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<br />THE STATE OF TEXAS <br /> <br />TRI-PARTY AGREEMENT <br />§ <br />§ <br />§ <br /> <br />CITY OF SAN MARCOS <br />CAL TEX PARTNERS, L TO. <br />BANK OF THE WEST <br /> <br />COUNTY OF HAYS <br /> <br />THIS TRI-PARTY AGREEMENT IS MADE AS A COVENANT TO THE REVOLVING <br />LOAN FUND CONTRACT BETWEEN THE CITY OF SAN MARCOS AND CAL TEX <br />PARTNERS, L TO. IN SUPPORT OF AN ECONOMIC DEVELOPMENT PROJECT. <br /> <br />This agreement is entered into as a requirement of the Contract for the Revolving Loan <br />Fund between the City of San Marcos ("City") and the Cal Tex Partners, L TD <br />("Company") dated the _ day of ,2003. The City agrees to provide <br />funding to Company to support a real estate development project (the "Project") located <br />within the Extraterritorial Jurisdiction of the City of San Marcos at 4600 State Highway <br />123 (the "Project Site"). In order to assist with construction of the Project, Bank of the <br />West ("Lender") will also be providing funds for the Project, subject to certain conditions, <br />by means of a construction loan to the Company. <br /> <br />Açrreement. The City, the Company and the Lender agree to the following terms: <br /> <br />1. Lender agrees to provide written notice to City of any default by Company on <br />the Lender's loan for the Project. Notice will be provided to the City as set <br />forth in "Notices and Addresses" herein. <br /> <br />2. Lender agrees to give the City a minimum of 90 days to make any scheduled <br />loan payments that are in default by Company, prior to foreclosure by the <br />Lender. <br /> <br />3. Lender agrees in the event of default to give the City at least 90 days to retire <br />the outstanding balance of the Lender's loan for the Project Site prior to <br />foreclosure by the Lender. <br /> <br />4. To further economic development in or near the City of San Marcos, City will <br />allow Lender to place a lien on the Project Site specified in Exhibit A. The lien <br />will not exceed the original amount of the Lender's financing for the Project as <br />specified in Exhibit A, without the City's approval. <br /> <br />5. In the event that Lender acquires the Project Site through a foreclosure sale, <br />and Lender subsequently sells the Project Site for an amount in excess of the <br />foreclosure sales price, the Lender agrees to pay the City a pro-rata share of <br />