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EXHIBIT 10.70
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$40,000,000
CREDIT AGREEMENT
dated as of January 1, ▇▇▇▇
▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ EQUITIES LIMITED PARTNERSHIP,
a Delaware limited partnership,
as the Lender,
and
CRESCENT DEVELOPMENT MANAGEMENT CORP.,
a Delaware corporation,
as the Borrower
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CREDIT AGREEMENT
THIS CREDIT AGREEMENT (this "Agreement"), dated as of January 1, ▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ EQUITIES LIMITED PARTNERSHIP, a Delaware limited
partnership (the "Lender") and CRESCENT DEVELOPMENT MANAGEMENT CORP., a Delaware
corporation (the "Borrower").
ARTICLE I
RECITALS
WHEREAS, contemporaneously herewith the Borrower and the Lender have
entered into that certain Amended and Restated Credit Agreement dated January 1,
1999 (the "Amended and Restated Credit Agreement"); and
WHEREAS, the Borrower has applied for and Lender is willing, on the
terms and subject to the conditions hereinafter set forth, to extent to the
Borrower a line of credit loan (the "Loan"), in a maximum aggregate principal
amount at any time outstanding not to exceed $40,000,000 from time to time prior
to the Commitment Termination Date; and
WHEREAS, the proceeds will be used from time to time for working
capital purposes of the Borrower in order to provide funds for making equity
investments, as provided in this Agreement;
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE II
COMMITMENTS, ADVANCE PROCEDURES AND NOTES
Section 2.1 Commitment. On the terms and subject to the conditions of
this Agreement (including Article V), the Lender agrees, until the Commitment
Termination Date, to make advances under the Loan to the Borrower up to an
aggregate outstanding principal amount of Forty Million and No/100 Dollars
($40,000,000) (the "Commitment Amount") pursuant to Section 2.2. Prior to the
available Commitment Termination Date, the Borrower may repay and reborrow up to
the full amount of the Commitment Amount in accordance with the terms hereof.
The Lender shall not make any advances after the Commitment Termination Date.
The Lender shall not be required to make any advance under this Loan if, after
giving effect thereto, (a) the aggregate principal amount of all
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Advances made would exceed the Commitment Amount or (b) with respect to an
Approved Project, the aggregate Project Equity Advance then outstanding with
respect to such Project would exceed the Project Advance Limit for such Project
or (c) with respect to any Project, the aggregate Project Equity Advance made
with respect to such Project (whether or not all or any portion of such Project
Equity Advance remains outstanding) would exceed the Total Equity for such
Project. Notwithstanding anything in this Agreement to the contrary, (i) the
Lender shall not be obligated to advance additional funds with respect to a
Project if a Subpartnership shall default (after notice and expiration of cure
periods) under the Project Loan Documents, (ii) the Lender shall not be
obligated to advance additional funds in excess of the aggregate Commitments
pursuant to Approved Project Plans if there is an Incapacity of ▇▇▇▇▇▇▇▇ (as
defined in the Partnership Agreement), (iii) the Lender shall not be obligated
to advance additional funds if there is an Event of Default (as defined in the
Partnership Agreement) that occurs under the Partnership Agreement and that
remains uncured and (iv) the Lender shall not be obligated to advance more than
20% of the Commitment with respect to a Project until the earlier of that point
in time when (A) the Subpartnership with respect to such Project has entered
into a binding contract for the purchase of real property in connection with the
Project or (B) a Project Loan Commitment has been received from a Project Lender
with respect to the Project.
Section 2.2 Advance Procedure. Prior to the Commitment Termination
Date, the Borrower may from time to time request that an Advance be made. Each
Advance following the Initial Advance shall be in an amount that is equal to the
lesser of (a) the amount of the Commitment Amount not outstanding, or (b) the
allowable Project Equity Advance for the applicable Project. The request shall
be made by delivering a Application for Advance to the Lender not less than
fifteen (15) calendar days prior to the date upon which such Advance is to be
made and, if all such conditions precedent to such Advance have been satisfied,
the Lender shall make such Advance directly to the Borrower by wire transfer to
the accounts the Borrower shall have specified in its Application for Advance.
Section 2.3 Note. The Loan shall be evidenced by a single promissory
note (the "Note") payable to the order of the Lender in the maximum principal
amount of Forty Million Dollars ($40,000,000).
Section 2.4 Limitation on Advances Prior to April 1, 1999.
Notwithstanding anything to the contrary contained in this Agreement, prior to
April 1, 1999, no Initial or other Advance will be made to the Borrower pursuant
to this Agreement.
ARTICLE III
PAYMENTS AND INTEREST
Section 3.1 Payments. Payments of the Loan shall be made as set forth
in this Section 3.1 and shall be without premium or penalty.
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Section 3.1.1 Final Maturity. On the Stated Maturity Date, the
Borrower shall repay in full all accrued but unpaid interest and the entire
unpaid principal amount of the Loan.
Section 3.1.2 Mandatory Payments. The Borrower shall, within
one (1) Business Day following (a) the Borrower's receipt of any Distribution
other than a Tax Distribution, make a mandatory payment of the Loan in an amount
equal to such Distribution less an amount that the Lender may approve in its
reasonable discretion for unpaid expenses and payables that the Borrower has
incurred in the ordinary course of business and a reasonable reserve for future
expenses and (b) the Borrower's receipt of any payments on an Emergency Loan,
make a mandatory payment of the Loan in an amount equal to the payments received
(less amounts retained for expenses and payables). All mandatory payments made
under this Section shall be applied first to accrued but unpaid interest and
thereafter to the outstanding principal balance of the Loan. The Borrower
acknowledges to the Lender that (i) each Subpartnership is generally obligated
to distribute all net cash flow (other than tax distributions) to its members
(including the Partnership) and (ii) the Partnership is generally obligated to
distribute all net cash flow (other than tax distributions and amounts
established as reserves) to its partners (including the Borrower).
Notwithstanding anything in this Agreement to the contrary, the Lender shall not
be obligated to make any additional Advance to the Borrower pursuant to this
Agreement if, based on the Lender's determination in its reasonable discretion,
the Partnership or any Subpartnership has failed to satisfy its obligation to
make the distributions described in the preceding sentence and such failure is
continuing.
Section 3.1.3 Acceleration of Stated Maturity Date.
Immediately upon any acceleration of the Stated Maturity Date of the Loan
pursuant to Section 8.2 or Section 8.3, the Borrower shall repay the Loan to the
full extent of such acceleration.
Section 3.2 Interest Provisions. Interest on the outstanding principal
amount of the Loan shall accrue and be payable in accordance with this Section
3.2.
Section 3.2.1 Rate. Prior to an Event of Default, the
outstanding principal balance of the Loan shall accrue interest at the rate (the
"Interest Rate") of 11.5%, compounded annually.
Section 3.2.2 Post-Maturity Rates. Upon and after an Event of
Default, the Loan shall accrue interest on the outstanding principal balance of
the Loan and, to the extent permitted by applicable law, on the unpaid interest,
at a rate per annum equal to the Interest Rate plus an additional 5.0% per annum
(the "Default Rate"); provided in no event shall the Default Rate exceed the
maximum rate of interest permitted by applicable law.
Section 3.2.3 Accrual. At the end of each calendar year during
the term hereof, all interest that has accrued but has not been paid during such
calendar year shall be added to the outstanding principal balance of the Loan
and shall, thereafter, bear interest, prior to an Event of Default, at the
Interest Rate.
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ARTICLE IV
CERTAIN OTHER PROVISIONS
Section 4.1 Payments, Computations, etc. Unless otherwise expressly
provided, all payments by the Borrower pursuant to this Agreement, the Note or
any other Loan Document shall be made, without setoff, deduction or
counterclaim, not later than 12:00 noon, Fort Worth, Texas time, on the date
due, in same day or immediately available funds, to such account as the Lender
shall specify from time to time by written notice delivered to the Borrower.
Whenever any payment to be made shall otherwise be due on a day that is not a
Business Day, such payment shall be made on the next succeeding Business Day and
such extension of time shall be included in computing interest and fees, if any,
in connection with such payment.
Section 4.2 Setoff. The Lender shall, upon the occurrence of any
Default have the right to appropriate and apply to the payment of the Note
(whether or not then due) all amounts of the Borrower then held by the Lender.
The Lender's rights under this Section are in addition to other rights and
remedies (including other rights of setoff under applicable law or otherwise)
that the Lender may have. The Borrower hereby waives all rights of setoff,
appropriation and application it may have pursuant to applicable law or
otherwise.
Section 4.3 Use of Proceeds. The Borrower shall use each Advance
(including but not limited to the Initial Advance) solely to make capital
contributions to the Partnership, in an amount that does not exceed the Project
Equity Advance for a Project, and to defray expenses incurred in connection with
this transaction.
ARTICLE V
CONDITIONS TO BORROWING
Section 5.1 Initial Advance. The Lender's obligation to fund the
Initial Advance shall be subject to the prior or concurrent satisfaction of each
of the conditions precedent set forth in this Section 5.1.
Section 5.1.1 Application for Advance. The Lender shall have
received an Application for Advance.
Section 5.1.2 Resolutions, etc. The Lender shall have received
from the Borrower a certificate of resolutions and incumbency as to resolutions
of its Board of Directors then in full force and effect authorizing the
execution, delivery and performance of this Agreement, the Note and each other
Loan Document to which it is a party.
Section 5.1.3 Delivery of Note. The Lender shall have received
the Note duly executed and delivered by the Borrower.
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Section 5.1.4 Borrower Security Agreement. The Lender shall
have received executed counterparts of the Borrower's Security Agreement
together with such UCC-1 financing statements and UCC search reports as the
Lender may require.
Section 5.1.5 Financial Information, etc. The Lender shall
have received, in form and scope reasonably satisfactory to the Lender, the
financial statements referred to in Section 6.5.
Section 5.1.6 Closing Fees, Expenses, etc. The Lender shall
have received all fees, costs and expenses due and payable pursuant to this
Agreement.
Section 5.1.7 Equity Contributions. Borrower shall have
received from the Subscribers the equity contributions required under Section
7.1.7 of this Agreement to be received by Borrower prior to the Initial Advance.
Section 5.2 All Advances. The Lender's obligation to fund future
Advances shall be subject to the satisfaction of each of the conditions
precedent set forth in this Section 5.2.
Section 5.2.1 Application for Advance. The delivery of an
Application for Advance.
Section 5.2.2 Compliance with Warranties, No Default, etc.
Both before and after giving effect to any Advances the following statements
shall be true and correct to the Lender's satisfaction:
(a) the representations and warranties set forth in
this Agreement shall be true and correct with the same effect
as if then made; and
(b) no Default shall have then occurred and be
continuing.
Section 5.2.3 Organic Documents. The Lender shall have
received a copy of the Organic Documents for the Subpartnership that will be
capitalized with the proceeds of the requested Advance.
Section 5.2.4 Resolutions, Etc. The Lender shall have received
from the Partnership (in its individual capacity and in its capacity as manager
of the applicable Subpartnership) a certificate of resolutions and incumbency
authorizing the organization of the Subpartnership, and the Subpartnership's
execution, delivery and performance of the Project Loan Documents.
Section 5.2.5 Approved Budget. The Lender shall have received
a final Approved Budget with respect to the Project to be constructed by the
Subpartnership in which the Partnership proposes to make a capital contribution
with the proceeds of the requested Advance (the "Contemplated Project").
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Section 5.2.6 Project Loan Commitment. The Lender shall have
received a fully executed copy of the Project Loan Commitment for the
Contemplated Project if there is a Project Loan Commitment for the Contemplated
Project at the time of the delivery of the Application for Advance. In the event
there is not a Project Loan Commitment for the Contemplated Project at the time
of the delivery of the Application for Advance but such Project Loan Commitment
is later received, the Borrower shall promptly provide a copy of such commitment
to the Lender upon receipt.
Section 5.2.7 Evidence of Insurance. The Lender shall have
received adequate evidence that all insurance required by this Agreement is in
effect with respect to the Contemplated Project.
Section 5.2.8 Evidence of Approval. The Lender shall have
received evidence, satisfactory to it, that the Project Lender has approved all
conditions precedent to its obligation to advance proceeds of the Project Loan
with respect to the Contemplated Project.
Section 5.2.9 Estoppel Letter from Project Lender. If there is
a Project Loan Commitment from a Project Lender at the time of the delivery of
the Application for Advance, the Lender shall have received a duly executed
letter from the Project Lender providing the Lender with written notice of any
event of default under the Project Loan Documents with respect to the
Contemplated Project, and a reasonable opportunity in which the Lender may cure
such default prior to the Project Lender's exercise of any remedies available to
it under the Project Loan Documents.
Section 5.2.10 Fees and Expenses. The Lender shall have
received all fees, costs and expenses due and payable pursuant to this
Agreement.
Section 5.2.11 Satisfactory Legal Form. All documents executed
or submitted pursuant hereto shall be reasonably satisfactory in form and
substance to the Lender and its counsel; the Lender shall have received all
other information, approvals, opinions, documents or instruments as the Lender
or its counsel may reasonably request.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
To induce the Lender to enter into this Agreement and to make the Loan
hereunder and to make each Advance pursuant to the Loan, the Borrower represents
and warrants unto the Lender as of the day and year first written above and on
the date of each Advance as set forth in this Article VI.
Section 6.1 Organization, etc. The Borrower is a duly formed
corporation under the laws of Delaware, is duly qualified to do business and has
full power and authority and holds all
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requisite governmental licenses, permits and other approvals to enter into and
perform its obligations under this Agreement, the Note and each other Loan
Document to which it is a party, and to own and hold its property and to conduct
its business substantially as it currently is conducted.
Section 6.2 Due Authorization, Non-Contravention, etc. The Borrower's
execution, delivery and performance of this Agreement, the Note and each other
Loan Document executed or to be executed by it, are within the Borrower's
corporate powers, have been duly authorized by all necessary action (including
but not limited to any consent of stockholders required by law or its Organic
Documents) and do not (a) contravene the Borrower's Organic Documents; or (b)
contravene any contractual restriction, law or governmental regulation or court
decree or order binding on or affecting the Borrower except for such
contraventions that will not, singly or in the aggregate, have a material
adverse effect on the Borrower's ability to perform its obligations under this
Agreement or any Loan Document.
Section 6.3 Government Approval, Regulation, etc. No authorization,
consent or approval or other action by, and no notice to, filing with or license
from, any governmental authority or regulatory body or other Person is required
for the Borrower's due execution or delivery of this Agreement, the Note or any
other Loan Document to which it is a party, or for the consummation and
performance of the transactions contemplated hereby or thereby.
Section 6.4 Validity, etc. Each of this Agreement and, upon the due
execution and delivery thereof, the Note and each other Loan Document executed
by the Borrower or the Partnership, as the case may be, constitutes the legal,
valid and binding obligation of such party enforceable in accordance with its
terms, except as such enforceability may be limited by applicable bankruptcy,
reorganization, insolvency and other similar laws affecting creditors' rights
generally.
Section 6.5 Financial Information. All financial information that has
been or shall hereafter be furnished to the Lender by or on behalf of the
Borrower or by any other Person at the Borrower's direction for the purposes of
or in connection with this Agreement present fairly the financial condition as
at the dates thereof (subject to normal year end adjustments in the case of
unaudited financial statements).
Section 6.6 No Material Adverse Change. There has been no material
adverse change in the business, financial condition, operations, assets,
revenues, or properties, of the Borrower taken as a whole from the financial
information previously provided to the Lender.
Section 6.7 No Default Under Indebtedness. No event of default has
occurred and is continuing, and no event has occurred that with the giving of
notice, passage of time or both would become a material event of default under
any of the Indebtedness permitted to be incurred pursuant to Section 7.2.2
hereof.
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Section 6.8 Litigation, Labor Controversies, etc. There is no pending
or, to the Borrower's knowledge, threatened litigation, action, proceeding or
labor controversy affecting the Borrower, the Partnership or any Subpartnership
that, if adversely determined, reasonably could be expected to have a material
adverse effect on the Borrower, the Partnership, any Subpartnership, any Project
or the Lender.
Section 6.9 Taxes. The Borrower has filed all material tax returns and
reports required by law to have been filed and has paid all taxes and
governmental charges thereby shown to be due and payable.
Section 6.10 ERISA. Neither the Borrower, nor, to the Borrower's best
knowledge, any other person has taken any action or failed to take any action
that would subject the Borrower, the Partnership or any Subpartnership to any
potential liability under ERISA.
Section 6.11 Accuracy of Information. All factual information, as
amended, supplemented or modified, furnished by or on behalf of the Borrower in
writing to (or as directed by) the Lender for purposes of or in connection with
this Agreement, any other Loan Document or any transaction contemplated hereby
is true and accurate in all material respects as of the date of execution and
delivery of this Agreement and all other such factual information thereafter
furnished by or on behalf of the Borrower to (or as directed by) the Lender
pursuant to the terms of this Agreement or any other Loan Document is true and
accurate in every material respect on the date as of which such information as
dated or certified, and does not omit any material fact necessary to make such
Information not misleading.
ARTICLE VII
COVENANTS
Section 7.1 Affirmative Covenants. The Borrower will perform the
obligations set forth in this Section 7.1.
Section 7.1.1 Financial Information, Reports, Notices, etc.
The Borrower will furnish, or will cause to be furnished, to the Lender copies
of the following financial statements, reports, notices and information:
(a) As soon as available and in any event within 45
days after the end of each Fiscal Quarter of each Fiscal Year
of the Borrower (including the final Fiscal Quarter of each
Fiscal Year), the Borrower will deliver, or cause to be
delivered, balance sheets of the Borrower as of the end of
such Fiscal Quarter and statements of income, cash flow and
the Borrower's equity for such Fiscal Quarter and for the
period commencing at the end of the previous Fiscal Year and
ending with the end of such Fiscal Quarter, setting forth in
each case in comparative form the figures for the
corresponding Fiscal Quarter of the previous Fiscal Year,
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certified by the Borrower's chief financial officer in a
manner acceptable to the Lender.
(b) if requested by the Lender for any Fiscal Year,
the Borrower will have prepared at the Borrower's expense and
the Borrower will deliver, or cause to be delivered, to the
Lender a copy of an annual audit report for the Borrower
including therein balance sheets of the Borrower as of the end
of such Fiscal Year and statements of cash flow, income and
the Borrower's equity for such Fiscal Year, in each case
certified (without qualification) by independent public
accountants reasonably acceptable to the Lender.
(c) a copy of all financial accounting and reports
that are to be provided to the Partnership's partners pursuant
to Article 11 of the Partnership Agreement.
(d) As soon as possible and in any event within three
Business Days after becoming aware of
(i) the occurrence of any material adverse
development with respect to any Project,
Subpartnership, Project Loan or the Partnership's
investment in any Subpartnership, or
(ii) copies of any material notices or
communications from a Project Lender or a
Governmental Authority with respect to the Borrower,
the Partnership, a Project or the Project Loan
Documents; or
(iii) copies of any material notices or
communications from the Partnership, a Subpartnership
to a Project Lender or Governmental Authority with
respect to a Project or the Project Loan Documents.
The Borrower will deliver, or will cause to be delivered,
notice thereof and copies of all documentation relating
thereto.
(e) The Borrower will deliver, or will cause to be
delivered, such other information respecting the condition or
operations, financial or otherwise, of the Borrower, the
Partnership or any Subpartnership as the Lender from time to
time reasonably may request.
Section 7.1.2 Compliance with Laws, etc. The Borrower will,
and, consistent with the Borrower's rights and obligations under the Partnership
Agreement, will cause the Partnership and each Subpartnership to, comply in all
material respects with all applicable Governmental Requirements such compliance
to include, but not be limited to:
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(a) the maintenance and preservation of its existence
and qualification in all foreign jurisdictions where it is
required to do so except where the failure to do so would not
be material; and
(b) the payment, before the same become delinquent,
of all taxes, assessments and governmental charges imposed
upon it or upon its property except to the extent they are
being diligently contested in good faith by appropriate
proceedings and for which adequate reserves in accordance with
GAAP shall have been set aside on its books.
Section 7.1.3 Maintenance of Properties. The Borrower will,
and, consistent with the Borrower's rights and obligations under the Partnership
Agreement, will cause the Partnership and each Subpartnership to, maintain,
preserve, protect and keep its properties (specifically including but not
limited to, the Projects) in good repair, working order and condition, normal
wear and tear excepted, and make necessary and proper repairs, renewals and
replacements so that its business carried on in connection therewith may be
properly conducted at all times.
Section 7.1.4 Books and Records. The Borrower will, and,
consistent with the Borrower's rights and obligations under the Partnership
Agreement, will cause the Partnership and each of its Subpartnerships to, keep
books and records that accurately reflect all of its business affairs and
transactions in all material respects. The Borrower will, and will cause the
Partnership and each Subpartnership to, permit the Lender at reasonable times
and intervals during normal business hours to examine and photocopy extracts
from any of its books or other corporate records. The Borrower shall pay any
fees of its independent public accountant incurred in connection with the
Lender's exercise of its rights pursuant to this Section.
Section 7.1.5 Environmental Covenant. The Borrower will, and,
consistent with the Borrower's rights and obligations under the Partnership
Agreement, will cause the Partnership and each of its Subpartnerships to,
(a) use and operate all of its assets in compliance
in all material respects with all Environmental Laws, keep all
necessary and material permits, approvals, certificates,
licenses and other authorizations required under Environmental
Laws in effect and remain in compliance therewith, and handle
all Hazardous Materials in compliance in all material respects
with all Environmental Laws; and
(b) immediately notify the Lender and provide copies
upon receipt of all potentially material written claims,
complaints or notices (excluding routine fee or schedule
notices) relating to non-compliance with, or liabilities or
obligations arising under or relating in any way to,
Environmental Laws with respect to its assets.
Section 7.1.6 ERISA Compliance. The Borrower will, and will
cause each of its ERISA affiliates to, maintain all employee benefit plans in
compliance in all material respects with
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all applicable law, including any reporting requirements, and make all
contributions due under the terms of each employee benefit plan or as required
by law.
Section 7.1.7 Additional Funding Instruments. The Borrower
acknowledges to the Lender that the Subscribers have executed Additional Funding
Instruments requiring the contribution from time to time of, in the aggregate,
up to Eight Million and No/100 Dollars ($8,000,000) in cash to the Borrower's
capital upon demand of the Board of Directors of Borrower as described below.
Prior to the Initial Advance, the Borrower will, through its Board of
Directors, make written demand upon each Subscriber to contribute to the
Borrower cash in an amount equal to the product realized by multiplying (i) One
Million and No/100 Dollars ($1,000,000) by (ii) a fraction, the numerator of
which is the number of shares of the Borrower's common stock that Subscriber
owns as of the date of such demand and the denominator of which is the number of
outstanding shares of the Borrower's common stock as of the date of such demand
("Initial Equity Shortfall Share"). Notwithstanding anything to the contrary
contained in this Agreement, no Initial Advance will be made to the Borrower
pursuant to this Agreement unless and until each Subscriber has contributed cash
to the Borrower in an amount equal to such Subscriber's Initial Equity Shortfall
Share.
The Borrower will, through its Board of Directors, make an Assessment
Determination at that point in time when the aggregate of the accrued but unpaid
interest and the unpaid principal balance of the Loan first equals Four Million
and No/100 Dollars ($4,000,000) or would exceed such amount if a requested
Advance were made. In such event, the Borrower's Board of Directors shall make
written demand upon each Subscriber to contribute to the Borrower cash in an
amount equal to the product realized by multiplying (i) One Million and No/100
Dollars ($1,000,000) by (ii) a fraction, the numerator of which is the number of
shares of the Borrower's common stock that Subscriber owns as of the date of the
Assessment Determination and the denominator of which is the number of
outstanding shares of the Borrower's common stock as of the date of the
Assessment Determination ("Secondary Equity Shortfall Share"). Notwithstanding
anything to the contrary contained in this Agreement, no additional Advance will
be made to the Borrower pursuant to this Agreement that would increase the
aggregate unpaid principal and interest on the Loan above Four Million and
No/100 Dollars ($4,000,000) unless and until each Subscriber has contributed
cash to the Borrower in an amount equal to such Subscriber's Secondary Equity
Shortfall Share.
The Borrower will, through its Board of Directors, make an Assessment
Determination at that point in time when the aggregate of the accrued but unpaid
interest and the unpaid principal balance of the Loan first equals Eight Million
and No/100 Dollars ($8,000,000) or would exceed such amount if a requested
Advance were made. In such event, the Borrower's Board of Directors shall make
written demand upon each Subscriber to contribute to the Borrower cash in an
amount equal to the product realized by multiplying (i) One Million and No/100
Dollars ($1,000,000) by (ii) a fraction, the numerator of which is the number of
shares of the Borrower's common stock that Subscriber owns as of the date of the
Assessment Determination and the denominator of which
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is the number of outstanding shares of the Borrower's common stock as of the
date of the Assessment Determination ("Third Equity Shortfall Share").
Notwithstanding anything to the contrary contained in this Agreement, no
additional Advance will be made to the Borrower pursuant to this Agreement that
would increase the aggregate unpaid principal and interest on the Loan above
Eight Million and No/100 Dollars ($8,000,000) unless and until each Subscriber
has contributed cash to the Borrower in an amount equal to such Subscriber's
Third Equity Shortfall Share.
The Borrower will, through its Board of Directors, make an Assessment
Determination at that point in time when the aggregate of the accrued but unpaid
interest and the unpaid principal balance of the Loan first equals Twelve
Million and No/100 Dollars ($12,000,000) or would exceed such amount if a
requested Advance were made. In such event, the Borrower's Board of Directors
shall make written demand upon each Subscriber to contribute to the Borrower
cash in an amount equal to the product realized by multiplying (i) One Million
and No/100 Dollars ($1,000,000) by (ii) a fraction, the numerator of which is
the number of shares of the Borrower's common stock that Subscriber owns as of
the date of the Assessment Determination and the denominator of which is the
number of outstanding shares of the Borrower's common stock as of the date of
the Assessment Determination ("Fourth Equity Shortfall Share"). Notwithstanding
anything to the contrary contained in this Agreement, no additional Advance will
be made to the Borrower pursuant to this Agreement that would increase the
aggregate unpaid principal and interest on the Loan above Twelve Million and
No/100 Dollars ($12,000,000) unless and until each Subscriber has contributed
cash to the Borrower in an amount equal to such Subscriber's Fourth Equity
Shortfall Share.
The Borrower will, through its Board of Directors, make an Assessment
Determination at that point in time when the aggregate of the accrued but unpaid
interest and the unpaid principal balance of the Loan first equals Sixteen
Million and No/100 Dollars ($16,000,000) or would exceed such amount if a
requested Advance were made. In such event, the Borrower's Board of Directors
shall make written demand upon each Subscriber to contribute to the Borrower
cash in an amount equal to the product realized by multiplying (i) One Million
and No/100 Dollars ($1,000,000) by (ii) a fraction, the numerator of which is
the number of shares of the Borrower's common stock that Subscriber owns as of
the date of the Assessment Determination and the denominator of which is the
number of outstanding shares of the Borrower's common stock as of the date of
the Assessment Determination ("Fifth Equity Shortfall Share"). Notwithstanding
anything to the contrary contained in this Agreement, no additional Advance will
be made to the Borrower pursuant to this Agreement that would increase the
aggregate unpaid principal and interest on the Loan above Sixteen Million and
No/100 Dollars ($16,000,000) unless and until each Subscriber has contributed
cash to the Borrower in an amount equal to such Subscriber's Fifth Equity
Shortfall Share.
The Borrower will, through its Board of Directors, make an Assessment
Determination at that point in time when the aggregate of the accrued but unpaid
interest and the unpaid principal balance of the Loan first equals Twenty
Million and No/100 Dollars ($20,000,000) or would exceed such amount if a
requested Advance were made. In such event, the Borrower's Board of
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Directors shall make written demand upon each Subscriber to contribute to the
Borrower cash in an amount equal to the product realized by multiplying (i) One
Million and No/100 Dollars ($1,000,000) by (ii) a fraction, the numerator of
which is the number of shares of the Borrower's common stock that Subscriber
owns as of the date of the Assessment Determination and the denominator of which
is the number of outstanding shares of the Borrower's common stock as of the
date of the Assessment Determination ("Sixth Equity Shortfall Share").
Notwithstanding anything to the contrary contained in this Agreement, no
additional Advance will be made to the Borrower pursuant to this Agreement that
would increase the aggregate unpaid principal and interest on the Loan above
Twenty Million and No/100 Dollars ($20,000,000) unless and until each Subscriber
has contributed cash to the Borrower in an amount equal to such Subscriber's
Sixth Equity Shortfall Share.
The Borrower will, through its Board of Directors, make an Assessment
Determination at that point in time when the aggregate of the accrued but unpaid
interest and the unpaid principal balance of the Loan first equals Twenty-Four
Million and No/100 Dollars ($24,000,000) or would exceed such amount if a
requested Advance were made. In such event, the Borrower's Board of Directors
shall make written demand upon each Subscriber to contribute to the Borrower
cash in an amount equal to the product realized by multiplying (i) One Million
and No/100 Dollars ($1,000,000) by (ii) a fraction, the numerator of which is
the number of shares of the Borrower's common stock that Subscriber owns as of
the date of the Assessment Determination and the denominator of which is the
number of outstanding shares of the Borrower's common stock as of the date of
the Assessment Determination ("Seventh Equity Shortfall Share"). Notwithstanding
anything to the contrary contained in this Agreement, no additional Advance will
be made to the Borrower pursuant to this Agreement that would increase the
aggregate unpaid principal and interest on the Loan above Twenty-Four Million
and No/100 Dollars ($24,000,000) unless and until each Subscriber has
contributed cash to the Borrower in an amount equal to such Subscriber's Seventh
Equity Shortfall Share.
The Borrower will, through its Board of Directors, make an Assessment
Determination at that point in time when the aggregate of the accrued but unpaid
interest and the unpaid principal balance of the Loan first equals Twenty-Eight
Million and No/100 Dollars ($28,000,000) or would exceed such amount if a
requested Advance were made. In such event, the Borrower's Board of Directors
shall make written demand upon each Subscriber to contribute to the Borrower
cash in an amount equal to the product realized by multiplying (i) One Million
and No/100 Dollars ($1,000,000) by (ii) a fraction, the numerator of which is
the number of shares of the Borrower's common stock that Subscriber owns as of
the date of the Assessment Determination and the denominator of which is the
number of outstanding shares of the Borrower's common stock as of the date of
the Assessment Determination ("Eighth Equity Shortfall Share"). Notwithstanding
anything to the contrary contained in this Agreement, no additional Advance will
be made to the Borrower pursuant to this Agreement that would increase the
aggregate unpaid principal and interest on the Loan above Twenty-Eight Million
and No/100 Dollars ($28,000,000) unless and until each Subscriber has
contributed cash to the Borrower in an amount equal to such Subscriber's Eighth
Equity Shortfall Share.
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The Borrower will, through its Board of Directors, make an Assessment
Determination at that point in time when the aggregate of the accrued but unpaid
interest and the unpaid principal balance of the Loan first equals Thirty-Two
Million and No/100 Dollars ($32,000,000) or would exceed such amount if a
requested Advance were made. In such event, the Borrower's Board of Directors
shall make written demand upon each Subscriber to contribute to the Borrower
cash in an amount equal to the product realized by multiplying (i) One Million
and No/100 Dollars ($1,000,000) by (ii) a fraction, the numerator of which is
the number of shares of the Borrower's common stock that Subscriber owns as of
the date of the Assessment Determination and the denominator of which is the
number of outstanding shares of the Borrower's common stock as of the date of
the Assessment Determination ("Ninth Equity Shortfall Share"). Notwithstanding
anything to the contrary contained in this Agreement, no additional Advance will
be made to the Borrower pursuant to this Agreement that would increase the
aggregate unpaid principal and interest on the Loan above Thirty-Two Million and
No/100 Dollars ($32,000,000) unless and until each Subscriber has contributed
cash to the Borrower in an amount equal to such Subscriber's Ninth Equity
Shortfall Share.
The Borrower will, through its Board of Directors, make an Assessment
Determination at that point in time when the aggregate of the accrued but unpaid
interest and the unpaid principal balance of the Loan first equals Thirty-Six
Million and No/100 Dollars ($36,000,000) or would exceed such amount if a
requested Advance were made. In such event, the Borrower's Board of Directors
shall make written demand upon each Subscriber to contribute to the Borrower
cash in an amount equal to the product realized by multiplying (i) One Million
and No/100 Dollars ($1,000,000) by (ii) a fraction, the numerator of which is
the number of shares of the Borrower's common stock that Subscriber owns as of
the date of the Assessment Determination and the denominator of which is the
number of outstanding shares of the Borrower's common stock as of the date of
the Assessment Determination ("Tenth Equity Shortfall Share"). Notwithstanding
anything to the contrary contained in this Agreement, no additional Advance will
be made to the Borrower pursuant to this Agreement that would increase the
aggregate unpaid principal and interest on the Loan above Thirty-Six Million and
No/100 Dollars ($36,000,000) unless and until each Subscriber has contributed
cash to the Borrower in an amount equal to such Subscriber's Tenth Equity
Shortfall Share.
Section 7.2 Negative Covenants. The Borrower will comply with the
obligations set forth in this Section 7.2.
Section 7.2.1 Business Activities. The Borrower will not, and,
consistent with the Borrower's rights and obligations under the Partnership
Agreement, will not permit the Partnership or any of its Subpartnerships to,
engage in any business activity other than those activities set forth in the
Organic Documents for each such entity.
Section 7.2.2 Indebtedness. The Borrower will not, and,
consistent with the Borrower's rights and obligations under the Partnership
Agreement, will not permit the Partnership or any of its Subpartnerships to,
create, incur, assume or suffer to exist or otherwise become or be liable in
respect of any indebtedness, other than, without duplication, the following:
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(a) indebtedness in respect of the Loan and other
obligations;
(b) unsecured Indebtedness incurred in the ordinary
course of its business in the nature of open accounts extended
by suppliers and other vendors on normal trade terms in
connection with purchases of goods and services, accrued
liabilities, deferred income and deferred taxes;
(c) Emergency Loans, as described in the Partnership
Agreement and the Subpartnership Organic Documents;
(d) the Project Loans incurred by Subpartnerships on
terms that are consistent with the requirements of this
Agreement; and
(e) other unsecured Indebtedness of the Borrower, the
Partnership and the Subpartnerships in an aggregate amount not
to exceed $50,000 for the Borrower, $50,000 for the
Partnership and $10,000 for any Subpartnership.
Section 7.2.3 Asset Dispositions, etc. The Borrower will not,
and, consistent with the Borrower's rights and obligations under the Partnership
Agreement, will not permit the Partnership or any of its Subpartnerships to,
sell, transfer, lease, contribute, convey or otherwise dispose of all or any
part of its assets to any Person, unless
(a) no Default has occurred and is continuing or
would occur after giving effect thereto; or
(b) such sale, transfer, lease or other disposition
is approved by the Lender or is approved in the then-current
Approved Annual Business Plan under the Partnership Agreement.
Section 7.2.4 Restriction on Distributions. The Borrower will
not make dividend distributions to its shareholders at any time when there
exists an outstanding balance on the Loan.
ARTICLE VIII
EVENTS OF DEFAULT
Section 8.1 Listing of Events of Default. Each of the following events
or occurrences described in this Section 8.1 shall constitute an "Event of
Default." Upon the occurrence of an Event of Default (or any event or state of
facts that, with the giving of notice or the passage of time or both, would
constitute an Event of Default), the Borrower shall give notice thereof to the
Lender.
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Section 8.1.1 Non-Payment of Obligations. The Borrower shall
default in the payment when due of any principal of the Loan, the East West
Resorts Term Loan, the East West Resorts Credit Loan, or any Other Crescent
Indebtedness, or of any interest in respect of the Loan, the East West Resorts
Term Loan, the East West Resorts Credit Loan, or any Other Crescent
Indebtedness.
Section 8.1.2 Breach of Warranty. Any representation or
warranty made or deemed to be made hereunder or in any other Loan Document, any
East West Resorts Loan Document, any Other Crescent Indebtedness Loan Document,
or any other writing or certificate furnished by or on behalf of the Borrower to
the Lender for the purposes of or in connection with this Agreement, either of
the East West Resorts Loans, or any Other Crescent Indebtedness or any such
other Loan Document, any other East West Resorts Loan Document, or any Other
Crescent Indebtedness Loan Document, is or shall be incorrect when made in any
material respect.
Section 8.1.3 Non-Performance of Other Covenants and
Obligations. There shall be a default in the due performance and observance of
any other agreement contained herein or in any other Loan Document, any East
West Resorts Loan Document, or any Other Crescent Indebtedness Loan Document
executed by the Borrower, and such default shall continue unremedied for a
period of 30 days after the Lender shall have given notice thereof to the
Borrower.
Section 8.1.4 Bankruptcy, Insolvency, etc. The Borrower, the
Partnership, any Subpartnership, East West Resorts or any EWRD Partnership
shall:
(a) become insolvent or generally fail to pay, or
admit in writing its inability or unwillingness to pay, debts
as they become due;
(b) apply for, consent to, or acquiesce in, the
appointment of a trustee, receiver, sequestrator or other
custodian for the Borrower, the Partnership, any
Subpartnership, East West Resorts or any EWRD Partnership or
any property of any thereof, or make a general assignment for
the benefit of creditors;
(c) absent such application, consent or acquiescence
permit or suffer to exist the appointment of a trustee,
receiver, sequestrator or other custodian for the Borrower,
the Partnership, any Subpartnership, East West Resorts or any
EWRD Partnership for a substantial part of the property of any
thereof, and such trustee, receiver, sequestrator or other
custodian shall not be discharged within 60 days, provided
that the Borrower, the Partnership, each Subpartnership, East
West Resorts and each EWRD Partnership hereby expressly
authorize the Lender to appear in any court conducting any
relevant proceeding during such 60-day period to preserve,
protect and defend their rights under the Loan Documents and
the East West Resort Loan Documents;
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(d) permit or suffer to exist the commencement of any
(x) bankruptcy, reorganization, debt arrangement or other case
or proceeding under any bankruptcy or insolvency law, or (y)
any dissolution, winding up or liquidation proceeding, in
respect of the Borrower, the Partnership, any Subpartnership,
East West Resorts or any EWRD Partnership, and, if any such
case or proceeding is not commenced by the Borrower, the
Partnership, any Subpartnership, East West Resorts or any EWRD
Partnership, such case or proceeding shall be consented to or
acquiesced in by the Borrower, the Partnership, such
Subpartnership, East West Resorts or any EWRD Partnership or
shall result in the entry of an order for relief or, in the
event of any case or proceeding described in clause (x), shall
remain for 120 days undismissed, provided that the Borrower,
the Partnership, each Subpartnership, East West Resorts and
each EWRD Partnership hereby expressly authorizes the Lender
to appear in any court conducting any such case or proceeding
during such 120-day period to preserve, protect and defend
their rights under the Loan Documents or the East West Loan
Documents; or
(e) take any partnership, limited liability company
or corporate action authorizing, or with intent to further any
of the foregoing.
Section 8.2 Action if Bankruptcy. If any Event of Default described in
clauses (a) through (e) of Section 8.1.4 shall occur with respect to the
Borrower, the Partnership, any of its Subpartnerships, East West Resorts, or any
EWRD Partnership, the Commitment (if not theretofore terminated) to make
Advances shall automatically terminate and the outstanding principal amount of
the Loan shall automatically be and become immediately due and payable, without
notice or demand.
Section 8.3 Action if Payment Event of Default under East West Loan. If
any Event of Default described in Section 8.1.1 shall occur due to the
Borrower's default in the payment when due of any principal or interest in
respect of the East West Resorts Term Loan, the East West Resorts Credit Loan or
any Other Crescent Indebtedness (but not for any other reason), and the Borrower
fails to pay such principal or interest in full within 30 days after the due
date thereof, then the Lender shall by notice to the Borrower declare all or any
portion of the outstanding principal amount of the Loan and other obligations to
be due and payable and the Commitment (if not theretofore terminated) to be
terminated, whereupon the full unpaid amount of the Loan shall be and become
immediately due and payable, without further notice, demand or presentment and
the Commitment shall terminate.
Section 8.4 Action if Other Event of Default under East West Loan or
Other Crescent Indebtedness. If any Event of Default (other than any Event of
Default described in Section 8.2 or Section 8.3) shall occur with respect to any
East West Resorts Loan Document or Other Crescent Indebtedness Loan Document
(but not for any other reason) for any reason, whether voluntary or involuntary,
and (a) be continuing for a period of 90 days if an Event of Default under
Section 8.1.2 or (b) ,be continuing for a period of 90 days after notice thereof
shall have been given to the Borrower by the Lender if an Event of Default under
Section 8.1.3, then the
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Lender shall by notice to the Borrower declare all or any portion of the
outstanding principal amount of the Loan and other obligations to be due and
payable and the Commitment (if not theretofore terminated) to be terminated,
whereupon the full unpaid amount of the Loan shall be and become immediately due
and payable, without further notice, demand or presentment and the Commitment
shall terminate.
Section 8.5 Action if Other Event of Default. If any Event of Default
(other than any Event of Default described in Section 8.2, Section 8.3, or
Section 8.4) shall occur for any reason, whether voluntary or involuntary, and
be continuing, the Lender shall by notice to the Borrower declare all or any
portion of the outstanding principal amount of the Loan and other obligations to
be due and payable and the Commitment (if not theretofore terminated) to be
terminated, whereupon the full unpaid amount of the Loan shall be and become
immediately due and payable, without further notice, demand or presentment and
the Commitment shall terminate.
Section 8.6 Rescission of Event of Default. If an Event of Default
occurs hereunder and such Event of Default would not have occurred but for the
default by a Subpartnership (for purposes of this Section, the "Defaulting
Subpartnership") under Section 8.1.4 hereof, (such Events of Default being
described in this Section as "Specified Events of Default") then the Lender
shall be required to rescind and annul the Event of Default if and only if,
within twenty (20) Business Days following such Specified Event of Default:
(a) all Defaults and Events of Default, other than the
Specified Events of Default, are remedied or waived to the Lender's
sole satisfaction; and
(b) the Partnership's partners have approved of a revised
business plan with respect to the Project owned by the Defaulting
Subpartnership, the Borrower, on the basis of such revised business
plan, has submitted to the Lender a revised Annual Business Plan and
the Lender, in its reasonable discretion, has Approved such Annual
Business Plan.
No action taken by the Lender pursuant to this provision shall affect any
subsequent Default or Event of Default with respect to the Borrower or impair
any right or remedy consequent thereon.
ARTICLE IX
MISCELLANEOUS PROVISIONS
Section 9.1 Waivers, Amendments, etc. The provisions of this Agreement
and of each other Loan Document may from time to time be amended, modified or
waived, if such amendment, modification or waiver is in writing and consented to
by the Borrower and the Lender. No failure or delay on the part of the Lender,
or the holder of any Note in exercising any power or right under this Agreement
or any other Loan Document shall operate as a waiver thereof, nor shall any
single or partial exercise of any such power or right preclude any other or
further exercise thereof or the exercise of any other power or right. No notice
to or demand on
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the Borrower in any case shall entitle it to any notice or demand in similar or
other circumstances. No waiver or approval by the Lender or the holder of any
Note under this Agreement or any other Loan Document shall, except as may be
otherwise stated in such waiver or approval, be applicable to subsequent
transactions. No waiver or approval hereunder shall require any similar or
dissimilar waiver or approval thereafter to be granted hereunder.
Section 9.2 Notices. All notices and other communications provided to
any party hereto under this Agreement or any other Loan Document shall be in
writing and addressed, delivered or transmitted to such party at its address or
facsimile number set forth below its signature hereto, or at such other address
or facsimile number as may be designated by such party in a notice to the other
parties. Any notice, if sent via United States Postal Service Express Mail or
certified mail, properly addressed with postage prepaid or if sent via
nationally recognized overnight courier service, properly addressed with
delivery fees prepaid, shall be deemed given when received; any notice, if
transmitted by facsimile, shall be deemed given one business day after receipt
of electronic confirmation of transmission.
Section 9.3 Payment of Costs and Expenses. The Borrower agrees to pay
on demand all of the Lender's reasonable expenses (including the reasonable fees
and out-of-pocket expenses of the Lender's counsel and of local counsel, if any,
who the Lender's counsel may retain) in connection with this transaction
Section 9.4 Indemnification.
(a) In consideration of the execution and delivery of this
Agreement by the Lender and the extension of the Commitments, the
Borrower hereby indemnifies, exonerates and holds the Lender and each
of its respective trustees, partners, stockholders, officers,
directors, employees, agents, attorneys, consultants and experts
(collectively, the "Indemnified Parties") free and harmless from and
against any and all actions, causes of action, suits, judgments,
claims, demands, losses, costs, liabilities (including, without
limitation, strict liability), penalties, fines and damages,
(including, without limitation, punitive damages), and expenses
incurred in connection therewith (irrespective of whether any such
Indemnified Party is a party to the action for which indemnification
hereunder is sought), including reasonable attorneys, consultants and
experts fees and disbursements (collectively, the "Indemnified
Liabilities"), imposed upon or incurred by the Indemnified Parties or
any of them as a result of, or arising out of, or relating to
(i) any transaction financed or to be financed in
whole or in part, directly or indirectly, with the Loan
proceeds;
(ii) the entering into and performance of this
Agreement and any other Loan Document by any of the
Indemnified Parties;
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(iii) the actual or alleged release or presence of
any Hazardous Substance at, to or from any asset or former
asset of the Borrower, the Partnership or any Subpartnership;
or
(iv) the actual or alleged violation of any
Environmental Law by any person at or in connection with any
current asset or former asset of the Borrower, the Partnership
or any of any Subpartnership.
except for any such Indemnified Liabilities arising for the
account of a particular Indemnified Party by reason of the
relevant Indemnified Party's gross negligence or wilful
misconduct, and if and to the extent that the foregoing
undertaking may be unenforceable for any reason, the Borrower
hereby agrees to make the maximum contribution to the payment
and satisfaction of each of the Indemnified Liabilities that
is permissible under applicable law, except as aforesaid to
the extent not payable by reason of the Indemnified Party's
gross negligence or wilful misconduct or breach of such
obligations.
(b) THE LENDER SHALL NOT BE RESPONSIBLE OR LIABLE TO ANY OTHER
PARTY HEREUNDER OR ANY OTHER PERSON FOR CONSEQUENTIAL DAMAGES THAT MAY
BE ALLEGED AS A RESULT OF THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT.
Section 9.5 Severability. Any provision of this Agreement or any other
Loan Document that is prohibited or unenforceable in any jurisdiction shall, as
to such provision and such jurisdiction, be ineffective to the extent of such
prohibition or unenforceability without invalidating the remaining provisions of
this Agreement or such Loan Document or affecting the validity or enforceability
of such provision in any other jurisdiction.
Section 9.6 Headings. The various headings of this Agreement and of
each other Loan Document are inserted for convenience only and shall not affect
the meaning or interpretation of this Agreement or such other Loan Document or
any provisions hereof or thereof.
Section 9.7 Execution in Counterparts, Effectiveness, etc. This
Agreement may be executed by the parties hereto in several counterparts, each of
which shall be an original and all of which shall constitute together but one
and the same agreement. This Agreement, together with each other Loan Document,
shall become effective when counterparts hereof executed on behalf of the
Borrower and the Lender (or notice thereof satisfactory to the Lender) shall
have been received by the Lender and notice thereof shall have been given by the
Lender to the Borrower.
Section 9.8 Governing Law: Entire Agreement. THIS AGREEMENT, THE NOTES
AND EACH OTHER LOAN DOCUMENT SHALL EACH BE DEEMED TO BE A CONTRACT MADE UNDER
AND GOVERNED BY THE LAWS OF THE STATE OF TEXAS WITHOUT REGARD FOR CONFLICT OF
LAWS PRINCIPLES. Except as otherwise provided herein, this Agreement, the Note
given in replacement of that promissory note
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made as of May 8, 1998, and the other Loan Documents constitute the entire
understanding among the parties hereto with respect to the subject matter hereof
and supersede any prior agreements, written or oral, with respect thereto.
Section 9.9 Successors and Assigns. This Agreement shall be binding
upon and shall inure to the benefit of the parties hereto and their respective
successors and assigns; provided, however, that the Borrower may not assign or
transfer its rights or obligations hereunder without the Lender's prior written
consent.
Section 9.10 REIT Compliance. The Borrower acknowledges that the
Lender's affiliate, Crescent Real Estate Equities Company ("Crescent"), is a
real estate investment trust under the Code. The Borrower agrees that it will
not knowingly or intentionally take or omit to take any action that the Borrower
knows would or could result in Crescent being disqualified from treatment as a
real estate investment trust under the Code.
ARTICLE X
DEFINITIONS
Section 10.1 Defined Terms. In addition to the terms defined in
previous portions of this Agreement, the following terms when used in this
Agreement shall, except where the context otherwise requires, have the following
meanings (such meanings to be equally applicable to the singular and plural
forms thereof):
"Additional Funding Instruments" means the Additional Funding
Instruments executed by COPI Colorado, L. P. and the Lender dated January 1,
1999.
"Advance" means all money advances under the Loan made by the Lender
pursuant to an Application for Advance in accordance with Article II.
"Agreement" means, on any date, this Credit Agreement.
"Amended and Restated Credit Loan" means that line of credit loan, and
related Amended and Restated Credit Agreement, promissory note, and security
agreement, from the Lender to the Borrower effective January 1, 1999, and all
extensions, modifications, amendments, and renewals thereof.
"Annual Business Plan" is defined in the Partnership Agreement.
"Application for Advance" means a loan request and certificate duly
executed by the Borrower, in the form that is attached hereto as Exhibit A or
such other form that is approved by the Lender from time to time.
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"Approved" is defined in the Partnership Agreement.
"Approved Budget" means the Proposed Budget in the Approved Project
Plan, as adjusted and approved by the Partnership, the Borrower (both general
and limited partners) and the Project Lender.
"Approved Project Plan" shall be each of the Approved Project Plans
contemplated by Section 3.2 of the Partnership Agreement which shall, among
other things, include a Proposed Budget and for Projects to be developed in more
than one phase, a Project Advance Limit.
"Assessment Determination" is defined in the Additional Funding
Instruments.
"Borrower" means Crescent Development Management Corp., a Delaware
corporation, and its successors and assigns permitted hereunder.
"Borrower Security Agreement" means the Security Agreement executed and
delivered by the Borrower granting the Lender a security interest in (a) all
Partner Loans now or hereafter owing to the Borrower and all security therefor,
and (b) the Borrower's partnership interest in the Partnership.
"Business Day" means any day that is neither a Saturday or Sunday nor a
legal holiday on which banks are authorized or required to be closed in New
York, New York.
"CERCLA" means the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended.
"Code" means the Internal Revenue Code of 1986, as amended, reformed or
otherwise modified from time to time.
"Commitment" is defined in the Partnership Agreement.
"Commitment Termination Date" means the earlier of (i) the occurrence
of an Event of Default or (ii) the Stated Maturity Date.
"Construction Contract" means all construction contracts executed by
the Subpartnership for the construction of a Project.
"Contractor" means the general contractor retained by the
Subpartnership with respect to the construction of a Project.
"Default" means any Event of Default or any condition, occurrence or
event that, after notice or lapse of time or both, would constitute an Event of
Default.
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"Distribution" means each Distribution (other than deemed
distributions) made to the Borrower pursuant to Section 4.1 or Article X of the
Partnership Agreement.
"East West Loans" means the East West Resorts Term Loan and East West
Resorts Credit Loan.
"East West Resorts" means East West Resorts, LLC, a Delaware limited
liability company, and its successor or successors by merger, consolidation or
any other business combination as a result of which, by operation of law or by
agreement, such successor or successors assume the obligations or liabilities of
East West Resorts, LLC under any or all East West Resorts Loans.
"East West Resorts Credit Loan" means that line of credit loan, and
related Credit Agreement, promissory note, and security agreement, from the
Lender to the Borrower made effective January 1, 1998, and all extensions,
modifications, amendments, and renewals thereof.
"East West Resorts Loan Documents" means all documents evidencing,
securing or governing either of the East West Loans, including but not limited
to that Promissory Note dated February 29, 1996 in the principal amount of
$3,100,000, that Security Agreement dated February 29, 1996, that Credit
Agreement dated as of January 1, 1998, and all "Loan Documents" as defined
therein, and all extensions, modifications, amendments, and renewals thereof.
"East West Resorts Term Loan" means that term loan, and related
promissory note and Security Agreement made by the Borrower, from the Lender to
the Borrower made February 29, 1996, and all extensions, modifications,
amendments and renewals thereof.
"Emergency Loan" means each Emergency Loan made by the Borrower
pursuant to Section 3.4 of the Partnership Agreement.
"Environmental Laws" means all applicable foreign, federal, state or
local statutes, laws, ordinances, codes, rules, regulations (including, without
limitation, consent decrees and orders and administrative orders) judgments and
permits or other authorizations relating to health, safety or the environment,
including, without limitation, CERCLA and RCRA.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and any successor statute of similar import, together with the
regulations thereunder, in each case as in effect from time to time.
"Event of Default" is defined in Section 8.1.
"EWRD Partnerships" means East West Resort Development, L.P., East West
Resort Development II, L. P., East West Resort Development III, L. P., EWRD
Summit Holding, L. P., and EWRD Perry Holding, L. P.
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"Governmental Authority" means the United States, the state, county and
city or other political subdivision in which a Project is located and any other
political subdivision, agency or instrumentality exercising jurisdiction over
the Borrower, the Partnership, Subpartnership or a Project.
"Governmental Requirement" means all laws, ordinances, rules and
regulations of any Governmental Authority applicable to the Borrower, the
Partnership, Subpartnership, or a Project.
"Hazardous Material" means any pollutant, hazardous substance,
radioactive substance, toxic substance, hazardous waste, medical waste,
radioactive waste, special waste, petroleum or petroleum-derived substance or
waste, asbestos, polychlorinated biphenyls, or any hazardous or toxic
constituent thereof and includes, but is not limited to, any substance defined
in or regulated under Environmental Laws.
"Initial Advance" means the first Advance made hereunder.
"Loan" is defined in the preamble.
"Loan Document" means this Agreement, the Note, the Partnership
Security Agreement and all other documents evidencing, securing or governing the
Loan, as such documents may be amended, renewed, extended, restated or
supplemented from time to time.
"Note" means the Line of Credit Note of the Borrower delivered to the
Lender pursuant to this Agreement and any note subsequently given in exchange,
substitution, modification, renewal or extension therefor.
"Organic Document" means, relative to the Borrower, any of its
Subsidiaries and any other Obligor, its articles or certificate of
incorporation, as the case may be, its articles of organization, its by-laws and
all partnership agreements, operating agreements, shareholder agreements, voting
trusts and similar arrangements applicable to any partnership or limited
liability company interests issued by such person or authorized shares of
capital stock issued by such person.
"Other Crescent Indebtedness" means all indebtedness for borrowed
monies owing from Borrower to Lender, other than the Loan and the East West
Loans but including the Amended and Restated Credit Loan.
"Other Crescent Indebtedness Loan Documents" means all credit
agreements, loan agreements, notes, security agreements and other documents
evidencing, securing or governing any Other Crescent Indebtedness, as such
documents may be amended, renewed, extended, restated or supplemented from time
to time.
"Partner Loan" means each Partner Loan made by the Borrower pursuant to
Section 3.5 of the Partnership Agreement.
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26
"Partnership" means East West Resort Development IV, L. L. L. P., a
Delaware registered limited liability limited partnership.
"Partnership Agreement" means that certain Limited Partnership
Agreement of East West Resort Development IV, L. L. L. P., dated January 1,
1999.
"Partnership Security Agreement" means the Security Agreements executed
and delivered by the Partnership from time to time pursuant to this Agreement
granting the Lender a security interest in the Partnership's interest in the
Subpartnerships.
"Person" means any natural person, corporation, partnership, firm,
association, trust, government, governmental agency or any other entity, whether
acting in an individual, fiduciary or other capacity.
"Phased Project" means an Approved Project that is to be developed in
more than one phase.
"Project" means the land owned or acquired by a Subpartnership together
with the improvements to be constructed thereon, as contemplated by the Plans.
"Project Advance Limit" means, with respect to each Phased Project the
amount designated as the Commitment for the Project in the Approved Project Plan
and the Approved Budget.
"Project Equity Advance" means the amount advanced hereunder by the
Lender to the Borrower (in one or more Advances) to enable it to make an equity
contribution to the Partnership.
"Project Lender" means the lender who issues the Project Loan
Commitment.
"Project Loan" means the loan contemplated by the Project Loan
Commitment, the proceeds of which will be used in connection with the
acquisition, construction and development of the Project described in such
Project Loan Commitment.
"Project Loan Commitment" means the commitment issued by the Project
Lender to Subpartnership to make the Project Loan to be secured by a first lien
on the Subpartnership's Project containing only such conditions to funding as
are reasonable and customary.
"Project Loan Documents" means the instruments and documents
evidencing, securing, pertaining to or governing a Project Loan.
"Project Mortgage" means a mortgage or deed of trust and security
agreement securing the payment of the Project Loan and evidencing a first lien
on the Project.
"Proposed Budget" means a budget or cost itemization included in each
Approved Project Plan specifying the cost by item of (a) the real estate that
will constitute a part of the Project, (b)
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27
all labor, materials and services necessary for the construction of the Project
in accordance with the Plans and all Governmental Requirements, and (b) all
other expenses anticipated that are incident to the Project Loan and the
construction of the Project. The Proposed Budget shall include a calculation of
the anticipated Total Equity for such Project.
"RCRA" means the Resource Conservation and Recovery Act, 42 U.S.C.
Section 6901, et seq., as in effect from time to time.
"Stated Maturity Date" means December 31, 2006.
"Subpartnership" means each limited liability company, whether now
existing or hereafter formed, in which the Partnership has an equity interest.
"Subscriber" means the stockholders of Borrower that executed the
Additional Funding Instruments.
"Tax Distribution" means each Distribution made to the Borrower
pursuant to Section 4.2 of the Partnership Agreement.
"Total Equity" means, with respect to each Project, 80% of the
difference between the total costs set forth in the Approved Budget as the cost
of the Project and the amount of the Project Loan.
"UCC" means the Uniform Commercial Code as in effect, from time to
time, in the State of Texas.
"United States" or "U.S." means the United States of America, its fifty
States and the District of Columbia.
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28
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized as of the day
and year first above written.
BORROWER: CRESCENT DEVELOPMENT MANAGEMENT
CORP., a Delaware corporation
By:_________________________________________
Name:_______________________________________
Title:______________________________________
LENDER: CRESCENT REAL ESTATE EQUITIES LIMITED
PARTNERSHIP, a Delaware limited partnership
By: Crescent Real Estate Equities, Ltd., a
Delaware corporation, Sole General
Partner
By:_____________________________________
Name:___________________________________
Title:__________________________________
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29
EXHIBIT A
APPLICATION FOR ADVANCE
This Application for Advance is submitted by the undersigned to
Crescent Real Estate Equities Limited Partnership (the "Lender") pursuant to
that Amended and Restated Credit Agreement dated as of January 1, 1999, between
the Lender and the undersigned (the "Credit Agreement"). Capitalized terms used
herein and not otherwise defined shall have the meanings set forth in the Credit
Agreement.
1. The undersigned hereby requests an Advance under the
Credit Agreement in the amount of: $____________
2. The undersigned hereby requests this Advance to be made
effective (the "Advance Date"): _____________
2. The undersigned hereby warrants and represents the following to the Lender:
A. The Advance is being requested in connection and will be used
solely to fund the following Project (the "Applicable
Project"):
________________________________________________________________________________
B. Project Advance Limit approved
for the Applicable Project: $____________
C. Total Advances made in accordance with the Credit
Agreement prior to the Advance Date: $____________
D. Additional capital contributions made by the Shareholders
which were subsequently used for the Applicable Project: $____________
E. To Date Total Project Investment for the Applicable
Project made prior to the Advance Date (Sum of C and D): $____________
F. Both before and after giving effect to the Advance that is requested hereby, the
warranties and representations set forth in Article VI of the Credit Agreement are
true and correct with the same effect as if made on the date hereof.
CRESCENT DEVELOPMENT MANAGEMENT CORP.
By:__________________________________
Name:________________________________
Title:_______________________________
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30
LINE OF CREDIT NOTE
$40,000,000 January 1, 1999
FOR VALUE RECEIVED, CRESCENT DEVELOPMENT MANAGEMENT CORP., a Delaware
corporation ("Borrower") promises to pay to CRESCENT REAL ESTATE EQUITIES
LIMITED PARTNERSHIP, a Delaware limited partnership ("Lender"), at ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, the principal sum of FORTY MILLION
AND NO/100 DOLLARS ($40,000,000.00), or so much thereof as may be advanced, with
interest on the principal balance from time to time remaining unpaid at the
rates hereinafter provided.
Interest on the principal balance hereof from time to time remaining
unpaid prior to an Event of Default shall be payable at the Interest Rate
prescribed in the Credit Agreement (as hereinafter defined), provided that the
interest payable shall not exceed the maximum rate permitted by applicable law
(the "Maximum Rate"). Interest on the principal hereof from time to time
remaining unpaid and, to the extent permitted by applicable law, interest on the
unpaid interest, shall bear interest from and after an Event of Default at the
Default Rate provided that in no event shall the Default Rate be more than the
Maximum Rate.
This Note is the "Note" referred to in the Credit Agreement dated
January 1, 1999, executed by Lender and Borrower (the "Credit Agreement").
Borrower may borrow, repay and reborrow amounts under this Note as permitted by
the Credit Agreement. Terms defined in the Credit Agreement and not otherwise
defined herein are used herein with the meanings given those terms in the Credit
Agreement.
Borrower may request and receive Advances hereunder only in accordance
with the terms and provisions of the Credit Agreement. This Note shall be
payable as provided in Article III of the Credit Agreement.
Upon the occurrence of any Event of Default (after the giving of any
notice required in the Credit Agreement and the expiration of any applicable
grace periods provided for in the Credit Agreement), all amounts then remaining
unpaid on this Note shall become or may be declared to be immediately due and
payable and the holder hereof shall have all rights and remedies of Lender under
the Credit Agreement and other Loan Documents. The failure to exercise the
option to accelerate the maturity of this Note upon the happening of any one or
more of the Events of Default hereunder shall not constitute a waiver of the
right of the holder of this Note to exercise the same or any other option at
that time or at any subsequent time with respect to such uncured default or any
other event of uncured default hereunder or under any other of the Loan
Documents. The remedies of the holder hereof, as provided in this Note and in
any other of the Loan Documents, shall be cumulative and concurrent and may be
pursued separately, successively or together, as often as occasion therefor
shall arise, at the sole discretion of the holder hereof. The acceptance by the
holder hereof of any payment under this Note which is less than payment in full
of all amounts due and payable at the time of such payment shall not constitute
a waiver of or impair, reduce, release or extinguish any of the rights or
remedies of the holder hereof to exercise the foregoing option or any other
option granted to the holder in this Note or in any other of the Loan Documents,
at that time or at any subsequent time, or nullify any prior exercise of any
such option.
The undersigned and all other parties now or hereafter liable for the
payment hereof, whether as endorser, surety or otherwise, except as provided in
the Credit Agreement, severally waive demand, presentment, notice of dishonor,
notice of intention to accelerate the indebtedness evidenced hereby, notice of
the acceleration of the maturity hereof, diligence in collecting, grace, notice
and protest, and consent to all extensions which from time to time may be
granted by the holder hereof and to all partial payments hereon, whether before
or after maturity.
If this Note is not paid when due, whether at maturity or by
acceleration, or if it is collected through a bankruptcy, probate or other
court, whether before or after maturity, the undersigned agrees to pay all costs
of collection, including, but not limited to, reasonable attorneys' fees and
expenses incurred by the holder hereof.
All agreements between the undersigned and the holder hereof, whether
now existing or hereafter arising and whether written or oral, are hereby
limited so that in no contingency, whether by reason of acceleration of the
maturity
31
hereof or otherwise, shall the interest contracted for, charged, received, paid
or agreed to be paid to the holder hereof exceed the maximum amount permissible
under applicable law. If from any circumstance the holder hereof shall ever
receive anything of value deemed interest by applicable law in excess of the
maximum lawful amount, an amount equal to any excessive interest shall be
applied to the reduction of the principal hereof and not to the payment of
interest, or if such excessive interest exceeds the unpaid balance of principal
hereof, such excess shall be refunded to the undersigned. All interest paid or
agreed to be paid to the holder hereof shall, to the extent permitted by
applicable law, be amortized, prorated, allocated, and spread throughout the
full period until payment in full of the principal so that the interest hereon
for such full period shall not exceed the maximum amount permitted by applicable
law. This paragraph shall control all agreements between the undersigned and the
holder hereof.
This Note may be prepaid only in accordance with the terms of the
Credit Agreement.
The loan transaction evidenced hereby shall not be governed by, or be
subject to, Chapter 15 or Chapter 346 of the Texas Credit Code or Chapter 303 of
the Texas Finance Code.
EXCEPT WHERE FEDERAL LAW IS APPLICABLE (INCLUDING, WITHOUT LIMITATION,
ANY FEDERAL USURY CEILING OR OTHER FEDERAL LAW WHICH, FROM TIME TO TIME, IS
APPLICABLE TO THE INDEBTEDNESS EVIDENCED HEREIN AND WHICH PREEMPTS STATE USURY
LAWS), THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
TEXAS AND THE LAWS OF THE UNITED STATES APPLICABLE TO TRANSACTIONS IN SUCH
STATE.
THIS NOTE, TOGETHER WITH THE CREDIT AGREEMENT AND EACH OTHER
LOAN DOCUMENT REFERENCED HEREIN OR THEREIN, REPRESENT THE FINAL AGREEMENTS
BETWEEN THE PARTIES WITH RESPECT TO THE LOAN 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.
CRESCENT DEVELOPMENT MANAGEMENT CORP.,
a Delaware corporation
By:___________________________________
Name:_________________________________
Title:________________________________
2
32
SECURITY AGREEMENT
(Partnership Interests and Limited Liability Company Interests)
Date: January 1, 1999
A. PARTIES
1. Secured Party: CRESCENT REAL ESTATE EQUITIES LIMITED PARTNERSHIP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
2. Debtor (whether
one or more): CRESCENT DEVELOPMENT MANAGEMENT CORP.
▇/▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, President
B. AGREEMENT
1. Security Interest. Subject to the applicable terms of this Security
Agreement, Debtor grants to Secured Party a security interest in the Collateral
(hereinafter defined) to secure the payment of the Obligations (hereinafter
defined).
C. OBLIGATIONS
1. Description of Obligations. The following obligations
("Obligations") are secured by this Security Agreement:
a. The debt, obligations, liabilities and agreements of Debtor
under (i) that Line of Credit Note in the principal sum of $40,000,000
executed by Debtor of even date herewith, bearing interest and being
payable to the order of Secured Party as therein provided (the "Note"),
(ii) the Credit Agreement executed by Debtor and Secured Party of even
date herewith, (iii) all other documents evidencing, governing,
securing or otherwise pertaining to the indebtedness evidenced by the
Note, or any other debts for borrowed monies owing from Debtor to
Secured Party where a default or breach by Debtor thereunder would
cause a default or breach under the Credit Agreement (the Note, Credit
Agreement and all other such documents being called "Loan Documents"),
and (iv) all renewals, extensions, modifications or rearrangements of
the foregoing.
b. All costs incurred by Secured Party to obtain, preserve,
perfect and enforce this Security Agreement and collect the
Obligations, and maintain, preserve, collect and enforce the Collateral
(hereinafter defined), including but not limited to reasonable
attorneys' fees and legal expenses and expenses of sale.
c. Interest on the above amounts at the Default Rate as
defined in the Note.
d. All debt, obligations and liabilities of Debtor to Secured
Party of the kinds described in this Item C., now existing or hereafter
arising.
D. COLLATERAL
1. Description of the Collateral. Debtor assigns to Secured Party and
grants to Secured Party security interests in the following, whether now
existing or hereafter arising (the "Collateral"):
a. All of the rights and interests of Debtor as a limited
partner of each of East West Resort Development, L.P., a Delaware
limited partnership ("EWRD I"); East West Resort Development II, L. P.,
a Delaware limited partnership ("EWRD II"); EWRD Summit Holding, L. P.,
a Delaware limited partnership ("Summit"); East West Resort Development
III, L. P., a Delaware limited partnership ("EWRD III"); EWRD Perry
Holding, L. P., a Delaware limited partnership
33
("Perry"); and East West Resort Development IV, L. L. L. P., a Delaware
registered limited liability limited partnership ("EWRD IV") (each a
"Subpartnership" and collectively the "Subpartnerships"); and all of
the rights and interests of Debtor as a member of East West Resorts,
LLC, a Delaware limited liability company ("Resorts"); including,
without limitation, Debtor's rights as a partner or a member to receive
distributions of any sale, exchange, refinancing or other disposition
of property owned by EWRD I under the Limited Partnership Agreement of
East West Resort Development, L. P., entered into effective as of
August 11, 1995, as hereinbefore or hereinafter from time to time
amended (the "EWRD I Partnership Agreement"); owned by EWRD II under
the Limited Partnership Agreement of East West Resort Development II,
L. P., dated as of September 26, 1996, as hereinbefore or hereinafter
from time to time amended (the "EWRD II Partnership Agreement"); owned
by Summit under the Limited Partnership Agreement of EWRD Summit
Holding, L. P., entered into effective as of September 23, 1997, as
hereinbefore or hereinafter from time to time amended (the "Summit
Partnership Agreement"); owned by EWRD III under the Limited
Partnership Agreement of East West Resort Development III, L. P., dated
as of January ___, 1998, as hereinbefore or hereinafter from time to
time amended (the "EWRD III Partnership Agreement"); owned by Perry
under the Limited Partnership Agreement of EWRD Perry Holding, L. P.,
entered into effective as of November 1, 1998, as hereinbefore or
hereinafter from time to time amended (the "Perry Partnership
Agreement"); owned by EWRD IV under the Limited Partnership Agreement
of East West Resort Development IV, L. L. L. P., dated January 1, 1999,
as hereinafter from time to time amended (the "EWRD IV Partnership
Agreement"); and owned by the Company under the Second Amended and
Restated Operating Agreement entered into effective as of January 1,
1998, as hereinbefore or hereinafter from time to time amended (the
"Resorts Operating Agreement"); and all other profits, income, and
distributions, whether in cash or in kind, owing to Debtor under the
EWRD I Partnership Agreement, the EWRD II Partnership Agreement, the
Summit Partnership Agreement, the EWRD III Partnership Agreement, the
Perry Partnership Agreement, and the EWRD IV Partnership Agreement
(each a "Partnership Agreement" and collectively the "Partnership
Agreements") and under the Resorts Operating Agreement.
b. All Partner Loans and Default Loans (as those terms are
defined in the EWRD I Partnership Agreement, the EWRD II Partnership
Agreement and the Summit Partnership Agreement) and all Partner Loans
(as that term is defined in the EWRD III Partnership Agreement, the
EWRD IV Partnership Agreement and the Perry Partnership Agreement) now
or hereafter owing to Debtor and all security therefor.
c. All present and future rights and interests Debtor may have
or be or become entitled to in the real and personal property (the
"Collateral Property") now or hereafter owned by any Subpartnership.
d. All present and future proceeds, profits, combinations,
reclassification, improvements, and products of, accessions,
attachments, and other additions to, and substitutes and replacements
for, all or any part of the Collateral described herein.
e. All present and future accounts, contract rights, general
intangibles, chattel paper, documents, instruments, cash and noncash
Proceeds, and other rights arising from or by virtue of, or from the
voluntary or involuntary sale, lease, or other disposition of, or
collections with respect to, or insurance or condemnation proceeds
payable with respect to, or proceeds payable by virtue of warranty,
indemnity, guaranty, or other claims, causes and rights of action,
settlements thereof, judicial and arbitration judgments and awards
against any person with respect to, all or any part of the Collateral
or the Collateral Property described herein. As used herein, the term
"Proceeds" shall have the meaning assigned to it under the UCC and, to
the extent not otherwise included, shall include, but not be limited
to, (i) all income, revenues, fees, distributions, reimbursements and
payments from whatever source received by, or on behalf of Debtor, in
respect of the Collateral, (ii) any and all payments (in any form
whatsoever) made or due and payable to Debtor from time to time in
connection with any casualty with respect to the Collateral Property or
any of the Collateral (whether or not pursuant to an insurance policy),
or any requisition, confiscation, condemnation, seizure or forfeiture
of all or any part of the Collateral by any governmental authority,
(iii) all claims of Debtor for losses or damages arising out of or
related to or for any breach of any agreements, covenants,
representations or warranties or any default under any of the
Collateral described herein, and (iv) any and all other amounts from
time, to time paid or payable to, or on behalf of, Debtor under, or in
connection with, any of the Collateral.
f. All present and future security for the payment to Debtor
of any of the Collateral described herein and goods which gave, or will
give, rise to any of such Collateral or are evidenced, identified, or
represented therein or thereby.
The description of Collateral contained in this paragraph shall not be
deemed to permit any action prohibited by this Security Agreement or by terms
incorporated in this Security Agreement. Portions of the Collateral constitute
accounts, contract rights,
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34
general intangibles, chattel paper, documents or instruments, and all books and
records of Debtor concerning such Collateral are, and shall be, located at the
offices of the Debtor specified above.
E. DEBTOR'S WARRANTIES
Debtor represents, warrants, and covenants to Secured Party now and so
long as any Obligations secured hereby are outstanding as follows:
1. No financing statement covering any portion of the Collateral is on
file in any public office, except the financing statements relating to this
security interest created hereunder.
2. Debtor is the sole owner of the Collateral and each item
constituting the Collateral, free and clear of all liens except for the security
interest granted to Secured Party pursuant to this Security Agreement.
3. All actions necessary or desirable to perfect the Security Interest
in the Collateral in each state in which any portion of the Collateral is or
will be located have been, or will forthwith be, duly taken.
4. Each of the Partnership Agreements and the Resorts Operating
Agreement is in full force and effect and, to the knowledge of Debtor, there
exists no material default thereunder, or event or condition which, with the
passage of time or the giving of notice, or both, would constitute a material
default thereunder.
5. Neither any Partnership Agreement nor the Resorts Operating
Agreement will be amended or modified in any manner that would materially affect
Debtor's interest thereunder, or in any manner which would materially impair or
adversely affect the Collateral, nor shall Debtor consent to any such amendment
without the prior written consent of Secured Party.
6. There is no condition, circumstance, event, agreement, document,
instrument, restriction, litigation or other proceeding and, to the best of
Debtor's knowledge, there is no threatened litigation or proceeding or basis
therefor, which could materially adversely affect the validity or priority of
the liens and security interests granted, or intended to be granted, hereunder
when executed, delivered, recorded and filed as required hereunder, or that
could materially adversely affect the ability of Debtor to perform its
obligations hereunder and under the other Loan Documents to which Debtor is a
party, or which would constitute an Event of Default.
7. Each Subpartnership, Resorts and Debtor have fully complied with all
requirements imposed on them in connection with (a) the organization and
formation of such Subpartnership or Resorts, as applicable, and (b) the sale,
distribution and offer of partnership interests in such Subpartnership and
membership interests in Resorts.
F. DEBTOR'S COVENANTS
Debtor covenants to Secured Party and agrees with Secured Party as
follows:
1. Debtor shall promptly perform all of Debtor's agreements herein, and
any other agreements between Debtor and Secured Party.
2. Debtor shall defend the Collateral against all claims and demands of
all persons at any time claiming the same or any interest therein adverse to
Secured Party.
3. Debtor shall keep the Collateral free from liens and other security
interests (except liens for taxes not yet due), and shall not create or suffer
to exist any lien or security interest in the Collateral hereafter acquired
except for the security interests hereby granted. Debtor shall not file, or
permit to be filed, any financing statements or other security instruments,
covering the Collateral, unless by, or on behalf of, Secured Party in connection
with this Security Agreement or to effectuate the assignment to Debtor of the
financing statements currently of record against the Collateral.
4. Debtor shall pay all costs necessary to obtain, preserve, perfect,
defend and enforce the security interests hereby granted, collect the sums owing
under the Collateral Loan Documents, and preserve, defend, enforce, service and
collect the Collateral, including specifically, but without limitation, the
payment of taxes, assessments, reasonable attorneys' fees and legal
3
35
expenses, and expenses of sales. If Debtor shall have failed to pay such costs
and expenses within five (5) days after request by Secured Party, Secured Party
may, at its option, pay any such costs and expenses, and discharge encumbrances
on the Collateral. Debtor agrees to reimburse the Secured Party on demand for
any costs so incurred, and, until such reimbursement, the amount of any such
payment shall be a part of the Obligation.
5. Prior to or immediately following the occurrence thereof, Debtor
will notify the Secured Party of (i) any material adverse change occurring in or
to any of the Collateral, (ii) any change in Debtor's office address or mailing
address, (iii) any material change in any fact or circumstance warranted or
represented by Debtor in this Security Agreement or furnished to the Secured
Party by Debtor, (iv) any Event of Default or (v) any notices, communications,
or correspondence to be or which have been delivered to Debtor under the
Partnership Agreement and deliver to Secured Party copies thereof.
6. Debtor shall execute and deliver to Secured Party a financing
statement for filing to perfect the security interests hereunder and any other
papers furnished by Secured Party which are necessary in the judgment of Secured
Party to obtain, maintain and perfect the security interest hereunder and to
enable Secured Party to comply with any applicable federal or state law in order
to obtain or perfect Secured Party's interest in the Collateral. Debtor shall
have each Subpartnership and Resorts make appropriate entries in its partnership
or membership records to reflect the existence of the security interest granted
hereby in the Collateral.
7. Debtor shall cause Subpartnerships and Resorts to comply with all of
the representations, warranties, covenants, agreements, indemnities and terms
contained in the Subpartnerships' Organizational Documents and Resorts'
Organizational Documents and all other material agreements to which the
Subpartnerships and Resorts, or any of them, is bound and to enforce rights of
Subpartnerships and Resorts under all material agreements by which any of them
is bound, in a timely manner, consistent with prudent practices and all
applicable laws, and also as required by Secured Party.
8. Debtor shall fully perform all of Debtor's duties under and in
connection with each transaction to which the Collateral, or any part thereof,
relates, so that the amounts thereof shall actually become payable in their
entirety to Secured Party.
9. Debtor shall promptly notify Secured Party of any claim, action, or
proceeding affecting title to all or any of the Collateral or the security
interest and, at the request of Secured Party, appear in and defend, at Debtor's
expense, any such claim, action, demand or proceeding.
10. At Debtor's expense and upon Secured Party's request, after an
Event of Default, Debtor shall file or cause to be filed such applications and
take such other actions as Secured Party may request to obtain the consent or
approval of any governmental authority to Secured Party's rights hereunder,
including, without limitation, the right to sell all of the Collateral upon an
Event of Default without additional consent or approval from such governmental
authority (and, because Debtor agrees that Secured Party's remedies at law for
failure of Debtor to comply with this provision would be inadequate and that
such failure would not be adequately compensable in damages, Debtor agrees that
its covenants in this provision may be specifically enforced).
11. Upon demand by Secured Party, Debtor will deposit upon receipt all
checks, drafts, cash or other remittances on account or accounts or contracts or
received as proceeds of any other Collateral in a special bank account in a bank
of Secured Party's choice over which Secured Party alone shall have power of
withdrawal. The funds in said account shall be held by Secured Party as security
for the Obligation. Said proceeds shall be deposited in the form received,
except for the endorsement of Debtor where necessary to permit collection of
items, which endorsements Debtor agrees to make, but which Secured Party is
authorized to make on Debtor's behalf. Secured Party may from time to time apply
the whole or any part of the funds in such special account against the
Obligations. Any portion of said funds on deposit which Secured Party elects not
to apply to the Obligations may be paid by Secured Party to Debtor.
12. Debtor shall give Secured Party written notice of each office of
Debtor in which records of Debtor pertaining to accounts in the Collateral are
kept, and of any change of any office or location. Except as such notice is
given, all records of Debtor pertaining to the Collateral and to accounts are
and shall be kept in the location shown at the beginning hereof.
G. RIGHTS AND POWERS OF SECURED PARTY
1. Secured Party may in its discretion after an Event of Default but
only after prior written notice to Debtor, without liability to Debtor, obtain
from any person information regarding Debtor or Debtor's business, which
information any such person
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36
also may furnish without liability to Debtor; endorse as Debtor's agent any
instruments, documents or chattel paper in the Collateral or representing
proceeds of the Collateral; contact any account debtors directly to verify
information furnished by Debtor; take control of proceeds; release the
Collateral in its possession to any Debtor, temporarily or otherwise; after
default, take control of funds generated by the Collateral, such as cash
dividends, interest and proceeds or refunds from insurance, and use same to
reduce any part of the Obligations and exercise all other rights which an owner
of such collateral may exercise; after default, at any time transfer any of the
Collateral or evidence thereof into its own name or that of its nominee; demand,
collect, convert, redeem, receipt for, settle, compromise, adjust, ▇▇▇ for,
foreclose or realize upon the Collateral, in its own name or in the name of
Debtor, as Secured Party may determine. The foregoing rights and powers of
Secured Party will be in addition to, and not a limitation upon, any rights and
powers of Secured Party given by law, elsewhere in this agreement, or otherwise.
2. Secured Party may while any Event of Default continues hereunder
present for conversion any instrument (including any investment security) in the
Collateral which is convertible into any other instrument or investment security
or a combination thereof with cash. But Secured Party shall not have any duty to
present for conversion any instrument in the Collateral unless it shall have
received from Debtor written instructions to that effect at a time reasonably
far in advance of the final conversion date to make such conversion possible.
H. DEFAULT
1. Events of Default. The occurrence of a default under the Note, the
Credit Agreement or any document evidencing, governing, securing, guaranteeing,
indemnifying or otherwise pertaining to the Loan shall constitute an event of
default ("Event of Default") hereunder.
2. Remedies of Secured Party Upon Default. Should an Event of Default
occur and be continuing, Secured Party may, at its election, exercise any and
all rights and remedies available to a secured party under the UCC, in addition
to any and all other rights and remedies afforded by the Loan Documents, at law,
in equity, or otherwise, including, without limitation, such rights and remedies
as (a) Party, (b) applying by appropriate judicial proceedings for appointment
of a receiver for all or part of the Collateral (and Debtor hereby consents to
any such appointment), and (c) applying to the Obligation any cash held by
Secured Party under this Security Agreement. The exercise of one or more rights
or remedies by Secured Party hereunder shall not prejudice or impair the
concurrent or subsequent exercise of any other rights or remedies by Secured
Party. If, in the opinion of Secured Party, there is any question that a public
or semipublic sale or distribution of any Collateral will violate any state or
federal securities law, Secured Party in its discretion (a) may offer and sell
securities privately to purchasers who will agree to take them for investment
purposes and not with a view to distribution and who will agree to imposition of
restrictive legends on the certificates representing the security, or (b) may
sell such securities in an intrastate offering under Section 3(a)(11) of the
Securities Act of 1933, and no sale so made in good faith by Secured Party shall
be deemed to be not "commercially reasonable" because so made.
a. Notice. Reasonable notification of the time and place of
any public sale of the Collateral, or reasonable notification of the
time after which any private sale or other intended disposition of the
Collateral is to be made, shall be sent to Debtor and to any other
Person entitled to notice under the UCC. It is agreed that notice sent
or given not less than twenty (20) business days prior to the taking of
the action to which the notice relates is reasonable notification and
notice for the purposes of this subparagraph.
b. Application of Proceeds. Secured Party shall apply the
proceeds of any sale or other disposition of the Collateral under this
paragraph in the following order: first, to the payment of all its
expenses incurred in retaking, holding, and preparing any of the
Collateral for sale(s) or other disposition, in arranging for such
sale(s) or other disposition, and in actually selling or disposing of
the same (all of which are part of the Obligation); second, toward
repayment of amounts expended by Secured Party under Paragraph I.3; and
third, toward payment of the balance of the Obligation in accordance
with the Credit Agreement. If the proceeds are insufficient to pay the
Obligation in full, Debtor shall remain liable for any deficiency to
the extent provided in the Credit Agreement.
3. Other Rights of Secured Party.
a. Performance. In the event Debtor shall fail to pay when due
all taxes, subject to contest rights permitted by the Credit Agreement,
on any of the Collateral, or to preserve the priority of the Security
Interest in any of the Collateral, or otherwise fail to perform any of
its obligations under the Loan Documents with respect to the
Collateral, then Secured Party may, at its option, but without being
required to do so, pay such taxes, prosecute or defend any suits in
relation to the
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Collateral, or insure and keep insured the Collateral in any amount
deemed appropriate by Secured Party, or take all other action which
Debtor is required, but has failed or refused, to take under the Loan
Documents. Any sum which may be expended or paid by Secured Party
under this subparagraph (including, without limitation, court costs
and attorneys' fees) shall bear interest from the dates of expenditure
or payment at the Default Rate (as defined in the Note) until paid
and, together with such interest, shall be payable by Debtor to
Secured Party upon demand and shall be part of the Obligation.
b. Collection. After the occurrence of an Event of Default and
during the continuation thereof, upon notice from Secured Party, each
obligor with respect to any payments on any of the Collateral
(including without limitation condemnation proceeds, dividends and
other distributions with respect to securities, and insurance proceeds
payable by reason of loss or damage to any of the Collateral Property)
is hereby authorized and directed by Debtor to make payment directly to
Secured Party, regardless of whether Debtor was previously making
collections thereon. Subject to Subparagraph I.3(d) hereof, until such
notice is given, Debtor is authorized to retain and expend all payments
made on the Collateral. After the occurrence of an Event of Default and
during the continuation thereof, Secured Party shall have the right in
its own name or in the name of Debtor to compromise or extend the time
of payment with respect to all or any portion of the Collateral for
such amounts and upon such terms as Secured Party may determine; to
demand, collect, receive, receipt for, ▇▇▇ for, compound, settle,
compromise, adjust, realize upon and give acquittances for any and all
amounts due or to become due with respect to Collateral; to file any
claims or take any action or initiate any proceedings which Secured
Party may deem necessary or desirable for the collection of any of the
Collateral or to otherwise enforce the rights or remedies of Debtor
with respect to any Collateral; to take control of cash and other
Proceeds of any Collateral; to endorse the name of Debtor on any notes,
acceptances, checks, drafts, money orders, or other evidences of
payment on Collateral that may come into the possession of Secured
Party; to sign the name of Debtor on any drafts against obligors or
other Persons making payment with respect to Collateral, on assignments
and verifications of accounts or other Collateral and on notices to
obligors making payment with respect to Collateral; to send requests
for verification of obligations to any such obligor; to take any action
Debtor is required to take or any other necessary action to obtain,
preserve, and enforce this Security Agreement, and maintain, preserve
and collect the Collateral, without notice to Debtor, and add the costs
of same to the Obligation; to release Collateral in Secured Party's
possession to any Person, temporarily or otherwise; to set standards
from time to time to govern what may be deemed after-acquired
Collateral; to transfer any of the Collateral, or evidence thereof,
into its own name or that of its nominee and receive the Proceeds
therefrom and hold the same as security for the Obligation, or apply
the same thereon; to exercise as to the Collateral all the rights of
the owner thereof; and to do all other acts and things necessary to
carry out the intent of this Security Agreement. If any obligor fails
or refuses to make payment on any Collateral when due, Secured Party is
authorized, in its sole discretion, either in its own name or in the
name of Debtor, to take such action as Secured Party shall deem
appropriate for the collection of any amounts owed with respect to the
Collateral or upon which a delinquency exists. Regardless of any other
provision hereof, however, Secured Party shall never be liable for its
failure to collect, or for its failure to exercise diligence in the
collection of, any amounts owed with respect to Collateral, nor shall
it be under any duty whatever to anyone except Debtor to account for
funds that it shall actually receive hereunder. Without limiting the
generality of the foregoing, Secured Party shall have no responsibility
for ascertaining any maturities, calls, conversions, exchanges, offers,
tenders, or similar matters relating to any Collateral, or for
informing Debtor with respect to any of such matters (irrespective of
whether Secured Party actually has, or may be deemed to have, knowledge
thereof). The receipt of Secured Party to any obligor shall be a full
and complete release, discharge, and acquittance to such obligor, to
the extent of any amount so paid to Secured Party.
c. Certain Proceeds. After the occurrence and during the
continuance of an Event of Default, any cash Proceeds of Collateral
which come into the possession of Secured Party (including, without
limitation, insurance and condemnation proceeds) may, at Secured
Party's option, be applied in whole or in part to the Obligation, be
released in whole or in part to or on the written instructions of
Debtor for any general or specific purpose, or be retained in whole or
in part by Secured Party as additional Collateral. Any cash Collateral
in the possession of Secured Party may be invested by Secured Party but
Secured Party shall never be obligated to make any such investment and
shall never have any liability to Debtor for any loss which may result
therefrom. All interest and other amounts earned from any investment
of Collateral may be dealt with by Secured Party in the same manner as
other cash Collateral.
d. Use and Operation of Collateral. Should any Collateral come
into the possession of Secured Party, Secured Party may use or operate
such Collateral for the purpose of preserving it or its value pursuant
to the order of a court of appropriate jurisdiction or in accordance
with any other rights held by Secured Party with respect to such
Collateral. Debtor covenants promptly to reimburse and pay to Secured
Party, at Secured Party's request, the amount of all reasonable
expenses (including, without limitation, the cost of any insurance and
payment of taxes or other charges) incurred by Secured Party in
connection with its custody and preservation of Collateral, and all
such expenses, costs, taxes, and other charges shall bear
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interest at the Maximum Rate (as defined in the Note) until repaid
and, together with such interest, shall be payable by Debtor to
Secured Party upon demand and shall become part of the Obligation.
However, the risk of accidental loss or damage to, or diminution in
value of, Collateral is on Debtor, and Secured Party shall have no
liability whatever for failure to obtain or maintain insurance, nor to
determine whether any insurance ever in force is adequate as to amount
or as to the risks insured. With respect to Collateral that is in the
possession of Secured Party, Secured Party shall have no duty to fix
or preserve rights against prior parties to such Collateral and shall
never be liable for any failure to use diligence to collect any amount
payable in respect of such Collateral, but shall be liable only to
account to Debtor for what it may actually collect or receive thereon.
The provisions of this subparagraph shall be applicable whether or not
an Event of Default has occurred and is continuing.
e. Diminution in Value of Collateral. Secured Party shall have
no liability or responsibility whatsoever for any diminution in or loss
of value of any Collateral.
I. MULTIPLE COUNTERPARTS
This Security Agreement may be executed in counterparts, each of which
shall be deemed an original, and all of which shall be deemed but one and the
same instrument.
J. GENERAL
1. Waiver. No delay on the part of Secured Party in exercising any
power or right shall operate as a waiver thereof; nor shall any single or
partial exercise of any power or right preclude other or further exercise
thereof or the exercise of any other power or right. No waiver by Secured Party
of any right hereunder or of any default by Debtor shall be binding upon Secured
Party unless in writing, and no failure by Secured Party to exercise any power
or right hereunder or waiver of any default by Debtor shall operate as a waiver
of any other or further exercise of such right or power or of any further
default.
2. Parties Bound. The rights of Secured Party hereunder shall inure to
the benefit of its successors and assigns. The terms of this Security Agreement
shall be binding upon the successors and assigns of the parties. All
representations, warranties and agreements of Debtor are joint and several if
Debtor is more than one and shall bind Debtor's personal representatives, heirs,
successors and assigns.
3. Definitions. Unless the context indicates otherwise, definitions in
the UCC apply to words and phrases in this Security Agreement; if UCC
definitions conflict, Chapter 9 definitions apply.
4. Notice. Notice shall be deemed reasonable if mailed postage prepaid
at least ten (10) days before the related action (or if the UCC elsewhere
specifies a longer period, such longer period) to Debtor's address given above.
5. Expenses. Debtor agrees to reimburse Secured Party's out-of-pocket
expenses, including reasonable attorney's fees, incurred in negotiating,
administering or enforcing any part of the Obligations, and in preparation,
execution, delivery and recording of any documents in connection with any part
of the Obligations, when not contrary to law.
6. Limitation on Interest. All agreements between Debtor and Secured
Party, whether now existing or hereafter arising and whether written or oral,
are hereby expressly limited so that in no contingency, whether by reason of
demand or acceleration of the indebtedness secured hereby or otherwise, shall
the interest contracted for, charged, received, paid or agreed to be paid to
Secured Party exceed the maximum amount permissible under applicable law. If,
from any circumstance whatsoever interest would otherwise be payable to the
holder hereof in excess of the maximum lawful amount, the interest payable to
Secured Party shall be reduced to the maximum amount permitted under applicable
law; and if from any such circumstance Secured Party shall ever receive anything
of value deemed interest by applicable law in excess of the maximum lawful
amount, an amount equal to any excessive interest shall be applied to the
reduction of the principal amount owing on the indebtedness secured hereby and
not to the payment of interest, or if such excessive interest exceeds such
unpaid balance of the principal, such excess shall be refunded to the
undersigned. All interest paid or agreed to be paid to Secured Party on the
indebtedness secured hereby shall, to the extent permitted by applicable law, be
amortized, prorated, allocated and spread throughout the full term of such
indebtedness (including the period of any renewal or extension thereof) until
payment in full so that the interest on account of such indebtedness shall not
exceed the maximum amount permitted by applicable law. The terms and provisions
of this paragraph shall control all agreements between Debtor and Secured Party.
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7. Modifications. No provision hereof shall be modified or limited
except by a written agreement expressly referring hereto and to the provision so
modified or limited and signed by the Debtor and Secured Party, nor by course of
conduct, usage of trade, or by the law merchant.
8. Severability. The unenforceability of any provision of this Security
Agreement shall not affect the enforceability or validity of any other
provision.
9. Gender and Number. Where appropriate, the use of one gender shall be
construed to include the others or any of them; and the singular number shall be
construed to include the plural, and vice versa.
10. Applicable Law and Venue. THIS SECURITY AGREEMENT SHALL BE
CONSTRUED ACCORDING TO THE LAWS OF THE STATE OF TEXAS.
11. Financing Statement. A carbon, photographic or other reproduction
of this Security Agreement or any financing statement covering the Collateral
shall be sufficient as a financing statement.
EXECUTED as of the date and year first above written.
DEBTOR: CRESCENT DEVELOPMENT MANAGEMENT CORP.,
a Delaware corporation
By:_______________________________________________
Name:_________________________________________
Title_________________________________________
SECURED PARTY: CRESCENT REAL ESTATE EQUITIES LIMITED PARTNERSHIP,
a Delaware limited partnership
By: Crescent Real Estate Equities, Ltd.,
Sole general partner
By:___________________________________________
Name:_________________________________________
Title_________________________________________
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