LOAN AGREEMENT
Exhibit
10.23
THIS
LOAN AGREEMENT (this
“Agreement”) is made as of June 1, 2007 between STRATUS
PROPERTIES INC., a Delaware corporation (“Borrower”),
and XXXXXXXX XXXXXXXX XXXXXX, X.X., a Texas limited partnership
(“Lender”).
WHEREAS,
Borrower and Lender desire to
set forth herein the terms and conditions upon which Lender shall provide
financing to Borrower;
NOW,
THEREFORE, the parties hereto
hereby agree as follows:
Section
1. Certain
Definitions and Index to Definitions.
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A.
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Accounting
Terms. Unless otherwise specified herein, all accounting
terms used herein shall be interpreted, all accounting determinations
hereunder shall be made, and all financial statements required to
be
delivered hereunder shall be prepared in accordance with GAAP and
practices consistently applied.
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B.
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Definitions. Capitalized
terms used herein shall have the respective meanings set forth in
Schedule 1 attached hereto when used in this Agreement (including
the Exhibits hereto) except as the context shall otherwise
require. Schedule 1 is hereby made a part of this
Agreement.
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Section
2. Loan.
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A.
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Loan
Amount. Lender agrees to provide a loan to Borrower in the
amount of THREEMILLION FIVE HUNDRED THOUSAND AND
00/100 DOLLARS ($3,500,000.00) (“Loan”),
provided that all conditions precedent described in this Agreement
have
been met or waived by Lender and that Borrower is not otherwise in
default
as of the date of disbursement.
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B.
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Note. Borrower’s
obligation to repay the Loan shall be further evidenced by the
Note. Reference is made to the Note for certain terms relating
to interest rate, payments, prepayment, Maturity Date and additional
terms
governing the Loan.
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C. Referral
Fee/Application Fee. In connection with the Loan, Borrower agrees
to pay a referral fee of $35,000.00 to Lender and an application fee of $2,000
to FAF Advisors, Inc.
Section
3. Payments
by Borrower.
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A.
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General. All
payments hereunder shall be made by Borrower to Lender at the Lending
Office, or at such other place as Lender may designate in
writing. Payments shall be made by wire
transfer.
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B.
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Other
Outstanding Obligations. Unless required to be paid sooner
hereunder, any and all Obligations in addition to the amounts due
under
the Note shall be due and payable in full upon the Maturity
Date.
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Section
4. Conditions
Precedent. As conditions precedent to Lender’s obligation to
advance the Loan to Borrower:
A. Borrower
shall deliver, or cause to be delivered, to Lender:
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(1)
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A
duly executed copy of this Agreement, the Note, and any and all other
Loan
Documents.
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(2)
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A
favorable written opinion of counsel for Borrower, addressed to Lender
and
in form and substance acceptable to Lender and its
counsel.
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(3)
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Current
financial statements of Borrower in form and substance acceptable
to
Lender.
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(4)
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The
following organizational documents of
Borrower:
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(a)
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Borrower’s
Certificate of Incorporation as certified by the Secretary of State
of the
state of Borrower’s organization and by the corporate secretary of
Borrower, a Certificate of Good Standing dated no less recently than
thirty (30) calendar days prior to the date of this Agreement, issued
by
the Secretary of State of the state of Borrower’s organization, stating
that Borrower is in good standing in such state, and evidence of
good
standing to transact business in the State of Texas, dated no less
recently than thirty (30) calendar days prior to the date of this
Agreement, issued by the Secretary of State of the State of
Texas.
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(b)
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A
resolution of the board of directors of Borrower, certified as of
the date
of this Agreement by its corporate secretary, authorizing the execution,
delivery and performance of this Agreement and the other Loan Documents,
and all other instruments or documents to be delivered by Borrower
pursuant to this Agreement.
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(c)
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A
certificate of Borrower’s corporate secretary as to the incumbency and
authenticity of the signatures of the officers of Borrower
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executing
any Loan Documents (Lender being entitled to rely thereon until
a new such certificate has been furnished to Lender).
(5) The
written consent of Comerica Bank-Texas to the Loan as required under the
Comerica Loan Agreement (and/or the written consent of any other lender whose
consent is required to the financing evidenced by this Agreement pursuant to
agreements between Borrower and such lender(s)).
(6) Borrower
will pay (prior to or contemporaneously with the funding of the Loan) the
outstanding balance of the Comerica Bank-Texas Loan (as described in the
Comerica Loan Agreement) in full.
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B.
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All
acts, conditions, and things (including, without limitation, the
obtaining
of any necessary regulatory approvals and the making of any required
filings, recordings or registrations) required to be done and performed
and to have happened prior to the execution, delivery and performance
of
the Loan Documents to constitute the same legal, valid and binding
obligations of Borrower, enforceable in accordance with their respective
terms, subject to limitations as to enforceability which might result
from
bankruptcy, insolvency, moratorium and other similar laws affecting
creditors’ rights generally and subject to limitations on the availability
of equitable remedies, shall have been done and performed and shall
have
happened in compliance with all applicable laws or shall have been
waived
by Lender in writing.
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C.
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All
documentation shall be satisfactory in form and substance to Lender,
and
Lender shall have received any and all further information, documents
and
opinions which Lender may reasonably have requested in connection
therewith, such documents, where appropriate, to be certified by
proper
authorities and officials of
Borrower.
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D.
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All
representations and warranties of Borrower to Lender set forth herein
or
in any of the Loan Documents shall be accurate and complete in all
material respects.
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E.
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There
shall not exist an Event of Default or an event which with the giving
of
notice or passage of time, or both, would be an Event of
Default.
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Section
5. Representations
and Warranties of Borrower. Borrower represents and warrants to
Lender as follows:
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A.
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Capacity. Borrower
is duly organized, validly existing, and in good standing under the
laws
of the state of its organization (as described herein) and is authorized
to do business in the State of Texas and in any and all other
jurisdictions in which its ownership of Property or conduct of business
legally requires such authorization and the failure to do so would
have a
Material Adverse Effect, and has full power, authority, and legal
right to
own its properties and assets and to conduct its business as presently
conducted or proposed to be conducted, and the consummation of the
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transactions
contemplated herein do not, and will not, require the
consent or approval of, or filing with, any Person which has not been
obtained.
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B.
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Authority. Borrower
has full power, authority and legal right to execute and deliver,
and to
perform and observe the provisions of the Loan Documents to be executed
by
Borrower. The execution, delivery and performance of the Loan
Documents have been duly authorized by all necessary action, and
when duly
executed and delivered, will be legal, valid, and binding obligations
of
Borrower enforceable in accordance with their respective terms, subject
to
limitations as to enforceability which might result from bankruptcy,
insolvency, moratorium and other similar laws affecting creditors’ rights
generally and subject to limitations on the availability of equitable
remedies.
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C.
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Compliance. The
execution and delivery of the Loan Documents and compliance with
their
terms will not violate any provision of applicable law and will not
result
in a breach of any of the terms or conditions of, or result in the
imposition of any lien, charge, or encumbrance upon any properties
of
Borrower pursuant to, or constitute a default (with due notice or
lapse of
time or both) or result in an occurrence of an event pursuant to
which any
holder or holders of Indebtedness may declare the same due and
payable.
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D.
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Financial
Statements. The financial statements provided by Borrower
to Lender pursuant to subsection 4.A(3) are correct and complete
as of the
dates indicated in such statements and fairly present the financial
condition and results of operations of Borrower for the fiscal periods
indicated therein.
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E.
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Material
Adverse Events. Since the Statement Dates, neither any
event nor the passage of time has resulted in a Material Adverse
Effect.
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F.
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Litigation. Except
as heretofore disclosed by Borrower to Lender in writing, there are
no
actions or proceedings pending, or to the knowledge of Borrower
threatened, against or affecting Borrower which, if adversely determined,
could reasonably be expected to have a Material Adverse
Effect. Borrower is not in default with respect to any
applicable laws or regulations which materially affect the operations
or
financial condition of Borrower, nor is it in default with respect
to any
other writ, injunction, demand, or decree or in default under any
indenture, agreement, or other instrument to which Borrower is a
party or
by which Borrower may be bound where any such default would have
a
Materially Adverse Effect.
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G.
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Taxes. Borrower
has filed or caused to be filed all tax returns which are required
to be
filed by it. Borrower has paid, or made provision for the
payment of, all taxes which have or may have become due pursuant
to said
returns or otherwise or pursuant to an assessment received by Borrower,
except such taxes, if any, as are being contested in good faith and
as to
which adequate reserves have been provided. The charges,
accruals, and reserves in respect of income taxes on the books of
Borrower
are adequate. Borrower knows of no proposed material tax
assessment against it and no
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extension
of time for the assessment of federal, state, or local taxes of
Borrower is in effect or has been requested, except as disclosed in the
financial statements furnished to Lender.
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H.
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Accurate
Information. All written information supplied to Lender by
or on behalf of Borrower is and shall be true and correct in all
material
respects, and all financial projections or forecasts of future results
or
events supplied to Lender by or on behalf of Borrower have been prepared
in good faith and based on good faith estimates and assumptions of
the
management of Borrower, and Borrower has no reason to believe that
such
projections or forecasts are not
reasonable.
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I.
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Use
of Loan Proceeds. Borrower is not engaged principally in,
nor does it have as one of its important activities, the business
of
extending credit for the purpose of purchasing or carrying any margin
stock (within the meaning of Regulation U of the Board of Governors
of the
Federal Reserve System), and no part of any advance made hereunder
will be
used to purchase or carry margin stock, extend credit to others for
the
purpose of purchasing or carrying any margin stock, or used for any
purpose which violates Regulation U or Regulation X of the Board
of
Governors of the Federal Reserve System or any other provision of
law.
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J.
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ERISA. No
plan (as that term is defined in the Employee Retirement
Income Security Act of 1974 (“ERISA”))
of the Borrower (a “Plan”) which is subject to
Part 3 of Subtitle B of Title 1 of ERISA had an accumulated funding
deficiency (as such term is defined in ERISA) as of the last day
of the
most recent fiscal year of such Plan ended prior to the date hereof,
or
would have had such an accumulated funding deficiency on such date
if such
year were the first year of such Plan, and no material liability
to the
Pension Benefit Guaranty Corporation has been, or is expected by
the
Borrower to be, incurred with respect to any such Plan. No
Reportable Event (as defined in ERISA) has occurred and is continuing
in
respect to any such Plan.
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Section
6. Affirmative
Covenants of Borrower. Until payment in full of the Obligations,
Borrower agrees that:
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A.
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Financial
Statements, Reports and Certifications. Borrower will furnish to
Lender, in form and substance satisfactory to
Lender:
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(1)
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As
soon as possible after the end of each fiscal year of Borrower, and
in any
event within ninety (90) Business Days thereafter, (i) a complete
copy of
its annual audit which shall include the balance sheet of Borrower
as of
the close of the fiscal year and an income statement for such year,
certified by the Auditors without material qualification, (ii) a
statement
of changes in partners’ equity and cash flows for the period ended on such
date, certified by the Auditors, and (iii) a statement certified
by the
chief financial officer of Borrower that no act or omission has occurred
which has resulted in an Event or Default or, if not
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cured,
remedied, waived or otherwise eliminated to the satisfaction of
Lender, would result in an Event of Default;
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(2)
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No
later than thirty (30) Business Days after the close of each Accounting
Period, (i) Borrower’s balance sheet as of the close of such Accounting
Period and its income statement for that portion of the then current
fiscal year through the end of such Accounting Period prepared in
accordance with GAAP and certified as being complete, correct, and
fairly
representing its financial condition and results of operations by
the
chief financial officer of Borrower, subject to the absence of footnotes
and year-end adjustments, (ii) a statement of changes in equity and
cash
flows for the period ended on such date, certified by the chief financial
officer of Borrower, (iii) the calculation of the Debt Service Coverage
Ratio demonstrating compliance with Subsection 8.G. of this Agreement,
together with any supporting calculations used to arrive at such
calculation, certified by the chief financial officer of Borrower,
and
(iv) a completed Borrower’s Officer’s Compliance
Certificate;
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(3)
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Promptly
upon the filing or receiving thereof, copies of all reports which
the
Borrower files under ERISA or which the Borrower receives from the
Pension
Benefit Guaranty Corporation if such report shows any material violation
or potential violation by the Borrower of its obligations under ERISA;
and
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(4)
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Such
other information concerning Borrower as Lender may reasonably
request.
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B.
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Other
Information. Borrower will (1) maintain accurate books and
records concerning its business in a manner consistent with Borrower’s
current bookkeeping and record-keeping practices (provided such practices
result in accurate books and records), (2) upon request, furnish
to Lender
such information, statements, lists of Property and accounts, budgets,
forecasts, or reports as Lender may reasonably request with respect
to the
business, affairs, and financial condition of Borrower, and (3) permit
Lender or representatives thereof, upon at least forty-eight (48)
hours
prior written notice to Borrower, to inspect during Borrower’s usual
business hours, the properties of Borrower and to inspect, audit,
make
copies of, and make extracts from the books or accounts of
Borrower.
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C.
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Expenses. Borrower
shall pay all reasonable out-of-pocket expenses of Lender (including,
but
not limited to, fees and disbursements of Lender’s counsel) incident to
(1) preparation and negotiation of the Loan Documents and any amendments,
extensions and renewals thereof, (2) following an Event of Default,
the
protection and exercise of the rights of Lender under the Loan Documents,
or (3) defense by Lender against all claims against Lender relating
to any
acts of commission or omission directly or indirectly relating to
the Loan
Documents, all whether by judicial proceedings or otherwise, but
excluding
claims related to Lender’s gross negligence or intentional
misconduct. Borrower will also pay and save Lender harmless
from any and all liability
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with
respect to any stamp or other taxes (other than transfer or income
taxes) which may be determined to be payable in connection with the making
of
the Loan Documents.
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D.
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Taxes
and Expenses Regarding Borrower’s Property. Borrower shall
make due and timely payment or deposit of all taxes, assessments
or
contributions required of it, except such deposits, assessments or
contributions which are being contested in good faith and as to which,
in
the reasonable determination of Lender, adequate reserves have been
provided.
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E.
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Notice
of Events. Promptly after the later of (i) the occurrence
thereof or (ii) such time as Borrower has knowledge of the occurrence
thereof, Borrower will give Lender written notice of any Event of
Default
or any event which with the giving of notice or passage of time,
or both,
would become an Event of Default; provided, however, in the event
that the
respective Event of Default is subsequently cured as permitted herein,
such failure to give notice shall also be deemed to be
cured.
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F.
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Notice
of Litigation. In addition to any regularly scheduled
reporting required to be delivered with the Borrower’s Officer’s
Certificate, Borrower will promptly give notice to Lender in writing
of
(i) any litigation or other proceedings against Borrower involving
claims
for amounts in excess of $250,000 that Borrower does not reasonably
expect
are covered by insurance, (ii) any labor controversy resulting in
or
threatening to result in a strike against Borrower, or (iii) any
proposal
by any public authority to acquire a material portion of the assets
or
business of Borrower.
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G.
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Other
Debt. Borrower will promptly pay and discharge any and all
Indebtedness when due (where the failure to do so either individually
or
in the aggregate with any such other unpaid Indebtedness would have
a
Material Adverse Effect), and lawful claims which, if unpaid, might
become
a lien or charge upon the Property of Borrower, except such as may
in good
faith be contested or disputed or for which arrangements for deferred
payment have been made, provided appropriate reserves are maintained
to
the satisfaction of Lender for the eventual payment thereof in the
event
it is found that such Indebtedness is an Indebtedness payable by
Borrower,
and when such dispute or contest is settled and determined, will
promptly
pay the full amount then due.
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H.
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Cooperation. Borrower
will execute and deliver to Lender any and all documents, and do
or cause
to be done any and all other acts reasonably deemed necessary by
Lender,
in its reasonable discretion, to effect the provisions and purposes
of
this Agreement.
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I.
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Maintenance
of Insurance; Notice of Loss. Borrower shall maintain such
insurance with reputable insurance carriers as is normally carried
by
companies engaged in similar businesses and owning similar
Property. Upon request from Lender, Borrower will provide
Lender with certificates indicating that such insurance is in effect
and
all premiums due have been paid.
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J.
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Location
of Business. Borrower will give Lender written notice
immediately upon forming an intention to change the location of its
chief
place of business.
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K.
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Maintenance
of Existence. Borrower will preserve and maintain its legal
existence and all rights, privileges and franchises necessary or
desirable
in the normal conduct of its business, will conduct its business
in an
orderly, efficient and regular manner, and will comply with all applicable
laws and regulations and the terms of any indenture, contract or
other
instrument to which it may be a party or under which it or its properties
may be bound, in each instance where the failure to do so would have
a
Material Adverse Effect.
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L.
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Compliance
with ERISA. Cause each Plan to comply and be administered
in accordance with those provisions of ERISA which are applicable
to such
Plan.
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Section
7. Negative
Covenants of Borrower. Except as expressly provided for in
Section 7 H. below, and subject to the terms and conditions set forth therein,
until payment in full of the Obligations, without the prior written consent
of
Lender (which consent may be withheld in the sole discretion and determination
of Lender), Borrower will not do any of the following items A through
G:
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A.
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Sale
of Assets. Borrower will not sell, abandon, or otherwise
dispose of any of its assets except in the ordinary course of
business.
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B.
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Consolidation,
Merger, etc. Borrower will not consolidate with, merge
into, or sell (whether in a single transaction or in a series of
transactions) all or substantially all of its assets to any
Person.
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C.
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Change
in Business. Borrower will not make any change in the
nature of the business of Borrower or a Subsidiary which would result
in a
material change in the character of the business of Borrower, taken
as a
whole.
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D.
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Transactions
with Affiliates. Borrower will not enter into any transaction with any
Person affiliated with Borrower on terms materially less favorable
to
Borrower, than at the time could be available to Borrower, from any
Person
not affiliated with Borrower.
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E.
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Plans. Borrower
will not sponsor or contribute to any other Plan or other defined
benefit
pension plan or contributes to any multi-employer pension
plan.
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F.
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Dividends,
Redemptions.
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(1)
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Borrower
will not, except as allowed below, declare or pay any dividend on,
or
declare or make any other distribution on account of, any stock interest
or other ownership interest.
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(2)
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Borrower
will not, except as allowed below, directly or indirectly redeem,
retire,
purchase, or otherwise acquire beneficially any shares of any class
of its
own stock now or hereafter outstanding or set apart any sum for any
such
purpose. The foregoing notwithstanding, Borrower may redeem,
retire, purchase or otherwise acquire beneficially shares of common
stock
of Borrower in an aggregate amount that does not exceed
$5,000,000.
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G.
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Indebtedness.
Borrower will not incur any Indebtedness other than Permitted
Debt.
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H. Change of Control. Notwithstanding anything to the contrary, in the event of a contemplated Change in Control (as defined below) Borrower shall give thirty (30) days’ prior written notice to Lender indicating whether it (i) intends to prepay the Loan, which it shall have the right to do in its sole and absolute discretion, subject to a prepayment premium of one percent (1%) of the then outstanding balance of the Loan (the “Change in Control Prepayment Premium”) or in the event of a voluntary Change in Control under H.(a)(iii) below, the Reinvestment Charge, or (ii) requests Lender’s written consent to such Change in Control (with the intent to keep the Loan in place, subject to the terms hereof) which may be withheld, conditioned or delayed, for any or no reason, in its sole and absolute discretion.
Provided,
notwithstanding anything to the contrary (including any prepayment provisions
or
limitations in the Note, and without limiting its ability to prepay the Loan
pursuant to the provisions of the Note), if such consent is not granted,
Borrower may subsequently choose to prepay the Loan, together with (i) the
Change in Control Prepayment Premium or (ii) in the case of a voluntary Change
in Control under H.(a)(iii) below (i.e., one not necessitated by the death,
incapacity or other occurrence preventing a member of the senior management
from
fulfilling his role in the management of Borrower), the Reinvestment
Charge. Any Change in Control in contravention of the provisions set
forth herein, shall be an immediate Event of Default (as defined in Section
8
below) and Borrower shall be liable for the Change in Control Prepayment Premium
and Lender may also pursue any other remedies available to it at law, in equity
or under Section 8 of this Agreement.
(a) As
used herein “Change of Control” means (capitalized terms
not otherwise defined will have the meanings ascribed to them in paragraph
(b)
below):
(i) the
acquisition by any Person together with all Affiliates of such Person, of
Beneficial Ownership of the Threshold Percentage or more; provided, however,
that for purposes of this Section 7 H.(a)(i), the following will not constitute
a Change of Control:
(A) any
acquisition of Company Voting Stock by the Company or its
subsidiaries,
9
(B) any
acquisition of Company Voting Stock by any employee benefit plan (or related
trust) sponsored or maintained by the Company or any corporation or other
entity
controlled by the Company; or
(ii) individuals
who, as of the effective date of this Agreement, constitute the Board (the
“Incumbent Board”) cease for any reason to constitute at
least a majority of the Board; provided, however, that any individual becoming
a
director subsequent to the effective date of this Agreement whose election,
or
nomination for election by the Company’s shareholders, was approved by a vote of
at least a majority of the directors then comprising the Incumbent Board
will be
considered a member of the Incumbent Board, unless such individual’s initial
assumption of office occurs as a result of an actual or threatened election
contest with respect to the election or removal of directors or any other
actual
or threatened solicitation of proxies or consents by or on behalf of a Person
other than the Incumbent Board; or
(iii) a
majority of those three individuals currently comprising senior management,
Xxxxxxx X. Xxxxxxxxx, President, Xxxx X. Xxxxx, Senior Vice President, and
Xxxxxxx X. Xxxxx, General Counsel, cease to serve in their current positions;
or
(iv) the
consummation of a reorganization, merger or consolidation (including a merger
or
consolidation of the Company or any direct or indirect subsidiary of the
Company), or sale or other disposition of all or substantially all of the
assets
of the Company (a “Business Combination”), in each case,
unless, immediately following such Business Combination:
(A) the
individuals and entities who were the Beneficial Owners of the Company Voting
Stock immediately prior to such Business Combination have direct or indirect
Beneficial Ownership of more than 50% of the then outstanding shares of common
stock, and more than 50% of the combined voting power of the then outstanding
voting securities entitled to vote generally in the election of directors,
of
the Post-Transaction Corporation, and
(B) no
Person
together with all Affiliates of such Person (excluding the Post-Transaction
Corporation and any employee benefit plan or related trust of either the
Company, the Post-Transaction Corporation or any subsidiary of either
corporation) Beneficially Owns 30% or more of the then outstanding shares
of
common stock of the Post-Transaction Corporation or 30% or more of the combined
voting power of the then outstanding voting securities of the Post-Transaction
Corporation, and
(C) at
least
a majority of the members of the board of directors of the Post-Transaction
Corporation were members of the Incumbent Board at the time of the execution
of
the initial agreement, and of the action of the Board, providing for such
Business Combination; or
(v) approval
by the shareholders of the Company of a complete liquidation or dissolution
of
the Company.
(b) As
used in this Section 7 H. and elsewhere in this Agreement, the following
terms
have the meanings indicated:
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(i) Affiliate: “Affiliate”
means a Person that directly, or indirectly through one or more intermediaries,
controls, or is controlled by, or is under common control with, another
specified Person.
(ii) Beneficial
Owner: “Beneficial Owner” (and variants
thereof), with respect to a security, means a Person who, directly or indirectly
(through any contract, understanding, relationship or otherwise), has or
shares
(A) the power to vote, or direct the voting of, the security, and/or (B)
the
power to dispose of, or to direct the disposition of, the
security.
(iii) Company
Voting Stock: “Company Voting Stock” means
any capital stock of the Company that is then entitled to vote for the election
of directors.
(iv) Majority
Shares: “Majority Shares” means the number of
shares of Company Voting Stock that could elect a majority of the directors
of
the Company if all directors were to be elected at a single
meeting.
(v) Person: “Person”
means a natural person or entity, and will also mean the group or syndicate
created when two or more Persons act as a syndicate or other group (including
without limitation a partnership, limited partnership, joint venture or other
joint undertaking) for the purpose of acquiring, holding, or disposing of
a
security, except that “Person” will not include an underwriter temporarily
holding a security pursuant to an offering of the security.
(vi) Post-Transaction
Corporation: Unless a Change of Control includes a Business
Combination, “Post-Transaction Corporation” means the
Company after the Change of Control. If a Change of Control includes
a Business Combination, “Post-Transaction
Corporation” will mean the corporation
or
other entity resulting from the Business Combination unless, as a result
of such
Business Combination, an ultimate parent entity controls the Company or all
or
substantially all of the Company’s assets either directly or indirectly, in
which case, “Post-Transaction Corporation” will mean such ultimate parent
entity.
(vii) Threshold
Percentage: “Threshold Percentage” means 30%
of all then outstanding Company Voting Stock.
Section
8. Events
of Default; Remedies. If any of the following events occurs, it is hereby
defined as and declared to be and to constitute an “Event of
Default”:
|
A.
|
Borrower
shall fail to make any payment of principal, interest or other amount
under the Note, when due whether at maturity, upon acceleration,
or
otherwise, and such default shall continue for three (3) Business
Days
after written notice to Borrower from Lender (except that Borrower
shall
not be entitled to said three (3) Business Day notice period more
than
twice in any twelve (12) calendar month period);
or
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11
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B.
|
Borrower
shall default in the payment of any of the other Obligations when
due, and
such default shall continue for ten (10) Business Days after written
notice to Borrower from Lender; or
|
|
C.
|
An
order for relief shall be entered against Borrower or any Subsidiary
by
any United States Bankruptcy Court; or Borrower or any Subsidiary
shall
generally not pay its debts as they become due (within the meaning
of 11
U.S.C. 303(h) as at any time amended or any successor statute thereto)
or
make an assignment for the benefit of creditors; or Borrower or any
Subsidiary shall apply for or consent to the appointment of a custodian,
receiver, trustee, or similar officer for it or for all or any substantial
part of its Property; or such custodian, receiver, trustee, or similar
officer shall be appointed without the application or consent of
Borrower
or such Subsidiary and such appointment shall continue undischarged
for a
period of sixty (60) calendar days; or Borrower or such Subsidiary
shall
institute (by petition, application, answer, consent, or otherwise)
any
bankruptcy, insolvency, reorganization, moratorium, arrangement,
readjustment of debt, dissolution, liquidation or similar proceeding
relating to it under the laws of any jurisdiction; or any such proceeding
shall be instituted (by petition, application, or otherwise) against
Borrower or such Subsidiary and shall remain undismissed for a period
of
sixty (60) calendar days; or any judgment, writ, warrant of attachment,
execution, or similar process shall be issued or levied against a
substantial part of the Property of Borrower or such Subsidiary and
such
judgment, writ, or similar process shall not be released, vacated,
or
fully bonded within sixty (60) calendar days after its issue or levy;
or
|
|
D.
|
Borrower
shall be in breach of any other agreement, covenant, obligation,
representation or warranty hereunder or with respect to any of the
Loan
Documents, and such breach shall continue for twenty (20) Business
Days
after whichever of the following dates is the earliest: (i) the date
on
which Borrower gives notice of such breach to Lender, and (ii) the
date on
which Lender gives notice of such breach to Borrower; provided, however,
such twenty (20) Business Day period may be extended for up to an
additional thirty (30) calendar days if and only if Lender extends
such
time period in writing following Lender’s good faith determination that
(X) Borrower is continuously and diligently taking action to cure
such
breach, and (Y) such breach cannot be cured within the initial twenty
(20)-day cure period; or
|
|
E.
|
The
aggregate book value of the Borrower’s assets shall at any time be less
than (1) $80,000,000 minus (2) the product of $80,000,000 multiplied
by
the Cash Collateral Factor.
|
|
F.
|
The
aggregate market value of the Borrower’s assets shall at any time be less
than (1) $160,000,000 minus (2) the product of $160,000,000 multiplied
by
the Cash Collateral Factor.
|
|
G.
|
The
Debt Service Coverage Ratio measured on a quarterly basis for the
previous
twelve (12) months shall be less than (1) (a) 5.0 minus (b) the product
of
5.0 multiplied by the Cash Collateral Factor, to (2)
1.0.
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12
|
H.
|
The
ratio of (1) the Borrower’s Indebtedness to (2) the aggregate market value
of the Borrower’s assets shall at any time exceed (a) sixty percent
(60.0%) minus (b) the product of sixty percent (60.0%) multiplied
by the
Cash Collateral Factor.
|
|
I.
|
The
ratio of (1) the Borrower’s Secured Indebtedness to (2) the aggregate
market value of the Borrower’s assets shall at any time exceed (1) forty
percent (40.0%) minus (2) forty percent (40.0%) multiplied by the
Cash
Collateral Factor.
|
|
J.
|
An
“Event of Default” as defined in the Comerica Loan Agreement shall
occur.
|
|
K.
|
Any
Reportable Event (as defined in ERISA) shall have occurred and continue
for 30 days; or any Plan shall have been terminated by the Borrower
not in
compliance with ERISA, or a trustee shall have been appointed by
a court
to administer any Plan, or the Pension Benefit Guaranty Corporation
shall
have instituted proceedings to terminate any Plan or to appoint a
trustee
to administer any Plan.
|
THEN,
at
Lender’s option unless and until cured or waived in writing by Lender and
regardless of any prior forbearance by Lender, all Obligations shall, without
presentment, demand, protest, or notice of any kind, all of which are hereby
expressly waived, be forthwith automatically due and payable in full, and Lender
may, immediately and without expiration of any period of grace, enforce payment
of all Obligations and exercise any and all other remedies granted to it at
law,
in equity, or otherwise.
Section
9. Disclaimer
for Negligence. Lender shall not be liable for any claims,
demands, losses or damages made, claimed or suffered by Borrower, excepting
such
as may arise through or could be caused by Lender’s gross negligence or willful
misconduct, and specifically disclaiming any liability of Lender to Borrower
arising or claimed to have arisen out of Lender’s ordinary
negligence.
Section
10. Limitation
of Consequential Damage. Lender shall not be responsible for any lost
profits of Borrower arising from any breach of contract, tort (excluding
Lender’s gross negligence or willful misconduct), or any other wrong arising
from the establishment, administration or collection of the obligations
evidenced hereby.
Section
11. Indemnification
and Expenses. Borrower agrees to hold Lender harmless from and
indemnify Lender against all liabilities, losses, damages, judgments, costs
and
expenses of any kind which may be imposed on, incurred by or asserted against
Lender (collectively, the “Costs”)
relating to or arising out of this Agreement, any other Loan Document, or any
transaction contemplated hereby or thereby, or any amendment, supplement or
modification of, or any waiver or consent under or in respect of, this
Agreement, any other Loan Document, or any transaction contemplated hereby
or
thereby, that, in each case, results from anything other than Lender’s gross
negligence or willful
13
misconduct. Borrower
also agrees to reimburse Lender as and when billed by Lender for all Lender’s
reasonable costs and expenses incurred in connection with the enforcement or
the
preservation of Lender’s rights under this Agreement, any other Loan Document,
or any transaction contemplated hereby or thereby, including without limitation
the reasonable fees and disbursements of its counsel. Borrower’s obligations
under this Section 11 shall survive repayment of the Loan.
Section
12. Miscellaneous.
|
A.
|
Entire
Agreement. The Loan Documents embody the entire
agreement and understanding between the parties hereto and supersede
all
prior agreements and understandings relating to the subject matter
hereof. No course of prior dealings between the parties, no
usage of the trade, and no parole or extrinsic evidence of any nature,
shall be used or be relevant to supplement, explain or modify any
term
used herein.
|
|
B.
|
No
Waiver. No failure to exercise and no delay in exercising
any right, power, or remedy hereunder or under the Loan Documents
shall
impair any right, power, or remedy which Lender may have, nor shall
any
such delay be construed to be a waiver of any of such rights, powers,
or
remedies, or any acquiescence in any breach or default under the
Loan
Documents; nor shall any waiver of any breach or default of Borrower
hereunder be deemed a waiver of any default or breach subsequently
occurring. The rights and remedies specified in the Loan
Documents are cumulative and not exclusive of each other or of any
rights
or remedies which Lender would otherwise
have.
|
|
C.
|
Survival. All
representations, warranties and agreements herein contained on the
part of
Borrower shall survive the making of advances hereunder and all such
representations, warranties and agreements shall be effective so
long as
the Obligations arising pursuant to the terms of this Agreement remain
unpaid or for such longer periods as may be expressly stated
therein.
|
|
D.
|
Notices.
All notices of any type hereunder shall be effective as against
Borrower
or Lender, as the case may be, upon the first to occur of (a) three
(3)
Business Days after deposit in a receptacle under the control of
the
United States Postal Service, (b) one (1) Business Day after being
transmitted by electronic means to a receiver under the control
of the
receiving party, provided there is an electronic confirmation of
receipt,
or (c) actual receipt by an employee or agent of the receiving
party. For the purposes hereof, the addresses are as
follows:
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14
|
DEBTOR:
|
with
a copy to:
|
|
00
Xxx Xxxxxxx Xxxxxxxxx, Xxxxx 000
Xxxxxx,
XX 00000
Attention:
Xx. Xxxxxxx X. Xxxxxxxxx III
|
Xxxxxxxx
& Xxxxx, L.L.P.
000
Xxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx,
XX 00000
Attention:
Xxxxxxx Xxxxx, Esq.
|
|
Phone: (000)
000-0000
Fax: (000)
000-0000
|
Phone: (000)
000-0000
Fax: (000)
000-0000
|
|
LENDER:
|
with
a copy to:
|
|
Xxxxxxxx
Xxxxxxxx Xxxxxx, X.X.
0000
Xxxxx Xxxxxxx Xxxxxxxxxx,
Xxxxx
000
Xxxxxx,
XX 00000
Attn:
Xxxxxxxx Xxxxxxx
|
Xxxxxxx,
Street and Deinard
Suite
2300, 000 X. Xxxxx Xxxxxx
Xxxxxxxxxxx,
Xxxxxxxxx 00000
Attention: Xxxxxx
X. Xxx
|
|
Phone: (000)
000-0000
Fax: (000)
000-0000
|
Phone: (000)
000-0000
Fax: (000)
000-0000
|
|
E.
|
Separability
of Provisions. In the event that any one or more of the
provisions contained in this Agreement should be invalid, illegal
or
unenforceable in any respect, the validity, legality, and enforceability
of the remaining provisions contained herein shall not in any way
be
affected or impaired thereby.
|
|
F.
|
Successors
and Assigns. This Agreement shall be binding upon and inure
to the benefit of Borrower, Lender, and their respective successors
and
assigns, provided, however, that Borrower may not transfer its rights
or
obligations under any of the Loan Documents without the prior written
consent of Lender which may be withheld in its sole and absolute
discretion. Lender may assign its interest in the Loan
Documents, in whole, or in part, without any consent from, or notice
to,
Borrower.
|
|
G.
|
Counterparts. This
Agreement may be executed in any number of counterparts all of which
taken
together shall constitute one agreement and any party hereto may
execute
this Agreement by signing any such
Counterpart.
|
|
H.
|
|
I.
|
Amendment
and Waiver. Neither this Agreement nor any provisions
hereof may be changed, waived, discharged or terminated orally, but
only
by an
|
15
instrument
in writing signed by the party against whom enforcement of the
change, waiver, discharge or termination is sought.
|
J.
|
Plural. When
permitted by the context, the singular includes the plural and vice
versa.
|
|
K.
|
Retention
of Records. Lender shall retain any documents, schedules,
invoices or other papers delivered by Borrower only for such period
as
Lender, at its sole discretion, may determine
necessary.
|
|
L.
|
Headings. Section
and paragraph headings and numbers have been set forth for convenience
only.
|
|
M.
|
Information
to Participants. Borrower agrees that Lender may furnish
any financial or other information concerning Borrower or any of
its
Subsidiaries heretofore or hereafter provided by Borrower to Lender,
pursuant to this Agreement or otherwise, to any prospective or actual
purchaser of any participation or other interest in any of the loans
made
by Lender to Borrower (whether under this Agreement or otherwise),
or to
any prospective purchaser of any securities issued or to be issued
by
Lender; provided, however, any such delivery shall be delivered on
the
condition that such information is delivered on a confidential
basis.
|
|
N..
|
Acknowledgments.
Borrower hereby acknowledges that: (i) it has been advised by counsel
in
the negotiation, execution and delivery of this Agreement and the
other
Loan Documents; (ii) Lender has no fiduciary relationship to Borrower,
and
the relationship between Borrower and Lender is solely that of
debtor and
creditor; and (iii) no joint venture exists between Lender and
Borrower.
|
Section
13. Submission
to Jurisdiction; Venue. To induce Lender to enter into this
Agreement, Borrower irrevocably agrees that, subject to Lender’s sole
discretion, all actions and proceedings in any way, manner or respect, arising
out of, from or related to this Agreement or the other Loan Documents shall
be
litigated in courts having situs within the City of Minneapolis, State of
Minnesota. Borrower hereby consents and submits to the jurisdiction
of any local, state or federal court located within said City and State.
Borrower hereby waives any right it may have to transfer or change the venue
of
any litigation brought against Borrower by Lender in accordance with this
paragraph.
Section
14. Waiver
Of Trial By Jury. In recognition of the higher costs and delay
which may result from a jury trial, the parties hereto waive any right to trial
by jury of any claim, demand, action or cause of action (1) arising hereunder
or
any other instrument, document or agreement executed or delivered in connection
herewith, or (2) in any way connected with or related or incidental to the
dealings of the parties hereto or any of them with respect hereto or any other
instrument, document or agreement executed or delivered in connection herewith,
or the transactions related hereto or thereto, in each case whether now existing
or hereafter arising, and whether sounding in contract or tort or otherwise;
and
each party hereby agrees and consents that
16
any
such
claim, demand, action or cause of action shall be decided by court trial without
a jury, and that any party hereto may file an original counterpart or a copy
of
this section with any court as written evidence of the consent of the parties
hereto to the waiver of their right to trial by jury.
Section
15. Liability
of Officers, Directors, Shareholders. Notwithstanding anything
contained herein or in the other Loan Documents, or any conduct or course of
conduct by the parties hereto, before or after signing the Loan Documents,
this
Agreement shall not be construed as creating any rights, claims or causes of
action against any partner of Borrower or any officers, directors, or
shareholders of Borrower.
[Signature
page follows.]
17
[SIGNATURE
PAGE]
IN
WITNESS WHEREOF, the parties hereto
have caused this Agreement to be executed as of the day and year first above
written.
|
BORROWER:
|
|
a
Delaware corporation
By:
/s/ Xxxx X. Xxxxx
Name: Xxxx
X. Xxxxx
Title: Senior
Vice President
|
|
LENDER:
|
|
XXXXXXXX
XXXXXXXX XXXXXX, X.X., a Texas limited partnership, by Xxxxxxxx
XX Corp., a Delaware corporation, its General Partner
By:
/s/ Xxxxx Xxxxxxx
Name: Xxxxx
Xxxxxxx
Its: Vice
President
|
SCHEDULE
1 TO LOAN AGREEMENT
CERTAIN
DEFINITIONS
“Accounting
Period” means each
calendar quarter during the term of the Loan, commencing on July 1,
2007.
“Agreement”
means
the Loan
Agreement to which this Schedule 1 is attached to and made a part
of.
“Auditors”
means
Borrower’s
independent certified public accountants, which shall be of nationally
recognized standing and otherwise reasonably acceptable to Lender.
“Borrower”
has
the meaning
provided in the introductory paragraph of the Agreement.
“Borrower’s
Officer’s Compliance
Certificate” means a certificate made by a duly authorized officer of
Borrower and addressed to Lender, in the form attached hereto as Exhibit
B.
“Business
Day” means any day
excluding Saturday or Sunday and excluding any day on which national banking
associations are closed for business.
“Capital
Improvements
Expenditures” means investments of Borrower and certain affiliates of
Borrower in real estate and facilities investments, plus any municipal utility
reimbursements which have been credited to such real estate and/or facilities
investments, determined on a consolidated basis.
“Cash
and Cash
Equivalents” means cash and cash equivalents of Borrower and certain
affiliates of Borrower, determined on a consolidated basis.
“Cash
Collateral Account” means
a blocked deposit account held by Lender in which funds are deposited by
Borrower, which funds are pledged as collateral for the Loan pursuant to an
agreement satisfactory to Lender in form and substance and in which Lender
has a
perfected first security interest.
“Cash
Collateral Factor” means
at any time the ratio of (1) the balance in the Cash Collateral Account to
(2)
the principal balance of the Loan.
“Comerica
Debt” means the
Indebtedness incurred by Borrower from time to time pursuant to the Comerica
Loan Agreement.
“Comerica
Loan Agreement” means
that certain Loan Agreement dated as of September 30, 2005, among Borrower
and
certain Affiliates of Borrower and Comerica Bank-Texas.
“Controlled
Group” means a
“controlled group of corporations” as defined in Section 1563(a) (4) of the
Internal Revenue Code of 1954, as amended, determined without regard to Section
1563(a) and (e) (3) (c) of such Code, of which Borrower is a part.
“Costs”
has
the meaning
contained in Section 11.
“Debt
Service” means, with
respect to a specified period, scheduled payments of principal and interest
with
respect to the respective Indebtedness.
“Debt
Service Coverage Ratio”
means for any period of time the ratio of (1) the sum of the Borrower’s increase
(or decrease) in Cash and Cash Equivalents during that period, plus Capital
Improvements Expenditures during that period, plus Debt Service on all of
Borrower’s Indebtedness during that period, to (2) Debt Service on all of
Borrower’s Indebtedness.
“Events
of Default” has the
meaning contained in Section 8 of the Agreement.
“GAAP”
shall
mean generally
accepted accounting principles as in effect from time to time in the United
States.
“Indebtedness”
of
any Person
means all items of indebtedness which, in accordance with GAAP, would be deemed
a liability of such Person as of the date as of which indebtedness is to be
determined and shall also include, without duplication, all indebtedness and
liabilities of others assumed or guaranteed by such Person or in respect of
which such Person is secondarily or contingently liable (other than by
endorsement of instruments in the course of collection) that would otherwise
be
deemed to be liabilities under GAAP, whether by reason of any agreement to
acquire such indebtedness, to supply or advance sums, or otherwise.
“Lender”
has
the meaning
provided in the introductory paragraph of the Agreement.
“Lending
Office” shall refer to
Lender’s office described in Section 12.D of the Agreement.
“Loan”
has
the meaning contained
in Subsection 2.A. of the Agreement.
“Loan
Documents” means the
Agreement, the Note, and any riders, supplements and amendments thereto,
mortgages, security agreements, assignments, pledges, subordination agreements
or guaranties delivered in connection with the Agreement and all other documents
or instruments heretofore, now or hereafter executed, pursuant to the Agreement,
or any of the aforesaid.
“Material
Adverse Effect” means
with respect to any event or circumstance, a material adverse effect
on:
2
|
(i)
|
the
ability of Borrower to perform its obligations under the Agreement,
the
Note, or any other Loan Document;
or
|
|
(ii)
|
the
validity, enforceability or collectibility of the Note, the Agreement
or
any other Loan Document.
|
“Maturity
Date” means December
31, 2011.
“Note”
means
the Promissory Note
dated as of the date of the Agreement made by Borrower to Lender pursuant to
Subsection 2.B. of the Agreement in the form attached hereto as Exhibit
A, together with any replacements, modifications, amendments, renewals and
extensions thereof.
“Obligations”
means
and includes
all amounts owing by Borrower to Lender under the Note and the other Loan
Documents, together with any and all loans, advances, debts, liabilities,
obligations, letters of credit, or acceptance transactions, trust receipt
transactions, or any other financial accommodations, owing by Borrower to Lender
of every kind and description (whether or not evidenced by any note or other
instrument and whether or not for the payment of money), direct or indirect,
absolute or contingent, due or to become due, now existing or arising hereafter
with respect to the Note and the other Loan Documents, including, without
limitation, all interest, fees, charges, expenses, attorneys’ fees, and
accountants’ fees chargeable to Borrower and incurred by Lender in connection
the Loan.
“Permitted
Debt” means (i) the
Loan and other Indebtedness to Lender or Related Lenders, (ii) the Comerica
Debt
(as of the date hereof), (iii) any other Indebtedness of Borrower for fair
value
received that is secured by assets owned by Borrower having an appraised value
equal to or greater than the indebtedness secured thereby (and which assets
do
not secure other indebtedness), (iv) debt outstanding as of the date of the
Loan
Agreement, (v) unsecured trade, utility or non-extraordinary accounts payable
in
the ordinary course of business and other unsecured debt of Borrower at any
one
time not to exceed $500,000.00, and (vi) guaranties of Borrower guaranteeing
project development and/or construction costs and related costs, provided that
Borrower has a direct or indirect interest in such projects and that the
aggregate amount, at any one time, of such guaranties does not exceed the sum
of
$15,000,000.00.
“Person”
means
any individual,
entity, government, governmental agency or any other entity and whether acting
in an individual, fiduciary or other capacity.
“Plan”
means
any employee
pension benefit plan subject to Title IV of ERISA and maintained by Borrower
or
any member of a Controlled Group or any such plan to which Borrower or any
member of a Controlled Group is required to contribute on behalf of any of
its
employees.
3
“Property” shall
mean
any and all right, title and interest of a specified Person in and to any and
all property, whether real or personal, tangible or intangible, and wherever
situated.
“Related
Lenders” shall mean
American Strategic Income Portfolio Inc., a Minnesota corporation, American
Select Portfolio Inc., a Minnesota corporation, American Strategic Income
Portfolio Inc.—II, a Minnesota corporation, and American Strategic
Income Portfolio Inc.—III, a Minnesota corporation.
“Secured
Indebtedness” means any
Indebtedness that is subject to any security interest or lien securing the
payment of money.
“Statement
Dates” means the
dates of the financial statements delivered to Lender pursuant to Section 4.A(3)
of the Agreement.
“Subsidiary”
means
(i) any
entity of which more than fifty percent (50%) of the outstanding having ordinary
voting power (irrespective of whether or not at the time class or classes of
shall have or might have voting power by reason of the happening of any
contingency) is at the time directly or indirectly owned by Borrower and/or
any
Subsidiary, (ii) any limited liability company or similar entity of which more
than fifty percent (50%) of the member interests of such limited liability
company are directly or indirectly owned by Borrower and/or any Subsidiary,
and
(iii) any partnership of which more than fifty percent (50%) of the limited
partner interests of such limited partnership or any of the general partner
interests of such limited partnership are directly or indirectly owned by
Borrower and/or any Subsidiary.
4
EXHIBIT
A
TO LOAN AGREEMENT
FORM
OF NOTE
EXHIBIT
B
TO LOAN AGREEMENT
FORM
OF BORROWER’S OFFICER’S COMPLIANCE CERTIFICATE
00
Xxx
Xxxxxxx Xxxxxxxxx, Xxxxx 000
Xxxxxx,
XX 00000
[DATE]
Xxxxxxxx
Xxxxxxxx Xxxxxx, X.X.
c/o
FAF
Advisors, Inc.
000
Xxxxxxxx Xxxx, Xxxxx 000
XX-XX-X00X
Xxxxxxxxxxx,
XX 00000
Attention: Xxxx
X. Xxxxxx
|
Re
|
Loan
Agreement dated as of June 1, 2007 between Stratus Properties Inc.
(“Borrower”) and Xxxxxxxx Xxxxxxxx Xxxxxx, X.X.
(“Lender”) (the “Loan
Agreement”) (capitalized terms not defined herein have the
respective meanings contained in the Loan
Agreement)
|
Ladies
and Gentlemen:
Pursuant
to subsection 6.A(2) of the
Loan Agreement, Borrower certifies to Lender as follows:
1. As
of the date of this Certificate, no act or omission has occurred which has
resulted in an Event or Default or, if not cured, remedied, waived or otherwise
eliminated to the satisfaction of Lender, would result in an Event of
Default.
2. The
undersigned officer is authorized to make this Certificate on behalf of Borrower
and has reviewed the terms of the Loan Agreement and has made, or caused to
be
made under such officer’s supervision, a review in reasonable detail of the
facts necessary to make the certifications contained herein.
|
a
Delaware corporation
By:___________________________
Name: Xxxx
X. Xxxxx
Title: Senior
Vice President
|
