Exhibit 99.1
CONSTRUCTION LOAN AGREEMENT
This CONSTRUCTION LOAN AGREEMENT is entered into as of September 30,
2005 ("CLOSING DATE"), by and between BEHRINGER HARVARD MOCKINGBIRD COMMONS LP,
a Texas limited partnership ("BORROWER"), and TEXANS COMMERCIAL CAPITAL, LLC, a
Texas limited liability company ("LENDER").
W I T N E S S E T H:
WHEREAS, Lender and Borrower entered into that certain Loan Agreement
dated as of November 8, 2004, pursuant to which Lender agreed to lend to
Borrower up to the sum of $17,000,000.00 to finance the acquisition of the
Aggregate Property (hereinafter defined) and for certain other purposes related
to the Aggregate Property and such loan (the "ORIGINAL LOAN"); and
WHEREAS, the Original Loan was secured by, among other things, that
certain Deed of Trust, Security Agreement and Financing Statement executed by
Borrower for the benefit of Lender, dated as of November 8, 2004 against the
real property comprised of approximately 5.339 acres located in Dallas County,
Texas as more particularly described therein (the "AGGREGATE PROPERTY"),
recorded at Volume 2004217, Page 2155, and re-recorded at Volume 2005153, Page
0104, Real Property Records of Dallas County, Texas, as amended by First
Amendment to Deed of Trust, Security Agreement and Financing Statement dated as
of February 18, 2005, executed by Borrower and Lender, recorded at Volume
2005073, Page 175 and re-recorded at Volume 2005153, Page 0123, Real Property
Records of Dallas County, Texas (as amended, the "ORIGINAL DEED OF TRUST"); and
WHEREAS, Borrower has requested that Lender make a loan to Borrower to
refinance a portion of the Original Loan and for construction of a residential
condominium tower upon a portion of the Aggregate Property, as more particularly
described in the definition of "Property" below, and for certain other purposes
related thereto, which loan is to be secured by, among other things, a first
lien deed of trust on the Property; and
WHEREAS, Borrower has requested that Lender assign to American National
Bank the lien of the Deed of Trust to the extent, and only to the extent, that
it affects the Hotel/Retail Property (as hereinafter defined); and
WHEREAS, Lender is willing to make such loan to Borrower and to assign
to American National Bank the lien of the Original Deed of Trust, to the extent
it covers the Hotel/Retail Property, subject to and upon the terms and
conditions hereinafter set forth.
NOW, THEREFORE, for and in consideration of the mutual covenants herein
contained and other good and valuable consideration, the receipt and legal
sufficiency of which are hereby acknowledged by the parties hereto, Borrower and
Lender agree as follows:
ARTICLE I
DEFINITIONS
1.01 DEFINITIONS. For purposes of this Loan Agreement, unless the
context otherwise requires, the following terms shall have the respective
meanings assigned to them in this ARTICLE I or in the sections and subsections
referred to below:
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"ADA" means the Americans with Disabilities Act of 1990, Pub. L. No.
89-670, 104 Stat. 327 (1990), as amended, and all regulations promulgated
pursuant thereto.
"ACCOUNT" means an account of Borrower established with Texans Credit
Union.
"ADVANCE" means a disbursement by Lender of any of the proceeds of the
Loan and/or the Borrower's Deposit, and "ADVANCES" shall be the plural thereof..
"AFFILIATE" of any Person means any other Person:
(a) which directly or indirectly through one or more
intermediaries controls, or is controlled by, or is under common control
with, such Person; or
(b) which, directly or indirectly, beneficially owns or
holds 10% or more of any class of stock or any other ownership interest
in such Person; or
(c) 10% or more of the direct or indirect ownership of which
is beneficially owned or held by such Person.
For purposes of this definition, the term "control" (and its correlative
meanings) means the possession, directly or indirectly, of the power to direct
or cause the direction of the management and policies of a Person, whether
through the ownership of stock, by contract or otherwise. In any event, each of
Borrower and Guarantor, and each of their respective Affiliates, shall be deemed
to be an Affiliate of each of the other of them.
"ANB CONSTRUCTION LOAN" means that certain construction loan in the
amount of $36,000,000.00 of American National Bank to Borrower, secured by the
Hotel/Retail Property, and given for the purpose of the construction of the
Hotel Unit, the Hotel Room Units, and the Retail Unit (as each is defined in the
Master Declaration).
"ANTI-TERRORISM AND ANTI-MONEY LAUNDERING LAWS" means the USA Patriot
Act of 2001, the Bank Secrecy Act, as amended through the date hereof, Executive
Order 13324 - Blocking Property and Prohibiting Transactions with Persons Who
Commit, Threaten to Commit, or Support Terrorism, as amended through the date
hereof, and as they may be amended, and other federal laws and regulations and
executive orders administered by the United States Department of the Treasury,
Office of Foreign Assets Control ("OFAC") which prohibit, among other things,
the engagement in transactions with, and the provision of services to, certain
foreign countries, territories, entities and individuals (such individuals
include specially designated nationals, specially designated narcotics
traffickers and other parties subject to OAFC sanction and embargo programs),
and such additional laws and programs administered by OFAC which prohibit
dealing with individuals or entities in certain countries regardless of whether
such individuals or entities appear on any of the OFAC lists.
"APPLICABLE INTEREST RATE" has the meaning assigned in the Note.
"APPLICATION FOR ADVANCE" shall mean a written application submitted by
the Borrower's Architect and Borrower on American Institute of Architects form G
702 and/or G 703, as appropriate, or such other form as Lender may hereafter
request which shall: (a) request an Advance, (b) specify by name, current
address and amount owed, all parties to whom Borrower is obligated for labor,
materials or services actually furnished for the construction of the particular
part of the Improvements which are the subject matter of such application and
all other expenses incident to the Loan, (c) certify among other things that
such amounts represent payments due for services or labor actually rendered or
materials actually acquired or furnished in
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connection with construction of the Improvements, and interest then payable
under the Note, (d) state whether the sum requested is within the Approved
Budget and whether, in the opinion of the Architect and Borrower, the unadvanced
portion of the Loan is sufficient to complete the Improvements pursuant to the
Plans and to pay for all labor, material, interest and other expenses in
connection with the Loan and the construction of the Improvements, (e) if
requested by Lender, be accompanied by copies of billing statements, vouchers or
invoices from the parties named therein, in form satisfactory to Lender, (f)
refer to an attached schedule, verified by the Architect, and the Inspecting
Architect/Engineer, identifying in a manner satisfactory to Lender all materials
not yet affixed or incorporated into the Improvements but which have been
covered by certificates submitted to date, including the current certificate,
(g) contain a statement, verified by the Architect and the Inspecting
Architect/Engineer, that all such materials not yet affixed or incorporated into
the Improvements have been stored upon the Land under adequate safeguards to
minimize the possibility of loss, damage or commingling with other materials or
projects, (h) be accompanied by appropriate waivers of lien rights satisfactory
to Lender executed by all contractors, subcontractors, laborers, and materialmen
who have furnished labor or material to the Property, (i) certify that all labor
and material bills of every kind and character incurred by Borrower to the date
of such certificate in connection with the Improvements have been paid in
accordance with the payment provisions of each contract except for the unpaid
bills to be paid from the proceeds of the current Advance requested and items to
be retained hereunder, and (j) certify that the Builder's Risk Insurance
contains sufficient coverage for the construction of the Improvements.
"APPRAISAL" means a written appraisal report of the Property, as that
term is defined in the Code of Professional Ethics (the "APPRAISAL CODE") of the
American Institute of Appraisers, meeting the requirements of the Federal
Institutions Reform, Recovery and Enforcement Act of 1989, prepared by a
professional appraiser approved by Lender, who is a member of the Appraisal
Institute ("MAI"), addressed to Lender and in form, scope and substance
satisfactory to Lender, setting forth such appraiser's determination of the
market value of the Property on the appraisal date and as projected upon
completion of construction of the Improvements.
"APPROVED BUDGET" shall mean a budget or cost itemization prepared by
Borrower and approved in writing by Lender specifying the cost by item of (i)
all labor, materials, and services necessary for the construction of the
Improvements in accordance with the Plans and all Governmental Requirements, and
(ii) all other expenses anticipated by Borrower incident to the Loan, the
Property and the construction of the Improvements, including, without
limitation, the Interest Reserve.
"APPROVED MANAGEMENT AGREEMENT" means (i) prior to the completion of the
Improvements, if any, an agreement for the management of Property as a
residential condominium, entered into by Borrower with a management company and
in form and substance acceptable to Lender and (ii) after completion of the
Improvements, an agreement for the management of the Property as a residential
condominium, entered into by the Residential Association (as defined in the
Residential Condominium Declaration) with a management company and in form and
substance approved by the Residential Association.
"ARCHITECT" shall mean Three Architecture of Dallas, whose address is
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇.
"ASSIGNMENT OF LEASES AND RENTS" means the Assignment of Leases and
Rents dated of even date herewith and executed by Borrower, as it may from time
to time be renewed, amended, supplemented or restated.
"ASSIGNMENT OF PLANS AND SPECIFICATIONS" shall mean the written
agreement whereby Borrower assigns its rights in and to the Plans to Lender in
the form of EXHIBIT F attached hereto.
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"ASSIGNMENT OF RIGHTS UNDER CONSTRUCTION CONTRACt" shall mean the
written agreement whereby Borrower assigns its rights in the Construction
Contract to Lender in the form of EXHIBIT C attached hereto.
"AUDITED FINANCIAL STATEMENTS" means, for any Person, Financial
Statements of such Person in reasonable detail and accompanied by an opinion
thereon of independent public accountants of recognized standing reasonably
acceptable to Lender to the effect that such Financial Statements were prepared
in accordance with GAAP, and that the examination of such accounts in connection
with such Financial Statements has been made in accordance with generally
accepted auditing standards.
"AUTHORIZED SIGNATORY" means ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, III and any other person
authorized by Borrower by delivery of written authorization to Lender, each of
whom, without joinder of the other, is or will be authorized to execute any
Request for Disbursement or any other notice, request or document required or
permitted hereunder to be submitted by Borrower to Lender.
"BORROWER" means BEHRINGER HARVARD MOCKINGBIRD COMMONS LP, a Texas
limited partnership.
"BORROWER'S DEPOSIT" means the deposit, if any, required of Borrower
pursuant to SECTION 4.22.
"BUSINESS DAY" means a day other than a Saturday, Sunday or other day on
which commercial banks in Dallas, Texas are authorized or required by law to
close.
"CLOSING" means the Closing and funding of the Loan.
"CLOSING DATE" means the date of this Loan Agreement.
"CODE" means the Uniform Commercial Code as codified in the State of
Texas.
"CONDEMNATION PROCEEDS" shall have the meaning assigned to such term in
SECTION 8.12 of this Loan Agreement.
"CONSTRUCTION COMMITMENT TERMINATION DATE" means October 1, 2007.
"CONSTRUCTION CONTRACT" means all construction contracts executed by
Borrower for the construction of all or any part of the Improvements.
"CONTRACTOR" means ▇▇▇▇▇▇ Construction Company, L.L.C., whose address is
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, and each other person
contracting with Borrower to supply labor or materials for the construction of
all or any part of the Improvements, each of whom must be approved in writing by
Lender.
"CONTRACTOR'S AFFIDAVIT AND SUBORDINATION" means an agreement in
substantially the form of EXHIBIT E attached hereto and incorporated herein by
reference, executed by each Contractor.
"DEBTOR RELIEF LAWS" means any applicable relief, liquidation,
conservatorship, bankruptcy, moratorium, rearrangement, insolvency,
reorganization, or similar laws affecting the rights or remedies of creditors
generally, as in effect from time to time.
"DECLARANT RIGHTS" means (i) the Development Rights (as defined in the
Master Condominium Declaration) and the Special Declarant Rights (as defined in
the Master Condominium Declaration) and
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(ii) the Residential Development Rights (as defined in the Residential
Condominium Declaration) and the Special Residential Rights (as defined in the
Residential Condominium Declaration).
"DEFAULT RATE" means a per annum interest rate which shall from
day-to-day be equal to the Maximum Rate or, if no Maximum Rate exists, eighteen
percent.
"DISCLOSED LITIGATION" means the matters listed on EXHIBIT I attached
hereto.
"DISTRIBUTIONS" means, with respect to any Person, the payment of any
return on income or proceeds on or with respect to any partner's, shareholder's,
member's or other owner's investment and/or capital or other contribution to or
account with respect to such Person (whether by cash or other property), or the
purchase of any ownership interest in such Person, or any income or proceeds
therefrom.
"DIVIDENDS" means dividends (whether by cash, property or preferred
stock) or other distributions of capital stock or partnership interests, or the
redemption or acquisition of stock or any partnership interest unless made
contemporaneously from the net proceeds of the sale of such stock or partnership
interest to an unaffiliated third party.
"DOLLARS" and the sign "$" means lawful currency of the United States of
America.
"ENVIRONMENTAL AUDIT" means the Phase 1 environmental audit of the
Aggregate Property commissioned by Lender, prepared by an environmental
engineering firm acceptable to Lender, in form, scope and substance acceptable
to Lender.
"ENVIRONMENTAL INDEMNITY AGREEMENT" means the Environmental Indemnity
Agreement dated of even date herewith, and executed by Borrower and Guarantors,
as it may from time to time be amended, confirmed, supplemented or restated.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and the rules and regulations promulgated thereunder by any
Governmental Authority, as from time to time in effect.
"ERISA AFFILIATE" means any organization, trade or business, or other
arrangement (whether or not incorporated) which is a member of a group of which
Borrower is also a member and which is treated as a single employer within the
meaning of IRC Section 414(b), (c), (m) or (o).
"ERISA PLAN" means an employee benefit plan as defined in ERISA Section
3(3) maintained or contributed to by Borrower or any ERISA Affiliate for
employees of Borrower or any ERISA Affiliate.
"EVENT(S) OF DEFAULT" has the meaning set forth in ARTICLE VII hereof.
"FINANCIAL STATEMENTS" means, with respect to any Person, such balance
sheets, statements of operations, statements of cash flow, statements of changes
in partners' capital or shareholders' equity and other financial information
with respect to such Person as shall be reasonably required by Lender, and which
shall be prepared in accordance with GAAP, consistently applied for all periods.
"FINANCING STATEMENTS" means financing statements to be filed with the
appropriate state and/or county offices for the perfection of a security
interest in any of the Property or any other collateral or security for the
Loan.
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"FISCAL YEAR" means, for any Person, (a) the calendar year, or (b) such
other period as such Person may designate and Lender may approve in writing.
"FUTURE DEVELOPMENT AREA UNIT" has the meaning assigned to it in the
Master Declaration.
"GAAP" means those generally accepted accounting principles and
practices which are recognized as such by the American Institute of Certified
Public Accountants or by the Financial Accounting Standards Board or through
appropriate boards or committees thereof after the date hereof, and which are
consistently applied for all periods, so as to properly reflect the financial
position of a Person, except that any accounting principle or practice required
or permitted to be changed by the Financial Accounting Standards Board (or other
appropriate board or committee of that Board) in order to continue as a
generally accepted accounting principle or practice may be so changed.
"GENERAL PARTNER" means Behringer Harvard Mockingbird Commons GP, LLC, a
Texas limited liability company.
"GOVERNMENTAL AUTHORITY" means any federal, state, county, municipal,
parish, provincial, tribal or other government, or any department, commission,
board, court, agency (including, without limitation, the U. S. Environmental
Protection Agency), whether of the United States of America or any other
country, or any instrumentality of any of them, or any other political
subdivision thereof (a) in which any portion of the Property is located, (b) in
which any of Borrower, Guarantor or Lender, or any of their Affiliates, is
located or conducts business, or (c) exercising jurisdiction over Borrower,
Guarantor or Lender, or any of the Property, and any entity exercising
legislative, judicial, regulatory, or administrative functions of, or pertaining
to, government including, without limitation, any arbitration panel, any court
or any commission.
"GOVERNMENTAL REQUIREMENTS" means all laws, ordinances, rules,
regulations, orders and directives of any Governmental Authority applicable to
any of Borrower, Guarantor, Lender or any of the Property, including, without
limitation, all applicable licenses, building codes, restrictive covenants,
zoning and subdivision ordinances, flood disaster, health and environmental laws
and regulations, and the ADA.
"GUARANTORS" means, collectively, Behringer Harvard Mockingbird Commons
GP, LLC, a Texas limited liability company, Behringer Harvard Short Term
Opportunity Fund I LP, a Delaware limited partnership and any other Person at
any time guarantying all or any portion of the Obligation, and "GUARANTOR" shall
mean each of the Guarantors.
"GUARANTY" means, collectively, those certain Guaranty Agreements of
even date herewith by Guarantors for the benefit of Lender and any other
guaranty at any time executed in connection with the Loan.
"HOTEL/RETAIL PROPERTY" means that portion of the Aggregate Property
other than the Property.
"IMPROVEMENTS" means the Residential Condominium and all of the
buildings, improvements, structures, equipment, and amenities which are or will
be constructed and/or installed in relation thereto.
"INDEBTEDNESS" means, with respect to any Person, without duplication,
(a) all indebtedness of such Person for borrowed money or for the deferred
purchase price of property or services (including, without limitation, all
obligations, contingent or otherwise, of such Person in connection with letter
of credit facilities, acceptance facilities or other similar facilities and in
connection with any agreement to purchase, redeem, exchange, convert or
otherwise acquire for value any capital stock of such Person or
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any warrants, rights or options to acquire such capital stock, now or hereafter
outstanding), (b) all obligations of such Person evidenced by bonds, notes,
debentures or other similar instruments, (c) all indebtedness created or arising
under any conditional sale or other title retention agreement with respect to
property acquired by such Person (even though the rights and remedies of the
seller or lender under such agreement in the event of default are limited to
repossession or sale of such property), (d) all capital lease obligations of
such Person, (e) all obligations, contingent or otherwise, of such Person in
connection with indemnities, hold harmless agreements and similar arrangements
and in connection with interest rate exchange agreements and similar instruments
(provided that the obligations under such interest rate exchange agreements
shall be marked to market on a current basis), and (f) all Indebtedness of
another Person secured by (or for which the holder of such Indebtedness has an
existing right, contingent or otherwise, to be secured by) any lien, security
interest or other charge or encumbrance upon or in property (including, without
limitation, accounts and contract rights) owned by such Person, even though such
Person has not assumed or become liable for the payment of such Indebtedness,
but not in such event in excess of the value of such property. Notwithstanding
the foregoing, the term "INDEBTEDNESS" shall not include unearned deposits held
by Borrower for third parties not an Affiliate in the ordinary course of
Borrower's business and which are returned to such third parties as required by
the applicable agreement with third parties.
"INITIAL ADVANCE" means an Advance made on the Closing Date in the
amount set forth in a Borrower's Statement prepared by the Title Company and
approved by Lender in Lender's discretion.
"INITIAL FINANCIAL STATEMENTS" means the Financial Statements of each
Person delivered to Lender in connection with the application for the Loan.
"INSPECTING ARCHITECT/ENGINEER" means such architects and engineers as
Lender shall select to conduct inspections of the Improvements from time to
time.
"INSPECTING ARCHITECT/ENGINEER AUDIT" means an audit and review by the
Inspecting Architect/Engineer of the final plans and working drawings for all
improvements to be constructed on the Property and the Hotel/Retail Property
(including, without limitation, the Building, as that term is defined in the
Master Declaration) satisfactory to Lender in Lender's absolute and sole
discretion.
"INSURANCE POLICIES" means satisfactory evidence (including appropriate
certificates and insurance digests summarizing policies) of insurance and
reinsurance policies (whether individual or blanket) issued by (a) responsible
and reputable insurance companies licensed to do business in Texas having a
Best's rating of at least A-:VII or such other rating as Lender may specifically
approve, or (b) other insurers reasonably acceptable to Lender. Such policies
shall include:
(i) during the course of construction of the Improvements,
builder's completed value risk insurance against "all risks of physical
loss," including collapse and transit coverage, with deductibles not to
exceed $50,000, in nonreporting form, covering the total value of work
to be performed and equipment, supplies and materials to be furnished;
(ii) insurance on real and personal property for limits
reflecting 100% of the full replacement cost (exclusive of foundations
and footings) as a so called "All Risk" form with coverage for flood and
earthquake and such other hazards as Lender may reasonably require. Such
insurance policies shall contain replacement cost coverage and agreed
amount endorsements (with no reduction for depreciation), an endorsement
providing building ordinance coverage, and an endorsement covering the
cost of demolition and increased cost of construction due to the
enforcement of building codes and ordinances;
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(iii) Borrower shall also furnish insurance providing boiler
and machinery for all mechanical and electrical equipment at the
Improvements insuring against breakdown or explosion of such equipment
on a replacement cost value, which coverage shall include coverage for
increased cost of construction, demolition and building laws. Borrower
also shall furnish business interruption or loss of income insurance in
connection with policies covering property and boiler & machinery, for a
period of not less than one year, endorsed to provide a 180 day extended
period of indemnity, which limit for business interruption shall be in
addition to the replacement cost of the building. Not withstanding any
provisions set forth in paragraphs (a) or (b) above, all insurance
required under this paragraph shall be with companies, in amounts, and
with coverage and deductibles reasonably satisfactory to Lender and all
insurance required under this paragraph shall include endorsements
naming Lender as a loss payee and shall have endorsed thereon a standard
mortgage clause in favor of the Lender. All policies shall provide that
insurance evidenced thereby shall not be canceled (including for
non-payment) or modified without at least 30 days prior written notice
from the insurance carrier to the Lender and no act or thing done by
Borrower, Manager, or any Affiliate of any of them shall invalidate the
policy against Lender. Borrower shall deliver renewal certificates for
policies of insurance required under this paragraph at least 10 Business
Days prior to the expiration of the then current policy;
(iv) Commercial General Liability (including contractual
liability) covering the Property and Borrower's operations in an amount
not less than $1,000,000 per occurrence and $2,000,000 in the aggregate
per location;
(v) Worker's compensation insurance including liability and
any other appropriate insurance normally carried by companies engaged in
similar business and owning similar properties, in the statutory amount,
covering all employees of Borrower, if any;
(vi) Commercial Automobile Liability with a limit of not less
than $1,000,000 combined single limit and to be endorsed to cover owned,
hired, and non-owned automobiles, and garagekeepers liability;
(vii) Borrower shall also furnish Umbrella Liability coverage
in excess of the foregoing liability coverage with a limit of not less
than $10,000,000 or such higher limits as Lender may reasonably require.
Such insurance policies (other than those referred to in SUBPARAGRAPH
(V), above) shall name Lender, as loss-payee, mortgagee or additional insured,
as its interests may appear, as may be appropriate for the particular type of
insurance. At such time as any part of the Property or Aggregate Property is
used for the sale or dispensing of beer, wine or any other alcoholic beverages,
Liquor Liability insurance against claims arising out of such sale or dispensing
of beer, wine or other alcoholic beverages also shall be furnished.
"INTEREST RESERVE" has the meaning assigned in SECTION 2.06(D).
"IRC" means the Internal Revenue Code of 1986, as amended.
"LAND" means the real property described on EXHIBIT A attached hereto
and incorporated herein by reference.
"LATE PAYMENT FEE" has the meaning assigned in the Note.
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"LEASES" means all present and future space leases, subleases or other
agreements or arrangements, whether written or oral, and all agreements for the
use or occupancy of any portion of the Property, together with any and all
extensions or renewals of said leases and agreements and any and all future
leases or agreements upon or covering the use or occupancy of all or a part of
the Property, but excluding (i) room rents and meeting room rentals and (ii) any
lease entered into or assumed by Borrower, as lessee, to lease Personal Property
for use in connection with the operation of the Property.
"LEGAL OPINIONS" means favorable opinions of counsel for Borrower
reasonably acceptable to Lender as to form, scope and substance, and including
opinions as to Texas law.
"LENDER" means Texans Commercial Capital, LLC, a Texas limited liability
company.
"LENDER - MANAGER AGREEMENT" means an agreement between Lender and
Manager in form and content reasonably satisfactory to Lender and substantially
in the form of EXHIBIT L.
"LIEN" means any lien, mortgage, security interest, assignment, tax
lien, pledge or encumbrance, or conditional sale or title retention agreement,
or any other interest in property designed to secure the repayment of
indebtedness, whether arising by agreement or under any statute or law, or
otherwise.
"LOAN" means the loan by Lender to Borrower, in an amount not to exceed
the Loan Amount, in accordance with this Loan Agreement and the other Loan
Documents.
"LOAN AGREEMENT" or "AGREEMENT" means this Construction Loan Agreement,
together with all amendments and modifications hereof and supplements and
attachments hereto.
"LOAN AMOUNT" means Thirty-Four Million Forty-Seven Thousand Four
Hundred Fifty-Eight and No/100 Dollars ($34,047,458).
"LOAN DOCUMENTS" means this Loan Agreement, the Note, the Mortgage, the
Financing Statements, the Environmental Indemnity Agreement, the Guaranty, the
Assignment of Leases and Rents, the Lender - Manager Agreement, and such other
instruments evidencing, securing, or pertaining to the Obligation, or any part
thereof, as shall, from time to time, be executed and delivered by Borrower,
Manager, Any Guarantor, or any other Person to Lender pursuant to or in
connection with this Loan Agreement or any other Loan Document.
"MANAGER" means any manager of the Property pursuant to an Approved
Management Agreement, approved by Lender.
"MASTER DECLARATION" means that certain Master Condominium Declaration
for M Central Master Condominium dated as of September 16, 2005, executed by
Borrower, as Declarant, recorded on September 16, 2005 in Volume 2005182, Page
111 in the Real Property Records of Dallas County, Texas.
"MATERIAL AGREEMENT" means any contract or agreement with respect to the
ownership or operation of the Property requiring total consideration of $100,000
or more, which Lender reasonably determines has a material impact on the
ownership or operation of the Property.
"MATURITY DATE" has the meaning assigned in the Note.
"MAXIMUM RATE" means the maximum rate (or, if the context so requires,
an amount calculated at such rate) of interest which the holder of the Note is
allowed to contract for, charge, take, reserve, or
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receive under applicable law after taking into account, to the extent required
by applicable law, any and all relevant payments or charges.
"MINOR CONDEMNATION PROCEEDS" means, for all Condemnation Proceeds
resulting from any one (1) condemnation of the Property as described in SECTION
8.12, that such Condemnation Proceeds do not exceed Two Hundred Fifty Thousand
Dollars ($250,000.00).
"MORTGAGE" means the certain Amended and Restated Deed of Trust,
Security Agreement, Financing Statement and Assignment of Rental, of even date
herewith, executed by Borrower for the benefit of Lender, covering the Property,
as it may, from time to time, be renewed, extended, modified, increased or
supplemented.
"MULTIEMPLOYER PLAN" means a multiemployer plan as defined in ERISA
Section 4001(a)(3) or IRC Section 414 to which Borrower or any ERISA Affiliate
contributes, has contributed since September 2, 1974, or is required to
contribute.
"NOTE" means the promissory note issued by Borrower to Lender pursuant
to SECTION 2.03 hereof, as it may be renewed, extended, modified or increased.
"OBLIGATION" means all present and future indebtedness, obligations, and
liabilities of Borrower to Lender, and all renewals and extensions thereof, or
any part thereof, arising (a) pursuant to this Loan Agreement or represented by
the Note, and all interest accruing thereon, and reasonable attorneys' fees
incurred in the drafting, negotiation, enforcement or collection thereof,
regardless of whether such indebtedness, obligations, and liabilities are
direct, indirect, fixed, contingent, joint, several or joint and several;
together with all indebtedness, obligations and liabilities of Borrower
evidenced or arising pursuant to any of the other Loan Documents, and all
renewals, modifications, increases and extensions thereof, or any part thereof,
(b) pursuant to any other loan and/or advances which Lender may hereafter make
to Borrower in connection with the Loan or the Property or any portion thereof,
and (c) pursuant to all other and additional debts, obligations and liabilities
of every kind and character of Borrower now or hereafter existing in favor of
Lender, in connection with the Loan or the Property or any portion thereof,
regardless of whether such debts, obligations and liabilities be direct or
indirect, primary or secondary, joint, several or joint and several, fixed or
contingent, and regardless of whether such present or future debt, obligations
and liabilities may, prior to their acquisition by Lender, be or have been
payable to or in favor of some other person or entity or have been acquired by
Lender in a transaction with one other than Borrower.
"OFAC PROHIBITED PERSON" means, a country, territory, individual or
Person (i) listed on, included within or associated with any of the countries,
territories, individuals or entities referred to on The Office of Foreign Assets
Control's List of Specially Designated Nationals and Blocked Persons or any
other prohibited person lists maintained by governmental authorities, or
otherwise included within or associated with any of the countries, territories,
individuals or entities referred to in or prohibited by any other Anti-Terrorism
and Anti-Money Laundering Laws, or (ii) which is obligated or has any interest
to pay, donate, transfer or otherwise assign any property, money, goods,
services, or other benefits from the Mortgaged Property directly or indirectly,
to any countries, territories, individuals or entities on or associated with
anyone on such list or in such laws.
"OPERATING AGREEMENTS" means any agreement entered into by or on behalf
of Borrower, other than the Management Agreement and the Scheduled Personal
Property Contracts, which relates to the ownership, operation or maintenance of
the Property, but excluding cash purchase agreements.
"ORGANIZATIONAL DOCUMENTS" means:
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For any limited partnership, the following:
(a) Certificate of Limited Partnership and all amendments
thereto, certified as complete and correct by the Secretary of State (or
other appropriate officers) of the state of formation, together with a
copy of the partnership agreement, and all amendments thereto, certified
as complete and correct by the general partners of the partnership;
(b) Current certificates of existence and good standing
issued by the appropriate state officer(s) of the state of formation and
states in which the partnership does business; and
(c) Consents of partners to the extent necessary under the
partnership agreement; and
For any general partnership, the following:
(a) Certified copy of partnership agreement; and
(b) Consent of partners to the extent necessary under the
partnership agreement.
For any corporation, the following:
(a) Copy of the Articles of Incorporation of such
corporation and all amendments thereto certified as complete and correct
by the Secretary of State (or other appropriate officer) of the state of
incorporation, together with a true copy of the By-laws of such
corporation and all amendments thereto;
(b) A current certificate of corporate existence of such
corporation and certificate evidencing the filing of all required
franchise tax reports and the payment of all franchise taxes due, each
issued by the appropriate officer or department of the state of
incorporation;
(c) A signed certificate of the Secretary or Assistant
Secretary of such corporation certifying the names of the officers of
such corporation authorized to sign each of the Loan Documents to which
it is a party and the other documents or certificates to be delivered
pursuant to the Loan Documents to which it is a party, together with the
true signatures of each such officer. Lender may conclusively rely on
such certificate until Lender shall receive a further certificate of the
Secretary or Assistant Secretary of such corporation canceling or
amending the prior certificate and submitting the signatures of the
officers named in such further certificate; and
(d) Resolutions of such corporation approving the execution,
delivery and performance of the Loan Documents to which such corporation
is a party and the transactions contemplated therein, duly adopted by
the Board of Directors of such corporation and accompanied by a
certificate of the Secretary or Assistant Secretary of such corporation
stating that such Resolutions are true and correct, have not been
altered or repealed and are in full force and effect.
For any limited liability company, the following:
(a) Copy of the Regulations or other formation document of
such limited liability company and all amendments thereto certified as
complete and correct by the Secretary of State (or other appropriate
officer) of the state of formation;
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(b) A current certificate of existence of such entity and
certificate evidencing the filing of all required franchise tax reports
and the payment of all franchise taxes due, each issued by the
appropriate officer or department of the state of formation;
(c) A signed certificate of the manager of such entity
certifying the names of the members or managers of such entity
authorized to sign each of the Loan Documents to which it is a party and
the other documents or certificates to be delivered pursuant to the Loan
Documents to which it is a party, together with the true signatures of
each such member or manager. Lender may conclusively rely on such
certificate until Lender shall receive a further certificate of the
Manager of such entity canceling or amending the prior certificate and
submitting the signatures of the members or managers named in such
further certificate; and
(d) Resolutions of the members of such entity approving the
execution, delivery and performance of the Loan Documents to which such
entity is a party and the transactions contemplated therein, duly
adopted by the members of such entity and accompanied by a certificate
of the manager of such entity stating that such resolutions are true and
correct, have not been altered or repealed and are in full force and
effect.
"ORIGINATION FEE" means the Origination Fee required by and described in
SECTION 2.05 hereof.
"PARTICIPANT" shall have the meaning given to such term in SECTION
9.09(B).
"PAYMENT DATE" has the meaning assigned in the Note.
"PBGC" means the Pension Benefit Guaranty Corporation, and any successor
to all or any of the Pension Benefit Guaranty Corporation's functions under
ERISA.
"PERMITTED EXCEPTIONS" means the exceptions to title listed on EXHIBIT B
attached to the Mortgage.
"PERMITTED INDEBTEDNESS" means (a) the Loan, (b) property taxes and
insurance premiums accrued but not delinquent, (c) indebtedness for items
permitted under the Approved Budget for which no Advance has yet been made for
payment and which is not past due, (d) the ANB Construction Loan and (e) trade
Indebtedness incurred in the ordinary course of business of operation and
maintenance of the Aggregate Property in an amount not to exceed $100,000.00,
which is not past due..
"PERMITTED LIENS" means (a) the Permitted Exceptions, (b) Liens for
taxes, assessments, or governmental charges or levies not yet due or which
Borrower is actively contesting in good faith by appropriate proceedings and in
conformance with SECTIONS 4.10 and 4.11 hereof, (c) Liens for any other purpose
which Borrower is actively contesting in good faith by appropriate proceedings
and in conformance with SECTION 4.11 hereof and (d) Liens in favor of Lender and
ANB as contemplated in this Loan Agreement.
"PERMITTED PERSONAL PROPERTY TRANSACTION" means (a) any sale,
assignment, trade, transfer, exchange or other disposition of any item of
Personal Property which (i) has become obsolete or worn beyond practical use,
and (ii) has been replaced by an adequate substitute having a value equal to or
greater than the replaced item when new, which replacement item is owned by
Borrower and is subject to a first, perfected security interest in favor of
Lender, and (b) sales of food and beverages and gift shop inventory, to the
extent such sales are made in the ordinary course of Borrower's business.
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"PERMITTED TRANSFER" means (a) any transfer of any limited partnership
interest in Borrower other than to an OFAC Prohibited Person (but not including
any conversion of a general partnership interest to a limited partnership
interest) provided that Behringer Harvard Mockingbird Commons Investors LP at
all times owns, directly or indirectly, at least fifty-one percent of the
ownership interests in Borrower, (b) any transfer of ownership interests in the
General Partner to any Affiliate of a Guarantor (so long as no transfer of
ownership interests [other than limited partnership interests] in said Guarantor
have occurred), and (c) any transfer of ownership interests to Behringer Harvard
Mockingbird Commons Investors LP or any Affiliate thereof.
"PERSON" means any individual, corporation, partnership, joint venture,
association, joint stock company, trust, unincorporated organization, government
or any agency or political subdivision thereof, or any other form of entity.
"PERSONAL PROPERTY" means all fixtures, building materials, machinery,
equipment, inventory, furniture, furnishings, and personal property used in
connection with or resulting from the operation of the Property.
"PLANS" means the final working drawings and specifications as prepared
for the construction, renovation or reconstruction of the Improvements as
provided in SECTION 4.15.
"POTENTIAL DEFAULT" means the occurrence of any event or circumstance
which, after the giving of notice or passage of time, or both, could constitute
an Event of Default.
"PROHIBITED ERISA TRANSACTION" means a transaction that is prohibited
under IRC Section 4975 or ERISA Section 406 and not exempt under IRC Section
4975 or ERISA Section 408.
"PROPERTY" means the Land, the Improvements, the Personal Property, all
other estates, easements, licenses, interests, rights, titles, powers and
privileges of every kind and character arising from or used in connection with
the ownership or operation of the Residential Condominium or the Future
Development Area Unit (as defined in the Master Declaration), and all accounts,
accounts receivable, inventory, instruments, chattel paper, documents, consumer
goods, insurance proceeds, Leases, contract rights and general intangibles used
in connection with or resulting from the ownership or operation of the
Residential Condominium, and all other property and appurtenances constituting
the "Mortgaged Property," as described in the Mortgage.
"PURCHASER" means (a) any purchaser of all or any portion of the
Property at foreclosure or by deed in lieu of foreclosure, (b) Lender or any
Affiliate of Lender as the purchaser or successor owner of all or any portion of
the Property following foreclosure or deed in lieu of foreclosure, and any
transferee of any such Person which acquires the Property.
"QUARTERLY PERIOD" means each fiscal quarter of Borrower.
"REGULATION D" means Regulation D of the Board of Governors of the
Federal Reserve System, from time to time in effect, and shall include any
successor or other regulation relating to reserve requirements applicable to
member banks of the Federal Reserve System.
"REGULATION U" means Regulation U promulgated by the Board of Governors
of the Federal Reserve System, 12 C.F.R. Part 221, or any other regulation
hereafter promulgated by said Board to replace the prior Regulation U and having
substantially the same function.
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"REGULATION X" means Regulation X promulgated by the Board of Governors
of the Federal Reserve System, 12 C.F.R. Part 224, or any other regulation
hereafter promulgated by said Board to replace the prior Regulation X and having
substantially the same function.
"RENTS" means all rents, royalties, bonuses, income, accounts, accounts
receivable, receipts, revenues, issues, profits and other benefits derived from
the Property or any part thereof, or the occupation, use or enjoyment of the
Property, or any part thereof, or from any Lease, and all proceeds payable under
any policy of insurance covering the loss of rent or income resulting from
destruction of or damage to the Property.
"REPORTABLE EVENT" shall have the meaning assigned to that term in Title
IV of ERISA.
"RESIDENTIAL CONDOMINIUM" means a ten-story, 59 unit residential
condominium, and related amenities, to be constructed by Borrower on a portion
of the Property and comprising the Residential Unit under the Master Declaration
(excluding ▇▇▇▇▇ ▇ ▇▇▇ ▇▇▇▇▇ ▇ ▇▇ ▇▇▇▇▇▇/▇▇▇▇ ▇▇▇▇▇▇▇▇, as defined in the Master
Declaration).
"RESIDENTIAL CONDOMINIUM DECLARATION" means that certain Residential
Condominium Declaration for the M Central Residences, a Condominium, dated as of
September 16, 2005, executed by Borrower, as Declarant, recorded on September
16, 2005 in Volume 2005182, Page 204 in the Real Property Records of Dallas
County, Texas.
"SOILS REPORT" means a report prepared by a competent engineer
certifying that the soils of the Property are adequate to support the
Improvements.
"SUBSIDIARY" means, with respect to any Person, any other Person
directly or indirectly owned by such Person.
"SURVEY" means a current, certified survey of the Land and Improvements
in form and substance, including certification, acceptable to Lender and meeting
the requirements of EXHIBIT G attached hereto.
"TAX INFORMATION" means tax certificates from the tax
assessor-collectors of all taxing authorities having jurisdiction over all or
any part of the Property setting forth all outstanding ad valorem taxes against
such property.
"TERM" means the period commencing on the Closing Date and ending on the
Maturity Date.
"TITLE COMPANY" means First American Title Insurance Company.
"TITLE INSURANCE COMMITMENT" means the commitment to issue the Title
Insurance Policy issued by the Title Company, along with copies of all
instruments creating or evidencing exceptions or encumbrances to title.
"TITLE INSURANCE POLICY" means a Mortgagee Title Insurance Policy from
the Title Company and insuring the priority and sufficiency of the Mortgage as a
first Lien upon the Land and Improvements (a) in an amount equal to the Loan
Amount, (b) showing all easements or other matters affecting the Property, all
subject only to such exceptions or qualifications as are acceptable to Lender in
its sole discretion, (c) insuring unconditionally against contractors',
suppliers, and mechanics' lien claims recorded prior to the date hereof, as well
as matters related to the Survey; (d) contain any endorsements or assurances
that Lender may reasonably request for protection of its interests including,
but not limited to, (i) comprehensive endorsement, (ii) variable rate
endorsement, and (iii) an access endorsement, insuring
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that there will be at least one location at the Residential Condominium with
unlimited vehicular ingress and egress to an adjacent publicly dedicated street.
"UCC SEARCHES" means central and local current financing statement
searches from Texas and such other jurisdictions as Lender may request, covering
the Borrower and any other known owner of the Property during the past five
years, together with copies of all financing statements listed in said search.
1.02 OTHER DEFINITIONAL PROVISIONS.
(a) All terms defined in this Loan Agreement shall have the
above-defined meanings when used in the Notes or any of the other Loan
Documents, or in any other certificate, report or other document made or
delivered pursuant to this Loan Agreement, unless the context therein
shall otherwise require.
(b) Defined terms used in the singular shall import the
plural and VICE VERSA.
(c) The words "hereof," "herein," "hereunder" and similar
terms when used in this Loan Agreement shall refer to this Loan
Agreement as a whole and not to any particular provision of this Loan
Agreement.
(d) Any accounting terms used in this Loan Agreement which
are not separately defined shall have the meanings customarily given
them in accordance with GAAP.
ARTICLE II
THE LOAN
2.01 THE LOAN.
(a) Subject to the terms and conditions of this Loan
Agreement and relying upon the representations and warranties herein set
forth, and provided that no Potential Default or Event of Default has
occurred and is continuing, Lender agrees to advance the Initial Advance
to Borrower on the Closing Date and to make Advances to Borrower from
time to time as set forth in this Loan Agreement. The Advances for which
Borrower qualifies hereunder shall be made from time to time from the
date hereof to and including the Construction Commitment Termination
Date. Lender shall have no obligation to make any advance hereunder
after the Construction Commitment Termination Date. Notwithstanding
anything herein to the contrary, the commitment of Lender to make
Advances shall terminate if Borrower has not satisfied all conditions
precedent to the first of the Advances contemplated in SECTION 2.12 on
or before November 1, 2005. The Loan is not revolving and any principal
payment or prepayment made may not be reborrowed.
(b) Lender shall advance the Initial Advance on the Closing
Date by wire transfer in immediately available funds to the Title
Company for the benefit of Borrower.
2.02 INTEREST ON THE LOAN. The Loan shall bear interest as provided
in the Note.
2.03 NOTE; REPAYMENTS. The Loan shall be evidenced by and payable as
provided in the Note. After the maturity of the Loan, the obligations of
Borrower and the rights and privileges of Lender under
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this Loan Agreement, the Note and all other Loan Documents shall continue in
full force and effect until the Note and the remaining Obligation have been paid
and performed in full.
2.04 MANNER AND APPLICATION OF PAYMENTS. All payments of principal of
and interest on the Loan, and of all other amounts payable under this Loan
Agreement or the other Loan Documents by Borrower to or for the account of
Lender, shall be made by Borrower to Lender, before 1:00 p.m. (Dallas, Texas
time) in federal or other immediately available funds. Should any payment
required hereby become due and payable on a day other than a Business Day, the
maturity thereof shall be extended to the next succeeding Business Day. Funds
received after 1:00 p.m. (Dallas, Texas time) shall be treated for all purposes
as having been received by Lender on the first Business Day next following
receipt of such funds. All payments made on the Loan so long as no Event of
Default has occurred and is continuing shall be applied (except as may be
otherwise required by applicable Governmental Requirements) first to any payment
on the Loan (including principal, interest, costs, fees and expenses) then due
and owing, second to any past-due payment on the Loan, and third, to the
remaining Obligation in such order and manner as Lender may determine, any
instructions from Borrower or any other Person to the contrary notwithstanding.
All payments made on the Loan while an Event of Default has occurred and is
continuing shall be applied (except as may be otherwise required by applicable
Governmental Requirements) to the Obligation in such order and manner as Lender
may determine, any instructions from Borrower or any other Person to the
contrary notwithstanding. Subject to the foregoing limitations, Lender may, in
its sole and absolute discretion, apply payments first to satisfy the portion of
the Obligation, if any, for which Borrower or any other Person has no personal,
partnership or corporate liability, if any, and then to the remaining
Obligation.
2.05 ORIGINATION FEE. Contemporaneously with its execution of this
Agreement, Borrower shall pay to Lender an ORIGINATION FEE (herein so called) in
the amount of Three Hundred Forty Thousand Four Hundred Seventy-Five Dollars
($340,475.00), in consideration for the agreement of Lender to enter into this
Agreement.
2.06 ADVANCES..
(a) TIMING OF ADVANCES. Advances for the payment of the cost
of labor, materials, and services supplied for the construction of the
Improvements shall be made by Lender upon compliance by Borrower with
the terms and conditions contained in this Loan Agreement after actual
commencement of construction of the Improvements for work actually done
during the preceding period. From time to time, but no more frequently
than monthly, Borrower may submit to Lender an Application for Advance
requesting an Advance under the Loan for the payment of the cost of
labor, materials, and services supplied for the construction of the
Improvements and for the payment of other costs and expenses incident to
the Loan or the construction of the Improvements and specified in the
Approved Budget. Lender may require an inspection of, and favorable
report on, the Improvements by the Inspecting Architect/Engineer prior
to making any Advance. Each Application for Advance shall be submitted
by Borrower to Lender a reasonable time (but not less than five (5)
Business Days) prior to the date upon which the Advance requested is
desired by Borrower. Borrower shall be entitled to an Advance only in an
amount approved by Lender.
(b) LIMITATION ON ADVANCES. Advances for payment of the cost
of construction of the Improvements shall not exceed the aggregate of
(i) the cost of labor, materials, and services incorporated into the
Improvements in a manner acceptable to Lender and as specified in the
Approved Budget, PLUS (ii) the purchase price of all uninstalled
materials to be utilized in the construction of the Improvements and
stored upon the Property, or elsewhere with the written consent of, and
in a manner acceptable to, Lender, LESS (iii) retainage of not less than
ten percent (10%), and LESS (iv) all prior Advances made for payment of
the cost of labor, materials, and services
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for the construction of the Improvements. No Advances shall be made
after the Construction Commitment Termination Date.
(c) FINAL ADVANCE. The final Advance, including all
retainage, will not be made until the expiration of thirty (30) days
from the date of final completion and acceptance by Lender of the
Improvements, and in any event not until Lender has received the
following with respect to the Improvements and the Loan; (i) a
certificate from the Inspecting Architects/Engineers certifying to
Lender that the Improvements have been completed substantially in
accordance with the Plans, (ii) evidence that no mechanic's or
materialman's liens or other encumbrances have been filed and remain in
effect against the Improvements, (iii) evidence that all Governmental
Requirements have been satisfied, including without limitation, delivery
to Lender of a Certificate of Occupancy permitting the Improvements to
be legally occupied, and (iv) a liens paid affidavit executed by
Borrower and the Contractor to the effect that (and/or, at Lender's
request, final lien releases or waivers evidencing to Lender's
satisfaction that) all subcontractors, materialmen, and other parties
who have supplied labor, materials, or services for the construction of
the Improvements, or who otherwise might be entitled to claim a
contractual, statutory, or constitutional lien against the Property,
have been paid in full with respect to the Improvements, or Borrower, at
its option, may provide to Lender a Bond indemnifying Against Liens
(pursuant to Tex. Property Code ss.53.171) in such amount as Lender may
reasonably require.
(d) INTEREST RESERVE ADVANCES. Borrower acknowledges and
agrees that the sum of One Million and No/100 Dollars ($1,000,000.00) of
the Loan as specified or to be specified in the Approved Budget
represents a reserve for the payment of interest upon the full amount of
the Advances of the Loan (the "INTEREST RESERVE") pursuant to this Loan
Agreement. Borrower hereby authorizes Lender, and Lender shall have the
right, to disburse and charge (or cause to be disbursed and charged) the
Interest Reserve in reimbursement of Borrower for the interest payments
made by Borrower under this Loan Agreement and the other Security
Documents on each interest payment date as such interest payments become
due and payable pursuant to the terms hereof and of the Note. Such
disbursements shall be made as Advances of the Loan, in amounts equal to
the accrued interest which has been paid on each of such interest
payment dates. Interest as provided in the Note will be charged on any
disbursed portion of the Interest Reserve as and when disbursed, but
interest will not be charged on the undisbursed portion of the Interest
Reserve. If, at any time during the term of the Loan, the Interest
Reserve shall become depleted or shall be deemed by Lender to be
insufficient to reimburse Borrower for the interest payments on the Loan
as they are made, interest shall be payable on each interest payment
date in accordance with the terms of the Loan Agreement and the Note,
and Lender shall have no obligation to make any Advance to Borrower for
any such interest payments from the remaining proceeds of the Loan. The
Interest Reserve shall be available only for disbursement of the
periodic payments of accrued interest due to Lender on the Loan pursuant
to the terms of this Loan Agreement and the Note, and for no other
purpose. If, at any time, Lender shall not have received on the date
due, any payment of interest upon the Loan, Lender may, at its sole
option, disburse the Interest Reserve directly in payment of such
interest amount. Advances of the Interest Reserve shall be subject to
the terms and conditions of this Loan Agreement, including, without
limitation, the conditions precedent set forth in SECTIONS 2.11 and
2.12.
2.07 PREPAYMENT OF LOAN.
(a) At any time and from time to time Borrower may, upon
five (5) Business Days' written notice to Lender, prepay the principal
of the Loan then outstanding, in whole or in part, without penalty or
premium; PROVIDED, HOWEVER, thateach prepayment of less than the full
outstanding principal balance of the Loan shall be in an amount equal to
at least One Million Dollars ($1,000,000) and integral multiples
thereof.
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(b) All prepayments under this SECTION 2.07 shall also be
subject to the other terms of this Loan Agreement.
(c) All prepayments by Borrower hereunder shall be made by
Borrower to Lender, before 1:00 p.m. (Dallas, Texas time) in federal or
other immediately available funds. Funds received after 1:00 p.m.
(Dallas, Texas time) shall be treated for all purposes as having been
received by Lender on the first Business Day next following receipt of
such funds. All prepayments made on the Loan hereunder shall be made
together with interest accrued (through the date of such prepayment) on
the principal amount prepaid, and shall be applied by Lender in the
manner described in SECTION 2.04 hereof.
2.08 TAXES.
(a) Any and all payments by Borrower hereunder and under the
other Loan Documents shall be made free and clear of and without
deduction for any and all present or future taxes, levies, imposts,
deductions, charges or withholdings, and all liabilities with respect
thereto, BUT EXCLUDING, with respect to Lender, (i) taxes imposed on its
income, and franchise taxes imposed on it, by the jurisdiction under the
laws of which Lender is organized or any political subdivision thereof
and, taxes imposed on its income, and franchise taxes imposed on it, by
the jurisdiction of Lender's applicable lending office or any political
subdivision thereof and (ii) income and franchise taxes and any other
taxes imposed by the United States of America by means of withholding at
the source if and to the extent that such taxes shall be in effect and
shall be applicable, on the date hereof, to payments to be made to
Lender (all such taxes, levies, imposts, deductions, charges,
withholdings and liabilities except as so excluded being hereinafter
referred to as "TAXES"). If Borrower shall be required by law to deduct
any Taxes from or in respect of any sum payable hereunder to Lender, (A)
the sum payable shall be increased as may be necessary so that after
making all required deductions (including deductions applicable to
additional sums payable under this SECTION 2.08) Lender receives an
amount equal to the sum it would have received had no such deductions
been made, (B) Borrower shall make such deductions and (C) Borrower
shall pay the full amount deducted to the relevant taxation authority or
other authority in accordance with applicable law.
(b) In addition, Borrower agrees to pay any present or
future stamp or documentary taxes or any other excise or property taxes,
charges or similar levies which arise from any payment made hereunder or
from the execution, delivery or registration of, or otherwise with
respect to, this Loan Agreement or any other Loan Document (hereinafter
referred to as "OTHER TAXES").
(c) Borrower will indemnify Lender for the full amount of
Taxes or Other Taxes (including, without limitation, any Taxes or Other
Taxes imposed by any jurisdiction on amounts payable under this SECTION
2.08) paid by Lender and any liability (including penalties, interest
and expenses) arising therefrom or with respect thereto except as a
result of the gross negligence or willful misconduct of Lender, whether
or not such Taxes or Other Taxes were correctly or legally asserted.
This indemnification shall be made within thirty (30) days from the date
Lender makes written demand therefor.
(d) Within thirty (30) days after the date of any payment of
Taxes by or at the direction of Borrower, Borrower will furnish to
Lender, at its address referred to in SECTION 9.01 hereof, the original
or a certified copy of a receipt evidencing payment thereof.
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(e) Lender shall endeavor in good faith (consistent with its
internal policies and legal and regulatory restrictions) to select a
jurisdiction for its lending office or change the jurisdiction for its
lending office, as the case may be, so as to avoid the imposition of any
Taxes or Other Taxes or to reduce the amount of any such additional
amounts which may thereafter accrue; PROVIDED that no such selection or
change of the jurisdiction for its lending office shall be made if, in
the judgment of Lender, such selection or change would be
disadvantageous to Lender.
(f) Without prejudice to the survival of any other agreement
of Borrower hereunder, the agreements and obligations of Borrower
contained in this SECTION 2.08 shall survive the payment in full of the
Obligation.
2.09 LENDING OFFICE. Lender may change its lending offices from time
to time by notice to Borrower. Any such change in Lender's principal office or
lending office which is a result of an election by Lender for its internal
corporate convenience shall not increase the cost of the Loan to Borrower.
2.10 CONDITIONS PRECEDENT FOR THE BENEFIT OF LENDER. All conditions
precedent to the obligation of Lender to make the Loan or any Advance are
imposed hereby solely for the benefit of Lender, and no other party may require
satisfaction of any such condition precedent or be entitled to assume that
Lender will refuse to make the Loan or any Advance in the absence of strict
compliance with such conditions precedent. All requirements of this Loan
Agreement may be waived by Lender, in whole or in part, at any time in Lender's
sole discretion.
2.11 CONDITIONS TO THE INITIAL ADVANCE. As a condition precedent to
the Initial Advance under the Loan, Borrower must satisfy the conditions
required hereunder and execute and deliver to, procure for and deposit with, and
pay to Lender, and if appropriate, record in the proper records with all filing
and recording fees paid, the documents, certificates, and other items described
in ARTICLE VI, together with such other documents, instruments and certificates
as Lender may reasonably require from time to time.
2.12 CONDITIONS TO SUBSEQUENT ADVANCES. As a condition precedent to
each Advance subsequent to the Initial Advance, and in addition to all other
requirements herein, Borrower must satisfy the following requirements:
(a) All conditions precedent to the Initial Advance shall
have been satisfied;
(b) Borrower shall have delivered to Lender the following:
(i) the Plans;
(ii) the Construction Contract, executed by all
parties;
(iii) the Contractor's Affidavit and Subordination,
executed by Borrower;
(iv) the Assignment of Plans and Specifications,
executed by Borrower and acknowledged and consented to by the
Architect;
(v) the Assignment of Rights under Construction
Contract, executed by Borrower;
(vi) a building permit for the construction of the
Improvements and all related amenities; and
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(vii) the Approved Budget;
(c) There shall exist no Event of Default or Potential
Default;
(d) The representations and warranties made in this Loan
Agreement shall be true and correct on and as of the date of each
Advance, with the same effect as if made on such date;
(e) If any agreement or other instrument binding upon
Borrower requires that a consent of any third party be obtained before
Borrower may execute, deliver or perform this Loan Agreement, the Note
or the other Loan Documents executed by such party, then such consent
shall be delivered to Lender;
(f) Borrower shall procure and deliver to Lender, the
Inspecting Architect/Engineer and the Title Company releases or waivers
of mechanic's liens and receipted bills showing payment to all parties
who have furnished materials or services or performed labor of any kind
in connection with the construction of any of the Improvements;
(g) Promptly upon preparation thereof, Borrower shall
deliver to Lender copies of any inspection reports prepared by the
Inspecting Architect/Engineer, and/or any Governmental Authority having
jurisdiction over the Improvements;
(h) Borrower shall procure and deliver to Lender, if
required by Lender, evidence reasonably satisfactory to Lender that the
amount theretofore invested by Borrower in the Property, together with
the funds remaining to be advanced by Lender under the terms of this
Loan Agreement, or sums which Borrower agrees to make available, are
adequate to meet all costs incurred and to be incurred in connection
with the construction of the Improvements;
(i) Borrower shall procure and deliver to Lender inspection
reports, in form and substance acceptable to Lender, from the Inspecting
Architect/Engineer at not less than thirty (30)-day intervals; and
(j) Borrower shall have deposited into the Borrower's
Deposit such funds as Lender may have required pursuant to SECTION 4.22
hereof.
2.13 REALLOCATION OF APPROVED BUDGET. At any time that an Event of
Default has occurred and is continuing, Lender shall have the right from time to
time to make Advances which are allocated to any of the designated items in the
Approved Budget for such other purposes or in such different proportions as
Lender may, in its sole discretion, deem necessary or advisable. Borrower may
not reallocate items of cost or make changes in the Approved Budget without the
prior written consent of Lender, except that upon presentation to Lender of
reasonable evidence of demonstrated cost savings in a line item, the Borrower
may reallocate the cost savings in that line item to another line item.
2.14 NO WAIVER. No Advance shall constitute a waiver of any condition
precedent to the obligation of Lender to make any further Advance or preclude
Lender from thereafter declaring the failure of Borrower to satisfy such
conditions precedent to be an Event of Default.
2.15 SUBORDINATION. Lender shall not be obligated to make, nor shall
Borrower be entitled to receive, any Advance until such time as Lender shall
have received, to the extent requested by Lender, the Contractor Affidavit and
Subordination from the Contractor, and subordination agreements from all other
persons furnishing labor, materials, or services for the design or construction
of the Improvements,
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subordinating to the lien of the Mortgage any lien, claim or charge which such
party may have against Borrower or the Property.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF BORROWER
To induce Lender to enter into this Loan Agreement and to make the Loan
hereunder, Borrower hereby represents and warrants to Lender as of the Closing
Date the matters set forth in this ARTICLE III.
3.01 ORGANIZATION.
(a) BORROWER. Borrower is a limited partnership duly formed,
validly existing and in good standing under the laws of the State of Texas, in
accordance with the Organizational Documents of Borrower. The business which
Borrower carries on and which it proposes to carry on may be conducted in
limited partnership form by Borrower. General Partner is the sole general
partner of Borrower (with a 0.1% general partnership interest), and Realty
America Group (Mockingbird Commons) LP (with a 30% limited partnership
interest), Behringer Harvard Mockingbird Commons Investors LP (with a 69.9%
limited partnership interest) are the only limited partners of Borrower.
Borrower is duly authorized to conduct business in Texas and in each other
jurisdiction, if any, in which the nature of its properties, assets or
activities require such authorization. Except as disclosed in writing to Lender,
neither General Partner nor Behringer Harvard Mockingbird Commons Investors LP
have transferred, assigned, pledged or mortgaged its interest in Borrower or any
profits or proceeds therefrom.
(b) GUARANTORS. Behringer Harvard Mockingbird Commons GP,
LLC is a limited liability company duly formed, validly existing and in good
standing under the laws of the State of Texas in accordance with the
Organizational Documents of such person. The business which Any Guarantor
carries on and which it proposes to carry on may be conducted in limited
liability company form by such Guarantor. In addition, each Guarantor is duly
authorized to conduct business in Texas and in each other jurisdiction in which
the nature of its properties, assets or activities require such authorization.
Except as disclosed in writing to Lender, no partner or member of Any Guarantor
has transferred, assigned, pledged or mortgaged its interest in such Guarantor
or any profits or proceeds therefrom.
3.02 AUTHORIZATION AND POWER. Each of Borrower and each Guarantor has
the power and requisite authority to execute, deliver, and perform its
respective obligations under this Loan Agreement and the other Loan Documents to
which it is a party; each of Borrower and each Guarantor is duly authorized to,
and has taken all action necessary to authorize it to, execute, deliver and
perform under this Loan Agreement and each of the other Loan Documents to which
it is a party and is and will continue to be duly authorized to perform under
this Loan Agreement and the other Loan Documents to which it is a party.
3.03 VALID AND BINDING OBLIGATION. All of the Loan Documents, and all
other documents referred to herein to which Borrower, any Guarantor, or any
Partner is a party, upon execution and delivery by such Person, will constitute
valid and binding obligations of such Person, enforceable in accordance with
their terms, except as limited by Debtor Relief Laws and by general principles
of equity (regardless of whether such enforceability is considered in a
proceeding at law or in equity).
3.04 CONFLICTS. Neither the execution and delivery of this Loan
Agreement, the Note or the other Loan Documents to which Borrower, any Guarantor
or any Partner is a party, nor consummation of any of the transactions herein or
therein contemplated nor compliance with the terms and provisions hereof or with
the terms and provisions thereof, will contravene any provision of law, statute,
rule or
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regulation to which such Person is subject or any judgment, decree, license,
order or permit applicable to such Person, or will conflict or be inconsistent
with, or will result in any breach of any of the terms of the covenants,
conditions or provisions of, or constitute a delay under, or result in the
creation or imposition of a Lien (except Liens in favor of Lender) upon any of
the property or assets of such Person pursuant to the terms of any indenture,
mortgage, deed of trust, agreement or other instrument to which such Person is a
party or by which such Person may be bound, or to which such Person may be
subject, or violate any provision of the Organizational Documents of such
Person.
3.05 CONSENTS, ETC. No consent, approval, authorization or order of
any court or governmental authority or any third party (other than those which
have been obtained prior to the date hereof and of which Borrower has notified
Lender in writing on the date hereof) is required in connection with the
execution and delivery by Borrower or any Guarantor of this Loan Agreement or
the other Loan Documents, or to consummate the transactions contemplated hereby
or thereby.
3.06 PENDING LITIGATION. Other than the Disclosed Litigation, there
are no material proceedings pending, or to Borrower's knowledge, threatened,
against or affecting Borrower, any Guarantor, or the Property or any portion
thereof, in any case in any court or before any Governmental Authority or
arbitration board or tribunal which involve the possibility of materially and
adversely affecting (a) the assets, business, prospects, profits or condition
(financial or otherwise) of Borrower, any Guarantor, or the ability of any such
Person to perform its respective obligations under the Loan Documents or any
Organizational Document of any such Person, or (b) the Property or the
Residential Condominium. Neither Borrower, any Guarantor, nor the Property is in
default with respect to any order of any court, Governmental Authority or
arbitration board or tribunal.
3.07 PRINCIPAL OFFICE, ETC. The chief executive office, principal
office and principal place of business of Borrower is at ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇. The addresses of Borrower and Guarantors set
forth in SECTION 9.01 hereof are accurate, true and correct.
3.08 CONTROL PERSONS. Borrower is not, and no Person having "control"
(as that term is defined in 12 U.S.C. ss.375b or in regulations promulgated
pursuant thereto) of Borrower is, an "executive officer," "director," or "person
who directly or indirectly or in concert with one or more persons, owns,
controls, or has the power to vote more than 10% of any class of voting
securities" (as those terms are defined in 12 U.S.C. ss.375b or in regulations
promulgated pursuant thereto) of Lender, of a holding company of which Lender is
a subsidiary, or of any other subsidiary of a holding company of which Lender is
a subsidiary, of any bank at which Lender maintains a correspondent account, or
of any bank which maintains a correspondent account with any Lender.
3.09 GOVERNMENT REGULATION.
(a) Borrower is not an "investment company" or a company
"controlled" by an "investment company," within the meaning of the
Investment Company Act of 1940.
(b) Borrower is not a "public-utility company," or a
"holding company," or a "subsidiary company" of a "holding company," or
an "affiliate" of a "holding company" or of a "subsidiary company" of a
"holding company," within the meaning of the Public Utility Holding
Company Act of 1935.
(c) Borrower is not engaged principally, or as one of its
important activities, in the business of extending, or arranging for the
extension of, credit for the purpose of "purchasing or carrying any
margin stock," within the meaning of Regulation U of the Board of
Governors of the Federal Reserve System. No portion of the assets of
Borrower consists of any such margin stock,
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and no part of the proceeds of any Loan will be used to purchase or
carry any such margin stock within the meaning of said regulation or to
extend credit to others for such purpose.
(d) Neither Borrower, any Guarantor or any Person who owns a
controlling interest in or otherwise controls Borrower or any Guarantor
is an OFAC Prohibited Person. Borrower has implemented appropriate
procedures and policies to ensure compliance with the requirements of
the Anti-Terrorism and Anti-Money Laundering Laws.
3.10 INSIDER. Neither Borrower nor any general partner of Borrower is
an "executive officer", "director", or "person who directly or indirectly or
acting through or in concert with one or more persons, owns, controls, or has
the power to vote more than ten percent (10%) of any class of voting securities"
(as those terms are defined in 12 U.S.C. ss. 375b or in regulations promulgated
pursuant thereto) of Lender, of any bank holding company of which Lender is a
subsidiary, or of any subsidiary of a bank holding company of which Lender is a
subsidiary, of any bank at which Lender maintains a correspondent account or
which maintains a correspondent account with any Lender.
3.11 O.S.H.A. Each of Borrower, each Guarantor, and the Property,
have (or within thirty (30) days of the Closing Date will have) duly complied
with, and their respective facilities, business assets, property, leaseholds and
equipment are (or within thirty (30) days of the Closing Date will be) in
compliance in all material respects with, the provisions of the Federal
Occupational Safety and Health Act and all rules and regulations thereunder and
all similar state and local laws, rules and regulations, to the extent required
thereby; there are no outstanding citations, notices or orders of non-compliance
issued to Borrower or any Guarantor or relating to their respective businesses,
assets, property, leaseholds or equipment under any such laws, rules or
regulations, or with respect to the Property.
3.12 FINANCIAL CONDITION. As of the date of execution hereof and the
Closing Date, the present fair salable value of the assets of Borrower and each
Guarantor is greater than the amount required to pay such Person's total
liabilities, and each is able to pay its debts as they mature. Borrower has
sufficient capital to carry on its business and transactions as now conducted
and as planned to be conducted in the future. Neither Borrower nor any Guarantor
is the subject of any bankruptcy, insolvency, reorganization or receivership
proceeding and, to Borrower's best knowledge, no such proceeding is threatened
or imminent with respect to any such Person. The Initial Financial Statements
reflect the current financial condition of each Person described therein and no
material adverse change has occurred in the financial condition of any such
Person since the respective dates of the Initial Financial Statements.
3.13 RESTRICTIONS. Neither of Borrower nor any Guarantor is a party
to any contract or agreement, or subject to any charter or other restriction,
which materially and adversely affects its business. Neither of Borrower or any
Guarantor has agreed or consented to cause or permit in the future (upon the
happening of a contingency or otherwise) any of its assets, whether now owned or
hereafter acquired, to be subject to any Liens (other than the Permitted Liens).
Neither Borrower nor any Guarantor and no general partner or limited partner of
Borrower or any Guarantor has agreed or consented to cause or permit in the
future (upon the happening of a contingency or otherwise) all or any portion of
its direct ownership interest in such Person, or any profits or proceeds
therefrom, to be subject to any Liens (other than Permitted Liens).
3.14 NO DEFAULT. No Potential Default or Event of Default has
occurred and is continuing under this Loan Agreement or any other Loan Document.
3.15 LABOR RELATIONS. Borrower is not a party to any collective
bargaining agreement, and Manager is not a party to any collective bargaining
agreement with respect to the operation of the Property or the Hotel/Retail
Property. There are no material grievances, disputes or controversies with
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any union or any other organization of Borrower's employees, or Manager's
employees with respect to the Property or Hotel/Retail Property, or threats of
strikes, work stoppages or any asserted pending demands for collective
bargaining by any union or organization with respect to the Property or
Hotel/Retail Property.
3.16 ERISA. (a) No Reportable Event has occurred and is continuing
with respect to any ERISA Plan; (b) PBGC has not instituted proceedings to
terminate any ERISA Plan; (c) neither Borrower, any Affiliate of Borrower or any
General Partner, nor any duly-appointed administrator of an ERISA Plan (i) has
incurred any liability to PBGC with respect to any ERISA Plan other than for
premiums not yet due or payable or (ii) has instituted or intends to institute
proceedings to terminate any ERISA Plan under SECTION 4041 or 4041A of ERISA or
withdraw from any Multi-Employer Pension Plan (as that term is defined in
SECTION 3(37) of ERISA); and (d) each ERISA Plan of Borrower has been maintained
and funded in all material respects in accordance with its terms and with all
provisions of ERISA applicable thereto.
3.17 SINGLE PURPOSE ENTITIES; NATURE OF BORROWER. Borrower is a
single purpose limited partnership whose only business is the operation of the
Aggregate Property and whose only asset is the Aggregate Property and other
assets directly related to the operation of the Aggregate Property.
3.18 INDEBTEDNESS. Borrower has not incurred, created, contracted
for, waived, assumed, guaranteed or is otherwise liable in respect of any
Indebtedness other than the Permitted Indebtedness. No default or failure of
performance has occurred and is continuing with respect to any Indebtedness of
Borrower
3.19 TAXES. All tax returns required to be filed by Borrower in any
jurisdiction have been filed and all taxes, assessments, fees, and other
governmental charges upon Borrower or upon any of its properties, income or
franchises have been paid that are required to be paid prior to the time that
the non-payment of such taxes could give rise to a Lien on any asset of
Borrower, unless (i) such tax, assessment, fee or charge is being contested in
good faith by Borrower through appropriate proceedings after the establishment
of appropriate reserves therefor in accordance with GAAP or (ii) such filing,
tax, assessment, fee or charge would not involve the possibility of materially
and adversely affecting the assets, business, prospects, profits and condition
of Borrower or the Property. There is no proposed tax assessment against
Borrower or, to the knowledge of Borrower, any basis for such assessment which
is not being contested in good faith by Borrower through appropriate proceedings
after the establishment of appropriate reserves therefor in accordance with
GAAP. The Land is separately assessed from all other adjacent land for purposes
of real estate taxes and, to Borrower's knowledge, there are no intended public
improvements which may involve any charge, assessment or lien, upon the
Property.
3.20 PROPERTY.
(a) To Borrower's knowledge, there is no existing or
proposed plan to modify or realign any street or highway or any existing
or proposed eminent domain proceeding that would result in the taking of
all or any part of the Property or the Hotel/Retail Property or that
would adversely affect the Property or the Hotel/Retail Property or the
use or operation of the Property or the Hotel/Retail Property; and
(b) As of the Closing Date, no bills for labor and materials
furnished in connection with construction, renovation or maintenance of
the Property remain unpaid in part or in full.
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3.21 USE OF PROPERTY.
(a) To Borrower's knowledge, the Property and the
Hotel/Retail Property and the uses which Borrower makes of the Property
and the Hotel/Retail Property and intends to make thereof comply with
all applicable restrictive covenants (including, without limitation, the
Master Declaration and the Residential Condominium Declaration) and all
Governmental Requirements;
(b) Borrower has obtained or caused to be obtained all
requisite zoning, utility, building, health, and other necessary permits
from each Governmental Authority having jurisdiction over the Property
and the Hotel/Retail Property or any portion thereof and to Borrower's
knowledge, there is no problem which would jeopardize any license,
permit or approval necessary for the construction or operation of the
Property or the Hotel/Retail Property or any portion thereof. Borrower
owns, or is licensed or otherwise has the lawful right to use, all
applicable patents, trademarks, tradenames, copyrights, technology,
know-how and processes necessary for the conduct of its business as
currently conducted, and the operation of the Property and the
Hotel/Retail Property in the manner currently conducted. There are no
claims, and to the best of Borrower's knowledge, there is no
infringement of the rights of any Person, arising from the use of such
patents, trademarks, copyrights, technology, know-how and processes by
Borrower. Borrower has no knowledge of any infringement by any third
party on any rights of Borrower in any of its or any Guarantor's
intellectual property;
(c) The sanitary water supply, storm and sanitary sewers,
water lines, and other necessary utility facilities (including gas,
electric and telephone facilities) are available to and operational at
the Property and the Hotel/Retail Property and sufficient to meet the
current and anticipated needs of the Property and Hotel/Retail Property,
and design and as-built conditions of the Property are such that no
drainage or surface or other water will drain across or rest upon the
Land or the land of others. All utility service for the Property and
Hotel/Retail Property has been approved by applicable Governmental
Authorities, to the extent required or obtainable;
(d) Except as disclosed on the Survey, none of the
Improvements create an encroachment over, across, or upon any of the
Property boundary lines, rights of way, or easements and no buildings or
other improvements on adjoining land create such an encroachment on any
of the Land;
(e) The Property has been validly subdivided in accordance
with all Governmental Requirements so that, for all purposes, the
Property forms a separate tax lot, independent of any other property
(including, without limitation, the Hotel/Retail Property) and the
Property may be mortgaged, conveyed or otherwise dealt with as a whole
and independently of the Hotel/Retail Property or any other property.
3.22 FULL DISCLOSURE. There is no fact related specifically to
Borrower, any Guarantor, the Property or the Hotel/Retail Property known to
Borrower that Borrower has not disclosed to Lender which could have a material
adverse effect on Borrower, any Guarantor, or any of the Property or
Hotel/Retail Property.
3.23 TITLE TO THE PROPERTY. Borrower is the sole legal and beneficial
owner of the Property and the Hotel/Retail Property, and has and will have good
and indefeasible title to the Property and the Hotel/Retail Property, free and
clear of any and all Liens, claims, charges, equities, covenants, conditions,
restrictions, easements, rights-of-way and all other matters affecting such
property, whether or not of record, except for the Permitted Exceptions (and,
with respect to the Hotel/Retail Property, the ANB Construction Loan). Borrower
will preserve its title to the Property, will forever warrant and defend the
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same to Lender, and will forever warrant and defend the validity and priority of
the Liens of the Loan Documents with respect to the Property against the claims
of all Persons whomsoever. None of the Land is located within an area that has
been designated or identified as an area having special flood hazards by the
Secretary of Housing and Urban Development or by such other official shall from
time to time be authorized by federal or state law to make such designation
pursuant to the National Flood Insurance Act of 1968, as such act may be from
time to time amended, or pursuant to any other national, state, county or city
program of flood control.
3.24 LEASES. There are no Leases in existence with respect to the
Property or any portion thereof except the Scheduled Lease. No default, failure
of performance or terminating event has occurred and is continuing under the
Scheduled Lease as of the Closing Date.
3.25 GOVERNMENTAL REQUIREMENTS. To Borrower's knowledge, no violation
of any Governmental Requirement exists with respect to any of the Property, and
the current and anticipated use thereof complies with applicable restrictive
covenants (including without limitation, the Master Declaration and the
Residential Declaration) and Governmental Requirements affecting the Property,
and all Governmental Requirements for such use have been satisfied.
3.26 FINANCING STATEMENTS. There is no financing statement or other
document creating or evidencing a Lien now on file with any Governmental
Authority covering any of the Property, and there is no Lien on any of the
Property, whether such Property shall be real or personal, tangible or
intangible, or whether Borrower is named or signed as "Debtor", other than the
Liens which are Permitted Exceptions.
3.27 MATERIAL AGREEMENTS. The Management Agreement furnished to
Lender by or on behalf of Borrower pursuant to this Loan Agreement is true,
correct and complete. The Management Agreement and each Material Agreement are
in full force and effect and no terminating event, default or failure of
performance has occurred thereunder. No party to the Management Agreement or any
of the Material Agreements has challenged or denied the validity or
enforceability of any such agreement.
3.28 ACCURACY OF INFORMATION. All statements, certificates and
information delivered or to be delivered to Lender by or on behalf of Borrower
or any Partner pursuant to or as required by this Loan Agreement or any other
Loan Document are, or shall be, when delivered, true and correct in all material
respects as of the date given and does not, and do not or shall not, when
delivered, contain any untrue statement of a material fact or omit to state any
material fact necessary to keep the statements contained therein from being
materially misleading.
3.29 ACCESS. The Land has access to and from completed public streets
and roads adequate for its current use and for its intended use after completion
of the Improvements.
3.30 COMMENCEMENT OF CONSTRUCTION. As of the date hereof, there are
not bills for work performed or materials delivered to the Land which could give
rise to a mechanic's or materialman's lien which have not been paid or will not
be paid in full and there exists no contest or disagreement with respect to any
such ▇▇▇▇.
3.31 AUTHORIZED SIGNATORIES. Borrower has appointed and invested in
each of the Authorized Signatories full authority to execute and deliver, on
behalf of Borrower, any Request for Disbursement, and any other notice, request
or other document required or permitted hereunder to be submitted by Borrower to
Lender and Lender is entitled to rely upon the authority of each Authorized
Signatory until and unless Lender shall receive from Borrower written notice
revoking such authority and naming a new Authorized Signatory.
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ARTICLE IV
AFFIRMATIVE COVENANTS OF BORROWER
Until payment in full of the Obligation, Borrower agrees that:
4.01 FINANCIAL STATEMENTS, REPORTS AND DOCUMENTS OF BORROWER AND
OTHER PERSONS. Borrower shall deliver or cause to be delivered to Lender each of
the following:
(a) ANNUAL FINANCIAL STATEMENTS. As soon as available, and
in any event within one hundred five (105) days after the end of each
fiscal year of Borrower and each Guarantor, respectively, beginning with
the fiscal year ending December 31, 2005, (i) a copy of the annual
report of Borrower and each Guarantor for such fiscal year containing,
on a consolidated basis, balance sheets and statements of income,
retained earnings, and cash flow as at the end of such fiscal year and
for the 12-month period then ended, in each case setting forth in
comparative form the figures for the preceding fiscal year, all in
reasonable detail and compiled by independent certified public
accountants of recognized standing reasonably acceptable to Lender, to
the effect that such report has been prepared in accordance with GAAP
and containing no material qualifications or limitations on scope and
(ii) Audited Financial Statements for Behringer Harvard Short Term
Opportunity Fund I LP.
(b) QUARTERLY FINANCIAL STATEMENTS. As soon as available,
and in any event within forty-five (45) days after the end of each
quarter of each fiscal year of Borrower and each Guarantor,
respectively, beginning with the quarter ending December 31, 2005, a
copy of an unaudited financial report of Borrower and each Guarantor as
of the end of such quarter and for the portion of the fiscal year then
ended, containing balance sheets and statements of income, retained
earnings, and cash flow, all in reasonable detail certified by the chief
executive officer, president or chief financial officer of Borrower and
each Guarantor to have been prepared in accordance with GAAP and to
fairly and accurately present (subject to year-end audit adjustments)
the financial condition and results of operations of Borrower and each
Guarantor, on a consolidated and consolidating basis, at the date and
for the periods indicated therein.
(c) COMPLIANCE CERTIFICATE. Concurrently with the delivery
of the financial information and statements required by SECTIONS 4.01(A)
AND (B) hereof, a certificate executed by a responsible and authorized
officer or representative of Borrower in the form attached as EXHIBIT H
stating that a review of the activities of Borrower and the Property
during such Quarterly Period has been made under his or her supervision
and that to the best of his or her knowledge and belief after reasonable
and due investigation, (i) Borrower has observed, performed and
fulfilled each and every material obligation and covenant contained
herein and in each of the Loan Documents or, if there is any exception
to the foregoing, specifying the nature and status thereof, (ii) there
exists no Event of Default as of the date of such certificate or, if any
such event shall have occurred, specifying the nature and status
thereof, (iii) no default, material failure of performance or
terminating event has occurred under the Management Agreement or any
other Material Agreement, and no party to any such agreement has
challenged or denied the validity or enforceability of such agreement or
given any notice of default, termination or intent to terminate
thereunder, or specifying the nature and status thereof, (iv) there is
no litigation, mediation or arbitration which is material and is not
covered by insurance pending with respect to Borrower or Manager or any
of the Property or, if any such litigation, mediation, or arbitration is
pending, specifying the nature and status thereof and (v) that all
information and calculations delivered to Lender with respect to
SECTIONS 4.01(A) AND (B) are true and correct in all material
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respects. Concurrently with the delivery of the financial information
and statements required by SECTION 4.01(B) hereof, a certificate
executed by a responsible and authorized officer or representative of
Borrower stating that Borrower is in full compliance with SECTION 4.09
hereof.
(d) NOTICES BY GOVERNMENTAL AUTHORITIES. Promptly upon
receipt of the same, true and complete copies of any official notice,
claim or complaint by any Governmental Authority pertaining to any of
the Property and which would have a material adverse effect upon
Borrower, any Guarantor or the ownership, value, income, revenues or
operation of or from the Property.
(e) TAX RETURNS. Within ten (10) days after the first to
occur of (i) the date actually filed, and (ii) the applicable filing
deadline (including any extension(s) thereof), copies of all federal and
state tax returns required to be filed by Borrower and each Guarantor,
together with evidence of payment of any and all taxes shown to be due
and owing thereunder.
(f) MANAGEMENT AGREEMENT. Contemporaneously with Borrower's
receipt or giving of same, a copy of any written communication with
respect to any alleged default or default pursuant to or in connection
with the Approved Management Agreement.
(g) NOTIFICATION BY BORROWER. The following notifications:
(i) promptly upon the filing of, and any material
determination in, all litigation and all proceedings before any
Governmental Authority affecting Borrower, any Guarantor or any
of the Property;
(ii) promptly upon the occurrence thereof, of any
material change in any fact or circumstance represented or
warranted in this Loan Agreement or any of the other Loan
Documents, and of any fact or circumstance which might
materially interfere with the operation of the Property;
(iii) within five (5) Business Days after the
occurrence thereof, of any payment default, any failure to
satisfy any financial covenant, or any other material default
under any note, indenture, loan agreement, mortgage, lease, deed
or other similar agreement relating to any Indebtedness of
Borrower or any Guarantor;
(iv) within five (5) Business Days after the
occurrence thereof, if Borrower or any Guarantor shall incur,
create, contract for, waive, assume, have outstanding, guarantee
or otherwise become liable with respect to Indebtedness;
(v) promptly upon the occurrence thereof, of any
name change or change in Fiscal Year for Borrower or any
Guarantor;
(vi) promptly upon the occurrence thereof, a copy of
any amendment to the Organizational Documents of Borrower;
(vii) immediately upon Borrower's learning thereof, of
any event or occurrence which constitutes a Potential Default;
and
(viii) within five (5) Business Days after the date
entered into, a copy of each contract, agreement, arrangement or
understanding evidencing a material Operating Agreement which
has a primary term which is greater than one year and involves
payments by Borrower in excess of $50,000 per year.
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(h) PROPERTY RIGHTS AND CLAIMS. Promptly upon receipt of
same, a copy of any notice or other instrument received by Borrower
which might materially adversely affect the Property or the Liens
securing the Obligation including, without limitation, any notice from a
public authority concerning any tax or special assessment, or any notice
of any alleged violation of any zoning ordinance, restrictive covenant,
fire ordinance, building code provision, or other Governmental
Requirement affecting the Property.
(i) OTHER INFORMATION. Such other information concerning the
business, properties, or financial condition of Borrower and any
Guarantor as Lender shall reasonably request.
4.02 LOAN PROCEEDS. Borrower shall use the proceeds of the Initial
Advance to pay amounts set forth on the Borrower's Statement prepared by the
Title Company for Closing, approved by Lender, and shall use the balance of the
proceeds of the Loan Amount only for the purposes for which they are advanced in
accordance with this Loan Agreement.
4.03 ASSETS OF BORROWER. The only business of Borrower shall be the
ownership and operation of the Property and the Hotel/Retail Property, and the
only asset of Borrower shall be the Property and the Hotel/Retail Property and
other assets directly related to the operation of the Property and the
Hotel/Retail Property.
4.04 LEASES. Borrower shall execute no Lease with respect to any
portion of the Residential Condominium or the Future Development Area Unit
without the prior written consent of Lender. In the event Lender consents to any
Lease upon such Property (i) Borrower shall not collect any rent for more than
one month in advance under any such Lease, (ii) Borrower shall not pledge,
transfer, assign, mortgage, encumber, or allow to be encumbered any Leases or
future payments of the Rents except to Lender and (iii) at the request of
Lender, Borrower will assign and transfer to Lender any and all Leases and
execute and deliver all such further assurances and assignments as Lender shall
from time to time require.
4.05 MANAGEMENT, MAINTENANCE, REPAIRS AND ALTERATIONS.
(a) The Property shall at all times be managed directly and
exclusively by Manager pursuant to the Approved Management Agreement.
(b) Borrower shall cause the Aggregate Property to be
operated, maintained and managed at all times in a first-class manner
consistent with the requirements of the Master Declaration and shall
cause the Property to be operated, maintained and managed at all times
in a first-class manner consistent with the requirements of the Master
Declaration and Residential Condominium Declaration. Borrower shall keep
in effect (or cause to be kept in effect) at all times all permits,
licenses and contractual arrangements as may be necessary to meet the
standard of operation described in the foregoing sentence or as may be
required by Governmental Requirements.
(c) Except as contemplated by the Plans and Approved Budget,
Borrower (i) shall not undertake to construct any Improvements on the
Property without the prior written consent of Lender, (ii) shall not
commit or permit any waste or deterioration of or to the Property, and
(iii) following completion of the Improvements, shall constantly keep
and maintain the Property and all amenities in connection therewith in
good and neat order and repair and in compliance with the requirements
of the Master Declaration and the Residential Condominium Declaration.
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(d) From time to time, as required by Lender, Borrower and
Manager shall permit Lender and any Governmental Authority and their
respective agents, employees and representatives, to enter upon the
Property for the purpose of inspection thereof.
(e) Borrower will act prudently and in accordance with
customary industry standards in managing and operating its assets,
properties, business and investments (including the Property and the
Hotel/Retail Property). Borrower will keep the Property, the
Hotel/Retail Property and all of its other assets which are reasonably
necessary to the conduct of its business in good working order and
condition.
4.06 INSPECTION OF BOOKS AND RECORDS. Borrower shall at all times
keep complete and accurate books, records and accounts of its transactions, in
accordance with GAAP, and permit any representative of Lender, at all reasonable
times upon reasonable notice, to examine and copy the books and records of
Borrower, and all contracts, statements, invoices, bills, and claims for labor,
materials, and services supplied for the construction, reconstruction,
maintenance, operation and repair of the Property.
4.07 COMPLIANCE WITH GOVERNMENTAL REQUIREMENTS. Borrower shall timely
comply with all Governmental Requirements affecting the Property and, upon
request by Lender, deliver to Lender evidence thereof to the extent reasonably
available. Borrower assumes full responsibility for the compliance of the Plans
and the Property with all Governmental Requirements, applicable restrictive
covenants and sound building and engineering practices and, notwithstanding any
approvals by Lender, Lender shall not have any obligation or responsibility
whatsoever for the Plans or any other matter incident to the Property or the
construction, renovation or maintenance of any part of the Improvements.
4.08 INSURANCE AND NOTICE.
(a) Borrower shall maintain, or cause to be maintained, in
full force and effect, until the Loan and Obligation have been paid in
full, insurance as evidenced by the Insurance Policies, and shall
deliver or cause to be delivered to Lender, (a) contemporaneously with
the execution hereof, the Insurance Policies or certificates evidencing
the Insurance Policies and (b) all renewal Insurance Policies, or
certificates thereof, at least fifteen (15) days before the expiration
date of each expiring Insurance Policy. Each insurance policy shall
contain a provision whereby the insurer agrees that the policy shall not
be cancelled or modified without providing at least thirty (30) days
prior written notice to the Lender. The insurers waive any rights to
claim any premiums and commissions against Lender and provide that the
Lender is permitted to make payments to effect continuation of the
policies in the event of notice of cancellation due to non-payment of
premiums. The policies shall provide that, with respect to the interest
of the Lender, the policy will not be invalidated and shall insure
Lender regardless of any act, failure to act, negligence, or violation
of warranties, or conditions in the policy by any named insured.
(b) BORROWER IS REQUIRED TO (I) KEEP THE PROPERTY INSURED
AGAINST DAMAGE IN THE AMOUNT THE LENDER SPECIFIES; (II) PURCHASE THE
INSURANCE FROM AN INSURER THAT IS AUTHORIZED TO DO BUSINESS IN THIS
STATE OR AN ELIGIBLE SURPLUS LINES INSURER; AND (III) NAME THE LENDER AS
THE PERSON TO BE PAID UNDER THE POLICY IN THE EVENT OF A LOSS. BORROWER
MUST, IF REQUIRED BY THE LENDER, DELIVER TO THE LENDER A COPY OF THE
POLICY AND PROOF OF THE PAYMENT OF PREMIUMS. IF BORROWER FAILS TO MEET
ANY REQUIREMENT LISTED IN THE PRECEDING TWO SENTENCES, LENDER MAY OBTAIN
COLLATERAL PROTECTION INSURANCE ON BEHALF OF BORROWER AT BORROWER'S
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EXPENSE. This Notice is provided pursuant to the requirements of Texas
Finance Code ss.307.052.
4.09 PAYMENT OF TAXES. Borrower shall pay and discharge all taxes,
assessments, and governmental charges or levies imposed upon Borrower (whether
imposed by contract or agreement or by Governmental Requirement), or upon
Borrower's income or profits, or upon any of the Property or upon any other
property belonging to it before delinquent; PROVIDED, HOWEVER, that Borrower
shall not be required to pay any such tax, assessment, charge, or levy if and so
long as the amount, applicability, or validity thereof shall currently be
contested in good faith by appropriate proceedings and appropriate reserves
therefor have been established, unless such contest would violate SECTION 4.10
hereof. Borrower shall deliver to Lender evidence of the payment of all such
taxes, assessments and governmental charges and levies by no later than thirty
(30) days after the payment of any such taxes, assessments and governmental
charges or levies is due.
4.10 PAYMENT OF CLAIMS. Borrower shall promptly pay or cause to be
paid when due all lawful taxes and assessments and all costs and expenses
incurred in connection with the Property and the Hotel/Retail Property, and
shall keep the Property free and clear of any Liens, charges, or claims other
than the Liens of the Mortgage and other Liens securing obligations of Borrower
to Lender, and the Permitted Exceptions. Notwithstanding anything to the
contrary contained in this Loan Agreement, Borrower (a) may contest the validity
or amount of any claim of any contractor, consultant, architect, or other person
providing labor, materials, or services with respect to the Property, (b) may
contest any tax or special assessments levied by any Governmental Authority, and
(c) may contest the enforcement of or compliance with any Governmental
Requirement, and such contest on the part of Borrower shall not be an Event of
Default hereunder IF during the pendency of any such contest, Borrower shall
furnish to Lender and Title Company (i) a bond indemnifying against liens in
accordance with applicable law with corporate surety satisfactory to Lender and
Title Company or (ii) other security as required by a court of competent
jurisdiction to remove any such lien as an encumbrance against the Property, and
provided that Borrower shall immediately pay any amount adjudged by a court of
competent jurisdiction to be due, with all costs, interest, and penalties
thereon.
4.11 COSTS AND EXPENSES. Borrower shall pay when due all costs and
expenses required by this Loan Agreement including, without limitation, (a) all
taxes and assessments applicable to the Property, (b) all fees for filing or
recording the Loan Documents, (c) all fees and commissions lawfully due to
brokers, salesmen, and agents in connection with the Loan or the Property and
which are not incurred by Lender, (d) all reasonable fees, disbursements, and
expenses of legal counsel to Lender incurred in connection with the Loan, (e)
all title insurance and title examination charges, including premiums for the
Title Insurance Policy, (f) all survey costs and expenses, including the cost of
the Survey, (g) all premiums for the Insurance Policies, (h) all costs and
expenses of the Environmental Audit, the Engineer's Audit, the Insurance Audit,
and the Appraisal, and (i) all other reasonable costs and expenses payable to
third parties which are incurred by Lender in connection with the consummation
of the transactions contemplated by this Loan Agreement, whether incurred prior
to or after the date hereof.
Borrower further agrees to pay all out-of-pocket expenses to third
parties incurred by Lender in connection with the preparation of this Loan
Agreement and the other Loan Documents or in connection with any amendments,
modifications or waivers of the provisions hereof or thereof (whether or not the
transactions thereby contemplated shall be consummated) or incurred by Lender in
connection with the administration or the enforcement or protection of its
rights and obligations (or the rights and obligations of Lender) in connection
with this Loan Agreement and the other Loan Documents or in connection with the
Loan made or any Note issued hereunder including, but not limited to, all
reasonable fees, charges and disbursements of counsel for Lender and all
out-of-pocket expenses incurred by Lender for reasonable visits by Lender's
employees and agents to inspect the Property.
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4.12 INDEMNITY BY BORROWER. Borrower will indemnify, save, defend,
and hold harmless Lender and its respective Affiliates, directors, officers,
shareholders, agents, attorneys, and employees (collectively, the "INDEMNITEE")
from and against: (a) any and all claims, demands, actions, or causes of action
that are asserted against any indemnitee by any Person if the claim, demand,
action, or cause of action relates to a claim, demand, action, or cause of
action that the Person asserts or may assert against Borrower, any Guarantor or
any of the Property, (b) any and all claims, demands, actions or causes of
action that are asserted against any indemnitee if the claim, demand, action or
cause of action directly or indirectly relates to the failure of Borrower, any
Guarantor or any other Person to perform or comply with any of the terms,
covenants or provisions of this Loan Agreement or of any of the other Loan
Documents, (c) any and all claims, demands, actions or causes of action that are
asserted against any indemnitee if the claim, demand, action or cause of action
directly or indirectly relates to any failure of condition or any other breach
or default under any Governmental Requirement applicable to Borrower, any
Guarantor or any of the Property, (d) any administrative or investigative
proceeding by any Governmental Authority directly or indirectly related to a
claim, demand, action or cause of action described in clauses (a), (b) or (c)
above, and (e) any and all liabilities, losses, costs, or expenses (including
reasonable attorneys' fees, expenses and disbursements) that any indemnitee
suffers or incurs as a result of any of the foregoing; PROVIDED, HOWEVER, that
Borrower shall have no obligation under this SECTION 4.12 to any indemnitee with
respect to any of the foregoing arising out of the gross negligence or willful
misconduct of such indemnitee or any of such indemnitee's agents or employees
nor shall Borrower have any obligation under this SECTION 4.12 to any indemnitee
with respect to any negligent act of Lender in operating or managing the
Property after Lender has taken possession thereof. If any claim, demand, action
or cause of action is asserted against any indemnitee, such indemnitee shall
promptly notify Borrower, but the failure to do so shall not affect Borrower's
obligations under this SECTION 4.12 unless such failure materially prejudices
Borrower's right to participate in the contest of such claim, demand, action or
cause of action, as hereinafter provided. If requested by Borrower in writing
and so long as no Event of Default shall have occurred and be continuing, such
indemnitee shall in good faith contest the validity, applicability and the
amount of such claim, demand, action or cause of action and shall permit
Borrower to participate in such contest. Any indemnitee that proposes to settle
or compromise any claim or proceeding for which Borrower may be liable for
payment of indemnity hereunder shall give Borrower written notice of the terms
of such proposed settlement or compromise reasonably in advance of settling or
compromising such claim or proceeding and shall obtain Borrower's concurrence
thereto. Each indemnitee is authorized to employ counsel in enforcing its rights
hereunder and in defending against any claim, demand, action, or cause of action
covered by this SECTION 4.12; PROVIDED, HOWEVER, that each indemnitee shall
endeavor, but shall not be obligated, in connection with any matter covered by
this SECTION 4.12 which also involves other indemnitees, to use reasonable
efforts to avoid unnecessary duplication of effort by counsel for all
indemnitees.
4.13 FURTHER ASSURANCES. Borrower will make, execute or endorse, and
acknowledge and deliver or file or cause the same to be done, all such vouchers,
invoices, notices, certifications, additional agreements, undertakings,
conveyances, deeds of trust, mortgages, transfers, assignments, financing
statements or other assurances, and take all such other action, as Lender may,
from time to time, deem reasonably necessary or proper in connection with this
Loan Agreement or any of the other Loan Documents, the obligations of Borrower
hereunder or thereunder, or for better assuring and confirming unto Lender all
or any part of the security for any of the Obligation.
4.14 CONSTRUCTION CONTRACTS. Borrower shall become party to no
contract, for the performance of any work on the Property or for the supplying
of any labor, materials, or services for the construction of any improvements on
the Property except upon such terms and with such parties as shall be reasonably
approved in advance in writing by Lender. Each Construction Contract shall apply
only to construction of the Improvements and Property and shall not cover
construction on or related to the Hotel/Retail
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Property or any other property. Each Construction Contract must contain a
disclaimer by the Contractor of any and all claims for any lien against the Land
or Property in connection with any materials delivered to or services furnished
with respect to the Hotel/Retail Property. Contemporaneously with the execution
by Borrower of any construction contract for construction of any of the
Improvements, Borrower shall deliver to Lender a Contractor's Affidavit and
Subordination executed by the Contractor. Each Construction Contract shall
provide that all liens of the contractor are subordinate to the Mortgage and
shall require all subcontracts entered into by the contractor to contain a
provision subordinating the subcontractor's liens to the lien of the Mortgage.
No change orders requiring an increase in the cost of any labor, materials or
services in connection with the Property in excess of $100,000 per change order,
or in excess of $500,000 in the aggregate of increases required by all change
orders, shall be effective without the prior written approval of Lender.
Notwithstanding the foregoing, no change order which results in a change in the
Approved Budget which is not permitted by SECTION 4.16 may be made. No approval
by Lender of any construction contract or change order shall impose upon Lender
any responsibility for the adequacy, form, or content of such construction
contract or any change orders.
4.15 PLANS. Borrower shall deliver to Lender, for Lender's review, a
complete set of plans and specifications for the Improvements not later than
thirty (30) days before Borrower desires to commence construction of the
Improvements. Lender shall employ, at Borrower's cost and expense, the
Inspecting Architect/Engineer to review and comment upon plans and
specifications submitted by Borrower. Borrower and Borrower's Architect shall
resolve any comments or concerns of Lender or the Inspecting Architect/Engineer.
The plans and specifications approved by Lender shall constitute the "PLANS" for
purposes of this Loan Agreement. Lender shall use commercially reasonable
efforts to ensure that Lender and Lender's consultants do not unreasonably delay
a response to Borrower as to any plans and specifications submitted to Lender
for review.
4.16 PROSECUTION OF CONSTRUCTION. The construction of the
Improvements shall be prosecuted with due diligence and continuity, in a good
and workmanlike manner, and in accordance with sound building and engineering
practices, all applicable Governmental Requirements, and the Plans. From and
after the date hereof, Borrower shall not permit complete cessation of work for
a period in excess of thirty (30) consecutive days without the prior written
consent of Lender (which consent shall not be unreasonably withheld), except for
staging of construction as set forth in a schedule submitted to Lender in
connection with the Plans, delays due to weather, strikes, riots, acts of God,
war, unavailability of labor or materials, governmental laws, regulations or
restrictions. Borrower shall promptly notify Lender of any such delays;
provided, however, that in no event shall work cease for a period in excess of
one hundred and twenty (120) aggregate days regardless of the cause. Borrower
shall, in any event, complete construction of all Improvements free and clear of
all liens on or before the Construction Commitment Termination Date.
4.17 CORRECTION OF DEFECTS. Borrower shall correct or cause to be
corrected (i) any material defect in any part of the Improvements, (ii) any
material departure (other than pursuant to change orders provided for by SECTION
4.14 above) in the construction of any part of the Improvements from the Plans
and Governmental Requirements, or (iii) any encroachment by any part of the
Improvements upon any building line, easement, property line, or restricted
area, in each case except as may be consented to by Lender following Borrower's
written notice to Lender of such issue.
4.18 STORAGE OF MATERIALS. Borrower shall cause all materials
supplied for, or intended to be utilized in, the construction of any part of the
Improvements, but not affixed to or incorporated into the Improvements or the
Property, to be stored on the Property or at such other location as may be
approved by Lender in writing, with adequate safeguards, to prevent loss, theft,
damage, or commingling with other materials or projects.
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4.19 INSPECTION OF THE PROPERTY. Borrower shall permit Lender, the
Inspecting Architect/Engineer, any Governmental Authority, and their respective
agents and representatives, to enter upon the Property and Hotel/Retail Property
and any locations where materials intended to be utilized in the construction of
any part of the Improvements are stored, for the purpose of inspection of the
Property, the Improvements, and such materials at all reasonable times.
4.20 NOTICES BY GOVERNMENTAL AUTHORITY, FIRE AND CASUALTY LOSSES,
ETC. Borrower shall timely comply with and promptly furnish to Lender true and
complete copies of any official notice or claim by any Governmental Authority
pertaining to the Property. Borrower shall promptly notify Lender of any fire or
other casualty or any notice of taking or eminent domain action or proceeding
affecting the Property or the Hotel/Retail Property.
4.21 APPLICATION OF ADVANCES AND THE LOAN. No part of the Loan will
be used for the purpose, whether immediate, incidental or ultimate, of
purchasing or carrying any "margin stock" (as defined by Federal Reserve Board
Regulation U) or extending credit to others for the purpose of purchasing or
carrying any margin stock.
4.22 THE BORROWER'S DEPOSIT. If Lender reasonably determines at any
time that the unadvanced portion of the Loan will be insufficient for payment in
full of (i) the costs of labor, materials, and services required for the
construction of the Improvements, (ii) other costs and expenses specified in the
Approved Budget, and (iii) other costs and expenses required to be paid in
connection with the acquisition and financing of the Land and the construction
of the Improvements in accordance with the Plans and any Governmental
Requirements, then Borrower shall, within five (5) days of a written request
from Lender, deliver such funds as Lender may require (the "BORROWER'S DEPOSIT")
to Lender. Lender shall not be required to pay interest on such Borrower's
Deposit. Lender may advance all or a portion of the Borrower's Deposit prior to
disbursing any additional proceeds of the Loan. Borrower shall promptly notify
Lender in writing if and when the cost of the construction of the Improvements
exceeds, or appears likely to exceed, the amount of the unadvanced portion of
the Loan and the unadvanced portion of the Borrower's Deposit.
4.23 DIRECT DISBURSEMENT AND APPLICATION BY LENDER. Lender shall have
the right, but not the obligation, to disburse and directly apply the proceeds
of any Advance to the satisfaction of any of Borrower's obligations hereunder.
Any Advance by Lender for such purpose, except from the Borrower's Deposit,
shall be part of the Loan and shall be secured by the Security Instruments.
Lender shall notify Borrower in writing of any disbursements made directly by
Lender; provided, however, Lender shall have no liability to Borrower for
failure to deliver such notice. Borrower hereby authorizes Lender to hold, use,
disburse, and apply the proceeds of the Loan and the Borrower's Deposit for
payment of the costs of construction of the Improvements, expenses incident to
the Loan and the Property, and the payment or performance of the Obligation.
Borrower hereby assigns and pledges the proceeds of the Loan and the Borrower's
Deposit to Lender for such purposes. Lender may advance and incur such expenses
as Lender deems necessary for the completion of construction of the Improvements
and to preserve the Property, and any other security for the Loan, and all such
expenses, even though in excess of the amount of the Loan, shall be secured by
the Security Instruments, and payable to Lender upon demand. Lender may disburse
any portion of any Advance at any time, and from time to time, to persons other
than Borrower for the purposes specified in this SECTION 4.11, irrespective of
the provisions of SECTION 2.03 hereof, and the amount of Advances to which
Borrower shall thereafter be entitled shall be correspondingly reduced.
4.24 ANTI-TERRORISM COMPLIANCE Borrower shall maintain adequate
procedures and policies to ensure that it is in compliance at all times with the
requirements of Anti-Terrorism and Anti-Money Laundering Laws, including without
limitation, Executive Order 13224, 66 Fed. Reg. 49079 (published September 25,
2001).
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4.25 DEFENSE OF TITLE. Borrower will preserve and defend its title to
the Property, will forever warrant and defend the same to Lender, and will
forever warrant and defend the validity and priority of the Liens of the Loan
Documents with respect to the Property against the claims of all Persons
whomsoever.
ARTICLE V
NEGATIVE COVENANTS
Until payment in full of the Obligation, Borrower agrees that:
5.01 NAME, FISCAL YEAR AND ACCOUNTING METHOD. Borrower will not
change its Fiscal Year or, except as may be approved by Lender, its method of
accounting or its name. Lender will not unreasonably withhold its consent to any
name change if, in connection with such name change, Borrower executes such
financing statements and other documents as Lender may reasonably require to
protect and preserve the Liens, rights, benefits, privileges and claims of
Lender under the Loan Documents.
5.02 CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE. Without
the prior written consent of Lender, which consent may be granted or withheld at
Lender's sole discretion, Borrower will not consolidate with or merge into any
other Person or convey, transfer or lease its properties or assets substantially
as an entirety to any Person.
5.03 ERISA COMPLIANCE. Neither (a) Borrower, nor (b) any ERISA
Affiliate will take any action of fail to take any action in violation of ERISA.
5.04 TRANSACTIONS WITH AFFILIATES. Borrower will not enter into any
transaction with, or pay any construction, service, operation, management or
other fees to itself or any Affiliate of Borrower except with Lender's consent,
such consent not to be unreasonably withheld (it being agreed that each
transaction disclosed in the prospectus of Behringer Harvard Short-Term
Opportunity Fund I LP has been approved by Lender); PROVIDED, HOWEVER, that
Borrower may enter into transactions with an Affiliate of Borrower upon terms
not less favorable to Borrower than would be obtainable at the time in
comparable transactions of Borrower in arms-length dealings with Persons other
than such affiliated or related Persons.
5.05 NO CONDITIONAL SALES CONTRACTS, ETC. No materials, equipment, or
fixtures shall be supplied, purchased, or installed for the construction or
operation of the Property pursuant to security agreements, conditional sale
contracts, lease agreements, or other arrangements or understandings whereby
title or a security interest is retained by any party or the right is reserved
or accrues to any party to remove or repossess any property, materials,
equipment or fixtures intended to be utilized in the construction, renovation or
operation of the Property.
5.06 LINES OF BUSINESS. Borrower will not, directly or indirectly,
engage in any business other than those in which it is presently engaged, or
discontinue any of its existing lines of business or substantially alter its
method of doing business.
5.07 EASEMENTS. Borrower shall not grant any easements or licenses
for utilities, roads or any other purposes over, under or on any of the Property
without the prior written consent of Lender, which consent will not be
unreasonably withheld or delayed by Lender.
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5.08 CHANGES IN ZONING. Borrower will not request or seek to obtain
any change to, or consent to any request for or change in, any Governmental
Requirement, restrictive covenant or other restriction applicable to any of the
Property or any other law, ordinance, rule, regulation, restrictive covenant or
restriction affecting the zoning, development or use of any of the Property, or
any variance or special exception therefrom, without the prior written consent
of Lender, which consent will not be unreasonably withheld or delayed.
5.09 NEW CONSTRUCTION. Except with respect to construction of the
Improvements as contemplated in the Plans and Approved Budget, Borrower shall
not undertake to construct any new building or other significant improvement on
the Land without the prior written consent of Lender.
5.10 LIMITATION ON INDEBTEDNESS AND LIENS. Borrower shall not incur,
create, contract for, waive, assume, have outstanding, guarantee or otherwise
become liable with respect to Indebtedness other than Permitted Indebtedness, or
grant or suffer to exist any Liens other than Permitted Liens.
5.11 DISTRIBUTIONS, DIVIDENDS AND REPAYMENTS. Borrower shall not make
or allow to be made any Distributions or Dividends at any time if any Event of
Default has occurred and is continuing.
5.12 LIMITATION ON INVESTMENTS. Borrower shall not, without the prior
written consent of Lender, directly or indirectly, make, retain or have
outstanding any investments (whether through purchase of stock or obligations or
otherwise) in, or loans or advances to, any other Person or acquire all of any
substantial part of the assets or business of any other Person, or be or become
liable as endorser, guarantor, surety or otherwise for any debt, obligation or
undertaking of any other Person or otherwise agree to provide funds for payment
of the obligations of another, or supply funds thereto or invest therein or
otherwise assure a creditor of another against loss or apply for or become
liable to the issuer of a letter of credit or subordinate any claim or demand it
may have to the claim or demand of any other Person; PROVIDED, however, that the
foregoing provisions shall not apply to nor operate to prevent.
(a) investments in direct obligations of the United States
of America or of any agency or instrumentality thereof whose obligations
constitute full faith and credit obligations of the United States of
America provided that any such obligations shall mature within one year
from the date the same are acquired by Borrower;
(b) investments in commercial paper rated P-1 by ▇▇▇▇▇'▇
Investors Services, Inc., or A-1 by Standard & Poor's Corporation
maturing within one year of the date of issuance thereof;
(c) investments in certificates of deposit issued by any
United States or OECD commercial bank with a branch in the U.S. and in
all cases having capital and surplus of not less than $50,000,000; and
(d) endorsements for collection or deposit of commercial
paper received in the ordinary course of business.
5.13 ORGANIZATIONAL DOCUMENTS. Borrower shall not amend its
Organizational Documents without the prior written consent of Lender, which
consent will not be unreasonably withheld or delayed with respect to any
amendment necessary in connection with a Permitted Transfer.
5.14 MATERIAL AGREEMENTS. Without Lender's prior written consent,
which consent will not be unreasonably held, Borrower shall not amend, restate
or supplement, or allow the amendment, restatement or supplement of, or allow
any default or failure of performance to occur under, any Material
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Agreement. Without the prior written consent of Lender, Borrower shall not allow
the termination or rescission of any Material Agreement.
5.15 ANTI-TERRORISM COMPLIANCE. Borrower shall not permit any Person
who is an OFAC Prohibited Person to own any direct or indirect interest in
Borrower or any Guarantor.
5.16 MASTER DECLARATION Borrower shall not (i) exercise any of the
Declarant Rights under the Master Declaration without the prior written approval
of Lender of each act or omission in pursuance thereof and (ii) cast any vote as
an Owner of any Unit with respect to the Master Association (as defined in the
Master Declaration) without the prior written approval of Lender. Without
limitation of the foregoing, without the prior written consent of Lender,
Borrower shall take no action to reduce or impair any easement created in the
Master Declaration or alter any Common Element which is shared by the
Residential Unit or any Sub-Unit of the Residential Unit.
5.17 RESIDENTIAL UNIT DECLARATION Borrower shall not (i) exercise any
of the Declarant Rights under the Residential Condominium Declaration without
the prior written approval of Lender of each act or omission in pursuance
thereof and (ii) cast any vote as an Owner of any Residence with respect to the
Residential Association (as defined in the Residential Condominium Declaration)
without the prior written approval of Lender.
ARTICLE VI
CONDITIONS OF LENDING
The effectiveness of this Loan Agreement and the obligation of Lender to
make the Loan are subject to the conditions precedent that Lender shall have
received, each dated as of the date hereof, unless otherwise expressly stated,
all of the following, in form and substance acceptable to Lender:
6.01 LOAN DOCUMENTS. Fully executed and, where appropriate,
acknowledged counterparts of this Loan Agreement, the Note, the Mortgage, the
Assignments of Leases and Rents, the Environmental Indemnity Agreement, the
Guaranties, the Financing Statements, the Lender - Manager Agreement and the
Approved Manager Agreement.
6.02 GOVERNMENTAL APPROVALS. Zoning letters, an engineer's report or
other evidence, in form reasonably satisfactory to Lender, that the Property
complies with applicable zoning requirements and that the Improvements, after
completion of construction, will comply with the Americans with Disabilities Act
of 1990, Pub. L. No. 89-670, 104 Stat. 327 (1990), as amended, and all
regulations promulgated pursuant thereto to the extent compliance is required
thereby.
6.03 APPRAISAL. An Appraisal of the Property dated not earlier than
March 28, 2005, confirming that the aggregate value of the Property, after
completion of the Improvements, will be equal to or will exceed Forty-Six
Million Three Hundred Thousand Dollars ($46,300,000.00).
6.04 INSURANCE. Insurance Policies covering the Property, including
without limitation, builder's risk insurance.
6.05 SURVEY. A Survey of the Land dated within six (6) months of the
Closing Date or such more recent date as is required by the Title Insurance
Company to issue to Lender the Title Policy in the form required.
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6.06 TITLE INSURANCE. A Title Insurance Commitment, whereby the Title
Insurance Company unconditionally commits to issue the Title Insurance Policy.
6.07 UCC SEARCHES. The UCC Searches.
6.08 FINANCIAL INFORMATION. The Initial Financial Statements.
6.09 SOILS REPORT . The Soils Report.
6.10 INSPECTING ARCHITECT/ENGINEER AUDIT. The Inspecting
Architect/Engineer Audit.
6.11 ENVIRONMENTAL AUDIT. The Environmental Audit.
6.12 APPROVED MANAGEMENT AGREEMENT True and complete copies of the
Approved Management Agreement, if any.
6.13 ORGANIZATIONAL DOCUMENTS. True and complete copies of the
Organizational Documents of Borrower, each partner of Borrower, and Guarantors.
6.14 TAX INFORMATION. The Tax Information.
6.15 OPINIONS OF COUNSEL. The Legal Opinions.
6.16 ACCOUNT. The Account shall have been established with Texans
Credit Union.
6.17 THE FEES. The Origination Fee required by SECTION 2.05 hereof.
6.18 PARTNERSHIP CONSENT. A consent of Borrower to the incurrence by
Borrower of the Loan, in form and substance reasonably acceptable to Lender. A
consent of the members of each Guarantor to the execution and delivery of their
respective Guaranty and the Environmental Indemnity.
6.19 ANB CONSTRUCTION LOAN. Closing of the ANB Construction Loan and
delivery to Lender of a paydown on the Original Loan from the proceeds of the
ANB Construction Loan in the amount shown on a settlement statement prepared by
the Title Company in connection with Closing and approved by Lender.
6.20 ADDITIONAL INFORMATION. Such other information and documents as
may reasonably be required by Lender and its counsel.
ARTICLE VII
EVENTS OF DEFAULT
An "EVENT OF DEFAULT" (herein so called) shall exist if any one or more
of the following events shall occur:
(a) The failure of payment when due of (i) the principal of
or accrued, unpaid interest on the Note upon maturity, whether upon the
Maturity Date or earlier following acceleration, (ii) any regularly
scheduled installment of interest on the Note on or before ten (10) days
after the due date, or (iii) any other part of the Obligation on or
before ten (10) days after written notice from Lender;
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(b) The failure of any Person other than Lender to
punctually and properly perform any covenant, agreement, obligation, or
condition contained herein or in any other Loan Document and (except for
any negative covenant contained in ARTICLE IV, for which no notice or
grace period shall apply) the continuance of such failure for a period
of thirty (30) days following the earlier of Borrower's actual knowledge
thereof or written notice thereof from Lender, or such longer period of
time (but in no event longer than sixty (60) days from the date of such
failure) as may be necessary to cure such failure provided that such
Person is diligently working to cure or remedy such failure; or
(c) Any statement, representation, or warranty in this Loan
Agreement or any other Loan Document by any Person other than Lender was
false, misleading, or erroneous in any material respect as of the date
made; or
(d) Borrower or any Guarantor shall (i) execute a general
assignment for the benefit of its creditors, or (ii) become the subject,
voluntarily or involuntarily, of any bankruptcy, insolvency or
reorganization proceeding; provided, however, it shall not be an Event
of Default if Borrower or a Guarantor becomes the subject of an
involuntary bankruptcy, insolvency or reorganization proceeding so long
as such person promptly objects to such proceeding and seeks a dismissal
thereof AND the proceeding is dismissed within sixty (60) days following
its filing, or (iii) admit in writing that it is unable to pay its debts
generally as they become due, or (iv) apply for or consent to the
appointment of a custodian, receiver, trustee, or liquidator of itself
or of all or a substantial part of its assets, or (v) file a voluntary
petition seeking protection under any Debtor Relief Laws, or other
insolvency law now or hereafter existing, or (vi) file an answer
admitting the material allegations of, or consenting to, or default in
filing an answer to, a petition filed against it in any bankruptcy,
reorganization, or other insolvency proceedings, or (vii) institute or
voluntarily be or become a party to any other judicial proceedings
intended to effect a discharge of the debts of such person, in whole or
in part, or a postponement of the maturity and the collection thereof,
or a suspension of any of the rights or powers of Lender granted in the
Note, the Mortgage, this Loan Agreement, any Guaranty or the other Loan
Documents; or
(e) An order, judgment, or decree shall be entered by any
court of competent jurisdiction appointing a custodian, receiver,
trustee, or liquidator of Borrower or any Guarantor or of all or any
substantial part of such Person's assets; or
(f) The failure of Borrower or any Guarantor to pay (or bond
to the satisfaction of Lender) any money judgment against such person in
excess of $10,000.00, or with respect to each and every money judgment
against Borrower or any Guarantor, $50,000.00 in the aggregate as to
each such person, at least ten (10) Business Days prior to the date on
which its assets may be sold to satisfy such judgment; or
(g) The failure to have discharged within a period of ten
(10) Business Days after the commencement thereof any attachment,
sequestration, or similar proceedings against any of the assets of
Borrower or any Guarantor; or
(h) The liquidation, dissolution or termination of Borrower
or any Guarantor; or
(i) Any of the Loan Documents shall for any reason cease to
be in full force and effect, or be declared null and void or
unenforceable in whole or in material part; or the validity
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or enforceability (but excluding reasonable issues of interpretation) of
any Loan Document shall be challenged or denied by any party thereto; or
(j) Condemnation of all or any part of the Property which,
in Lender's good faith judgment, (i) results or will result in the
Property or any portion thereof failing to comply in any material
respect with any Governmental Requirement or any restriction affecting
the Property or (ii) will, in Lender's reasonable judgment, materially
and adversely affect the operation or use of the Property, including
without limitation, access, parking, security or material amenities; or
(k) Without the prior written consent of Lender, which
consent may be withheld in Lender's sole and absolute discretion, there
shall be any transfer, sale, Lease, trade, conveyance, exchange,
mortgage, encumbrance, pledge, assignment or other disposition of (i)
the Property (except for Leases permitted hereunder and Permitted
Personal Property Transactions), (ii) any ownership interest in Borrower
except for a Permitted Transfer, (iii) the right to receive
distributions, dividends or profits from Borrower, or (iv) any portion
of, or any interest in, any of the property, rights and interests
described in the foregoing SUBSECTIONS (I), (II), OR (III); or
(l) The Liens created (or purported to be created) by the
Mortgage or any other Loan Documents should become unenforceable, or
cease to be first priority Liens; or
(m) Any default or failure of performance occurs under any
Permitted Indebtedness (except the Obligation) involving an aggregate
amount in excess of $100,000 and is not cured to the satisfaction of the
holder of such Indebtedness within the applicable cure period, if any,
expressly granted in the documents evidencing such Indebtedness; or
(n) An inability of Borrower to satisfy any conditions
specified in this Loan Agreement as precedent to the obligation of
Lender to make an Advance within thirty (30) days after written notice
from Lender that Borrower has failed to satisfy the conditions to an
Advance requested pursuant to a Request for Disbursement; or
(o) A failure of any of the materials supplied for the
construction of the Improvements to comply in any material respect with
the Plans or any Government Requirements and such non-compliance is not
corrected by (i) if such failure is reasonably susceptible of cure
within thirty (30) days, within thirty (30) days of written notice from
Lender, or (ii) if such failure is not reasonably susceptible of cure
within thirty (30) days, the first to occur of (A) within one hundred
twenty (120) days following written notice from Lender, so long as
Borrower commences the cure within the first thirty (30) days and
diligently prosecutes such cure to completion, (B) the applicable
deadline imposed by any Governmental Authority or Governmental
Requirement, or (C) the Construction Commitment Termination Date; or
(p) The Improvements are not complete (other than
non-material punch list items) as contemplated in the Plans and the
Approved Budget within thirty (30) days beyond the Construction
Commitment Termination Date; or
(q) The proceeds of the Loan, or any part thereof, are
being, or shall at any time have been, diverted to a purpose other than
the purpose for which advanced; or
(t) Any default or event of default occurs and is not cured
within any applicable cure period under the ANB Construction Loan; or
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(u) Borrower exercises any of Declarant Rights under the
Master Condominium Declaration or the Residential Condominium
Declaration without the prior written consent of Lender.
ARTICLE VIII
RIGHTS AND REMEDIES OF LENDER
8.01 RIGHTS OF LENDER. At any time upon the occurrence and during the
continuance of any Event of Default, Lender shall have the right, in addition to
any other right or remedy of Lender, but not the obligation, in its own name or
in the name of Borrower, to enter into possession of all or any portion of the
Property; to perform all work necessary to complete the construction,
reconstruction, maintenance or renovation of or to operate the Property; and to
employ watchmen and other safeguards to protect such Property. Borrower hereby
appoints Lender as the attorney-in-fact of Borrower, with full power of
substitution, and in the name of Borrower, if Lender elects to do so, at any
time upon the occurrence and during the continuance of any Event of Default to
use such sums as are necessary to make such alterations, repairs and renovations
to the Property and employ such architects, engineers, and contractors as may be
required for the purpose of completing any construction, reconstruction,
maintenance or renovation on the Property or any portion thereof substantially
in accordance with Governmental Requirements, applicable restrictive covenants
and the Management Agreement, or to operate the Property or any portion thereof,
(b) execute all applications and certificates in the name of Borrower which may
be required for completion of construction, maintenance or renovation of or for
the operation of any of the Improvements, or for the benefit of the Property,
(c) endorse the name of Borrower on any checks or drafts representing proceeds
of the Insurance Policies, or other checks or instruments payable to Borrower
with respect to the Property, (d) do every act with respect to the construction,
repair, maintenance and operation of any of the Property or any portion thereof
which Borrower may do, and (e) prosecute or defend any action or proceeding
incident to the Property. The power-of-attorney granted hereby is a power
coupled with an interest and is irrevocable. Lender shall have no obligation to
undertake any of the foregoing actions, and if Lender should do so, it shall
have no liability to Borrower for the sufficiency or adequacy of any such
actions taken by Lender.
Notwithstanding the foregoing, it is expressly understood that Lender
assumes no liability or responsibility for the performance of any duties of
Borrower hereunder or under any of the Loan Documents, applicable Governmental
Requirements or restrictive covenants, or the Management Agreement, or other
control over the management and affairs of Borrower, nor by any such action
shall Lender be deemed to create a partnership with Borrower.
8.02 ACCELERATION. At any time upon the occurrence and during the
continuance of any Event of Default, Lender may, at its option, declare the Loan
and the remaining Obligation to be immediately due and payable without
presentment, demand, protest, notice of protest and non-payment, or other notice
of default, notice of acceleration and intention to accelerate or other notice
of any kind, all of which are expressly waived by Borrower; PROVIDED, HOWEVER,
that if any Event of Default specified in ARTICLE VII(E) hereof shall occur, the
principal of and all interest on the Loan shall thereupon become due and payable
concurrently therewith, without any further action by Lender and without
presentment, demand, protest, notice of protest and non-payment, or other notice
of default, notice of acceleration and intention to accelerate or other notice
of any kind, all of which are expressly waived by Borrower.
8.03 FUNDS OF LENDER. Any funds of Lender used for any purpose
referred to in this ARTICLE VIII shall constitute a portion of the Obligation,
shall bear interest from the date advanced at the Default Rate, shall be secured
by all collateral as security for the Loan and shall be due and payable
immediately upon demand.
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8.04 INTENTIONALLY DELETED.
8.05 PAYMENTS TO AFFILIATES. Borrower shall not pay or allow to be
paid any amount to Borrower, Guarantor or any Affiliate of any such Person upon
the occurrence and during the continuance of an Event of Default.
8.06 MANAGEMENT AGREEMENT Upon the occurrence of any Event of
Default, at any time prior to the completion of the Improvements, Lender may, at
its option, require that the Management Agreement be terminated. Upon a
foreclosure or deed in lieu of foreclosure with respect to all or any portion of
the Property prior to the completion of the Improvements, each Purchaser (and
Lender, if Lender is a Purchaser) shall have the right to terminate or continue
the Management Agreement as and upon the terms described in the Lender Manager
Agreement.
8.07 OTHER RIGHTS AND REMEDIES. Unless such document expressly allows
Lender to act prior to the occurrence of an Event of Default, and with or
without accelerating the maturity of the Loan, Lender may proceed to take and
enforce any of its rights, interests, benefits or privileges under the Loan
Documents or which may be otherwise available to Lender, at law or in equity.
8.08 NO WAIVER OR EXHAUSTION. No waiver by Lender of any of its
rights or remedies hereunder, in the other Loan Documents, or otherwise, shall
be considered a waiver of any other or subsequent right or remedy of Lender; no
delay or omission in the exercise or enforcement by Lender of any rights or
remedies shall ever be construed as a waiver of any right or remedy of Lender;
and, no exercise or enforcement of any such rights or remedies shall ever be
held to exhaust any right or remedy of Lender.
8.09 RIGHT OF OFFSET. Borrower hereby grants to Lender a right of
offset, to secure the repayment of the Obligation, upon any and all monies,
securities or other property of Borrower, and the proceeds therefrom, now or
hereafter held or received by or in transit to Lender, from or for the account
of Borrower, whether for safekeeping, custody, pledge, transmission, collection
or otherwise, and also upon any and all deposits (general or special) and
credits of Borrower, and any and all claims of Borrower against Lender at any
time existing. At any time upon the occurrence and during the continuance of any
Event of Default, Lender is hereby authorized at any time and from time to time,
without notice to Borrower, to offset, appropriate, apply and enforce said liens
against any and all items hereinabove referred to against the Loan and the
remaining Obligation. Borrower waives any right of Borrower to require or
request that Lender look to any of the Property or Collateral for repayment of
the Obligation prior to exercising its right of offset and waives any obligation
of Lender to do so.
8.10 APPLICATION OF INSURANCE PROCEEDS..
(a) Borrower shall give prompt notice to Lender of any
damage, destruction or casualty to the Property or any part thereof,
whether or not covered by insurance.
(b) Lender may collect the proceeds of any and all insurance
required to be carried under this Loan Agreement that may become payable
with respect to the Property or any portion thereof (and Borrower hereby
authorizes and directs each insurance company to make payment of such
proceeds directly to Lender at Lender's request) and, at Lender's sole
option, may apply the same to the Obligation in the order and manner as
Lender may determine, or use all such casualty proceeds to allow
Borrower to restore or rebuild the Property so damaged to a condition
reasonably satisfactory to Lender provided that all of the following
conditions are satisfied: (i) Lender determines in good faith that it is
economically, financially and practically feasible to
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repair and restore the Property to its previous condition, with such
repairs and restorations being completed prior to the Maturity Date;
(ii) the total cost of repairing and restoring the Property to its
previous condition, as estimated by an architect approved by Lender,
shall not be greater than the amount of such casualty insurance proceeds
together with any sums that Borrower deposits with Lender in advance for
the purpose of paying for the cost of such repairs and restoration;
(iii) such restoration and repair shall be accomplished in accordance
with the requirements and conditions of SECTION 8.10(C) hereof; and (iv)
no Event of Default has occurred and is continuing. Notwithstanding the
foregoing, upon the request of Borrower, Lender shall make such
insurance proceeds available to Borrower to restore or rebuild the
Property if the insurance proceeds payable with respect to any damage,
destruction or casualty do not exceed One Million Dollars
($1,000,000.00); provided, that the conditions set forth in SUBSECTIONS
(I), (II), (III) AND (IV) above have been satisfied. To the extent
Lender makes such proceeds available to restore or rebuild, the
Improvements shall be repaired and restored so as to be of at least
equal value in substantially the same character as prior to such damage
or destruction on or before the Maturity Date. If such casualty proceeds
are made available by Lender to Borrower, any surplus which may remain
out of said insurance proceeds after payment of all costs and expenses
of such repair and restoration shall, at the option of Lender, be
applied as a payment or prepayment of the Obligation.
(c) Any restoration or repair shall be commenced with due
diligence and in good faith by Borrower and all funds held by Lender in
accordance with the terms of this SECTION 8.10 shall be paid out from
time to time as such restoration and repair progresses upon the written
approval of Lender and the written request of Borrower, which requests
shall be submitted in form and substance, and with supporting notices,
documentation and waivers as may be required by Lender.
(d) Prior to application or disbursal of any casualty
insurance proceeds under this SECTION 8.10, Lender may deduct therefrom
any expenses incurred in connection with the collection or handling of
such proceeds, it being understood and agreed that Lender shall not be,
under any circumstances, liable or responsible for failure to collect,
or exercise diligence in the collection of, any such proceeds, and
Lender shall provide Borrower a written summary of all expenses deducted
from such proceeds.
(e) In the event the Mortgage is foreclosed, or title to any
of the Property is transferred in extinguishment, in whole or in part,
of the indebtedness secured thereby, or by transfer or conveyance in
lieu of foreclosure, and in connection therewith all right, title, and
interest of Borrower in and to all Insurance Policies passes to (i.e.,
is purchased by) such transferee or purchaser, the Insurance Policies
shall inure to the benefit of and pass to such successor in interest of
Borrower or the Purchaser.
(f) Notwithstanding anything set forth in this SECTION 8.10
to the contrary, if the casualty proceeds exceed the Obligation then
outstanding, Borrower may use such proceeds to first repay the
Obligation in full, and upon receipt of funds sufficient to repay the
Obligation in full, Lender shall release the balance of the casualty
proceeds to Borrower.
8.11 APPLICATION OF CONDEMNATION PROCEEDS.
(a) Lender shall be entitled to receive any and all sums
which may be awarded or become payable to Borrower for the condemnation
of any of the Property for public or quasi-public use, or by virtue of
private sale in lieu thereof, and any sums which may be awarded or
become payable to Borrower for damages caused by public works or
construction on or near the Property (collectively, "CONDEMNATION
PROCEEDS"). All such Condemnation Proceeds are hereby
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assigned to Lender, and Borrower shall, upon request of Lender, make,
execute, acknowledge and deliver any and all additional assignments and
documents as may be necessary from time to time to enable Lender to
collect and receipt for any such Condemnation Proceeds. Lender shall
not, under any circumstances, be liable or responsible for failure to
collect, or exercise diligence in the collection of, any such
Condemnation Proceeds.
(b) Lender shall, upon Borrower's written request and so
long as no Event of Default has occurred, make all Minor Condemnation
Proceeds available to Borrower to allow Borrower to repair, renovate or
reconstruct the Property to a condition reasonably satisfactory to
Lender, provided that all of the following conditions are satisfied:
(i) Lender determines in good faith that following
the contemplated repairs, renovation or reconstruction, the Property
shall not fail to comply with the Management Agreement or any
Governmental Requirement or other restriction affecting the Property,
and any changes in the Property resulting therefrom will not materially
adversely affect the operation or use of the Property (including,
without limitation, access, parking, food and beverage service, security
or amenities);
(ii) Lender determines in good faith that it is
economically, financially and practically feasible to repair, renovate
or reconstruct the Property to a condition substantially equivalent to
the condition of the Property prior to such condemnation, with such
repairs, renovation or reconstruction being completed prior to the
Maturity Date;
(iii) The total cost of repairing, renovating or
reconstructing the Property to a condition substantially equivalent to
the condition of the Property prior to such condemnation, as approved by
Lender, and in accordance with the requirements of SUBSECTIONS (C)(I)
and (II) herein, as estimated by an architect approved by Lender, shall
not be greater than the amount of the Condemnation Proceeds, together
with any sums that Borrower deposits with Lender in advance for the
purpose of paying for the cost of such repairs, renovation or
reconstruction;
(iv) Such renovation, repairs or reconstruction shall
be accomplished in accordance with the requirements and conditions of
SECTION 8.11(D) hereof; and
(v) Lender in good faith believes that prior to
completion of such repair, renovation or reconstruction, sufficient
income and revenues will be available from the Property to pay Total
Debt Service and Expenses during the period of such repair, renovation
and reconstruction.
To the extent Lender makes Condemnation Proceeds available to renovate,
repair or reconstruct, the Improvements shall be renovated, repaired or
reconstructed so as to be of at least equal quality as the quality of
the Property prior to such condemnation on or before the Maturity Date.
If such Condemnation Proceeds are made available by Lender to Borrower,
any surplus which may remain out of such Condemnation Proceeds after
payment of all costs and expenses of such repair, renovation or
reconstruction, shall, at the option of Lender, be applied as a payment
or prepayment of the Obligation.
(c) Any repairs, renovation or reconstruction, shall be
commenced with due diligence and in good faith by Borrower and all funds
held by Lender in accordance with the terms of this SECTION 8.11 shall
be paid out from time to time as such repair, renovation, reconstruction
or satisfaction progresses upon the written approval of Lender and the
written
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request of Borrower, which request shall be submitted in form and
substance, and with supporting notices, documentation and waivers as may
be required by Lender.
(d) If (i) the conditions to Lender's obligation to make the
Condemnation Proceeds available to Borrower as set forth in SECTION
8.11(C) hereof are not satisfied, (ii) an Event of Default has occurred,
(iii) the Condemnation Proceeds are not Minor Condemnation Proceeds, or
(iv) Borrower does not request that Lender make such Minor Condemnation
Proceeds available to Borrower to repair, renovate or reconstruct the
Property, Lender may apply the Condemnation Proceeds to the Obligation
in the order and manner as Lender may determine, or as otherwise
provided in this Loan Agreement.
(e) Prior to application or disbursal of any Condemnation
Proceeds under this SECTION 8.11, Lender may deduct therefrom any
expenses incurred in connection with the collection or handling of such
Condemnation Proceeds, it being understood and agreed that Lender shall
not be, under any circumstances, liable or responsible for failure to
collect, or exercise diligence in the collection of, any such
Condemnation Proceeds.
8.12 THIRD PARTY PAYMENTS Whenever this Loan Agreement or any other
Loan Document requires that amounts payable by a third party be paid directly to
Lender, Lender may enforce such right with a preliminary injunction or temporary
restraining order. Borrower agrees that irreparable harm may result if such
payments are not made directly to Lender. Borrower agrees not to oppose a motion
for such injunction or restraining order.
8.13 PROTECTIVE ADVANCES. If Borrower has failed to keep or perform
any covenant whatsoever contained in any Loan Document, Lender may, but shall
not be obligated to any person to, perform or attempt to perform said covenant,
and any payment made or expense incurred in the performance or attempted
performance of any such covenant shall be a part of the Obligation, and Borrower
promises, upon demand, to pay to Lender all sums so advanced or paid by Lender,
with interest at the Default Rate from the date when paid or incurred by Lender.
No such payment by Lender shall constitute a waiver of any Event of Default. In
addition to the Liens of the Loan Documents, Lender shall be subrogated to all
rights, titles, liens, and security interests securing the payment of any debt,
claim, tax, or assessment for the payment of which Lender may make an advance,
or which Lender may pay.
8.14 TAX AND INSURANCE ESCROW. At the request of Lender after the
occurrence of any Event of Default, Borrower shall create a reserve for the
payment of all insurance premiums, taxes and assessments against the Property by
paying to Lender, on each Payment Date, a sum equal to the premiums that will
next become due and payable on the hazard Insurance Policies covering the
Property, or any part thereof, plus taxes and assessments next due on the
Property, or any part thereof, as estimated by Lender, less all sums paid
previously to Lender therefor, divided by the number of installments of
principal and/or interest to elapse before one month prior to the date when such
premiums, taxes and assessments will become delinquent, such sums to be held by
Lender for the purposes of paying such premiums, taxes and assessments. Upon
notice from Lender to Borrower, any excess reserve may, at the discretion of
Lender, be credited by Lender on subsequent payments to be made on the
Obligation by Borrower, and any deficiency shall be paid by Borrower to Lender
on or before the date when such premiums, taxes and assessments shall have
become delinquent. Transfer of legal title to the Property shall automatically
transfer title to any sums deposited under the provisions of this SECTION 8.15.
8.15 WAIVER OF OFFSET RIGHT DEFICIENCY STATUTE. Borrower hereby
knowingly and intentionally waives, on its own behalf and on behalf of each
Guarantor, the right of offset granted by Sections 51.003, 51.004 and 51.005 of
the Texas Property Code and agrees to the provisions of Section 3.8 of the
Mortgage, which are incorporated herein by reference.
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ARTICLE IX
MISCELLANEOUS
9.01 NOTICES. Any notice, demand, request, consent, approval or other
communication, which any party hereto may be required or may desire to give
hereunder, shall be in writing (except where telephonic instructions or notices
are expressly authorized herein to be given) and shall be deemed to be effective
(a) if by hand delivery, telex, telecopy or other facsimile transmission, on the
day and at the time on which delivered to such party at the address or
telecopier numbers specified below; (b) if by mail, on the second Business Day
following the day upon which it is deposited, postage prepaid, in the United
States, registered or certified mail, return receipt requested, (and first class
mail) addressed to such party at the address specified below; or (c) if by
Federal Express or other reputable express mail service, on the next Business
Day following the delivery to such express mail service, addressed to such party
at the address set forth below:
If to Lender: Texans Commercial Capital, LLC
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Telecopier: ▇▇▇-▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
with copy to: ▇▇▇▇▇▇ and ▇▇▇▇▇, LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Telecopier: ▇▇▇-▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇, Esq.
If to Borrower: Behringer Harvard Mockingbird Commons LP
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Telecopier: ▇▇▇-▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, III
with copy to: ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, L.L.P.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Telecopier: 214-373-8768
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Failure to deliver copies of notices to parties other than Borrower and Lender
shall not affect the effectiveness or validity of notices otherwise properly
given. Any party may change its address for purposes of this Loan Agreement by
giving ten (10) days written notice of such change to the other parties pursuant
to this SECTION 9.01.
Notwithstanding any provision contained herein or in any of the Loan
Documents to the contrary, in the event that Lender shall fail to give any
notice to any Person required hereunder or thereunder, the
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sole and exclusive remedy for such failure shall be to seek appropriate
equitable relief to enforce this Loan Agreement and the other Loan Documents to
give such notice and to have any action of such Person postponed or revoked and
any proceedings in connection therewith delayed or terminated pending the giving
of such notice by Lender, and no Person shall have any right to damages (whether
actual or consequential) or any other type of relief not herein specifically set
out against Lender, all of which damages or other relief are expressly waived.
The foregoing is not intended and shall not be deemed under any circumstances to
require Lender to give notice of any type or nature to any Person except as
expressly required hereby or thereby, or by applicable Governmental
Requirements.
9.02 MODIFICATIONS. No provision of this Loan Agreement or of the
other Loan Documents may be modified, waived, or terminated except by an
instrument in writing executed by Borrower and Lender.
9.03 FORM AND SUBSTANCE. All documents, certificates, Insurance
Policies, and other items required pursuant to the provisions of this Loan
Agreement or any other Loan Document to be executed and/or delivered to Lender
shall be in form and substance satisfactory to Lender.
9.04 NO THIRD PARTY BENEFICIARY. This Loan Agreement is for the sole
benefit of Lender and Borrower, and is not for the benefit of any third party.
9.05 AVAILABILITY OF RECORDS; CONFIDENTIALITY. Borrower acknowledges
and agrees that Lender may provide to any Participant or proposed Assignee or
Participant, originals or copies of this Loan Agreement, all Loan Documents and
all other documents, certificates, opinions, letters of credit, reports,
acquisitions and other material and information of every nature or description,
and may communicate all oral information, at any time submitted by or on behalf
of Borrower or received by Lender in connection with the Loan or the Property.
9.06 NUMBER AND GENDER. Whenever used herein, the singular number
shall include the plural and the singular, and the use of any gender shall be
applicable to all genders.
9.07 CAPTIONS. The captions, headings, and arrangements used in this
Loan Agreement are for convenience only and do not in any way affect, limit,
amplify, or modify the terms and provisions hereof.
9.08 SURVIVAL OF AGREEMENT. All covenants, agreements,
representations and warranties made by Borrower or any other Person herein or in
the other Loan Documents shall be considered to have been relied upon by Lender
and shall survive the making by Lender of the Loan and the execution and
delivery to Lender of the Note evidencing the Loan, regardless of any
investigation made by Lender or on its behalf, and shall continue in full force
and effect as long as all or any portion of the Obligation is outstanding.
9.09 PARTIES BOUND; ASSIGNMENT.
(a) The provisions of this Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective successors
and assigns, except that the Borrower may not assign or otherwise transfer any
of its rights under this Agreement without the prior written consent of Lender.
(b) Lender may at any time grant to one or more financial
institutions or other entities (each a "PARTICIPANT") a participating interest
in the Loan. In the event of any such grant by Lender of a participating
interest to a Participant, Lender shall remain responsible for the performance
of its obligations hereunder, and Borrower shall continue to deal solely and
directly with Lender in connection with Lender's rights and obligations under
this Agreement. Borrower shall not be responsible
-47-
for the payment of any taxes associated with the grant of a participating
interest in the Loan to any Participant as a result of the Participant's
domicile being other than within the United States of America.
(c) (i) Lender may at any time assign to one or more
financial institutions or other entities (an "Assignee") all, or a proportionate
part of all, of its rights and obligations under this Agreement and the Note.
9.10 GOVERNING LAW; CHOICE OF FORUM; CONSENT TO SERVICE OF PROCESS
AND JURISDICTION; WAIVER OF TRIAL BY JURY. This Agreement, the other Loan
Documents and all other aspects of the lending transaction contemplated herein
and evidenced by the Loan Documents shall be governed by the laws of the State
of Texas or the laws of the United States, as applicable. Any suit, action or
proceeding against Borrower with respect to this Loan Agreement, the Note or the
other Loan Documents or any judgment entered by any court in respect thereof,
may be brought in the courts of the State of Texas or in the United States
Courts located in the Northern District of Texas as Lender in its sole
discretion may elect, and Borrower hereby submits to the non-exclusive
jurisdiction of such courts for the purpose of any such suit, action or
proceeding. Borrower hereby agrees that service of all writs, process and
summonses in any such suit, action or proceeding brought in the State of Texas
may be brought upon its process agent appointed below, and Borrower hereby
irrevocably appoints ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, III, whose address is ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, its process agent, as its true and
lawful attorney-in--fact in the name, place and stead of Borrower to accept such
service of any and all such writs, process and summonses. Borrower hereby
irrevocably consents to the service of process in any suit, action or proceeding
in said court by the mailing thereof by Lender by registered or certified mail,
postage prepaid, to Borrower's address set forth in SECTION 9.01 hereof.
Borrower hereby irrevocably waives any objections which it may now or hereafter
have to the laying of venue of any suit, action or proceeding arising out of or
relating to this Loan Agreement, the Note or any other Loan Document brought in
the courts located in the State of Texas, County of Dallas, and hereby further
irrevocably waives any claim that any such suit, action or proceeding brought in
any such court has been brought in an inconvenient forum. BORROWER AND LENDER
AND LENDER HEREBY WAIVE TRIAL BY JURY IN ANY SUIT, ACTION OR PROCEEDING BROUGHT
IN CONNECTION WITH THIS LOAN AGREEMENT, THE NOTE OR ANY OF THE OTHER LOAN
DOCUMENTS, WHICH WAIVER IS INFORMED AND VOLUNTARY. TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAW, BORROWER HEREBY WAIVES ANY AND ALL RIGHTS TO
REQUIRE MARSHALING OF ASSETS BY LENDER, WITH RESPECT TO THEIR RESPECTIVE RIGHTS
UNDER THE LOAN DOCUMENTS OR OTHERWISE.
9.11 TIME OF THE ESSENCE. Time is of the essence with respect to the
provisions of this Loan Agreement and the other Loan Documents. By accepting
payment of any portion of the Obligation after its due date, Lender does not
waive its right to require prompt payment when due of all other portions of the
Obligation or to declare an Event of Default for failure so to pay.
9.12 WAIVERS. No failure or delay of Lender in exercising any power
or right hereunder or under any other Loan Document shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right or power, or
any abandonment or discontinuance of steps to enforce such a right or power,
preclude any other or further exercise thereof or the exercise of any other
right or power. The rights and remedies of Lender hereunder and under the other
Loan Documents are cumulative and not exclusive of any rights or remedies which
it would otherwise have. No waiver of any provision of this Loan Agreement or
any of the other Loan Documents or consent to any departure by Borrower or any
other Person therefrom shall in any event be effective unless signed in writing
by Lender, and then such waiver or consent shall be effective only in the
specific instance and for the purpose for which given. No notice or demand on
Borrower or any other Person in any case shall entitle Borrower or such Person
to any other or further notice or demand in similar or other circumstances.
-48-
9.13 SEVERABILITY. In the event any one or more of the provisions
contained in this Loan Agreement or in any other Loan Documents should be held
invalid, illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein or therein shall not
in any way be affected or impaired thereby. The parties shall endeavor in
good-faith negotiations to replace the invalid, illegal or unenforceable
provisions with valid provisions the economic effect of which comes as close as
possible to that of the invalid, illegal or unenforceable provisions.
9.14 COUNTERPARTS. This Loan Agreement may be executed in any number
of counterparts, with the same effect as if all of the parties had signed the
same document. All counterparts shall be construed together and constitute one
agreement.
9.15 MAXIMUM INTEREST RATE. It is the intention of each of Lender and
Borrower to comply with all applicable federal and state Laws relating to usury;
that is, laws limiting charges for the use, detention or forbearance of money
and governing contracts relating thereto. Accordingly, this Agreement and all
agreements between Borrower and Lender, whether now existing or hereafter
arising, are expressly limited so that in no event whatsoever, whether by reason
of acceleration of the maturity of the Obligation, or otherwise, shall the
amount paid or agreed to be paid to Lender for the use, forbearance or detention
of the money to be loaned under the Note or otherwise, or for the performance or
payment of any covenant or obligation contained herein or in any other Loan
Document exceed the Maximum Rate. In the event Lender ever receives, collects,
or applies as interest, any excess amount which would be excessive interest,
that amount shall be treated as a principal prepayment under the Note and
applied to reduce the outstanding principal balance of the Note; PROVIDED THAT,
if the principal of the Note is paid in full, any remaining excess shall be paid
to Borrower. In determining whether or not the interest paid or payable, under
any specific contingency, exceeds the Maximum Rate, Borrower and Lender shall,
to the maximum extent permitted under applicable law, (a) characterize any
nonprincipal payment as an expense, fee, or premium rather than as interest, (b)
exclude voluntary prepayments and the effects thereof, and (c) spread the total
amount of interest throughout the entire contemplated term of the Note; PROVIDED
THAT, if the Note is paid and performed in full prior to the end of the full
contemplated term of the Note, and if the interest received by Lender for the
actual period of existence of the Note exceeds the Maximum Rate, Lender shall
refund to Borrower the amount of such excess, and, in such event, Lender shall
not be subject to any penalties provided by any laws for contracting for,
charging, taking, reserving, or receiving interest in excess of the Maximum
Rate. To the extent that Lender is relying on the laws of the State of Texas for
purposes of determining the Maximum Rate, such term shall mean the interest rate
ceiling from time to time in effect as provided in Chapter 303 of the Texas
Finance Code, as may be hereafter amended or recodified. To the extent United
States federal law permits Lender to contract for, charge or receive a greater
amount of interest, Lender will rely on United States federal law instead of
Chapter 303 of the Texas Finance Code, as may be hereafter amended or
recodified, for the purpose of determining the Maximum Rate. Additionally, to
the extent permitted by applicable law now or hereafter in effect, Lender may,
at its option and from time to time, implement any other method of computing the
Maximum Rate under Chapter 303 of the Texas Finance Code, as may be hereafter
amended or recodified, or under other applicable Law, by giving Borrower the
notice required by applicable law now or hereafter in effect. In no event shall
the Loan be considered a revolving credit account as defined in Chapter 346 of
the Texas Finance Code, as may be hereafter amended or recodified. The terms and
provisions of this SECTION 9.15 shall control and supersede every other
provision of this Agreement and of all agreements with respect to the Loan
between Borrower and Lender in the event of a conflict in such provisions.
9.16 BINDING EFFECT. This Loan Agreement shall become effective when
it shall have been executed by Borrower and Lender.
-49-
9.17 CONTROLLING DOCUMENT. In the event of any conflict between the
terms of this Loan Agreement and any of the other Loan Documents, the terms of
this Loan Agreement shall control.
9.18 FINAL RELEASE. Full payment of the Note by Borrower or any other
Person shall automatically constitute a full release of any claims or causes of
action existing as of the date of such payment in favor of Borrower or any other
party, in connection with the Loan, this Agreement, the Note or any of the other
Loan Documents, to the extent that such claim relates to (i) alleged failure of
Lender or its Affiliates to act in good faith or deal fairly, (ii) alleged oral
agreements to modify the terms of this Agreement, the Note or the other Loan
Documents, (iii) alleged, special or fiduciary relationship between Borrower and
Lender, and (iv) tortuous interference with, or control, over the management of
Borrower.
9.19 ENTIRE AGREEMENT. The Loan Documents embody the entire agreement
between the parties and supersede all prior agreements and understandings.
9.20 LIABILITY. Any obligation or liability of Borrower hereunder
shall be enforceable only against, and payable only out of, the property of
Borrower, and in no event shall any officer, director, shareholder, partner,
beneficiary, agent, advisor or employee of Borrower, be held to any personal
liability whatsoever or be liable for any of the obligations of the parties
hereunder, or the property of any such Persons be subject to the payment of any
such obligations, except in the case of certain Persons as otherwise
specifically provided in the Loan Documents and where such Persons have executed
a written agreement pertaining thereto.
[Remainder of this page is blank. Next page is signature page.]
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IN WITNESS WHEREOF, Borrower and Lender have caused this Loan Agreement
to be duly executed by their duly authorized officers, all as of the day and
year first above written.
LENDER:
TEXANS COMMERCIAL CAPITAL, LLC,
a Texas limited liability company
By:____________________________________________
▇▇▇ ▇▇▇▇▇▇▇▇, Senior Vice President
BORROWER:
BEHRINGER HARVARD MOCKINGBIRD COMMONS LP,
a Texas limited partnership
By: Behringer Harvard Mockingbird Commons GP, LLC,
a Texas limited liability company,
its sole general partner
By:_______________________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, III,
Secretary
-51-
LOAN AGREEMENT
by and among
BEHRINGER HARVARD MOCKINGBIRD COMMONS LP,
as Borrower
and
TEXANS COMMERCIAL CAPITAL, LLC,
as Lender
* * *
US $34,047,458
* * *
September __, 2005
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS.........................................................................1
1.01 DEFINITIONS.........................................................................1
1.02 OTHER DEFINITIONAL PROVISIONS......................................................15
ARTICLE II THE LOAN...........................................................................15
2.01 THE LOAN...........................................................................15
2.02 INTEREST ON THE LOAN...............................................................15
2.03 NOTE; REPAYMENTS...................................................................15
2.04 MANNER AND APPLICATION OF PAYMENTS.................................................16
2.05 ORIGINATION FEE....................................................................16
2.06 INTENTIONALLY DELETED..............................................................16
2.07 PREPAYMENT OF LOAN.................................................................17
2.08 TAXES..............................................................................18
2.09 LENDING OFFICE.....................................................................19
2.10 CONDITIONS PRECEDENT FOR THE BENEFIT OF LENDER.....................................19
2.12 [INTENTIONALLY DELETED.].................................ERROR! BOOKMARK NOT DEFINED.
2.13 CONDITIONS TO SUBSEQUENT ADVANCES........................ERROR! BOOKMARK NOT DEFINED.
2.14 REALLOCATION OF APPROVED BUDGET....................................................20
2.15 NO WAIVER..........................................................................21
2.16 SUBORDINATION......................................................................21
ARTICLE III REPRESENTATIONS AND WARRANTIES OF BORROWER.........................................21
3.01 ORGANIZATION.......................................................................21
3.02 AUTHORIZATION AND POWER............................................................21
3.03 VALID AND BINDING OBLIGATION.......................................................22
3.04 CONFLICTS..........................................................................22
3.05 CONSENTS, ETC......................................................................22
3.06 PENDING LITIGATION.................................................................22
3.07 PRINCIPAL OFFICE, ETC..............................................................22
3.08 CONTROL PERSONS....................................................................22
3.09 GOVERNMENT REGULATION..............................................................22
3.10 INSIDER............................................................................23
3.11 O.S.H.A............................................................................23
3.12 FINANCIAL CONDITION................................................................23
3.13 RESTRICTIONS.......................................................................24
3.14 NO DEFAULT.........................................................................24
3.15 LABOR RELATIONS....................................................................24
3.16 ERISA..............................................................................24
3.17 SINGLE PURPOSE ENTITIES; NATURE OF BORROWER........................................24
3.18 INDEBTEDNESS.......................................................................24
3.19 TAXES..............................................................................24
3.20 PROPERTY...........................................................................25
3.21 USE OF PROPERTY....................................................................25
3.22 FULL DISCLOSURE....................................................................26
3.23 TITLE TO THE PROPERTY..............................................................26
3.24 LEASES.............................................................................26
3.25 GOVERNMENTAL REQUIREMENTS..........................................................26
3.26 FINANCING STATEMENTS...............................................................26
3.27 MATERIAL AGREEMENTS................................................................26
3.28 ACCURACY OF INFORMATION............................................................26
3.29 ACCESS.............................................................................27
i
3.30 COMMENCEMENT OF CONSTRUCTION...................................................................27
3.31 AUTHORIZED SIGNATORIES.........................................................................27
ARTICLE IV AFFIRMATIVE COVENANTS OF BORROWER..............................................................27
4.01 FINANCIAL STATEMENTS, REPORTS AND DOCUMENTS OF BORROWER AND OTHER PERSONS......................27
4.02 LOAN PROCEEDS..................................................................................29
4.03 ASSETS OF BORROWER.............................................................................29
4.04 LEASES.........................................................................................29
4.05 MANAGEMENT, MAINTENANCE, REPAIRS AND ALTERATIONS...............................................30
4.06 INSPECTION OF BOOKS AND RECORDS................................................................30
4.07 COMPLIANCE WITH GOVERNMENTAL REQUIREMENTS......................................................30
4.08 INSURANCE......................................................................................30
4.09 PAYMENT OF TAXES...............................................................................31
4.10 PAYMENT OF CLAIMS..............................................................................31
4.11 COSTS AND EXPENSES.............................................................................32
4.12 INDEMNITY BY BORROWER..........................................................................32
4.13 FURTHER ASSURANCES.............................................................................33
4.14 CONSTRUCTION CONTRACTS.........................................................................33
4.15 PLANS..........................................................................................33
4.16 PROSECUTION OF CONSTRUCTION....................................................................34
4.17 CORRECTION OF DEFECTS..........................................................................34
4.18 STORAGE OF MATERIALS...........................................................................34
4.19 INSPECTION OF THE PROPERTY.....................................................................34
4.20 NOTICES BY GOVERNMENTAL AUTHORITY, FIRE AND CASUALTY LOSSES, ETC...............................34
4.21 APPLICATION OF ADVANCES AND THE LOAN...........................................................34
4.24 ANTI-TERRORISM COMPLIANCE......................................................................35
4.25 DEFENSE OF TITLE...............................................................................35
ARTICLE V NEGATIVE COVENANTS.............................................................................35
5.01 NAME, FISCAL YEAR AND ACCOUNTING METHOD........................................................35
5.02 CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE...........................................35
5.03 ERISA COMPLIANCE...............................................................................36
5.04 TRANSACTIONS WITH AFFILIATES...................................................................36
5.05 NO CONDITIONAL SALES CONTRACTS, ETC............................................................36
5.06 LINES OF BUSINESS..............................................................................36
5.07 EASEMENTS......................................................................................36
5.08 CHANGES IN ZONING..............................................................................36
5.09 NEW CONSTRUCTION...............................................................................36
5.10 LIMITATION ON INDEBTEDNESS AND LIENS...........................................................36
5.11 DISTRIBUTIONS, DIVIDENDS AND REPAYMENTS........................................................36
5.12 LIMITATION ON INVESTMENTS......................................................................37
5.13 ORGANIZATIONAL DOCUMENTS.......................................................................37
5.14 MATERIAL AGREEMENTS............................................................................37
5.15 ANTI-TERRORISM COMPLIANCE......................................................................37
ARTICLE VI CONDITIONS OF LENDING..........................................................................38
6.01 LOAN DOCUMENTS.................................................................................38
6.02 GOVERNMENTAL APPROVALS.........................................................................38
6.03 APPRAISAL......................................................................................38
6.04 INSURANCE......................................................................................38
6.05 SURVEY.........................................................................................38
6.06 TITLE INSURANCE................................................................................38
6.07 UCC SEARCHES...................................................................................38
ii
6.08 FINANCIAL INFORMATION..........................................................................38
6.10 ENGINEER'S AUDIT...............................................................................38
6.11 ENVIRONMENTAL AUDIT............................................................................39
6.12 APPROVED MANAGEMENT AGREEMENT .................................................................39
6.13 ORGANIZATIONAL DOCUMENTS.......................................................................39
6.14 TAX INFORMATION................................................................................39
6.15 OPINIONS OF COUNSEL............................................................................39
6.16 ACCOUNT........................................................................................39
6.17 THE FEES.......................................................................................39
6.18 PARTNERSHIP CONSENT............................................................................39
6.19 ADDITIONAL INFORMATION.........................................................................39
ARTICLE VII EVENTS OF DEFAULT..............................................................................39
ARTICLE VIII RIGHTS AND REMEDIES OF LENDER..................................................................42
8.01 RIGHTS OF LENDER...............................................................................42
8.02 ACCELERATION...................................................................................42
8.03 FUNDS OF LENDER................................................................................42
8.04 INTENTIONALLY DELETED..........................................................................42
8.05 PAYMENTS TO AFFILIATES.........................................................................43
8.06 MANAGEMENT AGREEMENT...........................................................................43
8.07 OTHER RIGHTS AND REMEDIES......................................................................43
8.08 NO WAIVER OR EXHAUSTION........................................................................43
8.09 RIGHT OF OFFSET................................................................................43
8.10 APPLICATION OF INSURANCE PROCEEDS..............................................................43
8.11 APPLICATION OF CONDEMNATION PROCEEDS...........................................................44
8.12 THIRD PARTY PAYMENTS...........................................................................46
8.13 PROTECTIVE ADVANCES............................................................................46
8.14 TAX AND INSURANCE ESCROW.......................................................................46
8.15 WAIVER OF OFFSET RIGHT DEFICIENCY STATUTE......................................................46
ARTICLE IX MISCELLANEOUS..................................................................................47
9.01 NOTICES........................................................................................47
9.02 MODIFICATIONS..................................................................................48
9.03 FORM AND SUBSTANCE.............................................................................48
9.04 NO THIRD PARTY BENEFICIARY.....................................................................48
9.05 AVAILABILITY OF RECORDS; CONFIDENTIALITY.......................................................48
9.06 NUMBER AND GENDER..............................................................................48
9.07 CAPTIONS.......................................................................................48
9.08 SURVIVAL OF AGREEMENT..........................................................................48
9.09 PARTIES BOUND; ASSIGNMENT......................................................................49
9.10 GOVERNING LAW; CHOICE OF FORUM; CONSENT TO SERVICE OF PROCESS AND JURISDICTION;
WAIVER OF TRIAL BY JURY.....................................................................49
9.11 TIME OF THE ESSENCE............................................................................49
9.12 WAIVERS........................................................................................50
9.13 SEVERABILITY...................................................................................50
9.14 COUNTERPARTS...................................................................................50
9.15 MAXIMUM INTEREST RATE..........................................................................50
9.16 BINDING EFFECT.................................................................................51
9.17 CONTROLLING DOCUMENT...........................................................................51
9.18 FINAL RELEASE..................................................................................51
9.19 ENTIRE AGREEMENT...............................................................................51
iii
EXHIBITS
Exhibit A Legal Description of Land
Exhibit B Approved Budget
Exhibit C Assignment of Construction Contract
Exhibit D Application for Advance
Exhibit E Contractor's Affidavit and Subordination
Exhibit F Assignment of Plans and Consent of Architect and Engineer
Exhibit G Survey Requirements
Exhibit H Compliance Certificate
Exhibit I Disclosed Litigation
Exhibit J Note
Exhibit K Lender-Manager Agreement
iv