Exhibit 10.8
MEZZANINE GUARANTY
This Mezzanine Guaranty (“
Guaranty ”) is entered into as of December 31,
2008, by CFP Residential, L.P., a Texas limited partnership,
Kenneth J. Valach, an individual, Bruce Hart, an individual, and J.
Ronald Terwilliger, an individual (collectively, the “
Guarantor ”) for the benefit of Behringer Harvard St.
Rose REIT, LLC, a Delaware limited liability company, and/or any
subsequent holder of the Note (the “ Lender
”).
RECITALS
A.
SW 131 St. Rose Mezzanine Borrower
LLC, a Delaware limited liability company (the “
Borrower ”) has requested that Lender make one or more
loans (structured as one loan, or as a senior loan and a junior
loan, or in another manner agreed on by the Mezzanine Lender and
the Borrower) in the aggregate amount of up to Twenty One Million
Forty Three Thousand One Hundred Ninety Seven and No/100 Dollars
($21,043,197) (the “ Loan ”). The Loan
will be evidenced by a Senior Mezzanine Promissory Note and a
Junior Mezzanine Promissory Note from Borrower to Lender each dated
as of the date of this Guaranty (collectively, the “
Note ”). As of the date of this Guaranty, the
Note will be secured by liens on the Land (as defined in the Loan
Agreement) created by subordinate deeds of trust, dated the same
date as the Note, for the benefit of Lender (each, a “
Deed of Trust ”), made by SW 132 St. Rose Senior
Borrower LLC, a Delaware limited liability company (“
Mortgagor ”), which is a wholly owned subsidiary of
Borrower. Each Deed of Trust is referred to herein
collectively as the “ Security Instrument.
”
B.
The Loan is being made as more
particularly described in the Senior Mezzanine Loan Agreement and
Junior Mezzanine Loan Agreement, each dated as of the date of this
Guaranty, between Borrower and Lender (collectively, the “
Loan Agreement ”). Borrower will cause Mortgagor
to construct on the Land (as defined in the Loan Agreement) the
Project (as defined in the Loan Agreement).
C.
The Project is to be constructed in
accordance with, and pursuant to the terms and conditions and
requirements of, the Loan Agreement and other Loan
Documents.
D.
As a condition to making the Loan to
Borrower, Lender requires that the Guarantor execute this
Guaranty. Guarantor has an economic interest in Borrower or
will otherwise obtain a material financial benefit from the
Loan.
NOW, THEREFORE, in order to induce
Lender to make the Loan to Borrower, and in consideration thereof,
the Guarantor hereby agrees, unconditionally and irrevocably as
follows:
1.
Defined Terms
. Unless otherwise expressly
defined herein, capitalized terms used in this Guaranty shall have
the meaning given to such terms in the Loan Agreement.
2.
Guaranteed Obligations
.
(a)
As an inducement to Lender to extend
or continue to extend credit and other financial accommodations to
Borrower, Guarantor, for value received, does hereby
unconditionally and absolutely guarantee the prompt and complete
performance and
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payment of the Guaranteed
Obligations. For purposes of this Guaranty, the term “
Guaranteed Obligations ” shall mean (i) the
“ Completion Obligations ” (as hereinafter
defined), and (ii) the “ Bankruptcy Obligations
” (as hereinafter defined).
(i)
For purposes of this Guaranty, the
term “ Completion Obligations ” shall mean that
(i) Guarantor will cause the Completion of the Project in
substantial accordance with the Plans, and in accordance with the
terms and conditions of the Loan Agreement and other Loan
Documents, if for any reason, or under any contingency, Mortgagor
shall abandon construction of the Project or shall fail to cause
the Completion of the Project within the construction time set
forth in the Loan Agreement and Loan Documents, and
(ii) Guarantor will pay all cost overruns for construction of
the Project. In the preceding sentence, “cost
overruns” means costs of constructing the Project that, in
the aggregate, exceed the amount provided in the Construction
Budget, except that the following expenses shall not be included in
calculating cost overruns: operating deficits, taxes and, solely to
the extent increased by force majeure, construction interest.
“ Completion ” of the Project will occur upon
the issuance of the final certificate of occupancy; the receipt of
evidence reasonably satisfactory to Lender that no building has
been constructed over any easements or setback areas and no other
improvements prohibited by the terms of the easements or setbacks
have been constructed within such easements or setbacks, as
applicable; the issuance of a certificate of substantial completion
from the Mortgagor’s architect; and receipt of a
contractor’s release and the receipt of lien waivers or
similar evidence of payment from the general contractor and all
major subcontractors ( i.e. , subcontractors whose contract
amount exceeds $100,000) to Lender’s reasonable satisfaction;
provided, however, that if Senior Lender shall deem the Project to
have reached Completion, then Lender shall deem the Project to have
reached Completion.
(ii)
For purposes of this Guaranty, the
term “ Bankruptcy Obligations ” shall mean all
principal, interest and other amounts due and owing by Borrower
under the Note, the Security Instruments and any other Loan
Documents, but only if there is a filing of a voluntary bankruptcy
or insolvency proceeding of the Borrower prior to
Completion.
(b)
Without limiting the rights and
remedies of Lender, if after the occurrence of an Event of Default
and after Lender has so requested, Guarantor does not promptly
proceed with and diligently prosecute the applicable Completion
Obligations, then Lender may, at its option, without notice to
Guarantor or anyone else, cause Completion of the Project either
before or after commencement of foreclosure proceedings, and either
on or before the exercise of any other right or remedy of Lender
against Borrower or Guarantor, with such changes to the Plans that
Lender deems necessary or advisable to complete the Project, and
Guarantor waives any right to contest such necessary
expenditures. The amount of any and all expenditures made by
Lender for the foregoing purposes, to the extent they exceed the
unexpended portion of the Construction Budget shall bear interest
from the date made until repaid to Lender, at a rate per annum
equal to the Interest Rate provided for in the Note and, together
with such interest, shall be due
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and payable by Guarantor to Lender
upon demand. Lender does not have and shall never have any
obligation to cause the Completion of the Project or take such
action.
3.
Survival . The obligations of Guarantor under this
Guaranty shall survive any foreclosure proceeding, any foreclosure
sale, any delivery of any deed in lieu of foreclosure, and any
release of record of the Security Instruments.
4.
Guaranty of Performance and
Payment .
Guarantor’s performance and payment obligations under this
Guaranty constitute a guaranty of performance and payment and not
merely a guaranty of collection.
5.
Present, Unconditional and
Irrevocable Guaranty; Waivers . The obligations of Guarantor under this
Guaranty shall be performed without demand by Lender, other than as
provided herein and shall be present, unconditional, absolute and
irrevocable irrespective of the genuineness, validity, regularity
or enforceability of the Note, the Security Instruments, or any
other Loan Document, and without regard to any other circumstance
which might otherwise constitute a legal or equitable discharge of
a surety or a guarantor. This Guaranty shall be effective as
a waiver of, and Guarantor expressly waives, any and all rights to
which Guarantor may otherwise have been entitled under any
suretyship laws in effect from time to time, including (without
limitation) any rights pursuant to Rule 31 of the Texas
Rules of Civil Procedure, Section 17.001 of the
Texas Civil Practice and Remedies Code, and Chapter 34 of
the Texas Business and Commerce Code. Without limiting the
generality of the foregoing, Guarantor hereby waives, to the
fullest extent permitted by law, diligence in collecting the
Guaranteed Obligations, presentment, demand for payment, protest,
all notices with respect to the Note and this Guaranty which may be
required by statute, rule of law or otherwise to preserve
Lender’s rights against Guarantor under this Guaranty,
including notice of acceptance, notice of any amendment of the Loan
Documents, notice of the occurrence of any default or Event of
Default, notice of intent to accelerate, notice of acceleration,
notice of dishonor, notice of foreclosure, notice of protest, and
notice of the incurring by Borrower of any obligation or
indebtedness. Guarantor also waives, to the fullest extent
permitted by law, all rights to require Lender to (a) proceed
against Borrower or any other guarantor of Borrower’s payment
or performance with respect to the Guaranteed Obligations (an
“ Other Guarantor ”), (b) if Borrower or
any Other Guarantor is a partnership, proceed against any general
partner of Borrower or the Other Guarantor, (c) proceed
against or exhaust any collateral held by Lender to secure the
repayment of the Guaranteed Obligations, or (d) pursue any
other remedy it may now or hereafter have against Borrower, or, if
Borrower is a partnership, any general partner of
Borrower.
6.
Valuation of the Property Upon
Foreclosure . The
following shall be the basis for the determination of the fair
market value of any property encumbered by the Deed of Trust (the
“ Mortgaged Property ”) as of the date of the
foreclosure sale in proceedings governed by Sections 51.003, 51.004
and 51.005 of the Texas Property Code (as amended from time to
time), to the extent those provision apply: (i) the Mortgaged
Property shall be valued in an “as is” condition as of
the date of the foreclosure sale, without any assumption or
expectation that the Mortgaged Property will be repaired or
improved in any manner before a resale of the Mortgaged Property
after foreclosure; (ii) the valuation shall be based upon an
assumption that the foreclosure purchaser desires a resale of the
Mortgaged Property for cash promptly (but no
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later than twelve (12) months)
following the foreclosure sale; (iii) all reasonable closing
costs customarily borne by the seller in commercial real estate
transactions should be deducted from the gross fair market value of
the Mortgaged Property, including, without limitation, brokerage
commissions, title insurance, a survey of the Property, tax
prorations, attorneys’ fees, and marketing costs;
(iv) the gross fair market value of the Mortgaged Property
shall be further discounted to account for any estimated holding
costs associated with maintaining the Mortgaged Property pending
sale, including, without limitation, utilities expenses, property
management fees, taxes and assessments (to the extent not accounted
for in (iii) above), and other maintenance, operational and
ownership expenses; and (v) any expert opinion testimony given
or considered in connection with a determination of the fair market
value of the Mortgaged Property must be given by persons having at
least five (5) years experience in appraising property similar
to the Mortgaged Property and who have conducted and prepared a
complete written appraisal of the Mortgaged Property taking into
consideration the factors set forth above.
7.
Modification of Loan
Documents . At any
time or from time to time and any number of times, without notice
to Guarantor and without affecting the liability of Guarantor,
(a) the time for payment of the principal of or interest on
the Guaranteed Obligations may be extended or the Guaranteed
Obligations may be renewed in whole or in part; (b) the time
for Borrower’s performance of or compliance with any covenant
or agreement contained in the Note, the Loan Agreement, the
Security Instruments or any other Loan Document, whether presently
existing or hereinafter entered into, may be extended or such
performance or compliance may be waived; (c) the Maturity Date
may be accelerated as provided in the Note, the Security
Instruments or any other Loan Document; (d) the Note, the Loan
Agreement, the Security Instruments or any other Loan Document may
be modified or amended by Lender and Borrower in any respect,
including an increase in the principal amount; and (e) any
security for the Guaranteed Obligations may be modified, exchanged,
surrendered or otherwise dealt with or additional security may be
pledged or mortgaged for the Guaranteed Obligations.
8.
Joint and Several
Guaranty . If more
than one person executes this Guaranty, the obligations of those
persons under this Guaranty shall be joint and several.
Lender, in its discretion, may (a) bring suit against
Guarantor, or any one or more of the Persons constituting
Guarantor, and any Other Guarantor, jointly and severally, or
against any one or more of them; (b) compromise or settle with
any one or more of the Persons con
