UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 OR 15(d) of The Securities Exchange Act of
1934
Date
of Report (Date of earliest event reported): December 14,
2007
Stratus
Properties Inc.
(Exact
name of registrant as specified in its charter)
|
Delaware
|
0-19989
|
72-1211572
|
||
|
(State
or other jurisdiction of incorporation)
|
(Commission
File Number)
|
(IRS
Employer Identification Number)
|
|
98
San Jacinto Blvd., Suite 220
|
|
|
Austin,
Texas
|
78701
|
|
(Address
of principal executive offices)
|
(Zip
Code)
|
Registrant's
telephone number, including area code: (512) 478-5788
Check
the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions:
[
]
Written communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
[
]
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
[
]
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange
Act
(17 CFR 240.14d-2(b))
[
]
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange
Act
(17 CFR 240.13e-4(c))
Item
1.01 Entry into a Material Definitive Agreement.
On
December 14, 2007, our wholly owned subsidiary, Lantana Office Properties I,
L.P., (“Lantana”), signed a promissory note (the “Note”) to The Lincoln National
Life Insurance Company. Under the terms of the Note, Lantana borrowed
$21.5 million, which will be used for development costs and general corporate
purposes. The Note matures on January 1, 2018.
The
Note
contains customary financial covenants and other restrictions. The
Note bears interest at a rate of 5.99 percent per year.
Voluntary
prepayment of the Note is prohibited prior to February 1,
2010. Voluntary prepayment of the Note in whole, subsequent to
February 1, 2010, is subject to a prepayment premium of the greater of (1)
1
percent of the outstanding principal balance of the Note on the prepayment
date
or (2) the result of the sum of the present values of the remaining payments
due
from the prepayment date through the maturity date minus the outstanding
principal balance of the Note as of the prepayment date. Voluntary
prepayment of the Note in part is prohibited.
Repayments
under the Note can be accelerated by the lender upon the occurrence of certain
customary events of default. Lantana’s obligations under the Note are
secured by a first lien on real property and improvements and an assignment
of
rents and present and future leases related to Lantana’s property located at
7500 Rialto Boulevard, Austin, Texas.
The
Note
is filed as an exhibit to this Current Report (see Exhibit 10.1).
Item
2.03 Creation of a Direct
Financial Obligation or an Obligation Under an Off-Balance Sheet
Arrangement.
See
Item
1.01, which is incorporated herein by reference.
Item
9.01 Financial Statements and Exhibits.
(d) Exhibits.
The
Exhibit included as part of this Current Report is listed in the attached
Exhibit Index.
SIGNATURE
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant
has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
Stratus
Properties Inc.
By:
/s/
John E. Baker
----------------------------------------
John
E.
Baker
Senior
Vice President and
Chief
Financial Officer
(authorized
signatory and
Principal
Financial Officer)
Date: December
14, 2007
Stratus
Properties Inc.
Exhibit
Index
Exhibit
Number
|
Promissory
Note dated as of December 14, 2007, between Lantana Office Properties
I,
L.P., as borrower and The Lincoln National Life Insurance Company,
as
Lender.
|
||
Exhibit
10.1
Loan
Number: L0735100
PROMISSORY
NOTE
$21,500,000.00
December
14, 2007
FOR
VALUE RECEIVED, LANTANA OFFICE PROPERTIES I, L.P., a
Texas limited partnership (the "Maker"), whose Federal Tax
Identification Number is 74-2997008 hereby promises to pay to the order of
THE
LINCOLN NATIONAL LIFE INSURANCE COMPANY, an Indiana corporation and any
subsequent successors or assigns as holders of this Note (the
"Holder" or "Holders") in the manner
hereinafter provided, the principal sum of Twenty-One Million Five Hundred
Thousand and 00/100 DOLLARS ($21,500,000.00) together with interest on the
outstanding principal balance from the date of the initial disbursement (for
purposes of this Note, "disbursement" means the date funds are wire transferred
from Holder's account) of all or a part of the principal of this Note (the
"Disbursement Date") until paid in full at the rate of five and
ninety-nine hundredths percent (5.99%) per annum (the "Contract
Rate") in accordance with the provisions hereinafter set
forth.
1. Payment
of Principal and Interest. Principal and interest hereunder shall
be payable as follows (each of the payments described in this section, except
for the Interim Interest Payment defined below, are each referred to as a
“Monthly Payment”):
(a) On
the
Disbursement Date, interim interest accrued in advance (calculated on the basis
of a 360-day year containing twelve 30-day months) for the actual number of
days
which will elapse beginning with the Disbursement Date through the last day
of
the calendar month in which the Disbursement Date occurs (the
“Interim Interest Payment”); and
(b) Commencing
on the first day of February, 2008 (the "First Payment Date")
and on the first day of each month (each a “Payment Date”)
thereafter until this Note matures, principal and interest in consecutive equal
installments of One Hundred Twenty Eight Thousand Seven Hundred Sixty-Five
and
00/100 DOLLARS ($128,765.00); and
(c) On
January 1, 2018 (the "Maturity Date"), the entire unpaid
principal amount, together with accrued and unpaid interest thereon, and all
other sums due under this Note or under any other documents evidencing or
securing this Note (collectively, the "Loan Documents"), shall
be due and payable in full.
Except
as
set forth in 1(a) above, interest shall be payable in arrears and calculated
on
the basis of a 360-day year containing twelve 30-day months. In the
event a Payment Date or the Maturity Date is not a Business Day (as herein
defined) then such Payment Date or Maturity Date as the case may be, shall
be
deemed to be the next following Business Day. As used herein,
“Business Day” means any day in which the Holder is open for
the conduct of substantially all of its investment related
business.
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2. Payment
Information. Until directed otherwise in writing by the Holder,
all payments under this Note shall be made by Electronic Fund Transfer debit
entries to the Maker's account at an Automated Clearing House ("ACH") member
bank. Each payment shall be initiated by the Holder (or, at Holder's
option, by its loan servicing agent) through the ACH Network for settlement
on
the respective due dates. Prior to each payment due date, the Maker
shall deposit and/or maintain sufficient funds in its account to cover each
debit entry. Notwithstanding the foregoing, the failure, for whatever
reason, of the Electronic Funds Transfer debit entry transaction to be timely
completed shall not relieve the Maker from its obligations to promptly and
timely make all payments called for under this Note when due and to comply
with
Maker's other obligations hereunder.
3. Security
for Note. The payment of this Note and all other sums due Holder
is secured by the Indenture (as hereinafter defined) and the other Loan
Documents. Except as otherwise defined herein, all of the terms and
provisions contained in the Indenture and the other Loan Documents are hereby
incorporated herein by express reference.
4. Late
Charges. Should any Monthly Payment required under this Note not
be paid in full within ten (10) days from the date such payment is due, Maker
acknowledges that the Holder will incur extra expenses for the handling of
the
delinquent payment and servicing the indebtedness evidenced hereby, and that
the
exact amount of these extra expenses is extremely difficult and impractical
to
ascertain, but that a charge of four percent (4%) of the amount of the
delinquent payment (the "Late Charge") would be a fair
approximation of the expense so incurred by Holder. If applicable law
requires a lesser charge, however, then the maximum charge permitted by such
law
may be charged by Holder for said purpose. If applicable law requires
that more than a ten (10) day period elapse from the date a payment is due
until
the Late Charge can be imposed, Holder will impose the Late Charge at the
earliest date permitted by such law. Therefore, Maker shall, in such
event, without further notice, and without prejudice to the right of Holder
to
collect any other amounts provided to be paid hereunder or under the Indenture
or the other Loan Documents, or to declare an Event of Default (as defined
below) pay to Holder the Late Charge to compensate Holder for expenses incurred
in handling delinquent payments.
5. Interest
Payable Upon Default. If there occurs an Event of Default, under
this Note or the Indenture or under any of the other Loan Documents, then the
unpaid principal amount of this Note, and, to the extent permitted by applicable
law, all accrued and unpaid interest thereon, shall bear interest at the lesser
of (i) the Contract Rate plus four percent (4%) per annum compounded
monthly, or (ii) the maximum rate permitted by applicable
law (the "Default Rate") from the date of expiration of any
applicable cure or grace period until such time, if any, as the Event of Default
is cured and the Indenture and this Note are reinstated as permitted by
applicable law, or otherwise until such time as the unpaid principal amount
of
this Note and all other indebtedness evidenced by this Note or the other Loan
Documents are fully repaid, whichever is earlier.
6. Events
of Default. An "Event of Default" shall exist
under this Note (a) in the event Maker shall fail to make any payment due under
this Note, other than the final payment or the Prepayment Premium (as defined
herein), within ten (10) days from the date when such payment is due; or (b)
in
the event Maker shall fail to make the final payment or the Prepayment Premium
when
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such
payment is due; or (c) if there shall exist an Event of Default as that term
is
defined in the Indenture or in any of the other Loan Documents.
7. Additional
Payments. The additional payments called for under paragraphs 4
and 5 shall be in addition to, and shall in no way limit, any other rights
and
remedies provided for in this Note, the Indenture or in any of the other Loan
Documents, as well as all other remedies provided by law.
8. Payment
of Taxes and Expenses.
(a) Maker
further promises to pay to Holder, immediately upon written notice from Holder,
(i) all recordation, transfer, stamp, documentary or other fees or taxes levied
on Holder (exclusive of Holder's income taxes) by reason of the making or
recording of this Note, the Indenture or any of the other Loan Documents, and
(ii) all intangible property taxes levied upon any Holder of this Note or
mortgagee, beneficiary, or lender under the Indenture or secured party under
the
other Loan Documents.
(b) Maker
further promises to pay to Holder, immediately upon written notice from Holder,
all out-of-pocket costs, expenses, disbursements, escrow fees, title charges
and
reasonable legal fees and expenses actually incurred by Holder, its counsel
and
loan servicer as a result of Holder's entering into the loan transaction
evidenced by this Note, including without limitation, those incurred in (i)
connection with all requests by Borrower for consent or approval or waivers
under this Note or the other Loan Documents; and (ii) the collection or
attempted collection following an Event of Default, or negotiation and
documentation of any settlement or workout of the principal amount of this
Note,
the interest thereon or any installment or other payment due hereunder; and
(iii) any suit or proceeding whatsoever in regard to this Note or to protect
or
sustain any other Loan Document, including, without limitation, in any
bankruptcy proceeding or judicial or nonjudicial foreclosure
proceeding.
9. Application
of Payments. All payments from Maker shall be applied as
follows: (i) to unpaid Late Charges and costs of collection and to
any other costs and expenses due and payable to Holder under the Loan Documents;
(ii) to the Prepayment Premium due, if any; (iii) to interest accrued and unpaid
on the unpaid balance hereof; and (iv) the balance to unpaid
principal. Notwithstanding the foregoing, during the existence of an
Event of Default, Holder may apply payments received on any amounts due under
the Note, the Indenture, or any of the other Loan Documents as Holder may
determine in its sole discretion.
10. Prepayment. Maker
may not prepay this Note in whole or in part except as specifically provided
herein.
10.1 Prepayment. Maker
is prohibited from voluntarily prepaying this Note until February 1, 2010 (the
“No-Prepayment Period”). Subsequent to the
No-Prepayment Period, Maker may voluntarily prepay this Note in whole, but
not
in part, on any Payment Date, provided Maker gives Holder not less than thirty
(30) nor more than sixty (60) days’ written notice specifying the date of
prepayment (the “Prepayment Date”) and pays a prepayment fee
(the “Prepayment Premium”) as
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hereinafter
calculated.
The
Prepayment Premium shall be the greater of (a) one percent (1%) of the
outstanding principal balance of this Note on the Prepayment Date, or (b) the
result of (i) the sum of the present values (determined over the Remaining
Term
using periodic monthly intervals and a discount rate equal to the Treasury
Yield
plus twenty five (25) basis points divided by twelve (12)) of all the then
remaining unpaid Payments due from the Prepayment Date through the Maturity
Date
minus (ii) the outstanding principal balance of this Note as of the
Prepayment Date. The “Remaining Term” is the length
of time from the Prepayment Date through the Maturity Date. The
“Treasury Yield” is the average yield in percent per annum of
the Treasury Constant Maturities as published in document H.15(519) (presently
published by the Board of Governors of the Federal Reserve System titled
“Federal Reserve Statistical Release”) for the calendar week
immediately preceding the calendar week in which the Prepayment Date
falls. If the Remaining Term does not equal one of the maturities of
the Treasury Constant Maturities, then the Treasury Yield will be determined
by
interpolating linearly between two Treasury Constant Maturities reported in
such
Statistical Release, one having a maturity as close as possible to, but greater
than, the Remaining Term and one having a maturity as close as possible to,
but
less than, the Remaining Term. If the publishing of the yield of
Treasury Constant Maturities is ever discontinued, then the Treasury Yield
shall
be based upon the index which the Board of Governors of the Federal Reserve
System publishes in replacement or, if no such replacement index is published,
the index which, in Holder's determination, most nearly corresponds to the
yield
of the Treasury Constant Maturities. However, under no circumstances shall
the
Prepayment Premium ever be less than one percent (1%) of the then outstanding
principal balance due under this Note. As used herein the word
“Payments” shall mean any and all sums due under this Note or
under any other documents evidencing or securing this Note, including, without
limitation, Monthly Payments (as defined herein) and the entire unpaid principal
amount of this Note, together with all accrued and unpaid interest due
thereon.
Maker
acknowledges that Holder (a) has advanced the amounts evidenced by this Note
with the expectation that such amounts would be outstanding for a period at
least equal to the No-Prepayment Period, and would not have been willing to
advance such amounts on these terms for a shorter period of time and therefore,
Holder may refuse in its sole discretion to accept a voluntary prepayment prior
to the end of the No-Prepayment Period, even which such prepayment is
accompanied by a prepayment premium, (b) in making the loan evidenced
by this Note, is relying on Maker's creditworthiness and its agreement to pay
in
strict accordance with the terms set forth in this Note, and (c) would not
make
the loan without full and complete assurance by Maker of its agreement not
to
prepay all or a part of the principal of this Note except as expressly permitted
herein and in the Indenture. Maker has been advised and acknowledges
that Holder is relying on the receipt of payments under this Note through the
Maturity Date to, among other things, match and support its obligations under
contracts entered into by Holder with third parties and that in the event of
a
prepayment, Holder could suffer loss and additional expenses which are extremely
difficult and impractical to ascertain. The Prepayment Premium is a
good faith resolution by Maker and Holder of the damages Holder would suffer,
and it is not intended as a penalty. Accordingly, should this Note be
paid for any reason, whether voluntary or involuntary, prior to the end of
the
No-Prepayment Period or prior to the Maturity Date then Maker shall pay to
Holder a Prepayment Premium calculated in accordance with this Section 10.1,
except as otherwise expressly permitted herein or in
-4-
the
Indenture.
Maker
expressly acknowledges that pursuant to the provisions of this Note and except
as otherwise provided in the Indenture, Maker has no right to prepay this Note
in whole or in part without prepayment of the Prepayment Premium, and Maker
shall be liable for the payment of the Prepayment Premium upon any payment
of
the outstanding principal of this Note before its scheduled due date, whether
voluntary or involuntary or after acceleration of the Note whether the
acceleration of the maturity hereof is due to Maker's default or
otherwise. Furthermore, Maker waives any rights it may have under any
applicable state laws as they relate to any prepayment restrictions contained
in
this Section 10.1 or otherwise contained in this Note and expressly acknowledges
that Holder has made the loan evidenced by this Note in reliance upon such
agreements and waiver of Maker and that Holder would not have made the loan
evidenced by this Note without such agreements and waiver of
Maker. Maker acknowledges that specific weight has been given to the
consideration given for such agreements, which consideration is the granting
of
the loan evidenced by this Note.
Notwithstanding
the foregoing, in the event of an application of insurance proceeds upon a
casualty or the application of a condemnation award, made pursuant to Section
1.03(A) or Section 1.05(A), respectively, of the Indenture and if such
application occurs at a time when no outstanding Event of Default or event,
which with notice or passage of time or both could become an Event of Default,
then any such application made to the principal balance of the Note shall be
made without payment of a Prepayment Premium for the amount of such
application.
10.2 Calculation
of Prepayment Premium Following an Event of Default. Maker
acknowledges that in the event of an acceleration of the Maturity Date of this
Note following an Event of Default by Maker, a tender of payment of an amount
necessary to satisfy the entire indebtedness evidenced hereby, but not including
the Prepayment Premium as required pursuant to the terms of this Note or the
Indenture, made at any time prior to, during or after a foreclosure sale or
a
sale ordered by a court (including a bankruptcy court) and tendered by Maker,
its successors or assigns, or by anyone on behalf of Maker, or by a buyer upon
foreclosure or power of sale or other court ordered sale, shall be presumed
to
be and conclusively deemed to constitute a prohibited prepayment
hereunder and shall therefore be subject to the Prepayment Premium. In such
event, the Prepayment Premium will be calculated in accordance with Paragraph
10.1 of this Note; except that for the purposes of this Paragraph 10.2 only,
the
following assumptions will be applied: (a) the “Prepayment Date” will be deemed
to be the date of occurrence of the foreclosure sale or the date of the tender
of payment of the amount necessary to pay the entire indebtedness evidenced
hereby in full, including the Prepayment Premium; and (b) all
scheduled Payments due under this Note from the date of this Note to
and including the Prepayment Date will be assumed to have been made as
scheduled. Nothing in this paragraph 10.2 shall operate to prevent Holder from
charging Late Charges and the Default Rate on Payments not actually made as
required under this Note.
11. Maker's
Covenants. Maker agrees that (a) the obligation evidenced by this
Note is an exempted transaction under the Truth-in-Lending Act, 15.U.S.C § 1601,
etseq. (1982); and (b) said obligation constitutes a business loan
for the purpose of the application of any laws that distinguish
-5-
between
consumer loans and business loans and that have as their purpose the protection
of consumers in the state in which the Property (as herein defined) is
located.
12. Severability. The
parties hereto intend and believe that each provision of this Note comports
with
all applicable local, state and federal laws and judicial
decisions. However, if any provision or any portion of any provision
contained in this Note is held by a court of law to be invalid, illegal,
unlawful, void or unenforceable as written in any respect, then it is the intent
of all parties hereto that such portion or provision shall be given force to
the
fullest possible extent that it is legal, valid and enforceable, that the
remainder of the Note shall be construed as if such illegal, invalid, unlawful,
void or unenforceable portion or provision was not contained therein, and that
the rights, obligations and interests of Maker and Holder under the remainder
of
this Note shall continue in full force and effect.
13. Usury
Laws.
(a) It
is the intention of Maker and Holder to conform strictly to the usury laws
now
or hereafter in force in the state or commonwealth in which the Property is
located, and any interest payable under this Note, the Indenture, or any other
Loan Documents shall be subject to reduction to an amount not to exceed the
maximum non-usurious amount for commercial loans allowed under the usury laws
of
the state or commonwealth in which the Property is located as now or hereafter
construed by the courts having jurisdiction over such matters. In the
event such interest (whether designated as interest, service charges, points,
or
otherwise) does exceed the maximum legal rate, it shall be (i) cancelled
automatically to the extent that such interest exceeds the maximum legal rate;
(ii) if already paid, at the option of the Holder, either be rebated to Maker
or
credited on the principal amount of the Note; or (iii) if the Note has been
prepaid in full, then such excess shall be rebated to Maker.
(b) It
is further agreed, without limitation of the foregoing, that all calculations
of
the rate of interest (whether designed as interest, service charges, points,
or
otherwise) contracted for, charged, or received under this Note, or under any
instrument evidencing or securing the loan evidenced hereby, that are made
for
the purpose of determining whether such rate exceeds the maximum legal rate,
shall be made, to the extent permitted by applicable law, by amortizing,
prorating, allocating, and spreading throughout the full stated term (ten [10]
years) of this Note (and any extensions of the term hereof that may be hereafter
granted) all such interest at any time contracted for, charged, or received
from
the Maker or otherwise by the Holder so that the rate of interest on account
of
the indebtedness evidenced by this Note, as so calculated, is uniform throughout
the term hereof. If the Maker is exempt or hereafter becomes exempt
from applicable usury statutes or for any other reason the rate of interest
to
be charged on this Note is not limited by law, none of the provisions of this
paragraph shall be construed so as to limit or reduce the interest or other
consideration payable under this Note or under the Indenture or other Loan
Documents. The terms and provisions of this paragraph shall control
and supersede every other provision of all agreements between the parties
hereto.
14. Acceleration. Upon
an Event of Default, Holder shall have the right, without demand or notice,
to
declare the entire principal amount of this Note then outstanding, and all
accrued and
-6-
unpaid
interest thereon, and all other sums, including without limitation, the
Prepayment Premium required under this Note or the Indenture, to be immediately
due and payable, and notwithstanding the stated maturity in this Note, all
such
sums declared due and payable shall thereupon become immediately due and
payable.
15. Waivers
by Maker. As to this Note, the Indenture, the Loan Documents and
any other instruments securing the indebtedness, Maker and all guarantors,
sureties, endorsers and other parties hereafter assuming or otherwise becoming
liable under this Note (the foregoing are collectively referred to as the
“Maker Parties”), severally waive all applicable exemption
rights, whether under any state constitution, homestead laws or otherwise,
and
also severally waive diligence, valuation and appraisement, presentment for
payment, protest and demand, notice of protest, demand and dishonor and
diligence in collection and nonpayment of this Note and all other notices in
connection with the delivery, acceptance, performance, default, or enforcement
of the payment of this Note (except notice of default specifically provided
for
in the Indenture and the other Loan Documents). The Maker and Maker
Parties agree that the liability of each of them shall be unconditional without
regard to the liability of any other party and shall not be affected by an
indulgence, extension of time, renewal, waiver, or modification granted to
or
consented to by the Holder. Maker and Maker Parties consent to any
and all extensions of time, renewals, waivers, or modifications that may be
granted by Holder with respect to the payment or other provisions of this Note,
and to the substitution, exchange or release of the Collateral, or any part
thereof, and consent to the release of any party primarily or secondarily liable
hereon or the addition of makers, guarantors, sureties and endorsers as parties
hereto without notice to them or affecting their liability
hereunder. To the extent permitted by law, Maker and Maker Parties
further waive all benefit that might accrue to Maker or Maker Parties by virtue
of any present or future laws exempting the Property, or any other property,
real or personal, or the proceeds arising from any sale of any such property,
from attachment, levy, or sale under execution, or providing for any stay of
execution to be issued on any judgment recovered on this Note or in any action
to foreclose the Indenture, injunction against sale pursuant to power of sale,
exemption from civil process or extension of time for payment. Maker
and Maker Parties agree that any real estate that may be levied upon pursuant
to
a judgment obtained by virtue of this Note, or any writ of execution issued
thereon, may be sold upon any such writ in whole or in part in any order desired
by Holder.
16. Maker
Not Released. No delay or omission of Holder to exercise any of
its rights and remedies under this Note, the Indenture or any Loan Documents
at
any time following the happening of an Event of Default shall constitute a
waiver of the right of Holder to exercise such rights and remedies at a later
time by reason of such Event of Default or by reason of any subsequently
occurring Event of Default. This Note, or any payment hereunder, may
be extended from time to time by agreement in writing between Maker and Holder
without in any other way affecting the liability and obligations of Maker and
Maker Parties, if any.
17. Joint
and Several Obligation; Successors and Assigns. This Note shall
be the joint and several obligation of all Makers and Maker Parties, if any,
as
may exist now or hereafter in addition to Maker, and shall be binding upon
them
and their respective heirs, administrators, executors, legal representatives,
successors and assigns and shall inure to the benefit of Holder and its
successors, successors in title, and assigns.
-7-
18. Remedies
Cumulative. The remedies of Holder as provided in this Note, or
in the Indenture or the Loan Documents, and the warranties contained herein
or
therein shall be cumulative and concurrent, may be pursued singly, successively
or together at the sole discretion of Holder, may be exercised as often as
occasion for their exercise shall occur and in no event shall the failure to
exercise any such right or remedy be construed as a waiver or release of such
right or remedy. No remedy under this Note, conferred upon or
reserved to Holder is intended to be exclusive of any other remedy provided
in
this Note, the Indenture or any of the Loan Documents or provided by law, but
each shall be cumulative and shall be in addition to every other remedy given
under the Indenture or any of the Loan Documents or hereunder or now or
hereafter existing at law or in equity or by statute.
19. Notices. All
notices or other communications under this Note shall be given as provided
in
the Indenture.
20. Governing
Law. THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OR COMMONWEALTH IN WHICH THE PROPERTY IS LOCATED
WITHOUT GIVING EFFECT TO THE CONFLICT OF LAWS PRINCIPLES THEREOF. IN
ANY LITIGATION IN CONNECTION WITH OR TO ENFORCE THIS NOTE, THE MAKER HEREBY
IRREVOCABLY CONSENTS AND CONFERS PERSONAL JURISDICTION ON THE STATE COURTS
OF
THE COUNTY IN WHICH THE PROPERTY IS LOCATED, OR ON THE UNITED STATES DISTRICT
COURT OR THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT IN WHICH THE
PROPERTY IS LOCATED. MAKER EXPRESSLY WAIVES ANY OBJECTIONS AS TO
VENUE IN ANY SUCH COURTS AND AGREES THAT SERVICE OF PROCESS MAY BE MADE ON
THE
MAKER BY MAILING A COPY OF THE SUMMONS AND COMPLAINT BY REGISTERED OR CERTIFIED
MAIL, RETURN RECEIPT REQUESTED, TO THE MAKER'S ADDRESS. NOTHING
CONTAINED HEREIN SHALL, HOWEVER, PREVENT THE HOLDER FROM BRINGING ANY ACTION
OR
EXERCISING ANY RIGHTS WITHIN ANY OTHER STATE OR JURISDICTION OR FROM OBTAINING
PERSONAL JURISDICTION BY ANY OTHER MEANS AVAILABLE BY APPLICABLE
LAW.
21. Waiver
of Jury Trial. TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE
MAKER HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ALL RIGHT TO TRIAL BY JURY
IN ANY ACTION, SUIT OR PROCEEDING THAT RELATES TO OR ARISES OUT OF THIS NOTE
OR
THE ACTS OR FAILURE TO ACT OF OR BY HOLDER IN THE ENFORCEMENT OF ANY OF THE
TERMS OR PROVISIONS OF THIS NOTE.
22. Material
Inducements. ALL WAIVERS SET FORTH IN THIS NOTE ARE MATERIAL
INDUCEMENTS FOR THE HOLDER TO EXTEND THE LOAN EVIDENCED BY THIS NOTE TO THE
MAKER.
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23. No
Oral Modification. This Note may not be modified or discharged
orally, but only by an agreement in writing signed by the party against whom
enforcement or any waiver, modification or discharge is sought.
24. Time. Time
is of the essence with regard to the performance of the obligations of Maker
in
this Note and each and every term, covenant and condition herein by or
applicable to Maker.
25. Captions. The
captions and headings of the paragraphs of this Note are for convenience only
and are not to be used to interpret, define or limit the provisions
hereof.
26. Terminology. As
used in this Note the word "Indenture" means a Deed of Trust
Security Agreement and Fixture Filing of even date herewith from Maker to,
or
for the benefit of, Holder, which secures Maker's obligations hereunder and
which covers the property described therein (the
"Property").
27. Replacement
Note. Upon receipt of evidence reasonably satisfactory to Maker
of the loss, theft, destruction or mutilation of this Note, and in the case
of
any such loss, theft or destruction, upon delivery of an indemnity agreement
reasonably satisfactory to Maker or, in the case of any such mutilation, upon
surrender and cancellation of the mutilated Note, Maker will execute and deliver
to Holder in lieu thereof, a replacement note dated as of the date of this
Note,
identical in form and substance to this Note and upon such execution and
delivery all references in the Indenture to this Note shall be deemed to refer
to such replacement note.
28. Limitation
on Recourse.
(a) Except
as specifically set forth in paragraphs (b) and (c) of this Article 28, in
Section 1.13 of the Indenture and any separate agreement for indemnification
of
Holder or guaranty agreement of this Note, Holder’s recourse to the Maker for
the Maker’s liability under this Note, the Indenture and the other Loan
Documents shall be limited to Maker’s interest in the Property and any other
security furnished under the Loan Documents. In any action to
foreclose the Indenture or to otherwise realize upon any security furnished
under the Loan Documents or to collect any amount payable hereunder or under
the
other Loan Documents, no judgment for the repayment of this Note or interest
thereon or any other sum due under any of the Loan Documents or for damages
for
failure to perform any obligation of Maker hereunder or under any of the Loan
Documents will be enforced against Maker personally or against any property
of
Maker other than the Property and other security furnished under the Loan
Documents. Notwithstanding the foregoing, nothing contained in this
paragraph shall be construed as prohibiting Holder from exercising any and
all
remedies which the Loan Documents permit, including the right to bring actions
or proceedings against Maker and to enter a judgment against Maker; provided,
however, that any judgment so entered must specify that it is limited to the
security furnished under the Loan Documents and that it may not be levied
against any other property of Maker other than the security furnished under
the
Loan Documents.
(b) Notwithstanding
the foregoing provisions of paragraph (a) of this Article 28 or any other
agreement, Maker shall be fully liable for, Holder shall have full
recourse against Maker
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for,
and
the restrictions of paragraph (a) of this Article 28 shall not apply to, losses
or damages to Holder or the Property resulting from the following: (i) the
misapplication or misappropriation of (a) proceeds of insurance covering any
portion of the Property, or (b) proceeds of condemnation of any portion of
the
Property or proceeds from the sale or conveyance of any portion of the Property,
in lieu of condemnation, or (c) rentals received by or on behalf of Maker
subsequent to the date of the revocation of the license granted in the Absolute
Assignment of Rents and Profits and Collateral Assignment of Leases to the
extent such rentals are not applied to ordinary and necessary operational costs
of the Property, or (d) any funds deposited or required to be deposited under
any escrow agreement to be established pursuant to the Commitment Letter, the
Indenture or the Loan Documents; (ii) Maker’s failure to return all
unearned advance rentals and security deposits paid by tenants of the Property
and not refunded to or forfeited by such tenants; (iii) Maker's failure to
comply with any federal, state and local statute, ordinance or regulation
applicable to the Property relating to hazardous waste and environmental laws,
such loss to include expenses, clean up, penalties and damages incurred by
Holder and any diminution in the fair market value of the Property caused by
Maker, its agents and tenants as a result of non-compliance with such hazardous
waste and environmental laws from and after the date hereof (specifically
including any liability of Maker under Section 1.13 of the Indenture or under
any separate indemnification agreement or guaranty agreement); (iv) a lien
hereafter imposed upon any of the Property without Holder's prior written
consent and which has priority over any security for the payment of this Note,
including, without limitation, all costs incurred by Holder in the bonding,
payment or release of any lien arising from the use, incorporation, storage
or
disposal of toxic, hazardous, chemical or nuclear waste or materials upon or
in
any portion of the Property caused by Maker, its agents and tenants as a result
of non-compliance with Hazardous Material Laws (as defined in the Indenture)
from and after the period from the date hereof; (v) the commission of waste,
which shall include, but not be limited to, damage, destruction, disrepair
or
impairment in value of the Property caused by Maker’s willful act or grossly
negligent omission, including, but not be limited to, Maker’s failure to take
commercially reasonable steps to insure that the Property does not contain
those
species of mold, fungi, algae and other microbial matter which pose a serious
human health risk in concentrations greater than those found in the immediately
surrounding ambient environment.; (vi) failure of Maker to pay real estate
taxes, recording taxes, mortgage taxes or documentary stamp taxes or other
charges required in connection with the Indenture and the other Loan Documents
(together with any fines, penalties, interest or similar charges resulting
from
the non-payment thereof), and property insurance premiums relating to the
Property; (vii) Maker’s failure to maintain casualty and liability insurance as
required by the Indenture; (viii) any modification, termination or cancellation
of any of the leases or other occupancy agreements in effect at or concerning
the Property and assigned to Holder under the Indenture or other Loan Documents,
unless expressly permitted in the Indenture or the Absolute Assignment of Rents
and Profits and Collateral Assignment of Leases or with Holder's prior written
consent if and to the extent such modification, termination or cancellation
has
a material adverse effect on the value of the Property; (ix) Personal Property
(as defined in the Indenture) taken from the Property by or on behalf of Maker
and not replaced with Personal Property of the same utility and of the same
or
greater value; (x) all costs and expenses, including, without limitation,
attorneys’ fees and transfer taxes incurred by Holder in connection with the
enforcement of this Note, the Indenture or the other Loan Documents or a
deed-in-lieu of foreclosure, and any taxes, costs and expenses described in
Section 8(a) and 8(b) of this Note; and (xi) any breach of or failure to perform
any representation, warranty or covenant contained in the Indenture or any
Loan
Documents relating to
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anti-terrorism
measures, including but not limited to (a) Anti-terrorism Laws (as defined
in
the Loan Documents); and (b) other executive orders, laws, rules, regulations,
legislations, or orders as may be enacted now or in the future relating to
anti-terrorism measures.
(c) Notwithstanding
any provisions of this Section to the contrary, the agreement of Holder not
to
pursue recourse liability as set forth above SHALL BECOME NULL AND VOID and
shall be of no further force and effect and Maker shall become personally liable
for payment of the indebtedness evidenced by this Note and performance of all
other obligations of Maker under this Note, the Indenture and the other Loan
Documents in the event of:
(1) Fraud
or material misrepresentation, whether affirmative or by omission, of a material
fact by Maker or any principals of Maker in connection with this Note, the
Indenture or the other Loan Documents or any request for any action or consent
by Maker; or
(2) a
default or violation under Section 1.07 of the Indenture; or
(3) if
the Property or any part thereof shall become an asset in a voluntary bankruptcy
or insolvency proceeding.
29. Exhibits.
Exhibit(s) A and B attached hereto are incorporated herein by
reference.
THIS
NOTE AND THE OTHER WRITTEN LOAN
DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS
OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE
PARTIES.
IN
WITNESS WHEREOF, Maker has caused this Promissory Note to be duly
executed under seal on the date first above written.
MAKER:
LANTANA
OFFICE PROPERTIES I,
L.P.,
a
Texas limited
partnership
By: STRS
L.L.C.,
a
Delaware limited liability
company
By: STRATUS
PROPERTIES INC.,
A
Delaware corporation, its sole
member
By:___/s/
John E.
Baker___________________
John
E. Baker, Senior Vice
President
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