Exhibit 99.2
SECURITIES PURCHASE AGREEMENT
This SECURITIES PURCHASE AGREEMENT (this "Agreement") is
made and entered into as of May 22, 1998, by and between
Oly/Stratus Equities, L.P., a Texas limited partnership (the
"Purchaser"), and Stratus Properties Inc. (formerly known as FM
Properties Inc.), a Delaware corporation (the "Company").
RECITALS:
A. The Company presently conducts the business of
developing and marketing certain real property (the "Business");
B. The Company requires additional capital in order to
expand the Business; and
C. The Purchaser desires to provide additional capital to
the Company for such purpose in accordance with the terms and
subject to the conditions set forth in this Agreement.
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I. ISSUANCE OF SECURITIES
I.1. Authorization. The Company has duly authorized the
issuance and sale of 1,712,328 shares of its Series B
Participating Preferred Stock, par value $0.01 per share (the
"Securities"), having an aggregate initial liquidation preference
of $9,999,995.52 plus accrued and unpaid dividends thereon, if
any, and other rights as specified in the Certificate of
Designations of the Powers, Preferences and Relative
Participating, Optional and Other Special Rights of Series B
Participating Preferred Stock and Qualifications, Limitations and
Restrictions Thereof, substantially in the form of Exhibit A
attached hereto (the "Certificate of Designations").
I.2. Purchase and Sale of the Securities; the Closing.
Subject to the terms and conditions hereof, the Company hereby
agrees to sell to the Purchaser, and the Purchaser hereby agrees
to purchase from the Company, the Securities for an aggregate
purchase price of $9,999,995.52. The closing of such sale and
purchase shall be held at 10:00 A.M., Dallas, Texas time, on May
22, 1998, or on such other day and time as may be agreed by the
Company and the Purchaser (the "Closing Date"), at the offices of
Weil, Gotshal & Xxxxxx LLP, 000 Xxxxxxxx Xxxxx, Xxxxx 0000,
Xxxxxx, Xxxxx 00000.
On the Closing Date, the Company will deliver to the
Purchaser one or more certificates representing the Securities,
registered in the name of the Purchaser or in the names of one or
more nominees of the Purchaser and in any denomination as the
Purchaser may specify by timely notice to the Company (or, in the
absence of such notice, one certificate representing 1,712,328
shares registered in the name of the Purchaser), against delivery
to the Company of immediately available funds in the amount of
the purchase price of such Securities by wire transfer to an
account or accounts designated in writing by the Company prior to
the Closing Date.
ARTICLE II. REPRESENTATIONS AND WARRANTIES
II.1. Representations and Warranties of the Company. The
Company makes the following representations and warranties to the
Purchaser, each of which is true and correct as of the date
hereof and shall be true and correct as of the Closing Date and
shall be unaffected by any investigation heretofore or hereafter
made by the Purchaser.
II.1.1. Organization and Good Standing. The Company
and each of the Subsidiaries (as hereinafter defined) is duly
organized, validly existing and in good standing under the laws
of the state of its organization. The Company and each of the
Subsidiaries has the requisite power and authority to own, lease
or otherwise hold the assets owned, leased or otherwise held by
it and to carry on its business as presently conducted by it.
The Company and each of the Subsidiaries is in good standing and
duly qualified to conduct business as a foreign corporation,
partnership or limited liability company, as applicable, in every
state of the United States in which its ownership or lease of
property or conduct of business makes such qualification
necessary.
II.1.2. Authorization of Agreement; Binding
Obligation. The Company has the requisite corporate power to
execute and to deliver this Agreement and the other Transaction
Documents and to perform the transactions contemplated hereby and
thereby to be performed by it. The execution and delivery by the
Company of this Agreement and the other Transaction Documents and
the performance by it of the transactions contemplated hereby and
thereby to be performed by it have been duly authorized by all
necessary corporate action on the part of the Company. This
Agreement and the other Transaction Documents have been duly
executed and delivered by duly authorized officers of the Company
and constitute valid and binding obligations of the Company
enforceable against it in accordance with terms hereof or
thereof, except as may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the
enforcement of creditors' rights in general and subject to
general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at
law).
II.1.3. Subsidiaries and Equity Investments. (a)
Schedule 2.1.3 sets forth (i) the name of each entity of which
the Company directly or indirectly owns shares of capital stock
or other equity interests having in the aggregate 50% or more of
the total voting power of the issued and outstanding shares of
capital stock or other equity interests (individually, a
"Subsidiary" and collectively, the "Subsidiaries"); (ii) the name
of each corporation, partnership, limited liability company,
joint venture or other entity (other than the Subsidiaries) in
which the Company or any Subsidiary has, or pursuant to any
agreement has the right to acquire at any time by any means, an
equity interest or investment; (iii) in the case of each of the
Subsidiaries, (A) the jurisdiction of organization and (B) the
capitalization thereof and the percentage of each class of voting
stock or other equity interests owned by the Company or by any of
the Subsidiaries; and (iv) in the case of each of such entities
listed pursuant to clause (ii) hereof, the equivalent of the
information provided pursuant to the preceding clause (iii) with
regard to the Subsidiaries.
(b) All of the outstanding shares of capital stock or
other equity interests of each of the Subsidiaries have been duly
authorized and validly issued, are fully paid and non-assessable,
have not been issued in violation of any preemptive, maintenance
or similar rights. The shares of capital stock or other equity
interests owned by the Company or any of the Subsidiaries as set
forth on Schedule 2.1.3 are owned of record and beneficially by
the Company or such Subsidiary, free and clear of any liens,
claims, charges, security interests or other legal or equitable
encumbrances, limitations or restrictions, except for security
interests granted to IMC Global Inc. ("IMC") pursuant to the Sale
and Guaranty Agreement among the Company, FM Properties Operating
Co., Circle C Land Corp., Freeport McMoRan Inc. and IMC.
(c) There are no options, warrants, calls,
subscriptions, conversion or other rights, agreements or
commitments obligating any Subsidiary to issue any additional
shares of capital stock or other equity interests or any other
securities convertible into, exchangeable for or evidencing the
right to subscribe for any shares of such capital stock or other
equity interests.
II.1.4. No Restrictions Against Issuance of
Securities; Required Consents. The execution and delivery of
this Agreement and the other Transaction Documents by the Company
does not, and the performance by the Company of the transactions
contemplated hereby or thereby to be performed by it will not
(a) conflict with the certificate of incorporation or bylaws,
partnership agreement, operating agreement, or other
organizational documents, as applicable, of the Company or any
Subsidiary, (b) conflict with, or result in any violation of, or
constitute a default (with or without notice or lapse of time, or
both) under, or give rise to a right of termination, cancellation
or acceleration of any material obligation or to loss of a
benefit under, any material contract, permit, order, judgment or
decree to which the Company or any Subsidiary is a party or by
which any of their properties are bound, (c) constitute a
violation of any law or regulation applicable to the Company or
any Subsidiary, or (d) result in the creation of any lien, charge
or encumbrance upon any of the Company's or the Subsidiaries'
assets except, in the case of (a) through (d) hereof, for those
that, individually or in the aggregate, could not reasonably be
expected to have a material adverse effect (i) on the business,
assets, financial condition, prospects, financial projections, or
results of operations of the Company and its Subsidiaries taken
as a whole or (ii) on the ability of the Company to perform on a
timely basis any material obligation under this Agreement or the
other Transaction Documents or to consummate the transactions
contemplated hereby or thereby (each, a "Material Adverse
Effect"). Except as set forth on Schedule 2.1.4, no consent,
approval, order or authorization of, or registration, declaration
or filing with, any nation or government, any state or other
political subdivision thereof or an entity exercising executive,
legislative, judicial, regulatory or administrative function of
or pertaining to government (each a "Governmental Entity") is
required to be obtained or made by or with respect to the Company
in connection with the execution and delivery of this Agreement
or any of the other Transaction Documents by the Company or the
performance by the Company of the transactions contemplated
hereby or thereby to be performed by it. Assuming the accuracy
of the Purchaser's representations and warranties contained in
Section 2.2 hereof, the issuance and sale of the Securities are
exempt from the registration and prospectus delivery requirements
of the Securities Act of 1933, as amended (the "Securities Act").
II.1.5. Capitalization. The authorized capital stock
of the Company consists of 150,000,000 shares of common stock,
$0.01 par value ("Common Stock"), and 50,000,000 shares of
preferred stock, $0.01 par value ("Preferred Stock"). As of
March 31, 1998, the Company had, in the aggregate, 14,288,270
shares of Common Stock issued and outstanding. As of the date of
this Agreement and as of the Closing Date, except for the
Securities, the Company had and will have no shares of Preferred
Stock issued and outstanding. All of the outstanding shares of
Common Stock have been validly issued, are fully paid and
non-assessable and were not issued in violation of any
preemptive, maintenance or similar rights. At the Closing, the
Securities shall be validly issued, fully paid and non-assessable
and shall have not been issued in violation of any preemptive,
maintenance or similar rights. Except as disclosed in the SEC
Reports (as hereinafter defined), there are no options, warrants,
calls, subscriptions, conversion or other rights, agreements or
commitments obligating the Company to issue any capital stock of
the Company or any other securities convertible into, or
exchangeable, exercisable or evidencing the right to subscribe
for, capital stock of the Company.
II.1.6. Financial Statements. The Company has
delivered to the Purchaser true and complete copies of (a) the
audited consolidated balance sheets of the Company at December
31, 1996 and 1997 and the related statements of income, cash flow
and changes in shareholders' equity for the three years in the
period ended December 31, 1997, accompanied by certified opinions
of the Company's independent auditing firm as included in the
Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1997; and (b) unaudited consolidated balance sheets
of the Company at March 31, 1997 and 1998 and related statements
of income, cash flow and changes in shareholders' equity for the
periods then ended as contained in the Company's Quarterly Report
on Form 10-Q for the fiscal quarter ended March 31, 1998, all of
which have been prepared in accordance with United States
generally accepted accounting principles ("GAAP") consistently
applied throughout the periods involved. Such consolidated
balance sheets, including the related notes, fairly present the
consolidated financial position, assets and liabilities (whether
accrued, absolute, contingent or otherwise) of the Company and
the Subsidiaries at the dates indicated and such statements of
income, cash flow and changes in shareholders' equity fairly
present the consolidated results of operations, cash flow and
changes in shareholders' equity of the Company and the
Subsidiaries for the periods indicated. The unaudited
consolidated financial statements as of and for the periods
ending March 31, 1997 and 1998 contain all adjustments, which are
solely of a normal recurring nature, necessary for a fair
statement of the consolidated financial position and results of
operations of the Company and the Subsidiaries for the periods
then ended. References in this Agreement to the "Interim Balance
Sheet" shall mean the consolidated balance sheet of the Company
as of March 31, 1998 referred to above, and references in this
Agreement to the "Interim Balance Sheet Date" shall be deemed to
refer to March 31, 1998.
II.1.7. Business, Properties and Other Information.
The Company is subject to the reporting requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"),
and has delivered to the Purchaser true and complete copies of
the following reports and proxy statements filed with the
Securities and Exchange Commission (the "Commission"):
A. its Annual Report on Form 10-K for its fiscal year
ended December 31, 1997;
B. its Quarterly Report on Form 10-Q for its fiscal
quarter ended March 31, 1998;
C. its Current Report on Form 8-K dated March 3,
1998; and
D. the Proxy Statement for its 1998 Annual Meeting of
Stockholders, dated March 30, 1998.
Said reports and proxy statements comprise all materials required
to be filed by the Company with the Commission since December 31,
1997 and are collectively called the "SEC Reports," which term
shall also include on the Closing Date all further reports which
the Company may theretofore have filed with the Commission.
The SEC Reports do not contain any untrue statement of
a material fact or omit to state a material fact necessary in
order to make the statements contained therein, in the light of
the circumstances under which they were made, not misleading;
provided that to the extent any such information therein was
based upon or constitutes an estimate or projection, the Company
represents only that in preparing such estimate or projection it
acted in good faith and on a basis which the Company reasonably
believed to be reasonable and on a basis consistent with the
financial statements described in Section 2.1.6 hereof and
contained in the SEC Reports. The Company knows of no facts not
disclosed in the SEC Reports listed above which facts
individually or in the aggregate could reasonably be expected to
have a Material Adverse Effect.
II.1.8. Absence of Undisclosed Liabilities. Neither
the Company nor any of the Subsidiaries has liabilities or
obligations, either direct or indirect, matured or unmatured or
absolute, contingent or otherwise, except:
(a) those liabilities or obligations set forth on the
Interim Balance Sheet (including the notes thereto) and not
heretofore paid or discharged;
(b) liabilities arising in the ordinary course of
business under any agreement, contract, commitment, lease or plan
specifically disclosed in the SEC Reports or not required to be
disclosed therein because of the term or amount involved;
(c) those liabilities or obligations incurred,
consistently with past business practice, in or as a result of
the normal and ordinary course of business since the Interim
Balance Sheet Date;
(d) the obligations set forth in the Transaction
Documents; and
(e) those which, individually or in the aggregate,
could not reasonably be expected to have a Material Adverse
Effect.
II.1.9. Books of Account. The books, records and
accounts of the Company accurately and fairly reflect, in
reasonable detail, the transactions and the assets and
liabilities of the Company and the Subsidiaries and do not
contain any material inaccurate information or omit any material
information necessary in order to make such books, records and
accounts, in light of the circumstances under which they were
prepared, not misleading. Neither the Company nor any of the
Subsidiaries has engaged in any transaction, maintained any bank
account or used any of the funds of the Company or the
Subsidiaries except for transactions, bank accounts and funds
which have been and are reflected in the normally maintained
books and records of the Company.
II.1.10. Contracts and Commitments. (a) The SEC
Reports contain descriptions of and include as exhibits thereto
all agreements, contracts, commitments, leases, plans and other
instruments, documents and undertakings required to be described
therein and filed as an exhibit thereto pursuant to the Exchange
Act and the rules and regulations of the Commission promulgated
thereunder.
(b) Each of the agreements, contracts, commitments,
leases, plans and other instruments, documents and undertakings
described in and filed as an exhibit to (or required to be
described in and filed as an exhibit to) the SEC Reports is valid
and enforceable in accordance with its terms; the Company and the
Subsidiaries are (to the extent they are a party thereto), and to
the Company's knowledge all other parties thereto are, in
material compliance with the provisions thereof; the Company and
the Subsidiaries are not, and to the Company's knowledge no other
party thereto is, in default in the performance, observance or
fulfillment of any obligation, covenant or condition contained
therein; and no event has occurred which with or without the
giving of notice or lapse of time, or both, would constitute a
default thereunder. Furthermore, no such agreement, contract,
commitment, lease, plan or other instrument, document or
undertaking, in the reasonable opinion of the Company, contains
any contractual requirement with which there is a reasonable
likelihood the Company, any Subsidiary or any other party thereto
will be unable to comply.
II.1.11. Liens and Encumbrances; Condition of Assets.
(a) The Company and each of the Subsidiaries has good, valid
and indefeasible title to its material assets free and clear of
all title defects or objections, mortgages, liens, claims,
charges, pledges, or other encumbrances of any nature whatsoever,
including without limitation licenses, leases, chattel or other
mortgages, collateral security arrangements, pledges, title
imperfections, defect or objection liens, security interests,
conditional and installment sales agreements, charges, easements,
encroachments or restrictions, of any kind and other title or
interest retention arrangements, reservations or limitations of
any nature (collectively, "Liens"), other than (i) those
reflected or reserved against on the Interim Balance Sheet
(including the notes thereto), (ii) Liens for Taxes, assessments
and other governmental charges that are not due and payable or
that may thereafter be paid without penalty, (iii) those imposed
by municipal, county, state or federal land use or development
statutes, ordinances, rules, regulations or restrictions, and
(iv) those that, individually or in the aggregate, could not
reasonably be expected to have a Material Adverse Effect. (The
items referred to in the exception to the immediately preceding
sentence are hereinafter referred to as "Permitted Liens".)
(b) All of the assets of the Company and the
Subsidiaries are in good operating condition and repair, subject
to normal wear and maintenance, are usable in the regular and
ordinary course of business and materially conform to all
applicable laws, ordinances, codes, rules and regulations, and
Permits relating to their construction, use and operation.
II.1.12. Insurance. The Company and each of the
Subsidiaries has insurance policies in full force and effect for
such amounts as are sufficient for material compliance with all
requirements of law and of all material agreements to which the
Company or any of the Subsidiaries is a party or by which any of
them is bound. Except as set forth in Schedule 2.1.12, no event
relating to the Company or the Subsidiaries has occurred that can
reasonably be expected to result in a material retroactive upward
adjustment in premiums under any such insurance policies or that
is likely to result in a material prospective upward adjustment
in such premiums. Excluding insurance policies that have expired
and been replaced in the ordinary course of business, no
insurance policy has been cancelled within the last two years
and, to the Company's knowledge, no threat has been made to
cancel any insurance policy of the Company or any Subsidiary
during such period. No event has occurred, including, without
limitation, the failure by the Company or any Subsidiary to give
any notice or information or the Company or any Subsidiary giving
any inaccurate or erroneous notice or information, which limits
or impairs the rights of the Company or any Subsidiary under any
such insurance policies. The Company has provided the Purchaser
with true and complete copies of all regularly prepared loss run
reports as of the date hereof.
II.1.13. Conduct of the Business Since the Interim
Balance Sheet Date. Except for the transactions contemplated by
the Transaction Documents, since the Interim Balance Sheet Date,
neither the Company nor any of the Subsidiaries has:
(a) incurred any liabilities, other than liabilities
incurred in the ordinary course of business consistent with past
practice, or discharged or satisfied any lien or encumbrance, or
paid any liabilities, other than in the ordinary course of
business consistent with past practice, or failed to pay or
discharge when due any liabilities of which the failure to pay or
discharge has caused or will cause any material damage or risk of
material loss to it or any of its material assets or properties;
(b) sold, encumbered, assigned or transferred any
material assets or properties other than in the ordinary course
of business consistent with past practices;
(c) created, incurred, assumed or guaranteed any
indebtedness for money borrowed, or mortgaged, pledged or
subjected any of its assets to any mortgage, lien, pledge,
security interest, conditional sales contract or other
encumbrance of any nature whatsoever, except for Permitted Liens,
in each case other than in the ordinary course consistent with
past practices;
(d) made or suffered any amendment or termination of
any material agreement, contract, commitment, lease or plan to
which it is a party or by which it is bound, or cancelled,
modified or waived any substantial debts or claims held by it or
waived any rights of substantial value, in each case other than
in the ordinary course of business consistent with past
practices;
(e) declared, set aside or paid any dividend or made
or agreed to make any other distribution or payment in respect of
its capital shares or redeemed, purchased or otherwise acquired
or agreed to redeem, purchase or acquire any of its capital
shares;
(f) suffered any damage, destruction or loss that,
individually or in the aggregate, could reasonably be expected to
have a Material Adverse Effect;
(g) made commitments or agreements for capital
expenditures or capital additions or betterments exceeding in the
aggregate $500,000 except in the ordinary course of business
consistent with past practices or such as may be involved in
ordinary repair, maintenance or replacement of its assets;
(h) increased the salaries or other compensation of,
or made any advance (excluding advances for ordinary and
necessary business expenses) or loan to, any of its employees or
made any increase in, or any addition to, other benefits to which
any of its employees may be entitled, other than regularly
scheduled increases in the ordinary course of business consistent
with past practices;
(i) except as required by law or GAAP, changed any of
the accounting principles followed by it or the methods of
applying such principles;
(j) entered into any transaction other than in the
ordinary course of business consistent with past practice; or
(k) suffered any material adverse change in its
business, operations, assets, properties, prospects or condition
(financial or otherwise).
II.1.14. Employee Benefit Plans. (a) All "employee
benefit plans," as defined by Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), and
all other employee benefit arrangements or payroll practices,
including, without limitation, bonus plans, consulting or other
compensation agreements, incentive, equity or equity-based
compensation, deferred compensation arrangements, stock purchase,
severance pay, and change in control agreements, programs,
policies or arrangements maintained by the Company or any
Subsidiary or to which the Company or any Subsidiary contributes
or contributed on behalf of its respective employees or has any
liability, contingent or otherwise (the "Employee Plans"), are
listed on Schedule 2.1.14(a). Any Employee Plans which
constitute "employee pension benefit plans" as defined in Section
3(2) of ERISA (the "Pension Plans") are so designated on
Schedule 2.1.14(a). No Pension Plan is subject to Title IV of
ERISA or Section 412 of the Code.
(b) Except as set forth on Schedule 2.1.14(b),
(i) each Pension Plan is qualified under Section 401 of the
Internal Revenue Code of 1986, as amended (the "Code"), and any
trust maintained pursuant thereto is exempt from federal income
taxation under Section 501 of the Code; and (ii) the Company and
each of the Subsidiaries has complied with respect to each
Employee Plan in all material respects with the reporting and
disclosure requirements of ERISA and no "party in interest" or
"disqualified person" has engaged in a "prohibited transaction"
within the meaning of Section 406 of ERISA or Section 4975 of the
Code.
(c) The Employee Plans have been established,
maintained and operated in all material respects in accordance
with their terms and with all provisions of ERISA, the Code and
other applicable federal and state laws and regulations.
(d) Neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated
hereby will (i) result in any payment becoming due to any
employee or consultant (current, former or retired) of the
Company or any of the Subsidiaries, (ii) increase any benefits
otherwise payable under any Employee Plan or (iii) result in the
acceleration of the time of payment or vesting of any such
benefits.
II.1.15. Litigation; Decrees. There are no judicial
or administrative actions, proceedings or investigations pending
or, to the Company's knowledge, threatened that question the
validity of this Agreement or any action taken or to be taken by
the Company in connection with this Agreement. Except as
described in the SEC Reports or on Schedule 2.1.15, there are no
(i) lawsuits, claims, administrative or other proceedings or
investigations relating to the conduct of the Business pending
or, to the Company's knowledge, threatened by, against or
affecting the Company or any affiliate thereof or (ii) judgments,
orders or decrees of any Governmental Entity binding on the
Company or any Subsidiary.
II.1.16. Compliance With Law; Permits. The Company
and each of the Subsidiaries has complied with each law,
judgment, order and decree of any Governmental Entity to which
the Company or the Subsidiaries or their business, operations,
assets or properties is subject and is not currently in violation
of any of the foregoing, except where the failure to so comply
with or violation of any of the foregoing could not reasonably be
expected to have, individually or in the aggregate, a Material
Adverse Effect. The Company and each of the Subsidiaries owns,
holds, possesses or lawfully uses in the operation of its
business all material licenses, permits, authorizations and
approvals (collectively, "Permits") which are necessary to
conduct the Business as now conducted or for the ownership and
use of its assets, free and clear of all Liens and in compliance
with all laws. For purposes of this Agreement, the term "Permit"
excludes any development permit, approval or authorization issued
by any municipal, county, state or federal agency. Neither the
Company nor any Subsidiary is in default, nor has the Company or
any Subsidiary received any notice of any claim of default, with
respect to any such Permits. All such Permits are renewable by
their terms or in the ordinary course of business without the
need to comply with any special qualification procedures or to
pay any amounts other than routine filing fees. None of such
Permits will be adversely affected by consummation of the
transactions contemplated hereby. No shareholder, director,
officer, employee or former employee of the Company or any
affiliates of the Company, or any other person, firm or
corporation owns or has any proprietary, financial or other
interest (direct or indirect) in any Permits which the Company or
any Subsidiary owns, possesses or uses in the operation of the
Business as now conducted.
II.1.17. Taxes. (a) All Tax Returns (as defined in
paragraph (e) below) that are required to be filed on or before
the Closing Date by the Company or any of the Subsidiaries have
been duly filed on a timely basis under the statutes, rules or
regulations of each applicable jurisdiction. To the best
knowledge of the Company, all such Tax Returns were complete and
accurate in all material respects. All Taxes reflected on such
returns as owed by the Company or the Subsidiaries have been
paid, whether or not such Taxes are disputed.
(b) No claim for assessment or collection of Taxes has
been asserted against the Company or any of the Subsidiaries.
Except as disclosed on Schedule 2.1.17(b), neither the Company
nor any of the Subsidiaries is a party to any pending action,
proceeding or investigation by any Governmental Entity for the
assessment or collection of Taxes nor does the Company have
knowledge of any such threatened action, proceeding or
investigation.
(c) Except as disclosed on Schedule 2.1.17(c), no
waivers of statutes of limitation in respect of any Tax Returns
have been given or requested by the Company or any of the
Subsidiaries nor has the Company or any Subsidiary agreed to any
extension of time with respect to a Tax assessment or deficiency.
No claim has ever been made by a Governmental Entity in a
jurisdiction where the Company or any Subsidiary does not
currently file Tax Returns that it is or may be subject to
taxation by that jurisdiction nor is the Company aware that any
such assertion of jurisdiction is threatened. No security
interests have been imposed upon or asserted against any of the
assets of the Company or any of the Subsidiaries as a result of
or in connection with any failure, or alleged failure, to pay any
Tax.
(d) To the best knowledge of the Company, the Company
and each of the Subsidiaries has withheld and paid all Taxes
required to be withheld in connection with any amounts paid or
owing to any employee, creditor, consultant, independent
contractor or other third party.
(e) For purposes of this Agreement, the terms "Tax"
and "Taxes" shall mean all federal, state, local, or foreign
income, payroll, employee withholding, unemployment insurance,
social security, sales, use, service, service use, leasing,
leasing use, excise, franchise, gross receipts, value added,
alternative or add-on minimum, estimated, occupation, real and
personal property, stamp, transfer, workers' compensation,
severance, windfall profits, environmental (including taxes under
Section 59A of the Code), or other tax of the same or of a
similar nature, including any interest, penalty, or addition
thereto, whether disputed or not. The term "Tax Return" means
any return, declaration, report, claim for refund, or information
return or statement relating to Taxes or any amendment thereto,
and including any schedule or attachment thereto.
II.1.18. Real Property. (a) The SEC Reports list all
material real property owned by the Company and each of its
Subsidiaries (collectively, the "Owned Real Property"). Except
as described in the SEC Reports or on Schedule 2.1.18(a), the
Company and each of its Subsidiaries has good and indefeasible
title in fee simple title to all Owned Real Property owned by it,
free and clear of all Liens (other than Permitted Liens).
(b) The SEC Reports describe all material real property
leased by the Company and each of its Subsidiaries (collectively,
the "Leased Real Property"). Except as described in the SEC
Reports or on Schedule 2.1.18(b), the Company and each of the
Subsidiaries has good and valid leaseholds in all Leased Real
Property, in each case, under enforceable leases, free and clear
of all Liens (except Permitted Liens).
(c) None of such Owned Real Property or Leased Real
Property is subject to any easements, rights of way, licenses,
grants, building or use restrictions, exceptions, reservations,
limitations or other impediments which, individually or in the
aggregate, could reasonably be expected to have a Material
Adverse Effect.
II.1.19. Commissions or Finders Fees. Neither the
Company or any Subsidiary nor any person or entity acting on the
behalf of the Company or any Subsidiary has agreed to pay a
commission, finder's fee or similar payment in connection with
this Agreement or any matter related hereto to any other person
or entity.
II.1.20. Certain Business Practices and Regulations;
Affiliate Transactions. (a) None of the Company, the
Subsidiaries or any directors, officers, agents or employees of
the Company or the Subsidiaries has (i) used any corporate funds
for unlawful contributions, gifts, entertainment or other
unlawful expenses relating to political activity, (ii) made any
unlawful payment to foreign or domestic government officials or
employees or to foreign or domestic political parties or
campaigns from corporate funds or violated any provision of the
Foreign Corrupt Practices Act of 1977, as amended, or (iii) made
any other unlawful payment.
(b) Except as described in the SEC Reports or on
Schedule 2.1.20(b), none of (A) the officers or directors of the
Company or any of the Subsidiaries or any entity controlling or
controlled by any of the foregoing, or (B) any securityholder
known to the Company to own of record or beneficially more than
5% of the Common Stock, (i) owns, directly or indirectly, in
whole or in part, any Leased Real Property or other property the
use of which is necessary for the Business, (ii) has any cause of
action or other suit, action or claim whatsoever against, or owes
any amount to the Company or any of the Subsidiaries other than
claims in the ordinary course of business, (iii) has sold to, or
purchased from, the Company or any of the Subsidiaries any assets
or property for aggregate consideration in excess of $60,000
since January 1, 1998, or (iv) is a party to any contract or
participates in any arrangement, written or oral, pursuant to
which the Business provides services of any nature to any such
individual or entity, except to such individual in his capacity
as an employee of the Company or any of the Subsidiaries.
II.1.21. Compliance with Nasdaq National Market Rules
and Regulations. The Company has complied in all material
respects with all rules and regulations of the National
Associations of Securities Dealers, Inc. ("NASD") as they pertain
to the Nasdaq Stock Market's National Market interdealer
quotation system since the date the Common Stock was originally
approved for quotation thereon. No event has occurred or, to the
knowledge of the Company, is reasonably likely to occur which
could result in the Common Stock being delisted from the Nasdaq
National Market or the Company being subject to any material fine
or sanction imposed by The Nasdaq Stock Market or the NASD.
II.2. Representations and Warranties of the Purchaser. The
Purchaser makes the following representations and warranties to
the Company, each of which is true and correct as of the date
hereof and shall be true and correct as of the Closing Date and
shall be unaffected by any investigation heretofore or hereafter
made by the Company.
II.2.1. Corporate Organization. The Purchaser is a
limited partnership duly formed and validly existing under the
laws of the State of Texas and has the requisite partnership
power and authority to own, lease or otherwise hold its
properties and assets and to carry on its business as presently
conducted.
II.2.2. Authorization and Effect of Agreement. The
Purchaser has the requisite partnership power to execute and
deliver this Agreement and to consummate the transactions
contemplated hereby to be consummated by it. The execution and
delivery by the Purchaser of this Agreement and the consummation
by it of the transactions contemplated hereby to be consummated
by it have been duly authorized by all necessary partnership
action on the part of the Purchaser. This Agreement has been
duly executed and delivered by the Purchaser and constitutes a
valid and binding obligation of the Purchaser, except as may be
limited by bankruptcy, insolvency, reorganization, moratorium or
other similar laws affecting the enforcement of creditors' rights
in general and subject to general principles of equity
(regardless of whether such enforceability is considered in a
proceeding in equity or at law).
II.2.3. Investment Intent. The Purchaser is acquiring
the Securities for its own account for investment and not with a
view to, or for sale or other disposition in connection with, any
distribution thereof, nor with any present intention, agreement
or understanding to sell or otherwise dispose of all or any part
of the Securities.
II.2.4. Sophistication and Financial Strength. The
Purchaser is an "accredited investor" (as that term is defined in
Rule 501 promulgated under the Securities Act) with such
knowledge and experience in business and financial matters that
the Purchaser is capable of evaluating, and has evaluated, the
merits and risks of an investment in the Company and of making an
informed investment decision. The Purchaser has sufficient
financial strength to hold the Securities as an investment and to
bear the economic risks of such investment (including the
possible loss of such investment) for an indefinite period of
time. The Purchaser has had the opportunity to ask questions of
representatives of the Company and receive answers concerning the
terms and conditions of the Securities and to obtain any
additional information that it deemed necessary to verify the
accuracy of information provided to Purchaser by the Company.
II.2.5. Restrictions on Transfer. The Purchaser
understands that neither the Securities nor the Common Stock for
which the Securities may be redeemed has been registered under
the Securities Act or the securities laws of any state or other
jurisdiction and that neither the Securities nor the Common Stock
may be offered for sale, sold, transferred or otherwise disposed
of unless registered under the Securities Act and any applicable
state securities laws or sold, transferred or disposed of in a
transaction exempt for the registration requirements of the
Securities Act and any applicable state securities laws (and, if
requested by the Company, the Purchaser shall deliver an opinion
of counsel reasonably satisfactory to the Company that such
transaction is exempt from such registration requirements).
ARTICLE III. CONDITIONS TO CLOSING
III.1. Conditions Precedent to Obligations of the
Purchaser. The obligations of the Purchaser under this Agreement
to consummate the transactions contemplated hereby will be
subject to the satisfaction, at or prior to Closing, of all of
the following conditions, any one or more of which may be waived
at the option of the Purchaser:
III.1.1. Representations, Warranties and Covenants.
(a) All representations and warranties of the Company
made in this Agreement or in any Exhibit, Schedule or
document delivered pursuant hereto that are qualified with
respect to materiality shall be true and complete in all
respects as of the date hereof and on and as of the Closing
Date and such representations and warranties that are not so
qualified shall be true and complete on the date hereof and,
in all material respects, on and as of the Closing Date,
without regard to any schedule updates furnished by the
Company after the date hereof.
(b) All of the terms, covenants and conditions to be
complied with and performed by the Company on or prior to
the Closing Date shall have been complied with or performed.
(c) The Purchaser shall have received a certificate,
dated as of the Closing Date, executed by an Executive
Officer of the Company, certifying in such detail as the
Purchaser may reasonably request that the conditions
specified in Sections 3.1.1(a) and (b) hereof have been
fulfilled.
III.1.2. Closing Deliveries. The Company shall have
delivered to the Purchaser the documents identified in Section
4.1.
III.1.3. Governmental Consents or Approvals. Each of
the governmental and other approvals, consents or waivers listed
or required to be listed on Schedule 2.1.4 shall have been
obtained.
III.1.4. No Adverse Proceedings. No suit, action,
claim or governmental proceeding shall be pending against, and no
order, decree or judgment of any court, agency or Governmental
Entity shall have been rendered against, any party hereto which
would render it unlawful, as of the Closing Date, to effect the
transactions contemplated by this Agreement in accordance with
its terms.
III.1.5. Stock Certificates. Stock certificates
representing the Securities shall have been duly executed and
delivered in accordance with Section 1.2.
III.1.6. Certificate of Designations. The Certificate
of Designations shall have been duly filed with, and accepted by,
the Secretary of State of the State of Delaware.
III.2. Conditions Precedent to Obligations of the Company.
The obligations of the Company under this Agreement to
consummate the transactions contemplated hereby will be subject
to the satisfaction, at or prior to the Closing, of all of the
following conditions, any one or more of which may be waived at
the option of the Company:
III.2.1. No Material Misrepresentation or Breach.
(a) All representations and warranties of the
Purchaser made in this Agreement or in any Exhibit, Schedule
or document delivered pursuant hereto, shall be true and
complete in all material respects as of the date hereof and
on and as of the Closing Date.
(b) All of the terms, covenants and conditions to be
complied with and performed by the Purchaser on or prior to
the Closing Date shall have been complied with or performed.
(c) The Company shall have received a certificate,
dated as of the Closing Date, executed by an Executive
Officer of the Purchaser, certifying in such detail as the
Company may reasonably request that the conditions specified
in Sections 3.2.1(a) and (b) hereof have been fulfilled.
III.2.2. Closing Deliveries. The Purchaser shall have
delivered to the Company the purchase price and certificate as
set forth in Section 4.2.
III.2.3. Governmental Consents or Approvals. Each of
the governmental and other approvals, consents or waivers listed
on Schedule 2.1.4 shall have been obtained.
III.2.4. No Adverse Proceedings. No suit, action,
claim or governmental proceeding shall be pending against, and no
order, decree or judgment of any court, agency or other
Governmental Entity shall have been rendered against, any party
hereto which would render it unlawful, as of the Closing Date, to
effect the transactions contemplated by this Agreement in
accordance with its terms.
III.3. Conditions Precedent to Obligations of each of the
Company and the Purchaser. The obligations of the Company and
the Purchaser under this Agreement to consummate the transactions
contemplated hereby will be subject to the satisfaction, at or
prior to the Closing, of all of the following conditions, any one
or more of which may be waived by mutual agreement of the Company
and the Purchaser:
III.3.1. Investor Rights Agreement. An Investor
Rights Agreement (the "Investor Rights Agreement"), in the form
attached as an exhibit to the Master Agreement (as defined),
shall have been duly executed and delivered, shall be in full
force and effect and no term or condition thereof shall have been
amended, modified or waived.
III.3.2. Master Agreement. A Master Agreement (the
"Master Agreement"), shall have been duly executed and delivered,
shall be in full force and effect and no term or condition
thereof shall have been amended, modified or waived.
III.3.3. Loan Agreement. A Loan Agreement (the "Loan
Agreement"), in the form attached as an exhibit to the Master
Agreement, shall have been duly executed and delivered, shall be
in full force and effect and no term or condition thereof shall
have been amended, modified or waived.
ARTICLE IV. CLOSING DELIVERIES
IV.1. Deliveries by the Company. At the Closing, the
Company will deliver to the Purchaser the following:
IV.1.1. Certified Resolutions. Certified resolutions
of the Board of Directors of the Company approving the execution
and delivery of this Agreement, the Transaction Documents, and
each of the other documents delivered by the Company pursuant
hereto or thereto and authorizing the consummation of the
transactions contemplated hereby and thereby.
IV.1.2. Officer's Certificate. A certificate, dated
the Closing Date, executed on behalf of the Company in the form
described in Section 3.1.1.
IV.1.3. Good Standing Certificates. Governmental
certificates showing that the Company and the Subsidiaries are
duly incorporated and in good standing in the state of its
organization certified as of a date not more than five (5) days
before the Closing Date.
IV.2. Deliveries by the Purchaser. At the Closing, the
Purchaser will deliver to the Company:
IV.2.1. Purchase Price. Cash in immediately available
funds via wire transfer in the aggregate amount of $9,999,995.52
to the account or accounts designated by the Company pursuant to
Section 1.2.
IV.2.2. Officer's Certificate. A certificate, dated
the Closing Date, executed on behalf of the Purchaser in the form
described in Section 3.2.1.
ARTICLE V. POST-CLOSING COVENANTS
V.1. Post-Closing Notifications. The Purchaser and the
Company will, and each will cause their respective affiliates to,
comply with any post-Closing notification or other requirements,
to the extent then applicable to such party, of any antitrust,
trade competition, investment or control, export or other law of
any Governmental Entity having jurisdiction over the Purchaser or
the Company.
V.2. Certain Tax Matters. All sales, use, transfer, stamp,
conveyance, value added or other similar taxes, duties, excises
or governmental charges imposed by any taxing jurisdiction,
domestic or foreign, and all recording or filing fees, notarial
fees and other similar costs of Closing with respect to the
issuance of the Securities or otherwise on account of this
Agreement or the transactions contemplated hereby will be borne
by the Company. The Company will indemnify the Purchaser against
any liability, direct or indirect, for any Taxes imposed on the
Purchaser with respect to the issuance of the Securities.
ARTICLE VI. SURVIVAL AND INDEMNIFICATION
VI.1. Survival of Representations, Warranties and
Covenants. (a) The representations and warranties of the
Company and of the Purchaser contained in this Agreement shall
survive the Closing for a period of two years thereafter. Any
claim for an Indemnifiable Loss (as hereafter defined) asserted
within such period of survival as herein provided will be timely
made for purposes hereof.
(b) Unless a specified period is set forth in this
Agreement (in which event such specified period will control),
the covenants in this Agreement shall survive the Closing and
remain in effect for two years.
VI.2. Certain Definitions. For purposes of this Agreement,
(i) "Indemnity Payment" means any amount of Indemnifiable Losses
required to be paid pursuant to this Agreement, (ii) "Indemnitee"
means any person or entity entitled to indemnification under this
Agreement, (iii) "Indemnifying Party" means any person or entity
required to provide indemnification under this Agreement,
(iv) "Indemnifiable Losses" means any and all damages, losses,
liabilities, obligations, costs and expenses, and any and all
claims, demands or suits (by any person or entity, including
without limitation any Governmental Entity), including without
limitation the costs and expenses of any and all actions, suits,
proceedings, demands, assessments, judgments, settlements and
compromises relating thereto and including reasonable attorneys'
fees and expenses in connection therewith; provided, that
Indemnifiable Losses shall not include any loss of anticipated
profits, loss of use of revenues or capital, or any other
special, incidental or consequential losses or damages, and
(v) "Third Party Claim" means any claim, action or proceeding
made or brought by any person or entity who or which is not a
party to this Agreement or an affiliate of a party to this
Agreement.
VI.3. Indemnification. (a) The Company agrees to
indemnify, defend and hold harmless the Purchaser and its
affiliates and their respective directors, officers, partners,
employees, agents and representatives from and against any and
all Indemnifiable Losses, subject to the limitations and
equitable adjustments set forth Section 6.5 hereof, to the extent
relating to, resulting from or arising out of:
(i) any breach of representation or warranty of
the Company under Article II of this Agreement; and
(ii) any breach or nonfulfillment of any agreement
or covenant of the Company under the terms of this
Agreement.
(b) The Purchaser agrees to indemnify, defend and hold
harmless the Company and its affiliates and their respective
directors, officers, partners, employees, agents, and
representatives from and against any and all Indemnifiable
Losses, subject to the limitations set forth Section 6.5 hereof,
to the extent relating to, resulting from and arising out of:
(i) any breach of representation or warranty by
the Purchaser under Article II of this Agreement; and
(ii) any breach or nonfulfillment of any agreement
or covenant of the Purchaser under the terms of this
Agreement.
(c) (i) The Company agrees to pay, in accordance with
Section 6.3(c)(ii) below, any costs and expenses of the
defense of any lawsuit (a "Transaction Suit"), including any
negotiations relating to the settlement or compromise
thereof, initiated by a third party against the Purchaser or
any of its affiliates or their respective officers,
directors, employees, partners, agents or representatives
(each, a "Purchaser Transaction Defense Party") that arises
out of or is based upon allegations relating to the
transactions contemplated by the Transaction Documents that
are consummated on the Closing Date in the event that any
such Transaction Suit is filed within two years of the date
of this Agreement.
(ii) If any Purchaser Transaction Defense Party is
named or becomes party to any Transaction Suit, the Company
agrees to assume and provide for the defense of such
Purchaser Transaction Defense Party, including providing a
joint defense in the event that the Company or any of its
affiliates or their officers, directors, employees,
partners, agents or representatives (each, a "Company
Transaction Defense Party") is named or becomes a party to
such Transaction Suit. The Company shall provide legal
counsel to the Purchaser Transaction Defense Party (and pay
all related fees and expenses of such counsel), which
counsel shall be reasonably satisfactory to Purchaser and
may be counsel for the Company. Notwithstanding the
foregoing, the Purchaser Transaction Defense Parties shall
have the right to employ their own counsel, and the Company
shall pay the reasonable fees and expenses of such counsel
in an amount up to $250,000, in the event that the
Purchaser, upon advice of counsel, reasonably concludes that
there is a conflict of interest between any Purchaser
Transaction Defense Party, on the one hand, and any Company
Transaction Defense Party, on the other hand, in any such
Transaction Suit.
VI.4. Defense of Claims. (a) If any Indemnitee receives
notice of assertion or commencement of any Third Party Claim
against such Indemnitee with respect to which an Indemnifying
Party is obligated to provide indemnification under this
Agreement, the Indemnitee will give such Indemnifying Party
reasonably prompt written notice thereof, but in any event not
later than 20 calendar days after receipt of such notice of such
Third Party Claim. Such notice will describe the Third Party
Claim in reasonable detail, will include copies of all material
written evidence thereof and will indicate the estimated amount,
if reasonably practicable, of the Indemnifiable Loss that has
been or may be sustained by the Indemnitee. The Indemnifying
Party will have the right to participate in, or, by giving
written notice to the Indemnitee, to assume, the defense of any
Third Party Claim at such Indemnifying Party's own expense and by
such Indemnifying Party's own counsel (reasonably satisfactory to
the Indemnitee), and the Indemnitee will cooperate in good faith
in such defense.
(b) If, within ten calendar days after giving notice
of a Third Party Claim to an Indemnifying Party pursuant to
Section 6.4(a), an Indemnitee receives written notice from the
Indemnifying Party that the Indemnifying Party has elected to
assume the defense of such Third Party Claim as provided in the
last sentence of Section 6.4(a), the Indemnifying Party will not
be liable for any legal expenses subsequently incurred by the
Indemnitee in connection with the defense thereof; provided,
however, that if the Indemnifying Party fails to take reasonable
steps necessary to defend diligently such Third Party Claim
within ten calendar days after receiving written notice from the
Indemnitee that the Indemnitee believes the Indemnifying Party
has failed to take such steps or if the Indemnifying Party has
not undertaken fully to indemnify the Indemnitee in respect of
all Indemnifiable Losses relating to the matter, the Indemnitee
may assume its own defense, and the Indemnifying Party will be
liable for all reasonable costs or expenses paid or incurred in
connection therewith. Without the prior written consent of the
Indemnitee, the Indemnifying Party will not enter into any
settlement of any Third Party Claim which would lead to liability
or create any financial or other obligation on the part of the
Indemnitee for which the Indemnitee is not entitled to
indemnification hereunder. If a firm offer is made to settle a
Third Party Claim without leading to liability or the creation of
a financial or other obligation on the part of the Indemnitee for
which the Indemnitee is not entitled to indemnification hereunder
and the Indemnifying Party desires to accept and agree to such
offer, the Indemnifying Party will give written notice to the
Indemnitee to that effect. If the Indemnitee fails to consent to
such firm offer within ten calendar days after its receipt of
such notice, the Indemnitee may continue to contest or defend
such Third Party Claim and, in such event, the maximum liability
of the Indemnifying Party as to such Third Party Claim will not
exceed the amount of such settlement offer, plus costs and
expenses paid or incurred by the Indemnitee through the end of
such ten calendar day period.
(c) A failure to give timely notice or to include any
specified information in any notice as provided in Sections
6.4(a) or 6.4(b) will not affect the rights or obligations of any
party hereunder except and only to the extent that, as a result
of such failure, any party which was entitled to receive such
notice was deprived of its right to recover any payment under its
applicable insurance coverage or was otherwise damaged as a
result of such failure.
(d) The Indemnifying Party will have a period of 30
calendar days within which to respond in writing to any claim by
an Indemnitee on account of an Indemnifiable Loss which does not
result from a Third Party Claim (a "Direct Claim"). If the
Indemnifying Party does not so respond within such 30 calendar
day period, the Indemnifying Party will be deemed to have
rejected such claim, in which event the Indemnitee will be free
to pursue such remedies as may be available to the Indemnitee on
the terms and subject to the provisions of this Article VI.
VI.5. Limitation of Liability. (a) Notwithstanding any
other provision hereof, no Indemnitee will be entitled to make a
claim against an Indemnifying Party in respect of any breach of a
representation or warranty under Section 6.3(a)(i) or 6.3(b)(i)
unless and until the aggregate amount of claims in respect of
breaches of representations and warranties asserted for
Indemnifiable Losses under Section 6.3(a)(i) or 6.3(b)(i), as
applicable, exceeds $500,000, in which event the Indemnitee will
be entitled to make a claim against the Indemnifying Party to the
extent of the full amount of the Indemnifiable Losses.
(b) Notwithstanding any other provision hereof, in no
event shall an Indemnifying Party be liable under this Article VI
for any Indemnifiable Losses in excess of $10,000,000.
(c) In the event of a claim or right of action by
either party hereto against the other party arising out of this
Agreement and the transactions contemplated hereby (whether based
on contract, tort (including negligence), strict liability or
otherwise), each party's sole and exclusive remedy shall be its
rights under this Article VI and Section 8.1 of this Agreement.
ARTICLE VII. TERMINATION
VII.1. Termination. Notwithstanding anything contained in
this Agreement to the contrary, this Agreement may be terminated
at any time prior to the Closing, (a) by the mutual written
consent of the Purchaser and the Company, or (b) if the party
seeking to terminate is not then in material default or breach of
this Agreement:
(i) by either the Purchaser or the Company if the
Closing shall not have occurred on or before June 30, 1998;
(ii) by either the Purchaser or the Company if there
shall have been entered a final, nonappealable order or
injunction of any Governmental Entity restraining or
prohibiting the consummation of the transactions
contemplated hereby or any material part thereof; or
(iii) by either the Purchaser or the Company if the
other party is in material breach of any representation,
warranty, covenant or agreement herein contained and such
breach shall not be cured within twenty (20) days of the
date of notice of default served by the party claiming such
material default.
In no event shall termination of this Agreement relieve any party
of any liability for breaches of this Agreement prior to the date
of termination.
ARTICLE VIII. MISCELLANEOUS PROVISIONS
VIII.1. Specific Performance. The parties recognize that
if the Company refuses to perform under the provisions of this
Agreement, monetary damages alone will not be adequate to
compensate the Purchaser for its injury. The Purchaser shall
therefore be entitled, in addition to any other remedies that may
be available, to obtain specific performance of the terms of this
Agreement. If any action is brought by the Purchaser to enforce
this Agreement, the Company shall waive the defense that there is
an adequate remedy at law. In the event of a default by the
Company which results in the filing of a lawsuit for damages,
specific performances, or other remedies, the Purchaser shall be
entitled to reimbursement by the Company of reasonable legal fees
and expenses incurred by the Purchaser.
VIII.2. Notices. All notices and other communications
required or permitted hereunder will be in writing and (i)
delivered personally, (ii) sent by telefacsimile, (iii) delivered
by a nationally recognized overnight courier service, or (iv)
sent by registered or certified mail, postage prepaid, as
follows:
(a) If to the Company, to:
Stratus Properties Inc.
00 Xxx Xxxxxxx Xxxxxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Facsimile No.: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxxxxx, III
with a copy to:
Stratus Properties Inc.
0000 Xxxxxxx
Xxx Xxxxxxx, XX 00000
Facsimile No.: (000) 000-0000
Attention: Xxxx X. Xxxxx
(b) If to the Purchaser, to:
Oly/Stratus Equities, L.P.
000 Xxxxxxxx Xxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Facsimile No.: (000) 000-0000
Attention: Xxxxx X. Xxxxxxx
with a copy to:
Weil, Gotshal & Xxxxxx LLP
000 Xxxxxxxx Xxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Facsimile No.: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxx
All notices and other communications required or permitted under
this Agreement that are addressed as provided in this Section 8.2
will (x) if delivered personally or by overnight courier service,
be deemed given upon delivery; (y) if delivered by telefacsimile
or similar facsimile transmission, be deemed given when electron-
ically confirmed; and (z) if sent by registered or certified
mail, be deemed given three days following the date mailed. Any
party from time to time may change its address for the purpose of
notices to that party by giving a similar notice specifying a new
address, but no such notice will be deemed to have been given
until it is actually received by the party sought to be charged
with the contents thereof.
VIII.3. Expenses. Except as otherwise expressly set forth
herein, each party hereto shall pay its own fees and expenses
incurred by it in connection with the transactions contemplated
by this Agreement.
VIII.4. Successors and Assigns. This Agreement will be
binding upon and inure to the benefit of the parties hereto and
their respective successors and permitted assigns, but will not
be assignable or delegable by the Company. Nothing in this
Agreement is intended to limit the ability of the Purchaser to
sell or to transfer any or all of the Securities (and the rights
relating thereto) following the Closing Date.
VIII.5. Waiver. The Purchaser and the Company by written
notice to the other may (a) extend the time for performance of
any of the obligations of the other under this Agreement,
(b) waive any inaccuracies in the representations or warranties
of the other contained in this Agreement or in any document
delivered in connection herewith, (c) waive compliance with any
of the conditions or covenants of the other contained in this
Agreement, or (d) waive or modify performance of any of the
obligations of the other under this Agreement; provided, however,
that no such party may, without the prior written consent of the
other party, make or grant such extension of time, waiver of
inaccuracies or compliance or waiver or modification of
performance with respect to its (or any of its affiliates)
representations, warranties, conditions or covenants hereunder.
Except as provided in the immediately preceding sentence, no
action taken pursuant to this Agreement will be deemed to
constitute a waiver of compliance with any representations,
warranties, conditions or covenants contained in this Agreement
and will not operate or be construed as a waiver of any
subsequent breach, whether of a similar or dissimilar nature.
VIII.6. Entire Agreement. The Transaction Documents
(including the Schedules and Exhibits hereto and thereto)
supersedes any other agreement, whether written or oral, that may
have been made or entered into by any party or any of their
respective affiliates (or by any director, officer or
representative thereof) relating to the matters contemplated
hereby or thereby. The Transaction Documents (together with the
Exhibits and Schedules hereto and thereto) constitutes the entire
agreement by and among the parties hereto and there are no
agreements or commitments by or among such parties or their
affiliates except as expressly set forth herein.
VIII.7. Amendments and Supplements. This Agreement may be
amended or supplemented at any time by additional written
agreements signed by the parties hereto.
VIII.8. Rights of the Parties. Except as expressly
provided in Article VI or in Section 8.4, nothing expressed or
implied in this Agreement is intended or will be construed to
confer upon or give any person or entity other than the parties
hereto and their respective affiliates any rights or remedies
under or by reason of this Agreement or any transaction
contemplated hereby.
VIII.9. Brokers. The Purchaser hereby agrees to indemnify
and hold harmless the Company, and the Company hereby agrees to
indemnify and hold harmless the Purchaser, against any liability,
claim, loss, damage or expense incurred by the Purchaser or by
the Company, as the case may be, relating to any fees or
commissions owed to any broker, finder, or financial advisor as a
result of actions taken by the other in connection with this
Agreement or the transactions contemplated hereby. Any
indemnification payment by the Company required by this Section
shall be equitably adjusted so that the payment of such amount
shall not adversely affect the Purchaser, through its ownership
of the Securities or the Common Stock issuable upon redemption
thereof, if any, or otherwise.
VIII.10. Further Assurances. From time to time, as and
when requested by any party, the other party will execute and
deliver, or cause to be executed and delivered, all such
documents and instruments as may be reasonably necessary to
consummate the transactions contemplated by this Agreement.
VIII.11. Governing Law. This Agreement, including without
limitation, the interpretation, construction and validity hereof,
shall be governed by the laws of the State of Delaware, without
regard to conflict of law principles thereof.
VIII.12. Severability. The parties agree that if one or
more provisions contained in this Agreement shall be deemed or
held to be invalid, illegal or unenforceable in any respect under
any applicable law, this Agreement shall be construed with the
invalid, illegal or unenforceable provision deleted, and the
validity, legality and enforceability of the remaining provisions
contained herein shall not be affected or impaired thereby.
VIII.13. Execution in Counterparts. This Agreement may be
executed in two or more counterparts, each of which will be
deemed an original, but all of which together will constitute one
and the same agreement.
VIII.14. Titles and Headings. Titles and headings to
sections herein are inserted for convenience of reference only,
and are not intended to be a part of or to affect the meaning or
interpretation of this Agreement.
VIII.15. Certain Interpretive Matters and Definitions.
(a) Unless the context otherwise requires, (i) "Transaction
Documents" mean, collectively, this Agreement, the Certificate of
Designations, the Investor Rights Agreement, the Master
Agreement, and the Loan Agreement, including all exhibits and
schedules hereto or thereto, (ii) all references to Sections,
Articles or Schedules are to Sections, Articles or Schedules of
or to this Agreement, (iii) each term defined in this Agreement
has the meaning assigned to it, (iv) each accounting term not
otherwise defined in this Agreement has the meaning assigned to
it in accordance with GAAP, (v) "or" is disjunctive but not
necessarily exclusive, (vi) words in the singular include the
plural and vice versa, and (vii) the terms "affiliate" and
"subsidiary" have the meanings given to them in Rule 12b-2 of
Regulation 12B under the Exchange Act. All references to "$" or
dollar amounts will be to lawful currency of the United States of
America.
(b) No provision of this Agreement will be interpreted
in favor of, or against, either of the parties hereto by reason
of the extent to which either such party or its counsel
participated in the drafting thereof or by reason of the extent
to which any such provision is inconsistent with any prior draft
hereof or thereof.
[The remainder of this page is intentionally left blank.]
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day and year first above written.
STRATUS PROPERTIES INC.
(formerly known as FM Properties Inc.)
By:
Name:
Title:
OLY/STRATUS EQUITIES, L.P.
By: Oly Fund II GP Investments, L.P.,
its General Partner
By: Oly Real Estate Partners II,
L.P., its General Partner
By: Oly REP II, L.P., its
General Partner
By: Oly Fund II, LLC,
its General Partner
By:
Name:
Title:
TABLE OF CONTENTS
Page
ARTICLE I. ISSUANCE OF SECURITIES ............ 1
1.1. Authorization...................................... 1
1.2. Purchase and Sale of the Securities; the Closing... 1
ARTICLE II. REPRESENTATIONS AND WARRANTIES........ 2
2.1. Representations and Warranties of the Company...... 2
2.1.1. Organization and Good Standing.............. 2
2.1.2. Authorization of Agreement; Binding
Obligation..................................... 2
2.1.3. Subsidiaries and Equity Investments......... 3
2.1.4. No Restrictions Against Issuance of
Securities; Required Consents.................. 3
2.1.5. Capitalization.............................. 4
2.1.6. Financial Statements........................ 5
2.1.7. Business, Properties and Other
Information.................................... 5
2.1.8. Absence of Undisclosed Liabilities.......... 6
2.1.9. Books of Account............................ 7
2.1.10. Contracts and Commitments.................. 7
2.1.11. Liens and Encumbrances; Condition of
Assets......................................... 7
2.1.12. Insurance.................................. 8
2.1.13. Conduct of the Business Since the Interim
Balance Sheet Date............................. 8
2.1.14. Employee Benefit Plans..................... 10
2.1.15. Litigation; Decrees........................ 10
2.1.16. Compliance With Law; Permits............... 11
2.1.17. Taxes...................................... 11
2.1.18. Real Property.............................. 12
2.1.19. Commissions or Finders Fees................ 13
2.1.20. Certain Business Practices and
Regulations; Affiliate Transactions............ 13
2.1.21. Compliance with Nasdaq National Market
Rules and Regulations.......................... 13
2.2. Representations and Warranties of the Purchaser.... 14
2.2.1. Corporate Organization...................... 14
2.2.2. Authorization and Effect of Agreement....... 14
2.2.3. Investment Intent........................... 14
2.2.4. Sophistication and Financial Strength....... 14
2.2.5. Restrictions on Transfer.................... 15
ARTICLE III. CONDITIONS TO CLOSING............ 15
3.1. Conditions Precedent to Obligations of the
Purchaser........................................... 15
3.1.1. Representations, Warranties and Covenants... 15
3.1.2. Closing Deliveries.......................... 16
3.1.3. Governmental Consents or Approvals.......... 16
3.1.4. No Adverse Proceedings...................... 16
3.1.5. Stock Certificates.......................... 16
3.1.6. Certificate of Designations................. 16
3.2. Conditions Precedent to Obligations of the
Company............................................. 16
3.2.1. No Material Misrepresentation or Breach..... 16
3.2.2. Closing Deliveries.......................... 17
3.2.3. Governmental Consents or Approvals.......... 17
3.2.4. No Adverse Proceedings...................... 17
3.3. Conditions Precedent to Obligations of each of
the Company and the Purchaser....................... 17
3.3.1. Investor Rights Agreement................... 17
3.3.3. Loan Agreement.............................. 17
ARTICLE IV. CLOSING DELIVERIES.............. 17
4.1. Deliveries by the Company.......................... 17
4.1.1. Certified Resolutions....................... 18
4.1.2. Officer's Certificate....................... 18
4.1.3. Good Standing Certificates.................. 18
4.2. Deliveries by the Purchaser........................ 18
4.2.1. Purchase Price.............................. 18
4.2.2. Officer's Certificate....................... 18
ARTICLE V. POST-CLOSING COVENANTS ............ 18
5.1. Post-Closing Notifications......................... 18
5.2. Certain Tax Matters................................ 18
ARTICLE VI. SURVIVAL AND INDEMNIFICATION......... 19
6.1. Survival of Representations, Warranties and
Covenants........................................... 19
6.2. Certain Definitions................................ 19
6.3. Indemnification.................................... 19
6.4. Defense of Claims.................................. 20
6.5. Limitation of Liability............................ 22
ARTICLE VII. TERMINATION................. 22
7.1. Termination........................................ 22
ARTICLE VIII. MISCELLANEOUS PROVISIONS.......... 23
8.1. Specific Performance............................... 23
8.2. Notices............................................ 23
8.3. Expenses........................................... 24
8.4. Successors and Assigns............................. 24
8.5. Waiver............................................. 25
8.6. Entire Agreement................................... 25
8.7. Amendments and Supplements......................... 25
8.8. Rights of the Parties.............................. 25
8.9. Brokers............................................ 25
8.10. Further Assurances................................ 26
8.11. Governing Law..................................... 26
8.12. Severability...................................... 26
8.13. Execution in Counterparts......................... 26
8.14. Titles and Headings............................... 26
8.15. Certain Interpretive Matters and Definitions...... 26
Defined Terms
Agreement.......................................... Introduction
Business............................................... Recitals
Certificate of Designations.......................... Section 1.1
Closing Date......................................... Section 1.2
Code........................................... Section 2.1.14(b)
Commission......................................... Section 2.1.7
Common Stock....................................... Section 2.1.5
Company............................................. Introduction
Company Transaction Defense Party..............Section 6.3(c)(ii)
Direct Claim...................................... Section 6.4(d)
Employee Plans................................. Section 2.1.14(a)
ERISA.......................................... Section 2.1.14(a)
Exchange Act....................................... Section 2.1.7
GAAP............................................... Section 2.1.6
Governmental Entity............................... Section 2.1.4
Indemnifiable Losses................................. Section 6.2
Indemnifying Party................................... Section 6.2
Indemnitee........................................... Section 6.2
Indemnity Payment.................................... Section 6.2
Interim Balance Sheet Date......................... Section 2.1.6
Interim Balance Sheet.............................. Section 2.1.6
Investor Rights Agreement.......................... Section 3.3.1
Leased Real Property........................... Section 2.1.18(b)
Liens.......................................... Section 2.1.11(a)
Master Agreement................................... Section 3.3.2
NASD.............................................. Section 2.1.21
Owned Real Property............................ Section 2.1.18(a)
Pension Plans.................................. Section 2.1.14(a)
Permits........................................... Section 2.1.16
Permitted Liens................................ Section 2.1.11(a)
Preferred Stock.................................... Section 2.1.5
Purchaser........................................... Introduction
Purchaser Transaction Defense Party.............Section 6.3(c)(i)
SEC Reports........................................ Section 2.1.7
Securities........................................... Section 1.1
Securities Act..................................... Section 2.1.4
Subsidiaries....................................... Section 2.1.3
Tax Return..................................... Section 2.1.17(e)
Tax............................................ Section 2.1.17(e)
Taxes.......................................... Section 2.1.17(e)
Third Party Claim.................................... Section 6.2
Transaction Documents............................ Section 8.15(a)
Transaction Suit................................Section 6.3(c)(i)
Exhibits
Exhibit A Form of Certificate of Designations
Schedules
Schedule 2.1.3 Subsidiaries and Equity Investments
Schedule 2.1.4 Governmental Entity Consents
Schedule 2.1.12 Insurance Matters
Schedule 2.1.14(a) Employee Plans and Pension Plans
Schedule 2.1.14(b) Pension Plans Qualification
Schedule 2.1.15 Litigation
Schedule 2.1.17(b) Tax Proceedings
Schedule 2.1.17(c) Tax Waivers
Schedule 2.1.18(a) Owned Real Property
Schedule 2.1.18(b) Leased Real Property
Schedule 2.1.20(b) Affiliate Transactions
NOTICE OF INDEMNIFICATION: THIS AGREEMENT CONTAINS
INDEMNIFICATION PROVISIONS IN ARTICLE VI, NOTICE OF WHICH IS
HEREBY GIVEN.
SECURITIES PURCHASE AGREEMENT
DATED AS OF MAY 22, 1998
BY AND BETWEEN
OLY/STRATUS EQUITIES, L.P.
AND
STRATUS PROPERTIES INC.
