW ALL PERSONS BY THESE PRESENTS, that for and in consideration of the premises hereof, and other good and valuable consideration, the receipt and sufficiency of which are acknowledged and confessed, the parties hereto agree as follows:

1.           Recitals.  Each of the foregoing recitals is acknowledged to be true and correct.  The foregoing recitals are incorporated herein as contractual provisions of this Agreement.

2.           Definitions.  Capitalized terms used herein and not defined herein shall have the meaning assigned to them in the Loan Agreement.  In addition, the following terms shall have the meanings set forth below.

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“Affiliate” means, with respect to any Person, any other Person directly or indirectly controlling, or controlled by, or under common control with, such Person.

“Approved Operating Budget” means an operating budget for the Property that is prepared by Borrower for each calendar year during the term of this Agreement and is hereafter approved in writing by the holder of the Senior Loan (until the Senior Loan has been paid in full) and after the Senior Loan has been paid in full, then approved in writing by Lender.

“Approved Sale” means any sale or other conveyance of the Property (or a portion thereof) approved in writing by Lender or deemed approved by Lender if the holder of the Senior Loan has approved in writing.

“Capital Event” means any Approved Sale, any other sale or refinancing (from a lender other than Lender) approved by Lender, and any condemnation, collection of insurance proceeds, or other capital event occurring with respect to the Property or any portion thereof.

“Cash Flow” means, for any period, (a) all receipts, revenues, income, rents, issues, profits, accounts, proceeds, loan proceeds for interest carry or operating expenses, and expense and other reimbursements received by Borrower from or in connection with the ownership, development, operation, or leasing of the Property, less (b) all reasonable and necessary costs and expenses incurred by Borrower as a result of, or in connection with, the ownership, development, operation, management, or leasing of the Property and in accordance with the Approved Operating Budget, less (c) reserves set aside in accordance with the Approved Operating Budget, less (d) payment of interest and principal on any debt secured by the Property (excluding, however, any interest or principal that is not required to be paid out of Cash Flow), less (e) deposits required for taxes, impositions, insurance and operating expenses under the terms of any loan documents for any debt secured by the Property.

“Lender’s Cash Flow Profits Interest” means an amount equal to the product of (a) ninety-five percent (95%) times (b) Cash Flow.

“Lender’s Profits Interest” means, without duplication, the sum of (a) Lender’s Cash Flow Profits Interest, and (b) Lender’s Second Tier Profits Interest; provided that (i) Lender’s Profits Interest shall not exceed the Maximum Profits Interest and (ii) Lender’s Profits Interest shall not be payable until after the first anniversary of the Effective Date and after the Senior Loan and the Loan have been paid in full, except as otherwise expressly permitted in this Agreement.

“Lender’s Second Tier Profits Interest” means an amount equal to the product of (a) ninety-five percent (95%) times (b) Second Tier Profits.

“Maturity Date” means the Maturity Date as defined in the Note.

“Maximum Profits Interest” means the amount of $750,000.00 if the Lender’s Profits Interest is paid on the first anniversary of the Effective Date.  If paid after the first anniversary of 

 

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the Effective Date, then the Maximum Profits Interest will be increased each full or partial month thereafter by the amount of $62,500.00 until the Lender’s Profits Interest is paid in full.

“Net Proceeds” means:

(a)           with respect to a Capital Event that is an Approved Sale, (1) the sum of (A) the total cash consideration paid in connection with the sale of the Property and (B) the then outstanding principal balance of, and all accrued interest on, any debt secured by the Property that is assumed or taken subject to by the transferee less (2) the sum of (A) customary and reasonable selling and closing costs (including, without limitation, title insurance premiums, survey costs, attorneys’ fees, transfer taxes, brokerage commissions, tax, insurance, rent, expense, other prorations and other costs Borrower is required to pay under the purchase and sale agreement in connection with such sale of the Property), (B) the outstanding principal balance of, and all accrued interest on and prepayment penalties, if any, on, any debt secured by the Property (excluding, however, any principal and/or interest that is not required to be paid to satisfy such debt as a result of such Capital Event), and (C) funds placed in escrow by Borrower for the purpose of making repairs or for other purposes that are a condition to the closing of the sale of the Property;

(b)           with respect to a Capital Event that is a refinancing secured by a lien on the Property, the gross cash proceeds of such refinancing payable to Borrower less customary and reasonable expenses incurred in obtaining and closing such refinancing (including, without limitation, title insurance premiums, survey costs, attorneys’ fees, transfer taxes, brokerage commissions, tax, insurance, rent, expense, other prorations and other reasonable costs Borrower is required to pay under such refinancing);

(c)           with respect to a Capital Event that is the receipt of proceeds from condemnation or casualty, the gross cash proceeds thereof received by Borrower less (i) amounts required to restore the Property, (ii) amounts required to be paid to the holder of the Senior Loan under the Senior Loan Documents and to Lender under the Deed of Trust, and (iii) amounts reasonably incurred by Borrower in the collection of the condemnation award or casualty insurance proceeds; and

(d)           with respect to all other Capital Events, the gross cash proceeds thereof received by Borrower less amounts reasonably incurred by Borrower in the collection of such proceeds.

“Property” has the meaning assigned to it in the Recitals hereof.

“Second Tier Profits” means:

(a)           all Net Proceeds derived from all Capital Events (some of which require approval of Lender as provided herein); minus

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(b)           to the extent not deducted in the calculation of Cash Flow, the aggregate of the amount of any outstanding principal of, and any unpaid interest on, the Senior Loan (including any prepayment fee or premium) and the Loan that is required to be paid out of Cash Flow.

3.           Profits Interest.  Borrower hereby grants, transfers, assigns, and conveys to Lender the Lender’s Profits Interest, which grant and interest shall continue until the final payment of the Lender’s Profits Interest, if any, is made to Lender as required hereby.  Borrower and Lender acknowledge and agree that, except as otherwise expressly permitted in this Agreement, the Lender’s Profits Interest shall not be paid to Lender unless and until (a) the Senior Loan has been paid in full, Senior Lender consents to and approves of the payment of the Lender’s Profits Interest to Lender or Senior Lender declines to accept payment under the Senior Loan and allows the payment of the Lender’s Profits Interest to Lender and (b) the Loan has been paid in full.

4.           Option to Purchase.  Lender hereby grants to Borrower an option for Borrower to purchase (with funds from any source) the Lender’s Profits Interest and Lender’s rights under this Agreement for an amount equal to the Maximum Profits Interest calculated as of the closing date on which Borrower purchases the Lender’s Profits Interest pursuant to this Section 4 (the “Purchase Price”).  Borrower may not exercise the option set forth in this Section 4 until the later to occur of the first anniversary of the Effective Date and the payment in full of the Loan.  Borrower shall deliver to Lender written notice that Borrower has elected to exercise the option set forth in this Section 4 and setting the closing date for Borrower’s purchase (which closing date shall be at least ten (10) days but not more than thirty (30) days after Borrower’s written notice to Lender that Borrower has elected to exercise such option).  At the closing, Borrower shall pay to Lender in cash an amount equal to the Purchase Price and Lender shall assign to Borrower, without representation, warranty or recourse, all of Lender’s right, title and interest in and to this Agreement and the Lender’s Profits Interest.

 

 

5.           Term of the Agreement/Payoff/Release.  This Agreement shall be effective on the Effective Date hereof and shall continue until the earlier of the date that Borrower has paid to Lender all of the Lender’s Profits Interest or the sale of all of the Property by Borrower.  Notwithstanding any other provision in this Agreement to the contrary, upon payment in full of the Loan and the Lender’s Profits Interest from any source or sources, this Agreement will automatically terminate and be of no further force or effect.  Upon such termination and written request of Borrower, Lender will execute and deliver to Borrower a full and complete release of all of Lender’s rights under this Agreement, including a release of all liens and security interests, in form reasonably acceptable to Borrower and Lender.

6.           Reporting and Accounting.

(a)           Accounting. All accounts, books and records of Borrower relating to the Property shall be kept in accordance with the tax basis method, consistently applied.

(b)           Fiscal Year.  The fiscal year of Borrower shall be the calendar year.

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(c)           Statements.  Borrower shall timely deliver or cause to be delivered to Lender each of the financial statements required under the Loan Agreement.

(d)           Access to Books of Account.  Lender shall have the right at all reasonable times during business hours, upon reasonable notice and subject to the rights of tenants, if any, of the Property, to examine and make copies of or extracts from the books of account of Borrower and the Property and such other information regarding the Property as it may desire.

7.           Distributions and Losses.

(a)           Distributions.  The amounts, if any, which may be payable for the Lender’s Profits Interest granted to Lender hereby shall be payable to Lender, subject to compliance with the Senior Loan and the Intercreditor Agreement, (i) on a monthly basis upon receipt by Borrower of Cash Flow and (ii) upon the occurrence of a Capital Event.

(b)           Losses.  Should the Property at any time after the date hereof incur an operating deficit or other loss, Borrower shall advance to the Property an amount sufficient to cover such operating deficit or other loss.  Advances by Borrower to the Property for such purposes shall be unsecured and shall not reduce the Lender’s Profits Interest.  Any loans by partners or members of Borrower to Borrower shall be subordinate to Lender’s rights and interests hereunder and under all other Loan Documents, and shall be repaid only out of Borrower’s share of Second Tier Profits, if any.  Lender shall not share in and shall have no obligation with respect to any loss suffered by the Property.

8.           General Provisions.

(a)           No Partnership or Member.  Lender, by its acceptance hereof, does not become a partner with or a member of Borrower, and in no event shall Lender be liable for any of the debts, obligations, or liabilities of Borrower or any Affiliate of Borrower, or claim any of the tax benefits resulting from the ownership of the Property, including, without limitation, any depreciation or investment tax credit on all or any portion of the Property, nor is Lender liable for any contributions to Borrower.  Lender’s only interest created hereunder is the right to a portion of the profits of Borrower, if any, arising by reason of the Property as provided in this Agreement.

(b)           Power and Authority.  Borrower represents and warrants that: (i) Borrower is a Delaware limited liability company validly formed and existing under the laws of the State of Delaware and validly qualified to transact business in the State of Texas; (ii) Borrower is duly authorized and has all necessary partnership power and authority to grant the Lender’s Profits Interest; and (iii) the execution of this Agreement does not violate or conflict with the organizational documents of Borrower or any law, rule or regulation, or any other material agreement or instrument to which any such Person is a party or by which any such Person is bound.

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(c)           Security.  Borrower agrees from time-to-time to execute and deliver to Lender UCC-1 Financing Statements and other instruments reasonably requested by Lender to evidence or perfect the Lender’s Profits Interest granted to Lender hereby.

(d)           Lien.  The obligations of Borrower hereunder are secured by the liens and security interests securing the Loan, as they may from time-to-time be released as provided in the Loan Agreement and as they may from time-to-time be modified, renewed, extended, or increased.

(e)           Notices.  Written notice required to be given to either party shall be deemed given if sent in accordance with the provisions of the Loan Agreement.

(f)           Subject to Senior Loan.  Lender acknowledges and agrees that the payment of and performance under this Agreement is subject to and subordinate to the Senior Loan in accordance with the Intercreditor Agreement.  If any performance under this Agreement would cause a default under the Senior Loan, then such performance will not be required under this Agreement until such time as it would not cause a default under the Senior Loan.

9.           Speculative and Contingent Rights.  Borrower and Lender acknowledge that the receipt by Lender of any amounts which may be payable for the Lender’s Profits Interest is subject to numerous risks and uncertainties, including, without limitation, the possibility of unanticipated costs in the ownership, operation, and leasing of the Property (including, without limitation, those resulting from unforeseen conditions or force majeure); the possibility of utility moratoria or materials or labor costs decreasing the Cash Flow or Second Tier Profits; and the possibility of a change in interest rates or the economy in general, or the addition of or improvements to competing properties impacting the leasing, value, or sale of properties of the same type as the Property.  Borrower and Lender further acknowledge that Lender’s receipt of any of the Lender’s Profits Interest is contingent on the availability of Cash Flow and Second Tier Profits.  To the extent the grant of the Lender’s Profits Interest is deemed to be interest on the Loan, the value of such grant shall be determined as of the date of this Agreement, taking into account the speculative and contingent nature of the profits interest granted hereunder.  It is expressly stipulated and agreed to be the intent of Borrower and Lender at all times to comply with applicable state law or applicable United States federal law (to the extent that it permits Lender to contract for, charge, take, reserve, or receive a greater amount of interest than under state law) and that this Section 9 shall control every other covenant and agreement in this Agreement, the Loan Agreement, and the documents referenced therein.  If the applicable law (state or federal) is ever judicially interpreted so as to render usurious any amount called for under this Agreement, then it is Borrower’s and Lender’s express intent that all excess amounts theretofore collected by Lender be repaid to Borrower with interest thereon at the rate set forth in the Note, and the provisions of this Agreement immediately be deemed reformed and the amounts thereafter collectible hereunder reduced, without the necessity of the execution of any new document, so as to comply with the applicable law, but so as to permit the recovery of the fullest amount otherwise called for hereunder and thereunder.  All sums paid or agreed to be paid to Lender for the use, forbearance, and detention of the indebtedness represented by the Loan Agreement and the Note shall, to the extent permitted by applicable law, be amortized, prorated, allocated, and spread throughout the full term of such indebtedness until payment in full so that 

 

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the rate or amount of interest on account of such indebtedness does not exceed the Maximum Rate from time-to-time in effect and applicable to the Loan for so long as the Loan remains outstanding.

10.           Choice of Forum; Consent to Service of Process and Jurisdiction.  ANY SUIT, ACTION OR PROCEEDING AGAINST ANY BORROWER WITH RESPECT TO THIS AGREEMENT OR ANY JUDGMENT ENTERED BY ANY COURT IN RESPECT HEREOF, MAY BE BROUGHT IN THE COURTS OF THE STATE OF TEXAS, COUNTY OF TRAVIS, OR IN THE UNITED STATES COURTS LOCATED IN THE STATE OF TEXAS AS LENDER IN ITS SOLE DISCRETION MAY ELECT AND BORROWER HEREBY IRREVOCABLY SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF SUCH COURTS FOR THE PURPOSE OF ANY SUCH SUIT, ACTION, OR PROCEEDING.  BORROWER HEREBY IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS IN ANY SUIT, ACTION, OR PROCEEDING IN SAID COURT BY THE MAILING THEREOF BY LENDER BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO BORROWER’S ADDRESS SHOWN IN THE LOAN AGREEMENT.  NOTHING HEREIN SHALL AFFECT THE RIGHT OF LENDER TO BRING ANY ACTION OR PROCEEDING AGAINST BORROWER OR WITH RESPECT TO ANY OF ITS PROPERTY IN COURTS IN OTHER JURISDICTIONS.  BORROWER HEREBY IRREVOCABLY WAIVES ANY OBJECTIONS WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUIT, ACTION, OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT BROUGHT IN THE COURTS LOCATED IN THE STATE OF TEXAS, COUNTY OF TRAVIS, AND HEREBY FURTHER IRREVOCABLY WAIVES ANY CLAIM THAT ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN ANY INCONVENIENT FORUM.  ANY ACTION OR PROCEEDING BY ANY BORROWER AGAINST LENDER SHALL BE BROUGHT ONLY IN A COURT LOCATED IN TRAVIS COUNTY, TEXAS.

11.           Multiple Counterparts.  This Agreement may be executed in any number of counterparts, all of which taken together shall constitute one and the same agreement, and any of the parties hereto may execute this Agreement by signing any such counterpart.

12.           Entirety.  This Agreement, the Note, and the other Loan Documents referred to herein embody the final, entire agreement among the parties hereto and supersede any and all prior commitments, agreements, representations, and understandings, whether written or oral, relating to the subject matter hereof and may not be contradicted or varied by evidence of prior, contemporaneous, or subsequent oral agreements or discussions of the parties hereto.  There are no oral agreements among the parties hereto.  The provisions of this Agreement and the other Loan Documents to which Borrower is a party may be amended or waived only by an instrument in writing signed by the party or parties against whom the same is to be enforced.

13.           Governing Law.  THIS AGREEMENT AND ALL ISSUES, CLAIMS, COUNTERCLAIMS AND OTHER MATTERS RELATING HERETO OR ARISING IN CONNECTION THEREWITH (WHETHER BASED UPON TORT, CONTRACT OR OTHERWISE), SHALL BE GOVERNED AND CONSTRUED IN ACCORDANCE WITH 

 

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THE LAWS OF THE STATE OF TEXAS (WITHOUT CONSIDERATION OF ITS CONFLICTS OF LAWS RULES) AND THE APPLICABLE LAWS OF THE UNITED STATES OF AMERICA.

14.           Waiver of Jury Trial.  TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, BORROWER AND LENDER HEREBY IRREVOCABLY AND EXPRESSLY WAIVE ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING, OR COUNTERCLAIM (WHETHER BASED UPON CONTRACT, TORT, OR OTHERWISE) ARISING OUT OF OR RELATING TO LENDER OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THE ACTIONS OF LENDER IN THE NEGOTIATION, ADMINISTRATION, OR ENFORCEMENT THEREOF.

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

THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

[Signature pages follow]

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IN WITNESS WHEREOF, we hereunto set our hands, and this Agreement shall be effective as of the date first above written.

LENDER:

HUNTER’S GLEN/FORD INVESTMENTS I LLC,

a Texas limited liability company

By:                                                                                  

Name:                                                                                                                   

Title:                                                                                                                                                   

STATE OF TEXAS                              §

§

COUNTY OF ________                     §

This instrument was acknowledged before me on the ______ day of ___________, 2010, by _________________, _____________ of Hunter’s Glen/Ford Investments I LLC, a Texas limited liability company, on behalf of said limited liability company.

                                                                                                                                                                                           

Notary Public in and for the State of Texas

My Commission Expires:                                                                                                                                                          

Notary’s Printed Name

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BORROWER:

CJUF II STRATUS BLOCK 21 LLC, a Delaware limited liability company

	
  

	
By:

	
Stratus Block 21 Investments, L.P., a Texas limited partnership, Manager

	
  

	
By:

	
Status Block 21 Investments GP, L.L.C., a Texas limited liability company, General Partner

	
  

	
By:

	   /s/ Erin D. Pickens                                          	 

	
  

	
Erin D. Pickens, Senior Vice President

By:           CJUF II Block 21 Member, LLC, a Delaware limited liability company, Member

By:           Canyon-Johnson Urban Fund II, L.P., a Delaware

limited partnership, Member

By:           Canyon-Johnson Realty Advisors II LLC,

a Delaware limited liability company,

General Partner

By:               /s/ K. Robert Turner                                                          

K. Robert Turner, Managing Partner

STATE OF TEXAS                              §

§

COUNTY OF ________                     §

 This instrument was acknowledged before me on this ___ day of ________________, 2010, by Erin D. Pickens, Senior Vice President of Stratus Block 21 Investments GP, L.L.C., a Texas limited liability company, the General Partner of Stratus Block 21 Investments, L.P., a Texas limited partnership, Manager of CJUF II STRATUS BLOCK 21 LLC, a Delaware limited liability company, on behalf of said limited partnership and limited liability companies.

                                                                                                                                                                                             

Notary Public in and for the State of Texas

My Commission Expires:                                                                                                                                                        

Notary’s Printed Name

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STATE OF TEXAS                              §

§

COUNTY OF ________                     §

 This instrument was acknowledged before me on this ___ day of _______________, 2010, by K. Robert Turner, the Managing Partner of Canyon-Johnson Realty Advisors II LLC, a Delaware limited liability company, in its capacity as General Partner of Canyon-Johnson Urban Fund II, L.P., a Delaware limited partnership, as Member of CJUF II Block 21 Member, LLC, a Delaware limited liability company, as Member of CJUF II STRATUS BLOCK 21, LLC, a Delaware limited liability company, on behalf of said limited partnership and limited liability companies.

                                                                                                                                                                                           

Notary Public in and for the State of Texas

My Commission Expires:                                                                                                                                                   

Notary’s Printed Name

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EXHIBIT “A”

LEGAL DESCRIPTION OF LAND

Lots 1 through 12, Block 21, of the Original City of Austin, Travis County, Texas, according to the map or plat of record in the General Land Office of the State of Texas, together with the area within the alley traversing said Block, which was vacated by Ordinance recorded under Document No. 1999086902 and described in Memorandum Designating the Vacation of a 20 foot wide alley on Block 21 and Block 22, in the City of Austin as recorded under Document No. 2004040650 of the Official Public Records of Travis County, Texas.

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Exhibit 10.4

FOURTH MODIFICATION AND EXTENSION AGREEMENT

This FOURTH MODIFICATION AND EXTENSION AGREEMENT (this "Agreement") dated effective as of March 31, 2010 (the "Effective Date") by and between STRATUS PROPERTIES INC., a Delaware corporation ("Stratus"), STRATUS PROPERTIES OPERATING CO., L.P., a Delaware limited partnership ("SPOC"), CIRCLE C LAND, L.P., a Texas limited partnership ("Circle C"), and AUSTIN 290 PROPERTIES, INC., a Texas corporation ("Austin") (Stratus, SPOC, Circle C and Austin are sometimes referred to in this Agreement severally as "Borrower"), CALERA COURT, L.P., a Texas limited partnership ("Calera Court"), and COMERICA BANK ("Lender");

W I T N E S S E T H:

WHEREAS, Borrower has executed and delivered to Lender, inter alia, (i) that certain Revolving Promissory Note dated as of September 30, 2005, payable to the order of Lender in the original principal sum of $45,000,000.00, with interest and principal payable as therein provided, which note was amended by that certain (i) Modification and Extension Agreement (the "First Modification") dated as of May 30, 2006, executed by and among Borrower, Calera Court, Stratus JV and Lender, and recorded under Clerk's File No. 2006140557 of the Real Property Records of Travis County, Texas, (ii) Second Modification and Extension Agreement (the "Second Modification") dated as of May 30, 2007, executed by and among Borrower, Calera Court, Stratus JV and Lender, and recorded under Clerk's File No. 2007139303 of the Real Property Records of Travis County, Texas and (iii) Third Modification and Extension Agreement (the "Third Modification") dated as of May 30, 2008, executed by and among Borrower, Calera Court, Stratus JV and Lender, and recorded under Clerk's File No. 2008122886 of the Real Property Records of Travis County, Texas (said note, as amended by the First Modification, Second Modification and Third Modification, is herein called the "Note"); (ii) that certain Loan Agreement dated of even date with the Note between Borrower, Calera Court and Lender, which loan agreement was amended by the First Modification, Second Modification and Third Modification (said loan agreement, as amended by the First Modification, Second Modification and Third Modification, is herein called the "Loan Agreement"); (iii) that certain Deed of Trust, Security Agreement and Assignment of Rents dated of even date with the Note from Stratus to Melinda Chausse, Trustee, securing the payment of the Note, covering certain real and personal property described therein, recorded under Clerk's File No. 2005183345 of the Real Property Records of Travis County, Texas, which deed of trust was amended by the First Modification, Second Modification and Third Modification (said deed of trust, as amended by the First Modification, Second Modification and Third Modification, is herein called the "Stratus Deed of Trust"); (iv) that certain Deed of Trust, Security Agreement and Assignment of Rents dated of even date with the Note from Circle C to Melinda Chausse, Trustee, securing the payment of the Note, covering certain real and personal property described therein, recorded under Clerk's File No. 2005183344 of the Real Property Records of Travis County, Texas, which deed of trust was amended by the First Modification, Second Modification and Third Modification (said deed of trust, as amended by the First Modification, Second Modification and Third Modification, is herein called the "Circle C Deed of Trust"); (v) that certain Deed of Trust, Security Agreement and Assignment of Rents dated of even date with the Note from SPOC to Melinda Chausse, Trustee, securing the payment of the Note, covering certain real and 

 

  

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personal property described therein, recorded under Clerk's File No. 2005183343 of the Real Property Records of Travis County, Texas, which deed of trust was amended by the First Modification, Second Modification and Third Modification (said deed of trust, as amended by the First Modification, Second Modification and Third Modification, is herein called the "SPOC Deed of Trust"); (vi) that certain Deed of Trust, Security Agreement and Assignment of Rents dated of even date with the Note from Austin to Melinda Chausse, Trustee, securing the payment of the Note, covering certain real and personal property described therein, recorded under Clerk's File No. 2005183347 of the Real Property Records of Travis County, Texas, which deed of trust was amended by the First Modification, Second Modification and Third Modification (said deed of trust, as amended by the First Modification, Second Modification and Third Modification, is herein called the "Austin Deed of Trust"); (vii) that certain Deed of Trust, Security Agreement and Assignment of Rents dated of even date with the Note from Calera Court to Melinda Chausse, Trustee, securing the payment of the Note, covering certain real and personal property described therein, recorded under Clerk's File No. 2005183346 of the Real Property Records of Travis County, Texas, which deed of trust was amended by the First Modification, Second Modification and Third Modification (said deed of trust, as amended by the First Modification, Second Modification and Third Modification, is herein called the "Calera Court Deed of Trust"); (viii) that certain Deed of Trust, Security Agreement and Assignment of Rents dated of even date with the Note from Stratus JV to Melinda Chausse, Trustee, securing the payment of the Note, covering certain real and personal property described therein, recorded under Clerk's File No. 2005183348 of the Real Property Records of Travis County, Texas, which deed of trust was amended by the First Modification, Second Modification and Third Modification (said deed of trust, as amended by the First Modification, Second Modification and Third Modification, is herein called the "Stratus JV Deed of Trust") (the Stratus Deed of Trust, Circle C Deed of Trust, SPOC Deed of Trust, Austin Deed of Trust, Calera Court and Stratus JV Deed of Trust are herein collectively called the "Deed of Trust", and all of the property covered by the Deed of Trust is herein collectively called the "Mortgaged Property") (the Note, Loan Agreement, Deed of Trust, First Modification, Second Modification, Third Modification and all other documents executed by Borrower and/or any other party or parties evidencing or securing or otherwise in connection with the loans evidenced by the Note (the "Loan") being herein collectively called the "Loan Documents");

WHEREAS, the Note is due and payable on May 30, 2010, and Borrower has requested that Lender extend the term of the Note to May 30, 2012 and make certain other modifications to the Loan Documents, and Lender is willing to do so on the terms and conditions set forth below; and

WHEREAS, Lender is the owner and holder of the Note and Borrower is the owner of the legal and equitable title to the Mortgaged Property;

NOW, THEREFORE, for and in consideration of the mutual covenants contained herein and for other valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

1. Defined Terms.  Capitalized terms used but not defined in this Agreement shall have the meaning given to such capitalized terms in the Loan Agreement.

  

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2. Extension of Maturity Date.  The maturity date of the Note is hereby extended to May 30, 2012 (the "Maturity Date"), and the liens, security interests, assignments and other rights evidenced by the Loan Documents are hereby renewed and extended to secure payment of the Note as extended hereby.  Without limiting the foregoing, the term "Maturity Date" as used in the Note, Loan Agreement and other Loan Documents are likewise amended to mean and refer to "May 30, 2012".

3. Extension Fee.  As consideration for the extension of the Maturity Date, and as a condition to the effectiveness of this Agreement and the extension of the Maturity Date, Borrower shall pay to Lender an extension fee in the amount of $275,000.00 contemporaneously with the execution of this Agreement.

4. Bifurcation of Loan.  Prior to the Effective Date, the Loan Documents provided that the Loan is a $45,000,000 revolving credit facility.  Notwithstanding anything to the contrary contained in the Loan Documents, from and after the Effective Date, the Loan shall be bifurcated into two (2) tranches, with the first being a $35,000,000 revolving credit tranche (the "Revolving Loan Tranche"), and the second being a $10,000,000 term loan tranche (the "Term Loan Tranche").  Borrower may borrow the proceeds of the Term Loan Tranche for the same purposes as provided under the Loan Documents for the Revolving Loan Tranche; however, and notwithstanding anything to the contrary contained in the Loan Documents, any amounts borrowed and repaid under the Term Loan Tranche may not be reborrowed by Borrower.  In connection with each request for an Advance under the Loan Agreement, Borrower shall designate in such request whether such Advance is to be under the Revolving Loan Tranche or the Term Loan Tranche; provided, further, at such time as Borrower has borrowed an aggregate of $10,000,000 under the Term Loan Tranche, Borrower shall not have any further right to borrow under the Term Loan Tranche.  As of the Effective Date, (i) $16,325,872.02 of principal has been advanced and is outstanding under the Revolving Loan Tranche, (ii) $0 has been advanced and is outstanding under the Term Loan Tranche and (iii) a Letter of Credit in the face amount of $2,933,077 has been issued and is outstanding under the Revolving Loan Tranche.  As used in the Loan Documents, the terms "Revolving Loan Tranche" and "Term Loan Tranche" shall have the meaning set forth in this Section 4 of this Agreement.  The terms of the Revolving Loan Tranche and Term Loan Tranche are more specifically set forth in this Agreement.

5. Modifications to the Note.  From and after the Effective Date, the Note is hereby modified as follows:

(a)           The definition of "Applicable Base Rate" in the Note is hereby amended and restated in its entirety to read as follows:

 

"'Applicable Base Rate' shall mean, (1) with respect to the Revolving Loan Tranche, the lesser of (a) the Base Rate from time to time in effect plus two percent (2.0%) per annum, or (b) the Maximum Lawful Rate, but in no event shall the Applicable Base Rate ever be less than the Floor Rate applicable to the Revolving Loan Tranche, and (2) with respect to the Term Loan Tranche, the lesser of (x) the Base Rate from time to time in effect plus three percent (3.0%) 

 

  

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per annum, or (y) the Maximum Lawful Rate, but in no event shall the Applicable Base Rate ever be less than the Floor Rate applicable to the Term Loan Tranche.  Fluctuations in the Applicable Base Rate shall become effective immediately, without necessity for any notice whatsoever."

 

(b)           The definition of "Applicable LIBOR Rate" in the Note is hereby amended and restated in its entirety to read as follows:

 

"'Applicable LIBOR Rate' shall mean, (1) with respect to the Revolving Loan Tranche, the lesser of (a) the rate of interest equal to the Adjusted LIBOR Rate in effect for the subject Interest Period plus four percent (4.0%) or (b) the Maximum Lawful Rate, but in no event shall the Applicable LIBOR Rate ever be less than the Floor Rate applicable to the Revolving Loan Tranche, and (2) with respect to the Term Loan Tranche, the lesser of (x) the rate of interest equal to the Adjusted LIBOR Rate in effect for the subject Interest Period plus five percent (5.0%) or (y) the Maximum Lawful Rate, but in no event shall the Applicable LIBOR Rate ever be less than the Floor Rate applicable to the Term Loan Tranche."

(c)           The definition of "Floor Rate" in the Note is hereby amended and restated in its entirety to read as follows:

 

"'Floor Rate' shall mean, (1) with respect to the Revolving Loan Tranche, six percent (6.0%) per annum, and (2) with respect to the Term Loan Tranche, seven percent (7.0%) per annum."

 

(d)           The definition of "Interest Period" in the Note is hereby amended and restated in its entirety to read as follows:

 

"'Interest Period' shall mean the period of time commencing on the Effective Date of any LIBOR Rate Tranche and ending on the numerically corresponding day in the first, second or third calendar month thereafter (as designated by written notice by Maker to Payee given consistent with the requirements of Section 2.6 or Section 2.7 of this Note).  With respect to any Interest Period which commences on the last Business Day of a particular calendar month (or on any day for which there is no numerically corresponding day in the appropriate subsequent calendar month), such Interest Period shall end on the last Business Day of the appropriate subsequent calendar month.  Any Interest Period which would otherwise extend beyond the Maturity Date shall expire as of the Maturity Date."

 

(e)           Section 2.1 of the Note is hereby amended and restated as follows:

 

“2.1           Interest Rate.  Pursuant to the terms of this Note, the indebtedness evidenced hereby may collectively consist of either zero (0) or one (1) Base Rate Tranches under each of the Revolving Loan Tranche and the Term Loan Tranche, and any of zero (0), one (1), two (2), or three (3) LIBOR Rate Tranches under 

 

  

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each of the Revolving Loan Tranche and the Term Loan Tranche.  Under no circumstances shall any Tranche at any point in time accrue interest at a rate in excess of the Maximum Lawful Rate.”

 

(f)           Section 3.1 of the Note is hereby amended and restated as follows:

 

"3.1           Payment Schedule.  The amounts advanced by Payee under the Revolving Loan Tranche and repaid by Maker may be re-borrowed as provided in the Loan Agreement.  The amounts advanced by Payee under the Term Loan Tranche and repaid by Maker may not be re-borrowed, and shall permanently reduce the amount of the loan evidenced by this Note and the other Loan Documents.  The amounts advanced under this Note shall be due and payable as follows:

 

(a)           With respect to amounts advanced under the Revolving Loan Tranche, Maker shall pay Payee all then accrued but unpaid interest (including without limitation, all interest accruing under any Base Rate Tranche and under any LIBOR Rate Tranche) on the fifth (5th) day of each calendar month until the Maturity Date.

 

(b)           With respect to amounts advanced under the Term Loan Tranche, Maker shall pay Payee all then accrued but unpaid interest (including without limitation, all interest accruing under any Base Rate Tranche and under any LIBOR Rate Tranche) on the fifth (5th) day of each calendar month until the Maturity Date.  In addition to the foregoing monthly interest payments, commencing on June 5, 2011 and continuing regularly on the fifth (5th) day of each calendar quarter thereafter until the Maturity Date (i.e., each September 5, December 5, March 5 and June 5), Maker shall make a principal payment of $500,000 to Payee under the Term Loan Tranche, but only to the extent of any principal then outstanding under the Term Loan Tranche; provided, further, if there is not sufficient principal then outstanding under the Term Loan Tranche on account of Maker not previously requesting disbursements of the Term Loan Tranche, then the amount of the Term Loan Tranche shall be reduced by the amount of principal that Maker would have been required to pay to Payee had the Loan proceeds been previously advanced under the Term Loan Tranche.

 

(c)           In addition to the foregoing principal payments due under the Term Loan Tranche, any distributions received by Maker from its investment in CJUF II Stratus Block 21 LLC (the "Block 21 Entity") shall, after repayment of any amounts due to the senior lender and mezzanine lender having a lien or security interest on the Block 21 project (being the W Austin Hotel and Condominium Residences) and/or the Block 21 Entity, be paid to Payee and applied against the Term Loan Tranche to the extent of any outstanding principal thereunder; provided, further, if there is not sufficient principal then outstanding under the Term 

 

  

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Loan Tranche on account of Maker not previously requesting a disbursement of the Term Loan Tranche, then the amount of the Term Loan Tranche shall be reduced by the amount of excess distributions received by Maker (after repayment of the outstanding principal under the Term Loan Tranche) and the amount of the Term Loan Tranche available to be disbursed to Maker shall be reduced by the amount of excess distributions so received by Maker.

 

(d)           The outstanding principal balance hereof and any and all accrued but unpaid interest thereon, including without limitation, all amounts outstanding under the Revolving Loan Tranche and the Term Loan Tranche, shall be due and payable in full on the Maturity Date or upon earlier maturity hereof, whether by acceleration or otherwise."

 

(g)           The provisions of the Note regarding Advances, interest rate options, borrowings and similar issues shall apply both to the Revolving Loan Tranche and the Term Loan Tranche.  For example, Borrower may elect to have portions of both the Revolving Loan Tranche and the Term Loan Tranche bear interest at the Applicable Base Rate and the Applicable LIBOR Rate.

 

6. Modifications to the Loan Agreement.  From and after the Effective Date, the Loan Agreement is hereby modified as follows:

(a)           Notwithstanding anything to the contrary contained in Section 4.19 of the Loan Agreement, Lender shall have the right to update the Appraisals for the Primary Collateral or any other property included in the borrowing base on an annual basis (i.e., once per year), but in any event, Lender shall obtain updated Appraisals at least one (1) time every two (2) years for the Primary Collateral.

 

(b)           Section 4.20(a) of the Loan Agreement is hereby amended and restated in its entirety to read as follows:

 

"(a)           Maintain a Tangible Net Worth at all times of not less than $120,000,000."

 

(c)           Section 5.3 of the Loan Agreement is hereby amended by adding subparagraph (d) thereto, which reads as follows:

 

“(d)           guaranties executed by Stratus in connection with (i) the senior loan made by Beal Bank Nevada to CJUF II Stratus Block 21 LLC (the "Block 21 Entity") in connection with the development of the W Austin Hotel and Condominium Residences, herein referred to as the “Block 21 Project”) and (ii) the mezzanine loan made by Hunter’s Glen/Ford Investments 1 LLC or another affiliate of Gerald Ford to the Block 21 Entity in connection with the Block 21 Project (collectively, the “Block 21 Stratus Guaranties”).”

 

(d)           Section 5.4(c) of the Loan Agreement is hereby amended and restated in 

 

  

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its entirety to read as follows:

 

“except for the Guaranties of Non-Recourse Carve-Out Liabilities, the Block 21 Stratus Guaranties and any guaranties for the benefit of Bank with regard to other loans to Subsidiaries of Borrowers or any other Loan Party (except as expressly provided below), contingent liabilities of Borrowers on a Consolidated basis at any one time not to exceed $20,000,000.00, which $20,000,000 limitation shall be inclusive of the guaranties previously executed by Stratus (or its affiliates) in connection with (x) the loan made by Bank to Crestview Station RTB Land, LP, Crestview Station LLR Land, LP and Crestview Station DS Land, LP on the Crestview Station project and (y) the loan made by United Heritage Credit Union to 5700 Slaughter Lane, L.L.C. on the 5700 Slaughter Lane retail project;”

 

(e)           The definition of "Borrowing Base Limitation" in Addendum 1 of the Loan Agreement is hereby amended and restated in its entirety to read as follows:

 

"'Borrowing Base Limitation' shall mean the sum of:

 

(a)           thirty-five percent (35%) of the fair market value of the Primary Collateral which is unimproved real property (except for any portions which are covered by other subsections in the definition of Borrowing Base Limitation set forth below), as indicated by Appraisals delivered to and accepted by Bank pursuant to Section 4.19 hereof;

 

(b)           sixty percent (60%) of the fair market value of the Developed Lots, as indicated by Appraisals delivered to and accepted by Bank pursuant to Section 4.19 hereof;

 

(c)           with respect to portions of the Land which are currently being developed into single-family residential lots (but which are not yet fully Developed Lots), the lesser of (x) sixty percent (60%) of the fair market value of such Land (as if improved and developed), as indicated by Appraisals delivered to and accepted by Bank pursuant to Section 4.19 hereof or (y) an amount equal to the sum of (1) the discounted fair market value of the Land plus (2) the hard and soft cost of all improvements made to the Land as of the date of determination of the Borrowing Base Limitation;

 

(d)           fifty percent (50%) of the Credit Bank Value;

 

(e)           forty-five percent (45%) of the MUD Reimbursables Value;

 

(f)           sixty percent (60%) of the appraised value of the Calera Court Spec Houses (it being acknowledged that there are no further Calera Court Model Houses or Calera Court Pre-Sold Houses)."

 

(f)           The definition of "Loan" in Addendum 1 of the Loan Agreement is hereby amended and restated in its entirety to read as follows:

 

  

- 7 -

  

 

"'Loan'" shall mean, collectively, the Revolving Loan Tranche and the Term Loan Tranche made, or to be made, by Bank to or for the credit of Borrowers in one or more Advances not to exceed at any one time the aggregate Maximum Loan Amount applicable to the Revolving Loan Tranche and the Term Loan Tranche, as the case may be, pursuant to the Loan Terms, Conditions and Procedures Addendum.

 

(g)           The definition of "Maximum Loan Amount" in Addendum 1 of the Loan Agreement is hereby amended and restated in its entirety to read as follows:

 

"'Maximum Loan Amount' shall mean, (1) with respect to the Revolving Loan Tranche, the lesser of (a) $35,000,000.00 or (b) the Borrowing Base Limitation, (2) with respect to the Term Loan Tranche, the lesser of (c) $10,000,000.00, less any principal payments made by Borrower to Bank under the Term Loan Tranche or (d) the Borrowing Base Limitation and (3) with respect to the entire Loan (including the Revolving Loan Tranche and the Term Loan Tranche), the lesser of (e) $45,000,000, less any principal payments made by Borrower to Bank under the Term Loan Tranche or (f) the Borrowing Base Limitation."

 

(h)           All Advances under the Revolving Loan Tranche and the Term Loan Tranche shall be in accordance with the terms and condition set forth in Addendum 2 of the Loan Agreement; provided, however, (i) in no event shall the outstanding principal balance of the Loan under the Term Loan Tranche at any one time exceed the Maximum Loan Amount applicable to the Term Loan Tranche, (ii) in no event shall the outstanding principal balance of the Loan under the Revolving Loan Tranche plus any Letter of Credit Liabilities at any one time exceed the Maximum Loan Amount applicable to the Revolving Loan Tranche, (iii) in no event shall the aggregate outstanding principal balance of the Loan under the Term Loan Tranche, the Revolving Loan Tranche and any Letter of Credit Liabilities at any time exceed the lesser of (x) the Borrowing Base Limitation or (y) $45,000,000, reduced by any principal payments made by Borrower to Lender under the Term Loan Tranche, (iv) any outstanding Letter of Credit Liabilities shall reduce the amount available to be borrowed by Borrower under the Revolving Loan Tranche by a like amount and (v) any principal payments made by Borrower to Lender under the Term Loan Tranche may not under any circumstances be reborrowed.  Notwithstanding anything to the contrary contained in the Loan Agreement, Letters of Credit may only be issued under the Revolving Loan Tranche, and in no event shall the Letter of Credit Liabilities and the sum of the outstanding principal balance of the Revolving Loan Tranche ever exceed the Maximum Loan Amount applicable to the Revolving Loan Tranche.

 

(i)           Borrower shall continue pay to Lender an unused commitment fee on the entire amount of the Loan (i.e., a fee equal to .125% per annum multiplied by the difference between (i) the aggregate Maximum Loan Amount of the Revolving Loan Tranche and the Term Loan Tranche and (ii) the aggregate outstanding principal balance of the Revolving Loan Tranche and the Term Loan Tranche, in accordance with the terms of Section 1.6(b) of Addendum 2 of the Loan Agreement.

 

  

- 8 -

  

 

(j)           Notwithstanding anything to the contrary contained in Section 2.4 of Addendum 2 of the Loan Agreement, Borrower may borrow up to, but not in excess of, $9,000,000 of Loan proceeds under the Revolving Loan Tranche in the aggregate to make a principal payment due to FAAM on December 31, 2011 under the FAAM Loan.

 

(k)           In connection with and as consideration for the extension of the Maturity Date, Borrower has agreed to pledge to Lender, and a grant a security interest to Lender in, any Borrower's right to receive any distributions from CJUF II Stratus Block 21 LLC (the "Block 21 Entity", and being the owner of the W Austin Hotel and Condominium Residences), pursuant to a separate Security Agreement dated of even date with this Agreement, which Security Agreement shall be deemed included in the term "Security Agreements" in Addendum 1 of the Loan Agreement.  Borrower further covenants and agrees that any distributions received by any Borrower from its investment in the Block 21 Entity shall, after repayment of any amounts due to the senior lender and mezzanine lender having a lien or security interest on the Block 21 project and/or the Block 21 Entity, be paid to Lender and applied against the Term Loan Tranche to the extent of any outstanding indebtedness thereunder; provided, further, if there is not sufficient principal then outstanding under the Term Loan Tranche on account of Borrower not previously requesting a disbursement of the Term Loan Tranche, then the amount of the Term Loan Tranche available to be disbursed to Borrower shall be reduced by the amount of excess distributions received by Borrower (after repayment of the outstanding principal under the Term Loan Tranche) and the amount of the Term Loan Tranche shall be reduced by the amount of excess distributions so received by Borrower.

 

7. Representations and Warranties.  Borrower hereby represents and warrants that (a) Borrower is the sole legal and beneficial owner of the Mortgaged Property; (b) Borrower is duly organized and legally existing under the laws of the State of Texas; (c) the execution and delivery of, and performance under this Agreement are within Borrower's power and authority without the joinder or consent of any other party and have been duly authorized by all requisite action and are not in contravention of law or the powers of Borrower's articles of incorporation and bylaws; (d) this Agreement constitutes the legal, valid and binding obligations of Borrower enforceable in accordance with its terms; (e) the execution and delivery of this Agreement by Borrower do not contravene, result in a breach of or constitute a default under any deed of trust, loan agreement, indenture or other contract, agreement or undertaking to which Borrower is a party or by which Borrower or any of its properties may be bound (nor would such execution and delivery constitute such a default with the passage of time or the giving of notice or both) and do not violate or contravene any law, order, decree, rule or regulation to which Borrower is subject; and (f) to the best of Borrower's knowledge there exists no uncured default under any of the Loan Documents.  Borrower agrees to indemnify and hold Lender harmless against any loss, claim, damage, liability or expense (including without limitation reasonable attorneys' fees) incurred as a result of any representation or warranty made by it herein proving to be untrue in any respect.

8. Further Assurances.  Borrower, upon request from Lender, agrees to execute such other and further documents as may be reasonably necessary or appropriate to consummate the transactions contemplated herein or to perfect the liens and security interests intended to 

 

  

- 9 -

  

 

secure the payment of the loan evidenced by the Note.

9. Default; Remedies.  If Borrower shall fail to keep or perform any of the covenants or agreements contained herein or if any statement, representation or warranty contained herein is false, misleading or erroneous in any material respect, Borrower shall be deemed to be in default under the Deed of Trust and Lender shall be entitled at its option to exercise any and all of the rights and remedies granted pursuant to the any of the Loan Documents or to which Lender may otherwise be entitled, whether at law or in equity.

10. Endorsement to Mortgagee Title Policy.  Contemporaneously with the execution and delivery hereof, Borrower shall, at its sole cost and expense, obtain and deliver to Lender an Endorsement of the Mortgagee Title Policy insuring the lien of the Deed of Trust, under Procedural Rule P-9b(3) of the applicable title insurance rules and regulations, in form and content acceptable to Lender, stating that the company issuing said Mortgagee Title Policy will not claim that policy coverage has terminated or that policy coverage has been reduced, solely by reason of the execution of this Agreement.

11. Ratification of Loan Documents.  Except as provided herein, the terms and provisions of the Loan Documents shall remain unchanged and shall remain in full force and effect.  Any modification herein of any of the Loan Documents shall in no way adversely affect the security of the Deed of Trust and the other Loan Documents for the payment of the Note.  The Loan Documents as modified and amended hereby are hereby ratified and confirmed in all respects.  All liens, security interests, mortgages and assignments granted or created by or existing under the Loan Documents remain unchanged and continue, unabated, in full force and effect, to secure Borrower's obligation to repay the Note.

12. Liens Valid; No Offsets or Defenses.  Borrower hereby acknowledges that the liens, security interests and assignments created and evidenced by the Loan Documents are valid and subsisting and further acknowledges and agrees that there are no offsets, claims or defenses to any of the Loan Documents.

13. Merger; No Prior Oral Agreements.  This Agreement supersedes and merges all prior and contemporaneous promises, representations and agreements.  No modification of this Agreement or any of the Loan Documents, or any waiver of rights under any of the foregoing, shall be effective unless made by supplemental agreement, in writing, executed by Lender and Borrower.  Lender and Borrower further agree that this Agreement may not in any way be explained or supplemented by a prior, existing or future course of dealings between the parties or by any prior, existing, or future performance between the parties pursuant to this Agreement or otherwise.

14. Notices.  Any notice or communication required or permitted hereunder or under any of the Loan Documents shall be given in writing and sent in the manner required under the Loan Agreement.  Notwithstanding the foregoing, the address for notices to Lender under the Loan Documents is hereby amended to the following:

  

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to Lender:                              Comerica Bank

300 W. Sixth Street, Suite 1300

Austin, Texas  78701

Attention:  Commercial Real Estate, Sterling J. Silver

With a copy to:                     Thompson & Knight LLP

1722 Routh Street, Suite 1500

Dallas, Texas  75201-2533

Attention:  Mark M. Sloan

15.           Costs and Expenses.  Contemporaneously with the execution and delivery hereof, Borrower shall pay, or cause to be paid, all costs and expenses incident to the preparation hereof and the consummation of the transactions specified herein, including without limitation title insurance policy endorsement charges, recording fees and fees and expenses of legal counsel to Lender.

16.           Release of Lender.  Borrower hereby releases, remises, acquits and forever discharges Lender, together with its employees, agents, representatives, consultants, attorneys, fiduciaries, servants, officers, directors, partners, predecessors, successors and assigns, subsidiary corporations, parent corporations, and related corporate divisions (all of the foregoing hereinafter called the "Released Parties"), from any and all actions and causes of action, judgments, executions, suits, debts, claims, demands, liabilities, obligations, damages and expenses of any and every character, known or unknown, direct and/or indirect, at law or in equity, of whatsoever kind or nature, whether heretofore or hereafter accruing, for or because of any matter or things done, omitted or suffered to be done by any of the Released Parties prior to and including the Effective Date, and in any way directly or indirectly arising out of or in any way connected to this Agreement or any of the Loan Documents, or any of the transactions associated therewith, or the Mortgaged Property, including specifically but not limited to claims of usury.

17.           Counterparts.  This Agreement may be executed in any number of counterparts with the same effect as if all parties hereto had signed the same document.  All such counterparts shall be construed together and shall constitute one instrument, but in making proof hereof it shall only be necessary to produce one such counterpart.

18.           Severability.  If any covenant, condition, or provision herein contained is held to be invalid by final judgment of any court of competent jurisdiction, the invalidity of such covenant, condition, or provision shall not in any way affect any other covenant, condition or provision herein contained.

19.           Time of the Essence.  It is expressly agreed by the parties hereto that time is of the essence with respect to this Agreement.

20.           Representation by Counsel.  The parties acknowledge and confirm that each of their respective attorneys have participated jointly in the review and revision of this Agreement and that it has not been written solely by counsel for one party.  The parties hereto therefore 

 

  

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stipulate and agree that the rule of construction to the effect that any ambiguities are to or may be resolved against the drafting party shall not be employed in the interpretation of this Agreement to favor either party against the other.

21.           Governing Law.  This Agreement and the rights and duties of the parties hereunder shall be governed for all purposes by the law of the State of Texas and the law of the United States applicable to transactions within said State.

22.           Successors and Assigns.  The terms and provisions hereof shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns.

23.           Notice of No Oral Agreements.  Borrower and Lender hereby take notice of and agree to the following:

A.           PURSUANT TO SUBSECTION 26.02(b) OF THE TEXAS BUSINESS AND COMMERCE CODE, A LOAN AGREEMENT IN WHICH THE AMOUNT INVOLVED THEREIN EXCEEDS $50,000 IN VALUE IS NOT ENFORCEABLE UNLESS THE AGREEMENT IS IN WRITING AND SIGNED BY THE PARTY TO BE BOUND OR BY THAT PARTY'S AUTHORIZED REPRESENTATIVE.

B.           PURSUANT TO SUBSECTION 26.02(c) OF THE TEXAS BUSINESS AND COMMERCE CODE, THE RIGHTS AND OBLIGATIONS OF THE PARTIES TO THE LOAN DOCUMENTS SHALL BE DETERMINED SOLELY FROM THE LOAN DOCUMENTS, AND ANY PRIOR ORAL AGREEMENTS BETWEEN THE PARTIES ARE SUPERSEDED BY AND MERGED INTO THE LOAN DOCUMENTS.

C.           THE LOAN DOCUMENTS AND THIS AGREEMENT REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES THERETO AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES THERETO.  THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

[SIGNATURE PAGE FOLLOWS]

  

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IN WITNESS WHEREOF, this Agreement is executed on the respective dates of acknowledgement below but is effective as of the date first above written.

BORROWER:

STRATUS PROPERTIES INC.,

a Delaware corporation

By:     /s/ Erin D. Pickens                                         

Erin D. Pickens, Sr. Vice President

STRATUS PROPERTIES OPERATING CO., L.P., a Delaware limited partnership

	
  

	
By:

	
STRS L.L.C., a Delaware limited liability company, General Partner

	
  

	
By

	
Stratus Properties Inc., a Delaware corporation,  Sole Member

By:      /s/ Erin D. Pickens                           

Erin D. Pickens,

Sr. Vice President

CIRCLE C LAND, L.P.,

a Texas limited partnership

	
  

	
By:

	
Circle C GP, L.L.C., a Delaware limited liability company, General Partner

	
  

	
By

	
Stratus Properties Inc., a Delaware corporation, Sole Member

By:    /s/ Erin D. Pickens                                    

Erin D. Pickens,          

Sr. Vice President

AUSTIN 290 PROPERTIES, INC.,

a Texas corporation

By:     /s/ Erin D. Pickens                                              

Erin D. Pickens, Sr. Vice President

 

[Signature Page - Fourth Modification and Extension Agreement]

  

  

  

 

LENDER:

COMERICA BANK

By:     /s/ Sterling J. Silver                                           

Sterling J. Silver, Senior Vice President

 

[Signature Page - Fourth Modification and Extension Agreement]

  

  

  

STATE OF TEXAS                              §

 §

COUNTY OF TRAVIS                        §

This instrument was acknowledged before me on the ____ day of March, 2010, by Erin D. Pickens, Sr. Vice President of Stratus Properties Inc., a Delaware corporation, on behalf of said corporation.

                                                                                                                                                                                                                

Notary Public, State of Texas                                                            

My Commission Expires:                                                                    

Printed Name of Notary:                                                                                                                                             

STATE OF TEXAS                             §

§

COUNTY OF TRAVIS                       §

This instrument was acknowledged before me on the ____ day of March, 2010, by Erin D. Pickens, Sr. Vice President of Stratus Properties Inc., a Delaware corporation, Sole Member of STRS L.L.C., a Delaware limited liability company, General Partner of Stratus Properties Operating Co., L.P., a Delaware limited partnership, on behalf of said corporation, limited liability company and limited partnership.

                                                                                                                                                                                                                 

Notary Public, State of Texas                                                              

My Commission Expires:                                                                      

Printed Name of Notary:                                                                                                                                                

STATE OF TEXAS                             §

§

COUNTY OF TRAVIS                       §

This instrument was acknowledged before me on the ____ day of March, 2010, by Erin D. Pickens, Sr. Vice President of Stratus Properties Inc., a Delaware corporation, Sole Member of Circle C GP, L.L.C., a Delaware limited liability company, General Partner of Circle C Land, L.P., a Delaware limited partnership, on behalf of said corporation, limited liability company limited partnership.

                                                                                                                                                                                                                  

Notary Public, State of Texas                                                               

My Commission Expires:                                                                       

Printed Name of Notary:                                                                                                                                                  

 

 

[Signature Page - Fourth Modification and Extension Agreement]

 

  

  

  

STATE OF TEXAS                             §

§

COUNTY OF TRAVIS                       §

This instrument was acknowledged before me on the ____ day of March, 2010, by Erin D. Pickens, Sr. Vice President of Austin 290 Properties Inc., a Delaware corporation, on behalf of said corporation.

                                                                                                                                                                                                                      

Notary Public, State of Texas                                                               

My Commission Expires:                                                                       

Printed Name of Notary:                                                                                                                                                  

 

STATE OF TEXAS                             §

§

COUNTY OF DALLAS                      §

This instrument was acknowledged before me on the ___ day of March, 2010, by Sterling J. Silver, Senior Vice President of Comerica Bank, on behalf of said bank.

                                                                                                                                                                                                                        

Notary Public, State of Texas                                                              

My Commission Expires:                                                                                                                                                

Printed Name of Notary:                                                                                                                                                 

[Signature Page - Fourth Modification and Extension Agreement]

  

  

  

CONSENT OF CALERA COURT

The undersigned, Calera Court, L.P., hereby executes the Agreement to evidence its agreement to be bound by the extension of the Maturity Date, and confirms and agrees that all of its obligations under the Loan Documents applicable to it remain in full force and effect.

Executed on the date of acknowledgement below but effective as of March ___, 2010.

CALERA COURT, L.P. a Texas limited partnership

	
  

	
By:

	
Calera Court Management, L.L.C., a Texas limited liability company, its general partner

	
  

	
By:

	
Stratus Properties Operating Co., L.P., a Delaware limited partnership, its Manager

	
  

	
By:

	
STRS L.L.C., a Delaware limited liability company, its general partner

	
  

	
By:

	
Stratus Properties Inc., a Delaware corporation, its Sole Member

	
  

	
By:

	    /s/ Erin D. Pickens                                          

                   Erin D. Pickens,

                   Sr. Vice President

 

[Signature Page - Fourth Modification and Extension Agreement]

  

  

  

STATE OF TEXAS                                              §

§

COUNTY OF TRAVIS                                         §

This instrument was acknowledged before me on the ____ day of March, 2010, by Erin D. Pickens, Sr. Vice President of Stratus Properties Inc., a Delaware corporation, Sole Member of STRS L.L.C., a Delaware limited liability company, General Partner of Stratus Properties Operating Co., L.P., a Delaware limited partnership, Manager of Calera Court Management, L.L.C., a Texas limited liability company, General Partner of Calera Court, L.P., a Texas limited partnership, on behalf of each said entity and said limited partnership.

                                                                                                                                                                                                              

Notary Public in and for the State of Texas

                                                                                                                                                                                                       

Printed/Typed Name of Notary

My Commission Expires:

_____________________.

[Signature Page - Fourth Modification and Extension Agreement]

 

  

  

  

CONSENT OF TRACT 107, L.L.C.

The undersigned, Tract 107, L.L.C., a Texas limited liability company, hereby executes the Agreement to evidence its agreement to be bound by the extension of the Maturity Date, and confirms and agrees that all of its obligations under the Loan Documents applicable to it remain in full force and effect.

Executed on the date of acknowledgement below but effective as of March ___, 2010.

TRACT 107, L.L.C.,

a Texas limited liability company

	
  

	
By:

	  /s/ Erin D. Pickens                          

	
  

	
                Erin D. Pickens, Sr. Vice President

STATE OF TEXAS                                              §

§

COUNTY OF TRAVIS                                         §

This instrument was acknowledged before me on the ____ day of March, 2010, by Erin D. Pickens, Sr. Vice President of Tract 107, L.L.C., a Texas limited liability company, on behalf of said limited liability company.

                                                                                                                                                                                                           

Notary Public in and for the State of Texas

                                                                                                                                                                                             

Printed/Typed Name of Notary

My Commission Expires:

_____________________.

[Signature Page - Fourth Modification and Extension Agreement]

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