Loading...
HomeMy WebLinkAboutContract 39287-CA2 CITY SECRETARY CONTRACT NO. �C CONSENT TO ASSIGNMENT FOR SECURITY PURPOSES OF ECONOMIC DEVELOPMENT PROGRAM AGREEMENT BETWEEN CITY OF FORT WORTH AND RENAISSANCE SQUARE, LLC (CITY SECRETARY CONTRACT NO. 39287, AS AMENDED) This CONSENT TO ASSIGNMENT FOR SECURITY PURPOSES OF ECONOMIC DEVELOPMENT PROGRAM AGREEMENT ("Consent") is entered into by and between the CITY OF FORT WORTH ("City"), a home rule municipality corporation organized under the laws of the State of Texas; RENAISSANCE SQUARE, LLC ("Developer"), a Texas limited liability company; and WESTERN NATIONAL BANK, a national banking association ("Lender"). RECITALS The City, Developer and Lender hereby agree that the following statements are true and correct and constitute the basis upon which the parties have entered into this Consent: A. The City and FW Mason Heights, L.P. previously entered into that certain Economic Development Program Agreement on file in the City Secretary's Office as City Secretary Contract No. 39287, as assigned to Developer pursuant to City Secretary Contract No. 39287-CAI and amended pursuant to City Secretary Contract Nos. 39287-A1 and 39287-A2 (collectively, the "EDPA"), pursuant to which the City has agreed to pay Developer certain Program Grants in return for Developer's construction of a retail shopping center, as more specifically set forth in the EDPA (the "Development"). B. Developer wishes to obtain a loan from Lender in order to finance construction of the Development. As security for such loan, Lender has requested that, in addition to certain agreements between Developer and Lender (the "Loan Documents") Developer assign, transfer and convey to Lender, and to grant a security interest in, all of Developer's rights, interest in and to the EDPA until such time as Developer has fully satisfied all duties and obligations set forth in that certain agreement between Developer and Lender governing the loan, including, without limitation, as more specifically set forth in the form of that certain Security Agreement between Developer and Lender attached hereto as Exhibit"A" (the "Security Agreement"). C. The EDPA allows Developer to assign its rights and interest in the EDPA to a financial institution or other lender for purposes of granting a security interest in the Development and/or Development Property, provided that the lender first executes a written agreement with the City governing the rights and obligations of the City, Developer and the lender with respect to such security interest. Accordingly, the City, Developer and Lender wish to enter into this Consent. OFFICIAL RECORD CITY SECRETARY Page 1 FT.WORTH,TX Consent to Assignment of Economic Development Program for Security Purposes with Renaissance Square, LLC and Western National Bank ; :53 1 . AGREEMENT 1. The City, Developer and Lender hereby agree that the recitals set forth above are true and correct and form the basis upon which the City has entered into this Consent. 2. The City hereby consents to Developer's assignment, transfer and conveyance to Lender, and the granting to Lender of a security interest in, the EDPA solely for the purposes outlined in the Security Agreement and other Loan Documents. Pursuant to the Loan Documents, and in the ordinary course of business, Lender will enter into Non-Recourse Loan Participation Agreements ("Loan Participation Agreements") with other third party bank lenders who will participate with Lender in making loans to the Developer. Lender will act as agent for the other third party bank lenders who are entitled to share proportionately in the collateral securing the loans to Developer, including the EDPA. In furtherance of the purposes and intent hereof, the City's consent to Developer's assignment of a security interest in the EDPA to the Lender shall also be deemed to include Lender's assignment, transfer and conveyance of a pro rata share of the Lender's security interest in the EDPA pursuant to the Loan Participation Agreements; provided that Lender shall act as agent for the other third party bank lenders; Lender will retain title to the collateral securing the loans; Lender will not enter into any Loan Participation Agreement that contains terms and conditions that are in conflict with the terms and conditions of this Consent; and provided, further, nothing herein shall relieve Lender from its obligations hereunder without the prior written consent of the City, except as otherwise expressly provided herein, the parties (other than Lender) to any Loan Participation Agreements shall not have any rights of Lender hereunder and Lender shall remain solely responsible to the City for the performance of such obligations. Notwithstanding such consent, the City does not adopt, ratify or approve any of the particular provisions of the Security Agreement, the Loan Participation Agreements or other Loan Documents and, unless specifically acknowledged by the City in this Consent, does not grant any right or privilege to Lender or any assignee or successor in interest thereto that is different from or more extensive than any right or privilege granted to Developer under the EDPA. 3. In the event that the City is required by the EDPA to provide any kind of written notice to Developer, including notice of breach or default by Developer, the City shall also provide a copy of such written notice to Lender, addressed to the following, or such other party or address as Lender designates in writing, by certified mail, postage prepaid, or by hand delivery: Western National Bank 508 W. Wall, Suite 1100 Midland, Texas 79701 Telephone: (432) 570-4181 or such other address as Lender may advise City from time to time. 4. If Developer fails to cure any default under the EDPA Agreement, other than a default arising under Section 6.1 of City Secretary Contract No. 39287, the City agrees that Lender, its agents or designees shall have an additional thirty (30) calendar days or such greater time as may specifically be provided under the EDPA to perform any of the obligations or requirements of Page 2 Consent to Assignment of Economic Development Program for Security Purposes with Renaissance Square,LLC and Western National Bank Developer imposed by the EDPA and that the City will accept Lender's performance the same as if Developer had performed such obligations or requirements. If a default arises under Section 6.1 of City Secretary Contract No. 39287, Lender shall have no additional time to cure such default. 5. If at any time Lender wishes to foreclose its security interest in the EDPA, Lender shall first notify the City in writing that it intends to assume the EDPA (an "Assumption Notice"). Lender shall in the Assumption Notice represent and warrant that it has the right to exercise its security interest under its Loan Documents with Developer. Lender shall copy Developer on the Assumption Notice and deliver such notice to Developer by both first class and certified mail return receipt concurrent with its transmittal of the Assumption Notice to the City and represent in the Assumption Notice that it has done so. The City shall within a reasonable time thereafter (but not to exceed 90 days) thereafter recognize Developer with all of the rights and privileges thereunder, with the same force and effect as if such person were the Developer under the EDPA. Notwithstanding anything to the contrary in the EDPA, Security Agreement, Loan Participation Agreements or other Loan Documents, or any statements in an Assumption Notice, Lender shall have no right to assign, transfer or convey any of its rights or interests in the EDPA to any other party without the City's written consent, which shall not be unreasonably withheld or delayed, conditioned on (i) a finding by the City Council that the proposed assignee or successor in interest is financially capable of meeting the terms and conditions of this Agreement and (ii) prior execution by the proposed assignee or successor of a written agreement with the City under which the proposed assignee or successor agrees to assume all covenants and obligations of Developer under the EDPA. 6. During the term of the Loan Agreement (as defined in the Security Agreement), Developer will not request or consent to an amendment to the EDPA without the prior written consent of Lender, which consent shall not be unreasonably withheld or delayed. 7. In the- event of any conflict between this Consent and the EDPA, this Consent shall control. In the event of any conflict between this Consent and the Security Agreement, the Loan Participation Agreements or any other Loan Documents, this Consent shall control. 8. Lender will notify the City and Developer in writing within thirty (30) calendar days following the release of the entirety of its security interest in the EDPA. Lender will provide the City with a sworn statement concerning the status of its security interest in the EDPA within thirty (30) calendar days following receipt of a written request from the City. 9. This Consent may not be amended or modified except by a written agreement executed by all of the parties hereto. Developer and Lender covenant and agree that they will not amend the Security Agreement or assign any rights and/or obligations thereunder, without the prior written consent of the City. Lender shall have no right to assign any of its rights or interests under this Consent to any other party. Page 3 Consent to Assignment of Economic Development Program for Security Purposes with Renaissance Square,LLC and Western National Bank 10. This Consent shall be construed in accordance with the laws of the State of Texas. Venue for any action arising under the provisions of this Consent shall lie in state courts located in Tarrant County, Texas or in the United States District Court for the Northern District of Texas, Fort Worth Division. 11. Capitalized terms used but not specifically defined in this Consent shall have the meanings ascribed to them in the EDPA. 12. This written instrument contains the entire understanding and agreement between the City, Developer and Lender as to the matters contained herein. Any prior or contemporaneous oral or written agreement concerning such matters is hereby declared null and void to the extent in conflict with this Consent. 13. This Consent may be executed in any number of counterparts with the same effect as if all signatories had signed the same document, and will be effective upon the execution of one or more counterparts hereof by each of the parties hereto. In this regard, each of the parties hereto acknowledges that a counterpart of this Consent containing a set of counterpart execution pages reflecting the execution of each party hereto shall be sufficient to reflect the execution of this Consent by each party hereto. All counterparts will, taken together, constitute one and the same instrument. Delivery of an executed counterpart of a signature page of this Consent by telecopy, e-mail, facsimile or other electronic means shall be effective as a delivery of a manually executed counterpart of this Consent. [Signature Page Follows] Page 4 Consent to Assignment of Economic Development Program for Security Purposes with Renaissance Square,LLC and Western National Bank EXECUTED as of the last date indicated below: CITY OF FORT WORTH: APPROVED AS TO FORM AND LEGALITY: By: By: Fernando Costa Peter Vaky Assistant City Manager Deputy City Attorney Date: /D G�Z Date: /o -/5- /2-- M&C: M&C: none required RENAISSANCE SQUARE, LLC, a Texas limited liability company: pvatlA Attested by - a�foAr a� ,� #480t p � 000000O ��� By: Mariah Real Estate Company, LLC, a J� 0 °poo Texas limited liability company and - ��' Aits Manager: r MM J, Kayser, City SBCreaZ(: Go 0 Qy, °poo°oo°� a B 00000 ame: Title: PMS lots,,* Date: (,O— S�, -)'V(A WESTERN NATIONAL BANK, a Texas financial institution: By: Name: au.. r Title: Date: �� - Page s LFT L RECORD Consent to Assignment of Economic Development Program for Security CRETARY Purposes with Renaissance Square,LLC and Western National Bank 't�TX EXHIBIT "A" SECURITY AGREEMENT [Attached hereto and incorporated herein by reference] Consent to Assignment of Economic Development Program for Security Purposes with Renaissance Square,LLC and Western National Bank Exhibit "A" SECURITY AGREEMENT between RENAISSANCE SQUARE, LLC and WESTERN NATIONAL BANK TABLE OF CONTENTS Pale ARTICLE I Definitions and References............................................................................... 1 Section 1.1. Definitions in Loan Agreement .................................................................. 1 Section 1.2. Definitions in the UCC ............................................................................... 1 Section 1.3. Definitions in this Agreement..................................................................... 1 ARTICLE11 Security Interest............................................................................................... 2 Section 2.l. Grant of Security Interest............................................................................ 2 Section 2.2. Secured Indebtedness Secured.................................................................... 3 ARTICLE III Representations and Warranties..................................................................... 3 Section 3.1. Representations and Warranties.................................................................. 3 ARTICLEIV Covenants....................................................................................................... 4 Section 4.1. General Covenants Applicable to Collateral............................................... 4 ARTICLE V Remedies, Powers and Authorizations........................................................... 5 Section 5.1. Normal Provisions Concerning the Collateral............................................ 5 Section 5.2. Event of Default; Remedies........................................................................ 6 Section 5.3. Application of Proceeds.............................................................................. 8 Section5.4. Deficiency................................................................................................... 8 Section 5.5 Indemnity and Expenses............................................................................. 9 Section 5.6. Non-Judicial Remedies............................................................................... 9 Section 5.7. Limitation on Duty of the Secured Party in Respect of Collateral............. 9 Section 5.8. Appointment of Other Agents..................................................................... 10 ARTICLE VI Miscellaneous ................................................................................................ 10 Section6.l. Notices ........................................................................................................ 10 Section 6.2. Amendments and Waivers.......................................................................... 10 Section 6.3. Preservation of Rights................................................................................. 10 Section6.4. Severability................................................................................................. 10 Section6.5. Survival....................................................................................................... 10 Section 6.6. Binding Effect and Assignment.................................................................. 11 Section 6.7. Release of Collateral; Termination............................................................. 1 l Section 6.8. Limitation on Interest.................................................................................. 12 Section 6.9. Governing Law........................................................................................... 12 i [SECURITY AGREEMENT] Section 6.10. Final Agreement.......................................................................................... 12 Section 6.11. Counterparts; Facsimile.............................................................................. 12 Section 6.12. Acceptance by the Secured Party................................................................ 12 11 [SECURITY AGREEMENT] SECURITY AGREEMENT THIS SECURITY AGREEMENT (this "Agreement"), dated as of , 2012, is made by and between RENAISSANCE SQUARE, LLC, a Texas limited liability company ("Debtor"), and WESTERN NATIONAL BANK, a national banking association (the "Secured Party"). RECITALS A. The Debtor and the Secured Party have entered into that certain First Amended and Restated Loan Agreement, dated as of August 15, 2012 (as from time to time amended, supplemented or restated, the "Loan Agreement"). B. Pursuant to the Loan Agreement, the Secured Party has agreed to make certain loans to the Debtor. C. In order to induce the Secured Party to make such loans, Debtor has agreed to grant to the Secured Party a security interest in the Collateral. NOW, THEREFORE, in consideration of the premises and for other valuable consideration, the receipt and sufficiency of which the parties acknowledge, Debtor agrees as follows: ARTICLE I Definitions and References Section 1.1. Definitions in Loan Agreement. Capitalized terms used herein and not otherwise defined have the respective meanings specified in the Loan Agreement. Section 1.2. Definitions in the UCC. The following terms have the meanings specified in the UCC: (a) Account; (b) General Intangible; (c) Payment Intangible; and (d) Proceeds. Other terms used in this Agreement that are defined in the UCC and not otherwise defined herein or in the Loan Agreement have the meanings specified in the UCC, unless the context otherwise requires. Section 1.3. Definitions in this Agreement. The following terms have the following meanings: "Agreement" has the meaning specified in the preamble. "Debtor" has the meaning specified in the preamble. "Collateral" means, with respect to Debtor, all property described in Section 2.1 of this Agreement in which Debtor has any right, title or interest. "Contracts" means that certain (a) Tax Increment Financing Development Agreement executed on October 8, 2009 by the Board of Directors of Tax Increment Reinvestment Zone Number Twelve, City of Fort Worth, Texas, and executed on July 20, 2009 by FW Mason Heights, L.P., as subsequently assigned to the Debtor effective July 20, 2010, as thereafter amended by Amendment No. 1 To Tax Increment Financing Development Agreement, and that certain (b) Economic Development Program Agreement executed by the City of Fort Worth, Texas, on October 7, 2009 and executed by FW Mason Heights, L.P. on June 16, 2009, as assigned to the Debtor by Consent to Assignment of Economic Development Program Agreement (City Secretary Contract No. 39287) among the City of Fort Worth, FW Mason Heights, L.P. and Debtor, as thereafter amended by Amendment No. 1 and Amendment No. 2. "Loan Agreement" has the meaning specified in Recital A. "Loan Documents" means each Loan Document (as defined in the Loan Agreement) entered into from time to time between Debtor and Secured Party. "Secured Indebtedness"means all Indebtedness (as defined in the Loan Agreement). "Secured Party" has the meaning specified in the preamble. "Securities Act" means the Securities Act of 1933, as amended. "UCC" means the Uniform Commercial Code in effect in the State of Texas from time to time; provided that, if perfection or the effect of perfection or non-perfection or the priority of any security interest in any Collateral is governed by the Uniform Commercial Code as in effect in a jurisdiction other than the State of Texas, "UCC" means the Uniform Commercial Code as in effect from time to time in such other jurisdiction for purposes of the provisions hereof relating to such perfection, effect of perfection or non-perfection or priority. ARTICLE II Security Interest Section 2.1. Grant of Security Interest. As collateral security for the payment and performance of all Secured Indebtedness, Debtor pledges, collaterally assigns and grants to the Secured Party a continuing security interest in all right, title and interest of Debtor in and to all of the following property, whether now owned or existing or hereafter acquired or arising, regardless of where located and howsoever Debtor's interests therein arise, whether by ownership, security interest, claim or otherwise: 2 [SECURITY AGREEMENT] (a) Accounts; (b) General Intangibles, including all Payment Intangibles; (c) the Contracts; (d) books and records pertaining to any Collateral; and (e) Proceeds of the foregoing. Notwithstanding the foregoing, this Section 2.1 does not grant a security interest in any property to the extent that such grant is prohibited under any agreement relating to such property and the violation of such prohibition would cause Debtor to lose its interest in or rights with respect to such property, except to the extent that Part 4 of Article 9 of the UCC would render such prohibition ineffective. Section 2.2. Secured Indebtedness Secured. The security interest created hereby in the Collateral secures the payment and performance of all Secured Indebtedness. ARTICLE III Representations and Warranties Section 3.1. Representations and Warranties. Debtor represents and warrants to the Secured Party as follows: (a) Debtor has and will have at all times the right, power and authority to grant to the Secured Party as provided herein a security interest in the Collateral, free and clear of any Lien other than Liens permitted by the Loan Agreement. This Agreement creates a valid and binding security interest in favor of the Secured Party in the Collateral, securing the Secured Indebtedness. (b) Debtor is a limited liability company organized under the laws of the State of Texas, which is Debtor's location pursuant to the UCC. Debtor has not conducted business under any name except the name in which it has executed this Agreement, which is the exact name that appears in Debtor's organizational documents. Debtor's organizational identification number is 801128317. Debtor's Federal Tax ID Number is 27-0333773. (c) Debtor has good and marketable title to the Collateral, free and clear of all Liens, except for the security interest created by this Agreement and any Liens permitted by the Loan Agreement. No effective financing statement or other registration or instrument similar in effect covering any Collateral is on file in any recording office except (i) any that have been filed in favor of the Secured Party relating to this Agreement and (ii) any that have been filed to perfect or protect any Permitted Lien. 3 [SECURITY AGREEMENT] ARTICLE IV Covenants Section 4.1. General Covenants Applicable to Collateral. Debtor will at all times perform and observe the covenants contained in the Loan Agreement for so long as any Secured Indebtedness is outstanding. In addition, Debtor will, so long as this Agreement shall be in effect, perform and observe the following: (a) Debtor will, at its expense and as from time to time requested by the Secured Party, promptly execute and deliver all further instruments, agreements, filings and registrations, and take all further action, in order: (i) to confirm and validate this Agreement and the Secured Party's rights and remedies hereunder; (ii) to correct any error or omission in the description herein of the Secured Indebtedness or the Collateral or in any other provision hereof; (iii) to perfect, register and protect the security interest and rights created or purported to be created hereby or to maintain or upgrade in rank the priority of such security interests and rights; (iv) to enable the Secured Party to exercise and enforce its rights and remedies hereunder; or (v) otherwise to give the Secured Party the full benefits of the rights and remedies described in or granted under this Agreement. In connection with the foregoing, Debtor will, whenever requested by the Secured Party: (A) execute and file any financing statement, continuation statement or other filing or registration relating to the Secured Party's security interest and rights hereunder, and any amendment thereto, (B) mark its books and records relating to any Collateral to reflect that such Collateral is subject to this Agreement and the security interests hereunder, and (C) whenever requested by the Secured Party from time to time, Debtor will obtain from any account debtor or other obligor in respect of any property included in the Collateral an acknowledgment by such account debtor or obligor that such property is subject to this Agreement. (b) Debtor shall not take any action that would, or fail to take any action if such failure would, impair the enforceability, perfection or priority of the Secured Party's security interest in any Collateral. 4 [SECURITY AGREEMENT] ARTICLE V Remedies, Powers and Authorizations Section 5.1. Normal Provisions Concerning the Collateral. (a) Debtor irrevocably authorizes the Secured Party at any time and from time to time to file, without the signature of Debtor, in any jurisdiction any amendments to existing financing statements and any initial financing statements and amendments thereto that: (i) contain any other information required for the sufficiency or filing office acceptance of any financing statement or amendment, including whether Debtor is an organization, the type of organization and any organization identification number issued to Debtor; and (ii) properly effectuate the transactions described in the Loan Documents, as determined by the Secured Party in its discretion. Debtor will furnish any such information to the Secured Party promptly upon request. A carbon, photographic or other reproduction of this Agreement or any financing statement describing any Collateral is sufficient as a financing statement and may be filed in any jurisdiction by the Secured Party. Debtor ratifies and approves all financing statements heretofore filed by or on behalf of the Secured Party in any jurisdiction in connection with the transactions contemplated hereby. (b) Debtor appoints the Secured Party as Debtor's attorney in fact and proxy, with full authority in the place and stead of Debtor and in the name of Debtor or otherwise, from time to time in the Secured Party's discretion, to take any action and to execute any instrument that the Secured Party may deem necessary or advisable to accomplish the purposes of this Agreement including any action or instrument: (i) to ask for, demand, collect, sue for, recover, compound, receive and give acquittance and receipts for moneys due and to become due under or in respect of any Collateral; (ii) to receive, indorse and collect any drafts or any other instruments or documents; (iii) to enforce any obligations included in the Collateral; and (iv) to file any claims or take any action or institute any proceedings that the Secured Party may deem necessary or desirable for the collection of any Collateral or otherwise to enforce the rights of Debtor or the Secured Party with respect to any Collateral. Such power of attorney and proxy are coupled with an interest and are irrevocable. 5 [SECURITY AGREEMENT] (c) If Debtor fails to perform any agreement or obligation contained herein, the Secured Party may, but shall have no obligation to, itself perform, or cause performance of, such agreement or obligation, and the expenses of the Secured Party incurred in connection therewith shall be payable by Debtor under Section 5.5. (d) If any Collateral in which Debtor has granted a security interest hereunder is at any time in the possession or control of any warehouseman, bailee or any of Debtor's agents, Debtor shall, upon the request of the Secured Party, notify such warehouseman, bailee or agent of the Secured Party's rights hereunder and instruct such Person to hold all such Collateral for the Secured Party's account subject to the Secured Party's instructions. No such request by the Secured Party shall be deemed a waiver of any provision hereof that was otherwise violated by such Collateral being held by such Person prior to such instructions by Debtor. (e) Anything herein to the contrary notwithstanding: (i) Debtor shall remain liable to perform all duties and obligations under the agreements included in the Collateral to the same extent as if this Agreement had not been executed. (ii) The exercise by the Secured Party of any right hereunder shall not release Debtor from any duty or obligation under any agreement included in the Collateral. (iii) Secured Party shall not have any obligation or liability under the agreements included in the Collateral by reason of this Agreement or any other Loan Document, nor shall Secured Party be obligated to perform any duty or obligation of Debtor thereunder or take any action to collect or enforce any claim for payment assigned hereunder. Section 5.2. Event of Default; Remedies. If an Event of Default shall have occurred and be continuing, the Secured Party may from time to time in its discretion, without limitation and without notice except as expressly provided below: (a) Exercise in respect of the Collateral, in addition to any other right and remedy provided for herein, under the other Loan Documents, or otherwise available to it, all the rights and remedies of a secured party on default under the UCC (whether or not the UCC applies to the affected Collateral) and any other applicable law. (b) Require Debtor to, and Debtor will at its expense and upon request of the Secured Party forthwith, assemble all or part of the Collateral as directed by the Secured Party and make it (together with all books, records and information of Debtor relating thereto) available to the Secured Party at a place to be designated by the Secured Party that is reasonably convenient to both parties. (c) Prior to the disposition of any Collateral: (i) to the extent permitted by applicable law, enter, with or without process of law and without breach of the peace, any premises where any Collateral is or may be 6 [SECURITY AGREEMENT] located, and without charge or liability to the Secured Party seize and remove such Collateral from such premises; (ii) have access to and use the Company's books, records, and information relating to the Collateral; and (iii) store or transfer any Collateral without charge in or by means of any storage or transportation facility owned or leased by Debtor, process, repair or recondition any Collateral or otherwise prepare it for disposition in any manner and to the extent the Secured Party deems appropriate and, in connection with such preparation and disposition, use without charge any copyright, trademark, trade name, patent or technical process used by Debtor. (d) Reduce its claim to judgment or foreclose or otherwise enforce, in whole or in part, the security interest created hereby by any available judicial procedure. (e) Dispose of, at its office, on the premises of Debtor or elsewhere, any Collateral, as a unit or in parcels, by public or private proceedings, and by way of one or more contracts (but that the sale of any Collateral shall not exhaust the Secured Party's power of sale, and sales may be made from time to time, and at any time, until all of the Collateral has been sold or until the Secured Indebtedness has been paid and performed in full), and at any such sale it shall not be necessary to exhibit any Collateral. (f) Buy Collateral, or any part thereof, at any public sale. (g) Buy Collateral, or any part thereof, at any private sale if any Collateral is of a type customarily sold in a recognized market or is of a type that is the subject of widely distributed standard price quotations. (h) Apply by appropriate judicial proceedings for appointment of a receiver for the Collateral, or any part thereof, and Debtor consents to any such appointment. (i) Comply with any applicable state or federal law requirement in connection with a disposition of Collateral and such compliance shall not be considered to affect adversely the commercial reasonableness of any sale of Collateral. 0) Sell Collateral without giving any warranty, with respect to title or any other matter. (k) Notify (or require Debtor to notify) any and all obligors under any Account, Payment Intangible or other right to payment included in the Collateral of the assignment thereof to the Secured Party under this Agreement and to direct such obligors to make payment of all amounts due or to become due to Debtor thereunder directly to the Secured Party and, upon such notification and at the expense of Debtor and to the extent permitted by law, to enforce collection of any such Account, Payment Intangible or other right to payment and to adjust, settle or compromise the amount or payment thereof, in the same manner and to the same extent as Debtor could have done. After Debtor receives notice that the Secured Party has given (or after the Secured Party has required Debtor to give) any notice referred to above in this subsection: 7 [SECURITY AGREEMENT] (i) all amounts and proceeds (including instruments and writings) received by Debtor in respect of any Account, Payment Intangible or other right to payment included in the Collateral shall be received in trust for the benefit of the Secured Party hereunder, shall be segregated from other funds of Debtor and shall be forthwith paid over to the Secured Party in the same form as so received (with any necessary indorsement) to be, at the Secured Party's discretion, either: (A) held as cash collateral and released to Debtor upon the remedy of all Events of Default, or (B) while an Event of Default is continuing, applied as specified in Section 5.3, and (ii) Debtor shall not adjust, settle or compromise the amount or payment of any Account, Payment Intangible or other right to payment included in the Collateral or release wholly or partly any account debtor or obligor thereon or allow any credit or discount thereon. (1) Give an instruction to any depository bank that maintains a deposit account for Debtor with respect to the disposition of funds credited thereto or restrict the ability of Debtor to withdraw funds credited thereto. To the extent notice of sale shall be required by law with respect to Collateral, at least 10-days' notice to Debtor of the time and place of any public sale or the time after which any private sale is to be made shall constitute reasonable notification; provided that, if the Secured Party fails in any respect to give such notice, its liability for such failure shall be limited to the liability (if any) imposed on it by law under the UCC. The Secured Party shall not be obligated to make any sale of Collateral regardless of notice of sale having been given. The Secured Party may adjourn any public or private sale from time to time by announcement at the time and place fixed therefor, and such sale may, without further notice, be made at the time and place to which it was so adjourned. Section 5.3. Application of Proceeds. If an Event of Default shall have occurred and be continuing, any cash held by or on behalf of the Secured Party and all cash proceeds received by or on behalf of the Secured Party in respect of any sale of, collection from, or other realization upon any Collateral may, in the discretion of the Secured Party, be held by the Secured Party as collateral for, and/or then or at any time thereafter applied by the Secured Party against the Secured Indebtedness as set forth in the Loan Agreement. Section 5.4. Deficiency. If the proceeds of any sale, collection or realization of or upon the Collateral of the Debtor by the Secured Party are insufficient to pay all Secured Indebtedness and all other amounts to which the Secured Party is entitled, Debtor shall be liable for the deficiency, together with interest thereon as provided in the Loan Documents or (if no interest is so provided) at such other rate as shall be fixed by applicable law, together with the costs of collection and the reasonable fees of any attorneys employed by the Secured Party to collect such deficiency. Collateral may be sold at a loss, and the Secured Party shall have no 8 [SECURITY AGREEMENT] liability or responsibility to Debtor for such loss. Debtor acknowledges that a private sale may result in less proceeds than a public sale. Section 5.5. Indemnity and Expenses. In addition to, but not in qualification or limitation of, any similar obligations under other Loan Documents: (a) Debtor will indemnify the Secured Party and the Secured Party's officers, directors, employees and agents, including any agent appointed pursuant to Section 5.8, from and against all claims, losses and liabilities growing out of or resulting from this Agreement (including enforcement of this Agreement), WHETHER OR NOT SUCH CLAIMS, LOSSES AND LIABILITIES ARE IN ANY WAY OR TO ANY EXTENT CAUSED BY OR ARISING OUT OF SUCH INDEMNIFIED PARTY'S OWN NEGLIGENCE OR STRICT LIABILITY, except to the extent such claims, losses or liabilities are proximately caused by such indemnified party's individual gross negligence or willful misconduct. (b) Debtor will upon demand pay to the Secured Party the amount of all costs and expenses, including the fees and disbursements of the Secured Party's counsel and of any experts and agents,that the Secured Party may incur in connection with: (i) the transactions that give rise to this Agreement; (ii) the preparation of this Agreement and the perfection and preservation of the security interest created under this Agreement; (iii) the administration of this Agreement; (iv) the custody, preservation, use or operation of, or the sale of, collection from, or other realization upon, any Collateral; (v) the exercise or enforcement of any right of the Secured Party hereunder; or (vi) the failure by Debtor to perform or observe any of the provisions hereof. Section 5.6. Non-Judicial Remedies. In granting to the Secured Party the power to enforce its rights hereunder without prior judicial process or judicial hearing, to the extent permitted by applicable law, Debtor waives, renounces and knowingly relinquishes any legal right that might otherwise require the Secured Party to enforce its rights by judicial process and confirms that such remedies are consistent with the usage of trade, are responsive to commercial necessity and are the result of a bargain at arm's length. The Secured Party may, however, in its discretion, resort to judicial process. Section 5.7. Limitation on Duty of the Secured Party in Respect of Collateral. Beyond the exercise of reasonable care in the custody thereof, the Secured Party shall have no duty as to any Collateral in its possession or control or in the possession or control of any agent or bailee or as to the preservation of rights against prior parties or any other rights pertaining thereto. The Secured Party shall be deemed to have exercised reasonable care in the custody of Collateral in its possession if such Collateral is accorded treatment substantially equal to which that it accords its own property, and the Secured Party shall not be liable or responsible for any loss or damage 9 [SECURITY AGREEMENT] to any Collateral, or for any diminution in the value thereof, by reason of the act or omission of any warehouseman, carrier, forwarding agency, consignee or other agent or bailee selected by the Secured Party in good faith. Section 5.8. Appointment of Other Agents. At any time, in order to comply with any legal requirement in any jurisdiction, the Secured Party may appoint any bank or trust company or one or more other Persons, either to act as co-agent or co-agents, jointly with the Secured Party, or to act as separate agent or agents on behalf of the Secured Party, with such power and authority as may be necessary for the effective operation of the provisions hereof and may be specified in the instrument of appointment. ARTICLE VI Miscellaneous Section 6.1. Notices. Any notice or communication required or permitted hereunder shall be given in writing or by electronic transmission, sent in the manner provided in the Loan Agreement, if to the Secured Party or to the Debtor, to the address set forth in the Loan Agreement, or to such other address or to the attention of such other individual as hereafter shall be designated in writing by the applicable party sent in accordance herewith. Any such notice or communication shall be deemed to have been given as provided in the Loan Agreement for notices given thereunder. Section 6.2. Amendments and Waivers. No amendment of this Agreement shall be effective unless it is in writing and signed by Debtor and the Secured Party, and no waiver of this Agreement or consent to any departure by Debtor here from shall be effective unless it is in writing and signed by the Secured Party, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given and to the extent specified in such writing. In addition, all such amendments and waivers shall be effective only if given with the necessary approvals required in the Loan Agreement. Section 6.3. Preservation of Rights. No failure on the part of the Secured Party to exercise, and no delay in exercising, any right hereunder or under any other Loan Document shall operate as a waiver thereof, nor shall any single or partial exercise of any such right preclude any other or further exercise thereof or the exercise of any other right. The rights and remedies of the Secured Party provided herein and in the other Loan Documents are cumulative and are in addition to, and not exclusive of, any rights or remedies provided by law or otherwise. Section 6.4. Severability. Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or invalidity without invalidating the remaining portions hereof or thereof or affecting the validity or enforceability of such provision in any other jurisdiction. Section 6.5. Survival. Each representation and warranty, covenant and other obligation of Debtor herein shall survive the execution and delivery of this Agreement, the execution and delivery of any other Loan Document and the creation of the Secured Indebtedness. 10 [SECURITY AGREEMENT] Section 6.6. Binding Effect and Assignment. This Agreement shall: (a) be binding on Debtor and its successors, and (b) inure, together with all rights and remedies of the Secured Party hereunder, to the benefit of the Secured Party and its successors, transferees and assigns. Without limiting the generality of the foregoing, the Secured Party may pledge, assign or otherwise transfer any right under any Loan Document to any other Person, and such other Person shall thereupon become vested with all benefits in respect thereof granted herein or otherwise. No right or duty of Debtor hereunder may be assigned or otherwise transferred without the prior written consent of the Secured Party. Section 6.7. Release of Collateral; Termination. (a) Upon any sale, lease, transfer or other disposition of any Collateral of Debtor in accordance with the Loan Documents, the Secured Party will, at Debtor's expense, execute and deliver to Debtor such documents as Debtor shall reasonably request to evidence the release of such Collateral from the assignment and security interest granted hereby; provided that: (i) at the time of such request and such release no Event of Default shall have occurred and be continuing; (ii) Debtor shall have delivered to the Secured Party, at least 10 Business Days prior to the date of the proposed release (or by such lesser notice as the Secured Party may approve), a written request for release describing the item of Collateral and the terms of the sale, lease, transfer or other disposition in reasonable detail, including the price thereof and any expenses in connection therewith, together with a form of release for execution by the Secured Party and a certificate of Debtor to the effect that the transaction is in compliance with the Loan Documents and such other matters as the Secured Party may request; and (iii) if any Loan Document provides for any application of the proceeds of any such sale, lease, transfer or other disposition, or any payment to be made in connection therewith, such proceeds shall have been applied or payment made as provided therein. (b) Upon, and only upon the indefeasible payment and satisfaction in full in cash of the Secured Indebtedness and the termination or expiration of all obligations of the Secured Party under the Loan Agreement in accordance with the terms thereof, this Agreement and the security interest created hereby shall terminate, all rights in the Collateral shall revert to Debtor and the Secured Party, at Debtor's request and at Debtor's expense, will: (i) return to Debtor such of Debtor's Collateral in the Secured Party's possession as shall not have been sold or otherwise disposed of or applied pursuant to the terms hereof, and (ii) execute and deliver to Debtor such documents as Debtor shall reasonably request to evidence such termination. 11 [SECURITY AGREEMENT] Debtor is not authorized to file any financing statement or amendment or termination statement with respect to any financing statement originally filed in connection with this Agreement without the prior written consent of the Secured Party, subject to Debtors' rights under Sections 9-509(d)(2) and 9-518 of the UCC. Notwithstanding the foregoing, Sections 5.5 and 6.8 shall survive the termination of this Agreement. Section 6.8. Limitation on Interest. Section 2.5 of the Loan Agreement, which limits the interest for which Debtor is obligated, is incorporated herein by reference. Section 6.9. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Texas. Section 6.10. Final Agreement. This Agreement and the other Loan Documents represent the final agreement between the parties hereto and may not be contradicted by evidence of prior, contemporaneous, or subsequent oral agreements of the parties hereto. There are no unwritten oral agreements between the parties hereto. Section 6.11. Counterparts; Facsimile. This Agreement may be separately executed in any number of counterparts, all of which when so executed shall be deemed to constitute one and the same Agreement. This Agreement may be validly delivered by facsimile or other electronic transmission of an executed counterpart of the signature page hereof. Section 6.12. Acceptance by the Secured Party. By its acceptance of the benefits hereof, the Secured Party shall be deemed to have agreed to be bound hereby and to perform any obligation on its part set forth herein. [Signature Page Follows] 12 [SECURITY AGREEMENT] IN WITNESS WHEREOF, this Agreement has been executed and delivered as of the date first above written. RENAISSANCE SQUARE LLC LI-C- U M Am Title: PP�,S ioLtw'� WESTERN NATIONAL BANK By: Name: Title: 3 f. [Signature Page to Security Agreement with Renaissance Square, LLC] [SECURITY AGREEMENT]