LOAN AGREEMENT
Exhibit
10.19
THIS
LOAN
AGREEMENT (this “Agreement”)
is
made as of December 12, 2006 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.
A. 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.
B. 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.
Section
2. Loan.
A. Loan
Amount.
Lender
agrees to provide a loan to Borrower in the amount of EIGHT
MILLION AND 00/100 DOLLARS ($8,000,000.00)
(“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.
B. 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.
C. Referral
Fee/Application Fee.
In
connection with the Loan, Borrower agrees to pay a referral fee of $80,000.00
to
Lender and an application fee of $2,500 to FAF Advisors, Inc.
Section
3. Payments
by Borrower.
A. 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.
B. 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.
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:
(1) A
duly
executed copy of this Agreement, the Note, and any and all other Loan
Documents.
(2) A
favorable written opinion of counsel for Borrower, addressed to Lender and
in
form and substance acceptable to Lender and its counsel.
(3) Current
financial statements of Borrower in form and substance acceptable to
Lender.
(4) The
following organizational documents of Borrower:
|
(a)
|
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.
|
|
(b)
|
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.
|
|
(c)
|
A
certificate of Borrower’s corporate secretary as to the incumbency and
authenticity of the signatures of the officers of Borrower 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)).
B. 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.
C. 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.
D. 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.
E. 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.
Section
5. Representations
and Warranties of Borrower.
Borrower represents and warrants to Lender as follows:
A. 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 transactions contemplated herein do not, and will not,
require the consent or approval of, or filing with, any Person which has not
been obtained.
B. 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.
C. 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.
D. 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.
E. Material
Adverse Events.
Since
the Statement Dates, neither any event nor the passage of time has resulted
in a
Material Adverse Effect.
F. 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.
G. 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 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.
H. 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.
I. 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.
J. 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.
Section
6. Affirmative
Covenants of Borrower.
Until
payment in full of the Obligations, Borrower agrees that:
A. Financial
Statements, Reports and Certifications.
Borrower will furnish to Lender, in form and substance satisfactory to
Lender:
(1) 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 cured, remedied, waived or otherwise eliminated to the satisfaction of
Lender, would result in an Event of Default;
(2) 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;
(3) 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
(4) Such
other information concerning Borrower as Lender may reasonably
request.
B. 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.
C. 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 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.
D. 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.
E. 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.
F. 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.
G. 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.
H. 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.
I. 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.
J. Location
of Business.
Borrower will give Lender written notice immediately upon forming an intention
to change the location of its chief place of business.
K. 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.
L. Compliance
with ERISA.
Cause
each Plan to comply and be administered in accordance with those provisions
of
ERISA which are applicable to such Plan.
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:
A. Sale
of Assets.
Borrower will not sell, abandon, or otherwise dispose of any of its assets
except in the ordinary course of business.
B. 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.
C. 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.
D. 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.
E. 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.
F. Dividends,
Redemptions.
(1) 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.
(2) 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.
G. Indebtedness.
Borrower will not incur any Indebtedness other than Permitted Debt.
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,
(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:
(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
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)
$50,000,000 minus (2) the product of $50,000,000 multiplied by the Cash
Collateral Factor.
F. The
aggregate market value of the Borrower’s assets shall at any time be less than
(1) $100,000,000 minus (2) the product of $100,000,000 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.
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 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:
|
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. Choice
of Law; Location of Loan.
This
Agreement shall be governed by and construed in accordance with the laws of
the
State of Minnesota. Lender and Borrower agree that the Loan will be negotiated,
funded and closed in the State of Minnesota.
I. Amendment
and Waiver.
Neither
this Agreement nor any provisions hereof may be changed, waived, discharged
or
terminated orally, but only by an 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 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.]
[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. Baker________
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 Goodson____________________________________
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,
2006.
“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:
(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.
“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 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.
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 December 12, 2006 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:__/s/
Xxxx X. Baker_________________________
Name:
Xxxx X. Xxxxx
Title:
Senior Vice President
|
