E-3
Exhibit 10.20
LOAN AGREEMENT
THIS LOAN AGREEMENT is made as of June 14, 2001 among
STRATUS PROPERTIES INC., a Delaware corporation ("Borrower"), and
HOLLIDAY FENOGLIO FOWLER, L.P., 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 FIVE MILLION AND 00/100 DOLLARS
($5,000,000.00) ("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. Origination Fee. Borrower agrees to pay Lender,
upon Lender advancing the Loan, an origination fee of
$50,000.00.
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.
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, and (iii) 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. 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:
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 (i) shares of common stock of Borrower in an
aggregate amount that does not exceed $5,000,000.00, and
(ii) shares of that certain mandatorily redeemable preferred
stock (defined as the "Series B Participating Preferred")
issued by Borrower to Oly/Stratus Equities, L.P., a Texas
limited partnership, on May 22, 1998, pursuant to that
certain Securities Purchase Agreement between Oly/Stratus
Equities, L.P., as "Purchaser," and Borrower, as "Seller,"
dated May 22, 1998.
G. Indebtedness. Borrower will not incur any
Indebtedness other than Permitted Debt.
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) $75,000,000 minus
(2) the product of $75,000,000 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 copy to:
Stratus Properties Inc. Arbrust Brown & Davis, L.L.P.
98 San Jacinto Boulevard, Suite 220 100 Congress Avenue, Suite 1300
Austin, TX 78791 Austin, TX 78701
Attention: Mr. William H. Armstrong III Attention: Kenneth Jones, Esq.
Phone: (512) 478-5788 Phone: (512) 435-2312
Fax: (512) 478-6340 Fax: (512) 435-2360
LENDER:
with a copy to:
One Post Oak Central Leonard, Street and Deinard
2000 Post Oak Boulevard, Suite 2000 Suite 2300, 150 S. Fifth Street
Houston, TX 77056 Minneapolis, MN 55402
Attention: Nancy Goodson Attention: David W. Kelley
Phone (713) 527-9646 Phone: (612) 335-1670
Fax: (713) 521-7334 Fax: (612) 335-1657
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 14. 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.
[This space was intentionally left blank.]
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed as of the day and year first above
written.
BORROWER:
STRATUS PROPERTIES INC., a Delaware corporation
By: _______________________________________
Name: _____________________________________
Its: ________________________________________
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed as of the day and year first above
written.
LENDER:
HOLLIDAY FENOGLIO FOWLER L.P., a Texas limited partnership, by
HFF-GP, Inc., a Delaware corporation, its general partner
By: _______________________________________
Name: _____________________________________
Its: ________________________________________
SCHEDULE 1 TO LOAN AGREEMENT
CERTAIN DEFINITIONS
"Accounting Period" means each calendar quarter during
the term of the Loan, commencing on April 1, 2001.
"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.
"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 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 December 16, 1999, among Borrower and
certain Affiliates of Borrower and Comerica Bank-Texas, as
amended by Amendment to Loan Agreement dated December 27, 2000.
"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 net income during
that period plus interest, depreciation, amortization and income
tax expense 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 July 1, 2006.
"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, (ii) the Comerica
Debt, (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.
"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.
1971463v1
EXHIBIT A TO LOAN AGREEMENT
FORM OF NOTE
EXHIBIT B TO LOAN AGREEMENT
FORM OF BORROWER'S OFFICER'S COMPLIANCE CERTIFICATE
Stratus Properties Inc.
98 San Jacinto Boulevard, Suite 220
Austin, TX 78791
[DATE]
Holliday Fenoglio Fowler, L.P.
One Post Oak Central
2000 Post Oak Boulevard
Suite 2000
Houston, TX 77056
Attention: Nancy Goodson
Re Loan Agreement dated as of June 14, 2001 between Stratus
Properties Inc. ("Borrower") and Holliday Fenoglio Fowler,
L.P. ("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.
STRATUS PROPERTIES INC., a Delaware corporation
By: _______________________________________
Name: _____________________________________
Its: ________________________________________
Exhibit 15.1
October 26, 2001
Stratus Properties Inc.
98 San Jacinto Blvd.
Austin, TX 78701
Gentlemen:
We are aware that Stratus Properties Inc. has incorporated by reference
in its Registration Statements (File Nos. 33-78798, 333-31059 and 333-
52995) its Form 10-Q for the quarter ended September 30, 2001, which
includes our report dated October 26, 2001 covering the unaudited
interim financial information contained therein. Pursuant to Regulation
C of the Securities Act of 1933 (the Act), this report is not
considered a part of the registration statements prepared or certified
by our firm or a report prepared or certified by our firm within the
meaning of Sections 7 and 11 of the Act.
Very truly yours,
/s/ Arthur Andersen LLP
