Form 10-28

Loan Agreement

[Construction]

Date:

Borrower:

Mailing address:

Lender:

Mailing address:

Phone:

Loan no.:

Loan officer:

Guarantor:

Mailing address:

Title Company:

GF #:

Note

Date:

Original Principal Amount:

Maturity Date:

Loan Origination Fee:

Use of Loan Proceeds:

Collateral

Real Property: As described in Exhibit A attached to this Loan Agreement

Prior liens: [None/[include recording information]]

Personal Property: As described in the Deed of Trust, Security Agreement, Assignment of Rents, Collateral Assignment of Leases, and Financing Statement

Loan Documents (all dated to be effective as of the date of the Note)

Loan Agreement (Construction)

Promissory Note

Deed of Trust, Security Agreement, Assignment of Rents, Collateral Assignment of Leases, and Financing Statement

Errors and Omissions Agreement

Notice of Final Agreement

Business Purpose Affidavit

Notice to Borrower from Lender’s Attorney

Guaranty Agreement:

Certificate of Resolutions

Affidavit of No Prior Activity

Affidavits of Completion

Contractor’s Agreement and Consent

Agreement to Provide Ongoing Information

Financial Covenants

“Financial Statements” means statements of Borrower and Guarantor prepared in accordance with the requirements of paragraphs C.8. and C.9. of this Loan Agreement.

The Financial Statements delivered to Lender are true and correct in all respects, have been prepared in accordance with sound principles consistently followed, and fully and accu­rately present the financial condition of those statements’ subjects as of those statements’ dates, and no materially adverse change has occurred in that financial condition since.

Borrower and Guarantor will deliver to Lender true and correct copies of the federal income tax returns of Borrower and Guarantor for the prior year and each tax year there is an outstanding balance on the Note, each return within thirty days of its filing, but in no event later than May 15th in any tax year, unless the filing is extended based on any permitted extension, but not later than the final due date for any return.

Borrower will furnish to Lender at Closing and annually thereafter a current rent roll for all properties owned by Borrower under lease listing each tenant, a description of the tenant’s space, the rent amount, the status of the rent due under the lease, and the remaining term of the lease.

All financial information provided will substantiate to Lender’s satisfaction that Bor­rower thereafter continuously maintains from Borrower’s collective income sources a ratio of Net Operating Income to Debt Service for each calendar year beginning sixty days after 2023 year-end of not less than 1.20 (the “Debt Service Coverage Ratio”). “Net Operating Income” means gross income less operating expenses before income taxes, distributions to equity own­ers, dividends, depreciation, and amortization (also known as “EBITDA”). “Debt service” means principal and interest payments on all debts with a maturity in excess of one year. Fail­ure to continuously maintain the Debt Service Coverage Ratio shall be a default under this Loan Agreement and the Promissory Note.

Buyer will fund at closing and thereafter maintain an Interest Reserve Account in the initial amount of no less than $[amount] and will continuously maintain this account until the Maturity Date. Funds in the Interest Reserve Account may be released at Lender’s sole discre­tion for budgeted and Lender-approved expenses including interest due on the Note. The Reserve Account is subject to the security interest granted to Lender in the Deed of Trust, and all Obligors hereby grant Lender that Security Interest pursuant to the terms set out in the Deed of Trust.

The Loan

Subject to the terms and conditions of this Loan Agreement, Lender will lend Borrower the Original Principal Amount as represented by the Note (the “Loan”), and Borrower agrees to pay the Note.

Clauses and Covenants

A.Conditions Precedent to Loan

The obligation of Lender to make the Loan is conditioned on—

A.1.the execution and delivery of the Loan Documents;

A.2.the accuracy, in all material respects, of all representations and warranties in the Loan Documents;

A.3.no default existing under the Loan Documents;

A.4.payment of the Loan Origination Fee, set out above, and all expenses incurred by Lender in connection with the Loan Documents; and

A.5.Lender’s receipt, in a form acceptable to Lender, of—

A.5.a.certification from Borrower’s authorized representative for any Borrower that is an entity attaching (i) a copy of Borrower’s organizational documents, (ii) the approval of Borrower’s governing authority for the execution and delivery of the Loan Documents, and (iii) specimen signatures from all Borrower representatives authorized to execute the Loan Documents;

A.5.b.certification from governmental authorities for any Borrower that is an entity confirming Borrower’s existence and Borrower’s account status with the Texas Comptroller of Public Accounts;

A.5.c.appraisal of the Real Property;

A.5.d.survey plat of the Real Property;

A.5.e.commitment for issuance of a loan policy of title insurance in the Original Prin­cipal Amount insuring the validity of Lender’s lien on the Real Property and confirming that no liens exist on the Real Property other than those liens permitted by the Loan Documents;

A.5.f.financing statement reports on the Personal Property issued by all applicable fil­ing officers confirming no financing statements are filed on the Personal Property other than those financing statements permitted by the Loan Documents;

A.5.g.financial statement on Borrower and financial statement on Guarantor;

A.5.h.proof of insurance required by the Loan Documents; and

A.5.i.all other documents, instruments, and certificates reasonably requested by Lender.

B.Borrower’s Representations

To induce Lender to enter into this Loan Agreement and to make the Loan, Borrower represents to Lender that—

B.1.Borrower—

B.1.a.has the power and authority needed to execute and deliver the Loan Documents and to perform Borrower’s obligations under the Loan Documents;

B.1.b.possesses all permits, registrations, approvals, consents, licenses, trademarks, trademark rights, trade names, trade name rights, and copyrights needed to conduct Bor­rower’s business;

B.1.c.was validly formed and exists under the laws of the state of organization;

B.1.d.is in good standing under the laws of the state of organization and all other juris­dictions where the nature of Borrower’s business makes qualification necessary; and

B.1.e.is qualified to do business under the laws of the state of organization and all other jurisdictions where the nature of Borrower’s business makes qualification necessary.

B.2.the execution, delivery, and performance of the Loan Documents executed by Borrower have been duly authorized and do not and will not (a) contravene or violate any legal requirement; (b) result in the breach of, or constitute a default under, any instrument to which Borrower is a party or by which any of Borrower’s property may be bound or affected; or (c) result in a requirement to create any lien upon any of Borrower’s property other than liens granted to Lender on the Collateral;

B.3.the Loan Documents are legal, valid, and binding obligations of the parties exe­cuting the documents;

B.4.Borrower has good and indefeasible title to the Real Property and has good title to the Personal Property, free and clear of all liens except (a) as disclosed in the Loan Docu­ments; (b) liens for ad valorem taxes, general and special assessments, and other governmen­tal charges not yet due or payable; and (c) liens granted to Lender;

B.5.Borrower’s financial statements delivered to Lender fairly present the financial condition and the results of Borrower’s operations as of the dates and for the periods indi­cated, and no material adverse change has occurred in the assets, liabilities, financial condi­tion, or business of Borrower since the dates of the financial statements;

B.6.Borrower has no knowledge of any litigation or administrative claim, action, or proceeding, pending or threatened, against Borrower or directly involving the Collateral before or by any governmental authority that, if adversely determined, could have a material adverse effect on Borrower;

B.7.there is no outstanding adverse judgment, writ, order, injunction, award, or decree affecting Borrower or the Collateral;

B.8.Borrower is not in default under any agreement to which Borrower is bound or to which any of the collateral is subject that could have a material adverse effect on Borrower or the Collateral;

B.9.all information and documentation supplied to Lender and all statements made to Lender by or on behalf of Borrower are correct and complete in all material respects as of the date made;

B.10.except as disclosed in an environmental report previously provided to Lender, Borrower has no knowledge of the Real Property’s being used for the production, release, or disposal of hazardous wastes or materials in violation of applicable environmental laws;

B.11.the Real Property is taxed and billed separately from any other property for ad valorem tax purposes;

B.12.except as disclosed on the survey previously provided to Lender, no part of the Real Property is located within a flood zone;

B.13.Borrower’s financial records have been prepared and maintained in accordance with good accounting practices consistently applied and reflect all moneys due or to become due from or to Borrower; and

B.14.Borrower has filed all required tax returns and paid all taxes shown due on them, except those for which extensions have been obtained and those that are being contested in good faith and for which appropriate reserves have been established and disclosed in writ­ing to Lender.

C.Affirmative Covenants

Borrower will—

C.1.apply all proceeds from the sale, collection, or other disposition of the Collat­eral to amounts owing on the Note unless the Loan Documents authorize an alternate use of the proceeds;

C.2.comply with the Additional Loan Requirements;

C.3.comply with the Financial Covenants;

C.4.operate Borrower’s business in accordance with all applicable legal require­ments;

C.5.keep at Borrower’s address, or such other place as Lender may approve, accounts and records reflecting the operation of Borrower’s business and copies of all written contracts, leases, and other instruments that affect the Collateral;

C.6.prepare Borrower’s financial records in compliance with good accounting prac­tices consistently applied;

C.7.permit Lender to examine and make copies of Borrower’s books, records, con­tracts, leases, and other instruments at any reasonable time;

C.8.deliver to Lender, annually and at Lender’s request from time to time, Bor­rower’s tax returns and internally prepared financial statements of Borrower prepared in accordance with good accounting practices consistently applied, in detail reasonably satisfac­tory to Lender and certified to be true and correct by Borrower;

C.9.deliver to Lender, annually and at Lender’s request from time to time, Guaran­tor’s tax returns and internally prepared financial statements prepared in accordance with good accounting practices consistently applied, in detail reasonably satisfactory to Lender and certified to be true and correct by Guarantor;

C.10.execute, acknowledge as required, and deliver to Lender, at Lender’s request from time to time, at Borrower’s expense, any document needed by Lender to (a) correct any defect, error, omission, or ambiguity in the Loan Documents; (b) comply with Borrower’s obligations under the Loan Documents; (c) make subject to the Loan Documents, and perfect those documents’ liens on and security interests in, any property intended to be covered thereby; and (d) protect, perfect, or preserve the liens and security interests of the Loan Docu­ments against third parties or make any recordings, file any notices, or obtain any consents requested by Lender in connection therewith;

C.11.notify Lender promptly (a) on acquiring knowledge of the occurrence of any event of default under the Loan Documents; (b) if any of Borrower’s property is surrendered in satisfaction of a debt or obligation or on acquiring knowledge that any of Guarantor’s prop­erty was surrendered in satisfaction of a debt or obligation; and (c) of any litigation, arbitra­tion, mediation, or proceedings before any governmental agency that could have a material adverse effect on Borrower or the Collateral or on acquiring knowledge of any litigation, arbi­tration, mediation, or proceedings before any governmental agency that could have a material adverse effect on Guarantor;

C.12.pay promptly on demand all expenses in connection with (a) the negotiation, preparation, execution, filing, recording, rerecording, modification, and supplementation of the Loan Documents; (b) the collection of the Note; (c) the protection of the Collateral; (d) the collection, enforcement, sale, or other disposition of the Collateral; and (e) the performance by Lender of any of Borrower’s obligations under the Loan Documents;

C.13.use the Note proceeds for the purposes permitted in this Loan Agreement; and

C.14.do all things necessary to preserve Borrower’s existence, qualifications, rights, and franchises in all jurisdictions where Borrower does business.

D.Negative Covenants

Borrower will not—

D.1.use or allow the use of the Collateral in any manner that (a) constitutes a public or private nuisance; (b) makes void, voidable, or cancelable, or increases the premium of, any insurance required by the Loan Documents; or (c) lessens the value of the Collateral, other than as a result of ordinary wear and tear from the Collateral’s intended use;

D.2.purchase, acquire, or lease any property from, or sell, transfer, or lease any property to, any equity owner, manager, director, officer, agent, or employee of Borrower, or any person or entity controlled by, controlling, or under common control with Borrower, except on terms then customarily available between unrelated parties in substantially similar transactions;

D.3.lend money to, or guarantee the payment or performance of any liability or obli­gation of, any person, except short-term loans to Borrower’s employees that, in the aggregate, do not exceed $[amount];

D.4.materially change the nature of Borrower’s business or enter into any business that is substantially different from Borrower’s existing business;

D.5.incur any indebtedness other than the Note, except short-term indebtedness to trade creditors incurred in the ordinary course of Borrower’s business that, in the aggregate, does not exceed $[amount];

D.6.create or permit any mortgage, security interest, or lien on any Collateral other than mortgages, security interests, or liens existing at the date of this Loan Agreement and dis­closed to Lender or created pursuant to the Loan Documents;

D.7.purchase or redeem any of Borrower’s ownership interests, declare or pay any dividends, or make any distribution to the holders of any of Borrower’s ownership interests (to the extent Borrower is an entity);

D.8.sell, transfer, convey, or lease any Collateral except for sales or leases in the ordinary course of business and on the conditions provided in the Loan Documents;

D.9.acquire all or substantially all of the assets or ownership interests of any third party; or

D.10.liquidate or dissolve, or become a party to any merger or consolidation.

E.Default and Remedies

E.1.A default exists, subject to any notice and opportunity to cure rights set forth in the Loan Documents, if—

E.1.a.Borrower fails to timely pay the Note;

E.1.b.a party fails to perform any obligation or covenant in any of the Loan Docu­ments;

E.1.c.any representation made by a party in any of the Loan Documents is false in any material respect when made;

E.1.d.a receiver is appointed for any party executing any of the Loan Documents, or for any of the Collateral;

E.1.e.any Collateral is assigned for the benefit of creditors;

E.1.f.a bankruptcy or insolvency proceeding is commenced by a party executing any of the Loan Documents;

E.1.g.a bankruptcy or insolvency proceeding is commenced against a party executing any of the Loan Documents, and the proceeding continues without dismissal for sixty days, the party against whom the proceeding is commenced admits the material allegations of the petition against it, or an order for relief is entered;

E.1.h.any of the following parties is terminated, begins to wind up its affairs, is autho­rized by its governing body or persons to terminate or wind up its affairs, or any event occurs or condition exists that permits the termination or winding up of the affairs of any of the fol­lowing parties: Borrower, a partnership of which Borrower is a general partner, or any other obligated party executing any of the Loan Documents; or

E.1.i.any Collateral is impaired by uninsured loss, theft, damage, or destruction, or by levy and execution, or by issuance of an official writ or order of seizure, unless it is promptly replaced with collateral of like kind and quality or restored to its former condition.

E.2.If a default exists, Lender may—

E.2.a.declare the unpaid principal balance, earned interest, and any other amounts owed on the Note immediately due; and

E.2.b.exercise against Borrower, the Collateral, and any other party executing the Loan Documents, any rights and remedies available to Lender under the Loan Documents.

E.3.Notwithstanding any other provision in the Loan Documents, in the event of a default, before exercising any of Lender’s remedies under the Loan Documents, Lender will first give Borrower notice of default and Borrower will have ten days after delivery of notice of any monetary payment default and thirty days after notice of any other event of default (the “Cure Period”) in which to cure the default. If the default is not cured before the expiration of the applicable Cure Period, Borrower and each surety, endorser, and guarantor waive all demand for payment, presentation for payment, notice of intention to accelerate maturity, notice of acceleration of maturity, protest, and notice of protest, to the extent permitted by law.

F.General Provisions

F.1.Any notice required or permitted under this Loan Agreement must be in writing. Any notice required by this Loan Agreement will be deemed to be delivered (whether actually received or not) when deposited with the United States Postal Service, postage prepaid, certi­fied mail, return receipt requested, and addressed to the intended recipient at the address pro­vided in this Loan Agreement. Notice may also be given by regular mail, personal delivery, courier delivery, facsimile transmission, or other commercially reasonable means and will be effective when actually received. Any address for notice may be changed by notice delivered as provided herein.

F.2.The Loan Documents, including any of their exhibits and attachments, consti­tute the entire agreement of the parties. There are no representations, agreements, or promises by Lender pertaining to the Loan that are not in those documents.

F.3.This Loan Agreement may be amended only by an instrument in writing signed by the parties.

F.4.Borrower may not assign this Loan Agreement or any of Borrower’s rights under it without Lender’s prior written consent, and any attempted assignment is void. This Loan Agreement binds, benefits, and may be enforced by the parties and their successors in interest.

F.5.Borrower authorizes Lender to charge any amount due Lender under the Loan Documents against any of Borrower’s deposit accounts with Lender.

F.6.Except as otherwise provided in the Loan Documents, Borrower waives all demand for payment, presentation for payment, notice of intention to accelerate maturity, notice of acceleration of maturity, protest, and notice of protest, to the extent permitted by law.

F.7.No remedy, right, or power conferred on Lender in this Loan Agreement is intended to be exclusive of any other remedy, right, or power now or hereafter existing at law, in equity, or otherwise, and all remedies, rights, and powers are cumulative.

F.8.This Loan Agreement will be construed under the laws of the state of Texas, without regard to choice-of-law rules of any jurisdiction. This Loan Agreement is to be per­formed where the Note is payable.

F.9.Interest on the Note will not exceed the maximum amount of nonusurious inter­est that may be contracted for, taken, reserved, charged, or received under law. Any interest in excess of that maximum amount will be credited on the principal of the Note or, if that has been paid, refunded. On any acceleration or required or permitted prepayment, any excess will be canceled automatically as of the acceleration or prepayment or, if already paid, credited on the principal of the Note or, if the principal of the Note has been paid, refunded. This provi­sion overrides other provisions in this and all other Loan Documents.

F.10.It is not a waiver of default if the nondefaulting party fails to declare immedi­ately a default or delays taking any action. Pursuit of any remedies set forth in this Loan Agreement does not preclude pursuit of other remedies in the other Loan Documents or pro­vided by law.

F.11.There are no third-party beneficiaries of this Loan Agreement.

F.12.If any provision of this Loan Agreement is determined to be invalid or unen­forceable, the validity or enforceability of any other provision will not be affected.

F.13.The rule of construction that ambiguities in a document will be construed against the party who drafted it will not be applied in interpreting this Loan Agreement.

F.14.The parties’ relationship is an ordinary commercial relationship, and the parties do not intend to create the relationship of principal and agent, a partnership, a joint venture, or any other special relationship. Lender in exercising Lender’s rights and performing Lender’s obligations under the Loan Documents owes no fiduciary duty to Borrower.

F.15.If this Loan Agreement is executed in multiple counterparts, all counterparts taken together will constitute this Loan Agreement.

F.16.If Lender agrees to waive or defer any of the requirements of this Loan Agree­ment as a condition precedent to the advance of the proceeds of the Note, Borrower will pro­vide any deferred information or documentation within thirty days after the advance.

F.17.In the event of any conflict among the provisions of this Loan Agreement and any of the Loan Documents, the more restrictive provision will control.

F.18.When the context requires, singular nouns and pronouns include the plural.

F.19.The term Note includes all extensions and renewals of the Note.

G.Conditions to Lender’s Obligations to Make Loan Advances

Lender is not obligated to make any advance, including any after the first advance, of loan proceeds hereunder unless the following conditions have been satisfied, with proof pro­vided in a form and sufficiency as Lender may reasonably request:

G.1.Lender must have received and approved (a) copies of the plans, equipment leases, and any construction contracts that may be requested by Lender; (b) all presently pro­curable authorizations and permits required by any Governmental Authority for the construc­tion of the Improvements (as defined in the Deed of Trust), including those required for the use and operation of the Property for the purposes contemplated by the plans; (c) a current title report from the Title Insurer describing the Property with attached copies of all instru­ments that appear as exceptions in the report; (d) an original current survey of each lot certi­fied to Lender and the Title Insurer showing the locations of the perimeter of each lot within the Property by courses and distances, all easements and rights-of-way (identified as recorded in public records), the proposed building lines, the lines of the streets abutting the Property and the width thereof, encroachments, and the extent thereof in feet and inches upon the Prop­erty, the relation of the proposed Improvements by distances to the perimeter of the Property, the proposed building lines and the street lines, and if the Property is described as being on a filed map or plat, a legend relating the survey to the map or plat; (e) the Financial Statements; (f) advice from an architect or civil engineer and, if Lender elects, an independent architect or civil engineer approving the plans and indicating that the construction contracts are acceptable and satisfactorily provide for the construction of the Improvements; (g) the policies of insur­ance required by the Deeds of Trust and this Loan Agreement accompanied by evidence of the payment of the policies’ premiums; and (h) a satisfactory “As Built” appraisal of the Improve­ments proposed for each lot in the Property.

G.2.The Deed of Trust must have been executed by the parties to this Loan Agree­ment and recorded in the office of the county clerk of each county in which any part of the Real Property is located, with all filing fees paid, all before commencement of any construc­tion on any part of the Property and the placing of any material or equipment on the Property.

G.3.Lender must have received financing statements with proof of filing in the appropriate offices in the State of Texas and other things and instruments necessary or appro­priate in the opinion of Lender to perfect a security interest in the property covered by the Deed of Trust in accordance with the Texas Uniform Commercial Code, and Lender must have received proof that no prior financing statements from Borrower as debtor or from any other party affecting any of the Property have been filed in any such office in favor of any other party.

G.4.Lender must have received the Title Insurance showing the lien on the owner’s interest in favor of Lender as holder of the Note, to be valid, first, and prior lien on the Prop­erty free and clear of all defects and encumbrances except as Lender approves. The Title Insurance must not contain any survey exceptions not already approved by Lender, and the status of title to the owner’s interest shown therein shall otherwise be satisfactory to Lender.

G.5.The representations and warranties made in section B of this Loan Agreement shall be true and correct on the date of the advance with the same effect as if made on that date.

G.6.There must be no default under this Loan Agreement, the Note, or any of the security instruments.

G.7.Lender must have received the Note, Deed of Trust, and Loan Documents, all properly executed by the respective parties thereto.

G.8.An endorsement to the title policy or affidavit acceptable to Lender must state that there has been, as of the date of the requested advance, no change in the state of title and no survey exceptions not previously approved by Lender.

G.9.The Improvements, to the extent any have been made before the date of the advance, must not have been materially injured or damaged by fire or other casualty unless Lender has received insurance proceeds sufficient in the judgment of Lender and, if Lender elects, an independent supervising architect, to effect the satisfactory restoration of the Improvements and to permit their completion before the completion date.

G.10.Lender must have received (a) a proper request for advance from Borrower; (b) if construction has been performed before the advance, advice from an architect or inspector providing the opinion that the construction of the Improvements was performed in accordance with the plans; (c) for advances after the first advance, a copy of a valid building permit issued for the Improvements; and (d) for advances after the first advance, Lender must have received (i) a notice of title continuation or an endorsement of the Title Insurance already delivered indicating that since the last preceding advance, there has been no change in the state of title and no survey exceptions not already approved by Lender, which endorsement shall have the effect of increasing the coverage of the Title Insurance by an amount equal to the advance then being made if the Title Insurance does not by its terms provide for such additional cover­age without such an endorsement, and (ii) a forms or foundation survey satisfactory to Lender in its sole and absolute discretion.

G.11.All legal matters incident to this Loan Agreement and the transactions contem­plated by it must be satisfactory to counsel to Lender.

G.12.Lender must have received executed affidavits of contractor and Borrower duly and truthfully subscribed and sworn to evidencing any matter that Lender has requested.

G.13.Lender, if it so requests, must have received one or more photographs of the Property taken on or after the date of the filing of the Deeds of Trust and, if on the date of the filing, on or after the time of the filing. The photograph(s) must clearly show that there has not been actual commencement on the Property or any delivery of material to the Property. The photograph(s) must be signed on the back by the photographer for identification to an accom­panying affidavit, and each photograph must include on its back the photographer’s written description of the general area of the Property shown in the photograph and of the location from which the photograph was taken. The accompanying affidavit must be sworn and sub­scribed to by the photographer and certify that the photograph(s) were taken of the Property by the photographer at the date and time or times stated in the affidavit. Borrower shall pay the expenses of satisfying this condition.

The written Loan Agreement represents the final agreement between the parties and may not be contradicted by evidence of prior, contemporaneous, or subsequent oral agreements of the parties. There are no unwritten oral agree­ments between the parties.

Signed on [date].

Lender:

[Name of entity]

By:

   
[Name of representative]
[Title]

Borrower:

[Name of entity], [a/an] [type of entity]

By:

   
[Name of representative]
[Title]

Guarantor:

By:

   
[Name of representative]
[Title]

Exhibit A

Description of Real Property Used as Collateral