Document:

Exhibit 10.2 - Promissory Note

PROMISSORY NOTE
	
							
	$
	100,000,000.00
	

	 
	 
	 
	September 30, 2013

FOR VALUE RECEIVED, CJUF II Stratus Block 21 LLC, a Delaware limited liability company (“Borrower”), hereby unconditionally promises to pay to the order of Bank of America, N.A., a national banking association, as administrative agent for the lenders from time to time party to the Loan Agreement as hereinafter defined (as more particularly defined in the Loan Agreement, “Administrative Agent”), without offset, in immediately available funds in lawful money of the United States of America, at Administrative Agent’s Office, the principal sum of One Hundred Million and 00/100 Dollars ($100,000,000) (or the unpaid balance of all principal advanced against this Note (as hereinafter defined), if that amount is less), together with interest on the unpaid principal balance of this Note from day to day outstanding as hereinafter provided.
Section 1Payment Schedule and Maturity Date.  Beginning on November 5, 2013 (such initial date and each subsequent date, the “Payment Date”), the principal of this Note shall be due and payable in monthly installments on the fifth (5th) day of each month and each succeeding month thereafter, in an amount specified on the amortization schedule attached hereto as Exhibit A.  In addition to the foregoing payment of principal on this Note, accrued and unpaid interest on this Note shall be due and payable in arrears on the fifth (5th) day of each month commencing on November 5, 2013, until all principal and accrued interest owing on this Note shall have been fully paid and satisfied.  The entire principal balance of this Note then unpaid, together with all accrued and unpaid interest and all other amounts payable hereunder and under the other Loan Documents, shall be due and payable in full on the Maturity Date (as hereinafter defined), the final maturity of this Note.  Interest shall accrue hereunder from the date principal is first advanced on the principal balance of the Loan from day to day outstanding.
Section 2    Extension Option.
(a)    Subject to the conditions set forth in this Section 2, Borrower shall have three (3) options to extend the then Maturity Date.  The first option shall extend the Maturity Date from the Initial Maturity Date (as hereinafter defined) to the First Extended Maturity Date (as hereinafter defined) (the “First Extension Term”).  The second option shall extend the Maturity Date from the First Extended Maturity Date to the Second Extended Maturity Date (as hereinafter defined) (the “Second Extension Term”).  The third option shall extend the Maturity Date from the Second Extended Maturity Date to the Third Extended Maturity Date (as hereinafter defined) (the “Third Extension Term”) (each of said extension terms, an “Extension Term”).  Each such Extension Term shall be granted subject to the following terms and conditions:
(b)    Borrower’s option to extend the Maturity Date for each Extension Term shall be subject to the following conditions being satisfied by Borrower at its sole expense to the satisfaction of Administrative Agent, unless otherwise agreed by Administrative Agent and the Required Lenders in writing:
(i)    In case of the Second Extension Term, the Maturity Date shall have been extended from the Initial Maturity Date to the First Extended Maturity Date, and in the

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case of the Third Extension Term, the Maturity Date shall have been extended from the First Extended Maturity Date to the Second Extended Maturity Date.
(ii)    At the time of the request there shall be no Event of Default, and at the time of the extension, there shall not exist any Default or Event of Default, and Borrower shall deliver to Administrative Agent, at the time of the request a written certificate stating that no Event of Default exists and at the date of extension, a written certificate stating that no Default or Event of Default exists.
(iii)    Not later than the then-Maturity Date, Borrower shall pay to Administrative Agent an extension fee in an amount equal to the product of (y) the outstanding principal amount of the Loan as of the then-Maturity Date and (z) one-fifteenth of one percent (0.15%).
(iv)    Whether or not the extension becomes effective, Borrower shall pay all out-of-pocket costs and expenses incurred by Administrative Agent in connection with the proposed extension (pre- and post-closing), including reasonable attorneys’ fees actually incurred by Administrative Agent; all such costs and expenses incurred up to the time of Administrative Agent’s written agreement to the extension shall be due and payable prior to the then-Maturity Date (or if the proposed extension does not become effective, then upon demand by Administrative Agent), and any future failure to pay such amounts shall constitute a default under the Loan Documents.
(v)    As of any Determination Date occurring less than thirty (30) days prior to such extension, Borrower shall satisfy a Debt Service Coverage Ratio of at least 1.50 to 1.00.  In the event this Debt Service Coverage Ratio is not met, Borrower may satisfy this Debt Service Coverage Ratio prior to the extension date by making a voluntary paydown of the Loan, and the committed amount of the Loan shall be reduced by the amount of such principal payment.  For purposes of any Maturity Date extension, “Determination Date” shall mean a date as of which Administrative Agent makes a determination regarding Borrower’s satisfaction or failure to satisfy the Debt Service Coverage Ratio requirement as described herein and the definition of Debt Service Coverage Ratio set forth in the Loan Agreement shall be adjusted by incorporating said definition of Determination Date.
(vi)    Borrower shall have delivered to Administrative Agent such Financial Statements regarding Borrower, Stageside LLC, Service Company LLC, Show Bureau LLC and the Property as Administrative Agent reasonably requests, including Financial Statements evidencing the Debt Service Coverage Ratio set forth in Section 2(b)(v), certified in writing as true and correct by a representative of Borrower (without personal recourse to such representative) reasonably satisfactory to Administrative Agent.  Items provided under this paragraph shall be in form and detail reasonably satisfactory to Administrative Agent.
If all of the foregoing conditions are not satisfied strictly in accordance with their terms, the extension shall not be or become effective.  

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(c)    All terms and conditions of the Loan Documents shall continue to apply to each Extension Term except that the Maturity Date shall mean the First Extended Maturity Date with respect to the First Extension Term (such change to be effective on and after the Initial Maturity Date, if the extension becomes effective as provided herein), the Second Extended Maturity Date with respect to the Second Extension Term (such change to be effective on and after the First Extended Maturity Date, if the extension becomes effective as provided herein) and Third Extended Maturity Date  with respect to the Third Extension Term (such change to be effective on and after the Second Extended Maturity Date , if the extension becomes effective as provided herein).
Section 3    Security.  The security for this Note includes a Deed of Trust, Assignment of Leases and Rents, Security Agreement and Fixture Filing dated as of the date hereof, by Borrower for the benefit of Administrative Agent, conveying and encumbering certain real and personal property more particularly described therein.
Section 4    Interest Rate.
(a)    Interest Rates.  Subject to Section 18, the Principal Debt (as hereinafter defined) from day to day outstanding which is not past due shall bear interest at a fluctuating rate of interest per annum equal to the LIBOR Daily Floating Rate (as hereinafter defined) for that day plus two hundred fifty (250) basis points, except as specifically described in Sections 4(c) and 5.  For the avoidance of doubt, the maximum rate of interest hereunder shall not exceed the maximum lawful rate permitted by applicable law.
(b)    Computations and Determinations.  All interest shall be computed on the basis of a year of 360 days and paid for the actual number of days elapsed.  Administrative Agent shall determine each interest rate applicable to the Principal Debt in accordance with this Note and its determination thereof shall be conclusive in the absence of manifest error.  The books and records of Administrative Agent shall be conclusive evidence, in the absence of manifest error, of all sums owing to Lender from time to time under this Note, but the failure to record any such information shall not limit or affect the obligations of Borrower under the Loan Documents.
(c)    Unavailability of Rate.  Administrative Agent may notify Borrower in writing if the London Interbank Offered Rate is not available, or if Administrative Agent determines that no adequate basis exists for determining the LIBOR Daily Floating Rate, or that the LIBOR Daily Floating Rate will not adequately and fairly reflect the cost to Lenders of funding or maintaining the Principal Debt by reason of increased Compliance Costs (as defined in Section 4(d) below), or that any applicable Law, or any request or directive (whether or not having the force of law) of any Tribunal (as hereinafter defined), or compliance therewith by any Lender, prohibits or restricts or makes impossible the making or maintaining of the Principal Debt at the LIBOR Daily Floating Rate or the charging of interest on the Principal Debt at the LIBOR Daily Floating Rate.  If Administrative Agent so notifies Borrower, then until Administrative Agent notifies Borrower that the circumstances giving rise to such suspension no longer exist, the Principal Debt shall automatically bear interest at the Base Rate (as hereinafter defined).

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(d)    Increased Cost and Reduced Return.  Subject to Section 8.7(g) of the Loan Agreement, if at any time after the date hereof, any Lender (which shall include, for purposes of this Section 4(d), any corporation controlling any Lender) determines that any Change in Law (as defined in the Loan Agreement) or other adoption or modification of any applicable Law or the enforcement or interpretation thereof regarding taxation, such Lender’s required levels of reserves, deposits, insurance or capital (including any allocation of capital requirements or conditions), or similar requirements, or any interpretation or administration thereof by any Tribunal or compliance by such Lender with any of such requirements, has or would have the effect of (a) increasing such Lender’s costs related to its Pro Rata Share of the Indebtedness (as hereinafter defined), or (b) reducing the yield or rate of return of such Lender on its Pro Rata Share of the Indebtedness, to a level below that which such Lender could have achieved but for the adoption or modification of any such requirements (collectively, “Compliance Costs”), Borrower shall, within fifteen (15) days of any request by Administrative Agent, pay to such Lender such additional amounts as (in such Lender’s sole judgment, after good faith and reasonable computation) will compensate such Lender for such Compliance Costs of such Lender; provided that the imposition of such Compliance Costs is generally consistent with such Lender’s treatment of similar financings.  No failure by Administrative Agent to immediately demand payment of any additional Compliance Costs payable hereunder shall constitute a waiver of Administrative Agent’s or any Lender’s right to demand payment of any such amounts at any subsequent time.  Nothing herein contained shall be construed or shall so operate as to require Borrower to pay any interest, fees, costs or charges greater than is permitted by applicable Law.  
Section 5    Default Rate.  Subject to Section 18, after the occurrence of an Event of Default, Administrative Agent, in Administrative Agent’s sole discretion and without notice or demand, may raise the rate of interest accruing on the outstanding principal balance of this Note by three hundred (300) basis points above the rate of interest otherwise applicable (“Default Rate”), independent of whether Administrative Agent elects to accelerate the outstanding principal balance of this Note.  For the avoidance of doubt, the maximum rate of interest hereunder shall not exceed the maximum lawful rate permitted by applicable law.
Section 6    Definitions.  
(a)    In addition to other terms defined herein, as used herein the following terms shall have the meanings indicated, unless the context otherwise requires:
“Base Rate” means, on any day, a fluctuating rate per annum equal to the sum of (a) one hundred and fifty (150) basis points plus (b) the higher of (i) the Federal Funds Rate plus fifty (50) basis points or (ii) the rate of interest in effect for such day as publicly announced by Bank of America as its Prime Rate (as defined below).
“First Extended Maturity Date” means September 29, 2017.
“Indebtedness” means any and all of the indebtedness to Lenders evidenced, governed or secured by or arising under this Note or any other Loan Documents.
“Initial Maturity Date” means September 29, 2016.

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“LIBOR Daily Floating Rate” means, for any day, a fluctuating rate of interest per annum equal to the London Interbank Offered Rate or a successor thereto as approved by Administrative Agent, as published by Reuters (or other commercially available source providing quotations of the London Interbank Offered Rate as selected by Bank of America from time to time) at approximately 11:00 a.m., London time determined two (2) London Banking Days (as hereinafter defined) prior to such date for U.S. Dollar deposits being delivered in the London interbank eurodollar market for a term of one month commencing that day, as adjusted from time to time in Administrative Agent’s sole discretion for reserve requirements, deposit insurance assessment rates and other regulatory costs.
“Loan Agreement” means that certain Term Loan Agreement dated as of September 30, 2013 by and among Borrower, Administrative Agent and the lenders party thereto from time to time, as the same may be renewed, extended, increased, amended, replaced, restated, replaced, supplemented or otherwise modified from time to time in accordance with its terms.
“London Banking Day” means a day on which banks in London are open for business and dealing in offshore dollars.
“Maturity Date” means the Initial Maturity Date, as it may be earlier accelerated in accordance with the terms and provisions of this Note or the other Loan Documents, or as it may be extended to the First Extended Maturity Date, the Second Extended Maturity Date, the Third Extended Maturity Date or another date as may be agreed in writing by Borrower, Administrative Agent and Lenders, in each case in accordance with the terms hereof.  
“Note” means this promissory note, and any renewals, extensions, amendments or supplements hereof.
“Prime Rate” means a rate set by Bank of America based upon various factors including Bank of America’s costs and desired return, general economic conditions and other factors, and is used as a reference point for pricing some loans, which may be priced at, above, or below such announced rate.  Any change in such Prime Rate announced by Bank of America shall take effect at the opening of business on the day specified in the public announcement of such change.
“Principal Debt” means the aggregate unpaid principal balance of this Note at the time in question.
“Second Extended Maturity Date” means October 1, 2018.
“Third Extended Maturity Date” means September 30, 2019.
“Tribunal” means any applicable state, commonwealth, federal, foreign, territorial or other court or governmental department, commission, board, bureau, district, authority, agency, central bank, or instrumentality, or any arbitration authority.
(b)    All other capitalized terms used herein but not defined shall have the meaning as set forth in the Loan Agreement.

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Section 7    Prepayment.
(a)    Borrower may prepay the principal balance of this Note, in full at any time or in part from time to time, provided that:  (i) Administrative Agent shall have actually received from Borrower prior irrevocable written notice (the “Prepayment Notice”) of Borrower’s intent to prepay, the amount of principal which will be prepaid (the “Prepaid Principal”), and the date on which the prepayment will be made; (ii) each prepayment shall be in the amount of $1,000 or a larger integral multiple of $1,000 (unless the prepayment retires the outstanding balance of this Note in full); and (iii) each prepayment shall be in the amount of 100% of the Prepaid Principal, plus accrued unpaid interest thereon to the date of prepayment, plus any other sums which have become due to Administrative Agent and Lenders under the Loan Documents on or before the date of prepayment but have not been paid.  
(b)    Within fifteen (15) days after request by Administrative Agent (or at the time of any prepayment), Borrower shall pay to Administrative Agent such amount or amounts as will compensate Lenders for any loss, cost, expense, penalty, claim or liability, including any loss incurred in obtaining, prepaying, liquidating or employing deposits or other funds from third parties and any loss of revenue, profit or yield, as determined by each Lender in its judgment reasonably exercised (together, “Consequential Loss”) incurred by any Lender with respect to the LIBOR Daily Floating Rate as a result of:  (i) the failure of Borrower to make any payment on the date or in the amount specified in any Prepayment Notice from Borrower to Administrative Agent; or (ii) the payment or prepayment of any amount on a date other than the date such amount is required or permitted to be paid or prepaid.  Borrower agrees to pay all Consequential Loss upon any prepayment of all or any portion of the Principal Debt, whether voluntary or involuntary, whether effected by a credit bid at foreclosure, or whether by reason of acceleration upon an Event of Default or upon any transfer or conveyance of any right, title or interest in the Property giving Administrative Agent the right to accelerate the maturity of this Note as provided in the Mortgage or the other Loan Documents.  Notwithstanding the foregoing, the amount of the Consequential Loss shall never be less than zero or greater than is permitted by applicable Law.  Administrative Agent shall provide a written notice to Borrower setting forth in detail each applicable Lender’s determination of any Consequential Loss, which notice shall be conclusive and binding in the absence of manifest error.  Administrative Agent and Lenders reserve the right to provide interim calculations of such Consequential Loss in any notice of default or notice of sale for information purposes, but the exact amount of such Consequential Loss shall be calculated only upon the actual prepayment of all or any portion of the Principal Debt as described herein.  The Consequential Loss shall be included in the total indebtedness secured by the Mortgage for all purposes, including in connection with a foreclosure sale.  Administrative Agent may include the amount of the Consequential Loss in any credit bid Administrative Agent may make at a foreclosure sale.  No Lender shall have any obligation to purchase, sell and/or match funds in connection with the funding or maintaining of the Loan or any portion thereof.  The obligations of Borrower under this Section shall survive any termination of the Loan Documents and payment of this Note and shall not be waived by any delay by Administrative Agent or any Lender in seeking such compensation.
Section 8    Late Charges.  If Borrower shall fail to make any payment under the terms of this Note (other than the payment due at maturity or acceleration) within fifteen (15) days after the date such payment is due, Borrower shall pay to Administrative Agent on demand a late

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charge equal to four percent (4%) of the amount of such payment.  Such fifteen (15) day period shall not be construed as in any way extending the due date of any payment.  The late charge is imposed for the purpose of defraying the expenses of Administrative Agent and Lenders incident to handling such delinquent payment.  This charge shall be in addition to, and not in lieu of, any other amount that Administrative Agent or any Lender may be entitled to receive or action that Administrative Agent or any Lender may be authorized to take as a result of such late payment.
Section 9    Certain Provisions Regarding Payments.  All payments made under this Note shall be applied, to the extent thereof, to late charges, to accrued but unpaid interest, to unpaid principal then due, and to any other sums due and unpaid to Administrative Agent and Lenders under the Loan Documents, in such manner and order as Administrative Agent may elect in its sole discretion, any instructions from Borrower or anyone else to the contrary notwithstanding.  Remittances shall be made without offset, demand, counterclaim, deduction, or recoupment (each of which is hereby waived) and shall be accepted subject to the condition that any check or draft may be handled for collection in accordance with the practice of the collecting bank or banks.  Acceptance by Administrative Agent of any payment in an amount less than the amount then due on any indebtedness shall be deemed an acceptance on account only, notwithstanding any notation on or accompanying such partial payment to the contrary, and shall not in any way (a) waive or excuse the existence of an Event of Default (as hereinafter defined), (b) waive, impair or extinguish any right or remedy available to Administrative Agent or Lenders hereunder or under the other Loan Documents, or (c) waive the requirement of punctual payment and performance or constitute a novation in any respect.  Payments received after 2:00 p.m. shall be deemed to be received on, and shall be posted as of, the following Banking Day.  Whenever any payment under this Note or any other Loan Document falls due on a day which is not a Banking Day, such payment may be made on the next succeeding Banking Day.
Section 10    Events of Default.  The occurrence of any Event of Default under the Loan Agreement shall constitute an “Event of Default” under this Note.
Section 11    Remedies.  Following and during the continuance of an Event of Default, Administrative Agent may at any time thereafter exercise any one or more of the following rights, powers and remedies:
(a)    Administrative Agent may accelerate the Maturity Date and declare the unpaid principal balance and accrued but unpaid interest on this Note, and all other amounts payable hereunder and under the other Loan Documents, at once due and payable, and upon such declaration the same shall at once be due and payable.
(b)    Administrative Agent may (and may direct any Lender to) set off the amount due against any and all accounts, credits, money, securities or other property now or hereafter on deposit with, held by or in the possession of Administrative Agent or any Lender to the credit or for the account of Borrower, or pledged to Administrative Agent, without notice to or the consent of Borrower.
(c)    Administrative Agent may exercise any of its other rights, powers and remedies under the Loan Documents or at law or in equity.

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Section 12    Remedies Cumulative.  All of the rights and remedies of Administrative Agent and Lenders under this Note and the other Loan Documents are cumulative of each other and of any and all other rights at law or in equity, and the exercise by Administrative Agent or any Lender of any one or more of such rights and remedies shall not preclude the simultaneous or later exercise by Administrative Agent or any Lender of any or all such other rights and remedies.  No single or partial exercise of any right or remedy shall exhaust it or preclude any other or further exercise thereof, and every right and remedy may be exercised at any time and from time to time.  No failure by Administrative Agent or any Lender to exercise, nor delay in exercising, any right or remedy shall operate as a waiver of such right or remedy or as a waiver of any Event of Default.
Section 13    Costs and Expenses of Enforcement.  Borrower agrees to pay to Administrative Agent on demand all costs and expenses incurred by Administrative Agent and Lenders in seeking to collect this Note or to enforce any of Administrative Agent’s and Lenders’ rights and remedies under the Loan Documents, including court costs and reasonable attorneys’ fees and expenses, whether or not suit is filed hereon, or whether in connection with arbitration, judicial reference, bankruptcy, insolvency or appeal.
Section 14    Service of Process.  Borrower with its filing in Texas of an application for registration certificate to transact business in Texas on July 30, 2007, has designated and appointed William H. Armstrong III, 212 Lavaca, Suite 300, Austin, Texas 78701 as Borrower’s authorized agent to accept and acknowledge on Borrower’s behalf service of any and all process that may be served in any suit, action, or proceeding instituted in connection with this Note and the other Loan Documents in any state or federal court sitting in the State of Texas or any federal court sitting in the state in which any of the Property is located.  If such agent shall cease so to act, Borrower shall irrevocably designate and appoint without delay another such agent in the State of Texas satisfactory to Administrative Agent and shall promptly deliver to Administrative Agent evidence in writing of such agent’s acceptance of such appointment and its agreement that such appointment shall be irrevocable.
Borrower hereby consents to process being served in any suit, action, or proceeding instituted in connection with this Note and the other Loan Documents by (a) the mailing of a copy thereof by certified mail, postage prepaid, return receipt requested, to Borrower and (b) serving a copy thereof upon the agent, if any, hereinabove designated and appointed by Borrower as Borrower’s agent for service of process.  Borrower irrevocably agrees that such service shall be deemed to be service of process upon Borrower in any such suit, action, or proceeding.  Nothing in this Note shall affect the right of Administrative Agent to serve process in any manner otherwise permitted by law and nothing in this Note or any other Loan Document will limit the right of Administrative Agent otherwise to bring proceedings against Borrower in the courts of any jurisdiction or jurisdictions.
Section 15    Heirs, Successors and Assigns.  The terms of this Note and of the other Loan Documents shall bind and inure to the benefit of the heirs, devisees, representatives, successors and assigns of the parties.  The foregoing sentence shall not be construed to permit Borrower to assign the Loan except as otherwise permitted under the Loan Documents.

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Section 16    General Provisions.  Time is of the essence with respect to Borrower’s obligations under this Note.  Borrower hereby severally (a) waive demand, presentment for payment, notice of dishonor and of nonpayment, protest, notice of protest, notice of intent to accelerate, notice of acceleration and all other notices (except any notices which are specifically required by this Note or any other Loan Document), filing of suit and diligence in collecting this Note or enforcing any of the security herefor; (b) agree to any substitution, subordination, exchange or release of any such security or the release of any party primarily or secondarily liable hereon; (c) agree that Administrative Agent and Lenders shall not be required first to institute suit or exhaust its remedies hereon against Borrower or others liable or to become liable hereon or to perfect or enforce its rights against them or any security herefor; (d) consent to any extensions or postponements of time of payment of this Note for any period or periods of time and to any partial payments, before or after maturity, and to any other indulgences with respect hereto, without notice thereof to any of them; and (e) submit (and waive all rights to object) to non-exclusive personal jurisdiction of any state or federal court sitting in the State of Texas for the enforcement of any and all obligations under this Note and the other Loan Documents; (f) waive the benefit of all homestead and similar exemptions as to this Note; (g) agrees that its liability under this Note shall not be affected or impaired by any determination that any title, security interest or lien taken by Administrative Agent or any Lender to secure this Note is invalid or unperfected; and (h) hereby subordinate to the Loan and the Loan Documents any and all rights against Borrower and any security for the payment of this Note, whether by subrogation, agreement or otherwise, until this Note is paid in full.  A determination that any provision of this Note is unenforceable or invalid shall not affect the enforceability or validity of any other provision and the determination that the application of any provision of this Note to any person or circumstance is illegal or unenforceable shall not affect the enforceability or validity of such provision as it may apply to other persons or circumstances.  This Note may not be amended except in a writing specifically intended for such purpose and executed by the party against whom enforcement of the amendment is sought.  Captions and headings in this Note are for convenience only and shall be disregarded in construing it.  This Note and its validity, enforcement and interpretation shall be governed by the laws of the State of Texas (without regard to any principles of conflicts of laws) and applicable United States federal law.  Whenever a time of day is referred to herein, unless otherwise specified such time shall be Central Time.  The words “include” and “including” shall be interpreted as if followed by the words “without limitation.”
Section 17    Notices; Time.  All notices, requests, consents, approvals or demands required or permitted by this Note to be given by any party to any other party hereunder shall be in writing and shall be given in accordance with Section 8.6 of the Loan Agreement.
Section 18    No Usury.  It is expressly stipulated and agreed to be the intent of Borrower, Administrative Agent and Lenders at all times to comply with applicable state law or applicable United States federal law (to the extent that it permits Administrative Agent and Lenders to contract for, charge, take, reserve, or receive a greater amount of interest than under state law) and that this Section shall control every other covenant and agreement in this Note and the other Loan Documents.  If applicable state or federal law should at any time be judicially interpreted so as to render usurious any amount called for under this Note or under any of the other Loan Documents, or contracted for, charged, taken, reserved, or received with respect to the Loan, or if Administrative Agent’s exercise of the option to accelerate the Maturity Date, or 

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if any prepayment by Borrower results in Borrower having paid any interest in excess of that permitted by applicable law, then it is Administrative Agent’s and Lenders’ express intent that all excess amounts theretofore collected by Administrative Agent and Lenders shall be credited on the principal balance of this Note and all other indebtedness secured by the Mortgage, and the provisions of this Note and the other Loan Documents shall immediately be deemed reformed and the amounts thereafter collectible hereunder and thereunder reduced, without the necessity of the execution of any new documents, so as to comply with the applicable law, but so as to permit the recovery of the fullest amount otherwise called for hereunder or thereunder.  All sums paid or agreed to be paid to Administrative Agent and Lenders for the use, forbearance, or detention of the Loan shall, to the extent permitted by applicable law, be amortized, prorated, allocated, and spread throughout the full stated term of the Loan until payment in full so that the rate or amount of interest on account of the Loan does not exceed the maximum lawful rate from time to time in effect and applicable to the Loan for so long as the Loan is outstanding.
THE 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.
[Signature on following page]

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IN WITNESS WHEREOF, Borrower has duly executed this Note as of the date first above written.
BORROWER: 
 
CJUF II STRATUS BLOCK 21 LLC, 
a Delaware limited liability company
		
	By:
	Stratus Block 21 Investments, L.P., 
a Texas limited partnership, Manager

		
	By:
	Stratus Block 21 Investments, GP, L.L.C., 
a Texas limited liability company, General Partner

By: /s/ Erin D. Pickens 
Name: Erin D. Pickens 
Title:   Sr. Vice President
		
	By:
	CJUF II Block 21 Member, LLC, 
a Delaware limited liability company, Member

		
	By:
	Canyon-Johnson Urban Fund II, L.P., 
a Delaware limited partnership, Member

By: /s/ Daniel Millman
Name: Daniel Millman
Title:    Authorized Signatory

61400371.docx
S-1

Exhibit A
AMORTIZATION SCHEDULE
	
		
	Month
	Amortization Payment Amount Per Month

	1 – 12
	$122,900

	13 – 24
	$129,200

	25 – 36
	$135,800

	37 – 48 (First Extension Term)
	$142,800

	49 – 60 (Second Extension Term)
	$150,100

	61 – 72 (Third Extension Term)
	$157,800

Exhibit A-1Exhibit 10.1

 

 

MTS SYSTEMS CORPORATION

EXECUTIVE SEVERANCE
PLAN

Effective October 1, 2013

 

 

 

 

    	 

    	 

    

ARTICLE 1

Establishment of Plan

1.1.             
Establishment of Plan.  MTS Systems Corporation, a Minnesota
corporation, (the “Company”) establishes the MTS Systems Corporation Executive Severance Plan (the “Plan”).
This Plan was approved by the Compensation Committee on September 30, 2013, and the Board of Directors on October 1, 2013. Capitalized
terms used in this Plan shall have the meaning set forth in this Plan.

1.2.             
Purpose of the Plan.  The purpose of this Plan is to provide
uniform and consistent benefits to Participants who incur a Separation from Service with the Company or its Affiliates under the
conditions set forth in this Plan.  This Plan is an unfunded welfare benefit plan maintained by the Company for a select
group of management or highly compensated employees and, as such, is intended to be exempt from the provisions of Parts 2, 3 and
4 of Subtitle B of Title I of ERISA and shall be administered and interpreted to give effect to such intent.

1.3.             
Applicability of the Plan.  This Plan constitutes the complete
and entire statement regarding severance pay for all employees of the Company or its Affiliates who meet the Plan’s eligibility
requirements and supersedes any and all previous severance agreements and except as provided in Sections 1.4 and 3.1, any other
plan, policy, custom or practice providing severance benefits to Participants in this Plan.

1.4.             
Effective Date; Term of Plan.  This Plan shall be effective
from and after the Effective Date and shall continue in effect until amended or terminated as provided in Article 7; provided,
however, that if a Change in Control, as defined in the MTS Systems Corporation Executive Change in Control Severance Plan, shall
occur during the term of this Plan, the separate Executive Change in Control Severance Plan shall thereafter be effective and supersede
this Plan to the extent provided in that Plan. 

ARTICLE 2

Definitions

2.1.             
“Affiliate” means an entity that would be considered with
the Company a single employer under Sections 414(b) and (c) and 1563(a) of the Code, except that 50% shall be substituted for the
80% each place it appears in Sections 414(b) and (c) and 1563(a) of the Code.

2.2.             
“Annual Compensation” means the Participant’s regular
basic annualized cash remuneration in effect during the then current fiscal year before deductions for taxes and other items withheld
(and without giving effect to any reduction that would constitute Good Reason), payable to such individual for services rendered
to the Company or an Affiliate, but not including perquisites, allowances, per diem payments, bonuses, incentive compensation,
stock options, equity compensation, fringe benefits, special pay, awards or commission.

    	1

    	 

    

 

2.3.             
 “Cause” means:

		(a)	the willful and continued failure by the Participant
(other than any such failure resulting from (i) Disability, (ii) any such actual or anticipated failure after the issuance
of a Notice of Termination by the Participant for Good Reason or (iii) the Company’s active or passive obstruction of the
performance of the Participant’s duties and responsibilities) to perform substantially the duties and responsibilities of
the Participant’s position with the Company after a written demand for substantial performance is delivered to the Participant
by the Chief Executive Officer (or in the case of the Chief Executive Officer, the Chair of the Compensation Committee of the Board
of Directors) of the Company, which demand specifically identifies the manner in which the Company believes that the Participant
has not substantially performed his/her duties or responsibilities; 

		(b)	the conviction of the Participant by a court of competent
jurisdiction for felony criminal conduct which, in the good faith opinion of the Company, would impair the Participant’s
ability to perform his or her duties or impair the business reputation of the Company; 

		(c)	the willful engaging by the Participant in fraud or
dishonesty that is demonstrably and materially injurious to the Company, monetarily or otherwise: or

		(d)	a material violation by the Participant of the Company’s
policies or codes of conduct.

2.4.             
“Code” means the Internal Revenue Code of 1986, as amended,
and regulations and other guidance promulgated thereunder.

2.5.             
“Company” means MTS Systems Corporation, a Minnesota corporation,
and any successor thereto. 

2.6.             
“Conduct Detrimental to the Company” means:

		(a)	conduct that results in the Participant’s termination
for Cause as defined in Section 2.3 (or that would have resulted in termination for Cause if known by the Company prior to
the termination of Participant’s employment); 

		(b)	conduct in violation of the MTS Employee Agreements
and any similar document between the Participant and the Company; 

		(c)	violation of the provisions of Section 5.1 of this
Plan; or

    	2

    	 

    

		(d)	restatement of the Company’s financial statements
resulting from errors, omissions or fraud by the Participant during the Participant’s employment with the Company or its
Affiliates.

2.7.             
“Conflicting Product” means any product, process, system
or service of any person or entity, in existence or under development, which is the same as or similar to or competes with, or
has a usage allied to, a product, process, system, or service produced, developed, or used by the Company or its Affiliates.

2.8.             
“Date of Termination” means the date specified in the
Notice of Termination, which shall not be less than five nor more than 30 days, from the date such Notice of Termination is given
and on which occurs a Separation from Service as defined in Section 2.15 below.

2.9.             
“Disability” means the Participant has incurred or is
afflicted with any medically determinable physical or mental impairment that can be expected to result in death or can be expected
to last for a continuous period of not less than 12 months and. as a result, the Participant has become eligible for and begun
receiving income replacement benefits under the terms of the Company’s long-term disability plan or policy as may be in effect
from time to time.

2.10.          
“Effective Date” means October 1, 2013.

2.11.          
“Eligible Employee” means an individual who is classified
as a regular employee of the Company or an Affiliate who meets either of the following requirements: 

		(a)	the Chief Executive Officer (“CEO”)
of the Company; or 

		(b)	an individual who reports directly to the CEO and
whose annual compensation continues to be subject to review and approval each year by the Compensation Committee of the Board of
Directors.  

2.12.          
“ERISA” means the Employee Retirement Income Security
Act of 1974, as amended, and regulations and guidance promulgated thereunder.

2.13.          
“Good Reason” means, without the Participant’s express
written consent, any of the following:

		(a)	the assignment to the Participant of duties materially
inconsistent with the Participant’s authority, duties or responsibilities with respect to the Participant’s position
or any action by the Company that results in a diminution in such authority, duties or responsibilities (whether or not occurring
solely as a result of the Company’s ceasing to be a publicly traded entity);

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		(b)	a material reduction in the Participant’s base
salary;

		(c)	a material reduction in the budget over which the Participant
retains authority; 

		(d)	a change in the geographic location at which the Participant
must perform services for the Company greater than 25 miles from the prior location; and

		(e)	any material violation of this Plan by the Company,
including but not limited to, any purported termination of the Participant’s employment that is not made pursuant to a Notice
of Termination satisfying the requirements of this Plan.

The Participant shall be entitled to terminate
his or her employment for Good Reason only if: (i) the Participant provides written notice to the Chief Executive Officer (or in
the case of the Chief Executive Officer, to the Chair of the Compensation Committee of the Board of Directors) of the Company of
the existence of a condition specified in paragraphs (a) through (e) above within 90 days of the initial existence of the condition;
(ii) the Company does not remedy such condition within 30 days of the date of such notice; and (iii) the Participant terminates
employment within 90 days following the last day of the remedial period described above.

2.14.          
“Multiplier” means 100% with respect to all Participants.

2.15.          
“Notice of Termination” means a notice that shall indicate
the specific termination provision in this Plan relied upon and shall set forth the facts and circumstances claimed to provide
a basis for termination of the Participant’s employment.

2.16.          
“Separation from Service” means the Participant’s
termination of employment from the Company or its Affiliates. The Company will determine whether a Participant has incurred a Separation
from Service based on the facts and circumstances and in accordance with Treas. Reg. §1.409A-1(h)(1)(ii). The Company and
the Participant shall take all steps necessary (including with regard to any post-termination services by the Participant) to ensure
that any termination constitutes a Separation from Service as defined in this Section.

ARTICLE 3

Eligibility and Participation in the Plan

3.1.             
Eligibility to Participate.  An individual shall become
a Participant on the day such individual becomes an Eligible Employee; provided, however, that, except as provided in the next
sentence, any individual who is an Eligible Employee on the Effective Date of this Plan shall become a Participant on the Effective
Date.  Any Eligible Employee who, on the Effective Date, is eligible to receive a severance benefit under an individual
severance agreement between the Company and the individual, shall not become a Participant on the Effective Date, but shall become
a Participant immediately following the expiration and termination of all rights under such individual severance agreement. 

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3.2.             
Termination of Participation.  An individual ceases to be
a Participant on the earliest of:

		(a)	the date the Participant ceases to be an Eligible Employee;

		(b)	the date the Plan is amended pursuant to Section 7.1
to exclude the Participant from participation; or

		(c)	the date this Plan is terminated pursuant to Section
7.2.

ARTICLE 4

Severance Benefits

4.1.             
Eligibility for Severance Payment.  Subject to the conditions
set forth in Section 4.3 and Article 5, the Participant shall be entitled to benefits provided in Section 4.2 if the Participant
incurs a Separation from Service with the Company:

		(a)	by the Company other than for (i) Cause, (ii) the Participant’s
death or (iii) the Participant’s Disability; or

		(b)	by the Participant for Good Reason.

The Participant shall not be
entitled to the benefits provided in Section 4.2 if such Separation from Service is: (i) because of the Participant’s death
or Disability, (ii) by the Company for Cause, or (iii) by the Participant other than for Good Reason.

4.2.             
Severance Payment.  Subject to the conditions set forth
in Section 4.3 and Article 5, the Company shall provide to the Participant who satisfies the requirements of Section 4.1 the following
amounts and benefits:

		(a)	A severance amount (the “Severance Payment”)
equal to the Participant’s Multiplier times the Participant’s Annual Compensation.  The Severance Payment
shall be divided and paid in equal installments on each payroll pay date during the 12 month period beginning no later than 60
days after the Participant’s Date of Termination. In the event that the 60-day period in this Section 4.2 extends over two
calendar years, then the first installment of the Severance Payment shall be made in the second calendar year. If the Participant
should die before all Severance Payments have been paid, any payments then remaining shall cease and no further Severance Payments
shall be due under this Plan.

    	5

    	 

    

		(b)	If the Participant is eligible and applies for health
continuation coverage under Code Section 4980B or other applicable law (“COBRA Coverage”), life, accident and health
insurance benefits substantially similar to those that the Participant is receiving or entitled to receive immediately prior to
the Notice of Termination and the Company shall subsidize the premium cost on a pre-tax basis, equal to the Company’s share
of the premiums; provided however, that if the Company’s pre-tax subsidy would result in discrimination under any tax law,
then the Company shall pay an amount equal to 200% of such monthly premiums as additional compensation to the Participant. The
Participant shall be responsible for the payment of his or her portion of the premiums for such benefits at the same relative percentage
of total premiums as the Participant paid prior to the Date of Termination. The benefit provided under this Section 4.2(b) shall
continue for a period ending on the earlier of: (i) the end of the 12th month after the Date of Termination, or (ii)
the date COBRA coverage ends (the “Benefit Continuation Period”).  The cost of providing such benefits shall
be in addition to (and shall not reduce) the Severance Payment.  Benefits otherwise receivable by the Participant pursuant
to this subsection (b) shall be reduced to the extent comparable benefits are actually received by the Participant during the Benefit
Continuation Period, and any such benefits actually received by Participant shall be reported to the Company.

4.3.             
Release. The benefits in Section 4.2 are conditioned upon the Participant
executing and not rescinding within the time permitted under applicable law, a release of claims as provided in a form substantially
similar to that provided in Exhibit A (the “Release”).  The Release will be presented to the Participant
no later than five days after the Participant’s Date of Termination. 

4.4.             
Accrued Benefits.  In addition to the benefits provided
in Section 4.2, the Participant shall be entitled to the following benefits and payments upon the Participant’s Separation
from Service:

		(a)	the payment of the Participant’s base salary
as in effect at the time the Notice of Termination is given and any other form or type of compensation otherwise payable through
the Date of Termination;

		(b)	the right to receive all benefits payable to the Participant
in accordance with the terms under the Company pension and welfare benefit plans or any successor of such plan and any other plan
or agreement relating to retirement benefits; and

		(c)	the right to exercise and to receive all benefits in
which the Participant was vested on the Date of Termination, in accordance with the terms of all awards under any Company stock
purchase and stock incentive plans or programs, or any successor to any such plans or programs.

    	6

    	 

    

4.5.             
No Mitigation. The Participant shall not be required to mitigate the
Severance Payment by seeking other employment or otherwise, nor shall the amount of any payment or benefit provided for in Section
4.2 be reduced by any compensation earned by the Participant as the result of employment by another employer or by retirement benefits
after the Date of Termination, or otherwise except as provided in Article 5.

ARTICLE 5

Forfeiture and Recapture of Severance Payment

5.1.             
Noncompetition.  As a condition of receiving the Severance
Payment under this Plan, the Participant will not render services, directly or indirectly, in connection with the design, implementation,
development, manufacture, marketing, sale, merchandising, leasing, servicing or promotion of any Conflicting Product to any person
or entity, wherever located, for a period of one year following the Date of Termination.  

5.2.             
Recapture.  The Company shall have no obligation to pay
the Participant the Severance Payment and the Participant agrees to repay any portion of such Severance Payment previously paid
in excess of $10,000, if the Company establishes, by a preponderance of the evidence, that the Participant engaged in Conduct Detrimental
to the Company during the Participant’s period of employment or, in the case of conduct described in Section 5.1, during
the one-year period following the Participant’s Date of Termination.  

5.3.             
Offset for Clawback.  The Company shall offset against any
Severance Payment due and owing to the Participant any incentive compensation previously paid to the Participant by the Company
that the Participant is required by law or the terms of any incentive compensation plan or agreement, to repay to the Company as
a result of any material misstatement of the Company’s financial statement or for any other reason, regardless of the Participant’s
culpability.

ARTICLE 6

Administration and Claims

6.1.             
Administration.  The Plan shall be administered by
the Compensation Committee of the Board of Directors of the Company; provided, however, that the Committee may delegate any and
all of its powers and authority to a person or committee appointed by the Committee, subject to its review, and in that case, all
references in the Plan to the Compensation Committee shall instead mean such person or other committee.  The Compensation
Committee shall have full power to construe, interpret and administer this Plan, including to make any determination required under
this Plan and to make such rules and regulations as it deems advisable for the operation of this Plan.  All determinations
of the Compensation Committee shall be final and binding on all parties, subject only to the review of the Board of Directors of
the Company.

    	7

    	 

    

6.2.             
Named Fiduciary and Plan Administrator.  The Company is
designated as the Named Fiduciary of the Plan.  The Chief Human Resources Officer of the Company is authorized to perform
general administrative functions under the Plan on behalf of the Company.  Personnel acting within the scope of their
employment on behalf of the Company in the performance of its duties on behalf of the Named Fiduciary under this Plan shall not
become or be deemed to be fiduciaries in their individual capacity.

6.3.             
Claims Procedure and Review.  A Participant may make a claim
for Plan benefits within the time and in the manner described herein.  Such claim shall be made within 60 days after
the claim arises by filing a written request with the Chief Executive Officer (or in the case of the Chief Executive Officer, to
the Chair of the Compensation Committee of the Board of Directors) of the Company.  The claim shall be determined by
the Compensation Committee within a reasonable time (not to exceed 60 days except in unusual circumstances after notice to the
Participant of the delay) after the receipt of the written claim.  Notice of the Compensation Committee’s decision
shall be communicated to the Participant in writing.  If the claim is denied, the notice shall include the specific reasons
for the denial (including reference to pertinent Plan provisions), a description of any additional material or information necessary
for the Compensation Committee to reconsider the claim, the reasons for any of such additional material or information, and an
explanation of the review procedure.

6.4.             
Appeal.  The Participant or his or her duly authorized representative
may, within 60 days after receiving such written notice of review, request the Board of Directors to review the Compensation Committee’s
decision.  The Board of Directors shall afford the claimant a hearing and the opportunity to review all pertinent documents
and submit issues and comments orally and in writing and shall render a review decision in writing within 60 days after receipt
of the request for review.  

ARTICLE 7

Amendments and Termination

7.1.             
Amendments.  The Company reserves the right to amend or
modify, in whole or in part, any or all of the provisions of this Plan at any time by a written instrument approved by the Compensation
Committee; provided, however, that no amendment or modification shall:

		(a)	be effective earlier than six months after written
notice of the amendment is given to each Participant; and 

		(b)	deprive any Participant of any Severance Payment
to which he or she has vested and is entitled to under this Plan prior to the effective date of the amendment.

    	8

    	 

    

7.2.             
Termination.  Continuation of the Plan is not assumed as
a contractual obligation of the Company and the right is reserved by the Company, by written instrument approved by the Compensation
Committee, to reduce, suspend or discontinue this Plan; provided, however, that no such reduction, suspension or discontinuance
shall:

		(a)	be effective earlier than six months after written
notice of the action is given to each Participant; and 

		(b)	deprive any Participant of any Severance Payment
to which he or she has vested and is entitled to under the Plan prior to the effective date of the action.  This Plan
shall neither impose nor confer any further rights or obligations on the Company or the Participant on the day after the end of
the term of this Plan.  Termination of this Plan shall not end the employment relationship between the Company and the
Participant.

ARTICLE 8

Miscellaneous

8.1.             
Participant Rights.  Nothing in this Plan shall be construed
as giving a Participant the right to be retained in the employment of the Company, and a Participant shall remain subject to discharge
at any time to the same extent as if this Plan had not been adopted.

8.2.             
Tax Withholding.  The Company shall, at the time required
for such payment, deduct from any payments due under this Plan and remit to the Company or the proper governmental authorities
an amount sufficient to satisfy federal, state, and local tax withholding requirements.  Except with respect to the required
tax withholdings, the Company shall not be liable for any other taxes payable with respect to the Severance Payment.  

8.3.             
Remedies.  In addition to any other remedies available at
law or under the terms of this Plan, the Company will be entitled to obtain injunctive or other equitable relief to restrain any
breach or threatened breach or otherwise to specifically enforce the provisions of this Plan, in particular, Section 5.1, it being
agreed that money damages alone would be an inadequate remedy for such breach. The rights and remedies of the Company under this
Plan are cumulative and not alternative. If the Company brings a claim against the Participant under this Section 8.3, the non-prevailing
party shall reimburse the prevailing party for its reasonable attorney’s fees and costs.

8.4.             
Notice.  Notices and all other communications provided for
in the Plan shall be in writing and shall be deemed to have been duly given when delivered or mailed by United States registered
or certified mail, return receipt requested, postage prepaid, addressed to the last known residence address of the Participant
or in the case of the Company, to its Chief Executive Officer (or in the case of notice from the Chief Executive Officer, to the
Chair of the Compensation Committee of the Board of Directors), or to such other address as either party may have furnished to
the other in writing in accordance herewith, except that notice of change of address shall be effective only upon receipt.

    	9

    	 

    

8.5.             
Anti-Alienation.  Benefits conferred by this Plan shall
not, to the extent permitted by law, be subject to alienation, assignment, pledge, levy, attachment, garnishment or other legal
process or in any manner anticipated, encumbered, committed, withdrawn or surrendered, and neither shall the same be subject or
liable in any way for debts, contracts, or agreements or other claims of creditors of such Participants or their beneficiaries,
heirs, successors and assigns whether such claims are now contracted or which may hereafter be contracted or incurred prior to
actual payment thereof.

8.6.             
Non-application of Section 409A of the Code.   It is the
intent of the Company that this Plan satisfy those requirements of Section 409A of the Code to constitute a “separation pay
plan” to exempt the payments hereunder from the definition of a “nonqualified deferred compensation plan” under
Section 409A of the Code, and the Plan shall be so administered and interpreted in manner consistent with, and that gives effect
to, such intention. The Company shall have the authority, without the consent of the Participant, to amend such provision to maintain,
to maximum extent practicable, the intent that this Plan remains exempt from the requirements applicable to a “nonqualified
deferred compensation plan” under Section 409A of the Code.

8.7.             
Successors.  All obligations of the Company under the Plan
shall be binding upon and inure to the benefit of any successor to the Company, whether the existence of such successor is the
result of a direct or indirect purchase, merger, consolidation, or otherwise, of all or substantially all of the business and/or
assets of the Company.

8.8.             
Entire Agreement.  No agreements or representations, oral
or otherwise, express or implied, with respect to the subject matter hereof have been made to any Participant or person that are
not expressly set forth in this Plan.  

8.9.             
Validity.  The invalidity or unenforceability of any provision
of this Plan shall not affect the validity or enforceability of any other provision of this Plan, which shall remain in full force
and effect.

8.10.          
Governing Law. The validity, interpretation, construction and performance
of this Plan shall be governed by the laws of the State of Minnesota, except to the extent pre-empted by federal law.

 

	 	MTS SYSTEMS CORPORATION
	 	 	 
	 	 	 
	 	By	/s/ Kristin Trecker
	 	Its Senior Vice President and Chief Human Resources Officer

 

    	10

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