Exhibit 10.8
JUNIOR MEZZANINE COMPLETION
GUARANTY
This Junior Mezzanine Completion
Guaranty (“ Guaranty ”) is entered into as of
September 29, 2006, jointly and severally by CFP Residential L.P.,
a Texas limited partnership, Kenneth Valach, an individual, J.
Ronald Terwilliger, an individual and Bruce Hart, an individual
(collectively, the “ Guarantor ”) for the
benefit of Behringer Harvard Alexan Nevada, LLC, a Delaware limited
liability company, and/or any subsequent holder of the Note (the
“ Lender ”).
RECITALS
A.
SW 108 Wagon Wheel JM LLC, a
Delaware limited liability company (the “ Borrower
”) has requested that Lender make a loan to Borrower in the
amount of Two Million Seven Hundred Seventy-Five Thousand Eight
Hundred Seventy-Two Dollars ($2,775,872) (the “ Loan
”). The Loan will be evidenced by a Promissory Note from
Borrower to Lender dated as of the date of this Guaranty (the
“ Note ”). The Note will be secured by a Pledge
and Security Agreement dated the same date as the Note made by
Borrower in favor of Lender (the “ Security Instrument
”).
B.
The Loan is being made to finance
the purchase by SW 106 Wagon Wheel Holdings LLC, a Delaware limited
liability company (“ Property Owner ”), which is
a wholly-owned subsidiary of SW 109 Wagon Wheel SM LLC, which is a
wholly-owned subsidiary of Borrower, of certain real property (the
“ Property ”), as more particularly described in
the Loan Agreement dated as of the date of this Guaranty between
Borrower and Lender (the “ Loan Agreement ”) and
to facilitate the construction of a 213 unit apartment project on
the Property to be known as the Alexan at Nevada State Drive (the
“ Project ).
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
. “ Indebtedness
” and other capitalized terms used but not defined in this
Guaranty shall have the meanings assigned to them in the Loan
Agreement.
2.
Guaranty .
a)
Guarantor hereby guarantees to
Lender, upon written demand by Lender, at Lender’s option and
in its sole discretion, that Guarantor will (i) complete the
Project substantially in accordance with the plans and
specifications for the Project, as modified
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from time to time as allowed by the
Loan Agreement (the “ Plans and Specifications
”) and in accordance with the terms and conditions of the
Loan Agreement and other Loan Documents if, for any reason, or
under any contingency, Property Owner shall abandon construction of
the Project or shall fail to complete the Project within the
construction time set forth in the Loan Agreement and Loan
Documents and (ii) pay all cost overruns for construction of the
Project to the extent Borrower or Property Owner fails to do so;
provided that Lender shall reimburse Guarantor for all costs
incurred by Guarantor in completing the Project (provided that such
completion costs are included in the Project Budget (as defined
below) to the extent such costs do not constitute cost overruns. In
the preceding sentence, “cost overruns” means costs of
constructing the Project that, in the aggregate, exceed the amount
provided in the budget attached hereto as Exhibit “A”
(the “ Project Budget ”). All amounts reimbursed
to Guarantor by Lender in accordance with this Section 2(a) shall
correspondingly increase the amount of Loan to Borrower and shall
be payable by Borrower to Lender in accordance with the terms of
the Loan Agreement. The Project will be deemed substantially
completed in accordance with the Plans and Specifications upon the
issuance of the final certificate of occupancy, the issuance of a
certificate of substantial completion from the Property
Owner’s architect, 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 substantially complete then
Lender shall deem the Project substantially complete (“
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 proceed with
and diligently prosecute Completion of the Project in accordance
with the Loan Agreement, then Lender may, at its option, without
notice to Guarantor or anyone else, complete 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 and
Specifications 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 Project 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 and payable by Guarantor to Lender upon
demand. Lender does not have and shall never have any obligation to
complete the Project or take such action.
c)
In addition to the foregoing, and
notwithstanding anything to the contrary set forth herein or in any
of the Loan Documents, Guarantor hereby further guarantees to
Lender the full and prompt payment of all principal, interest and
other amounts due and owing by Borrower under the Note, the
Security Instrument and any other Loan Document from and after the
filing of a voluntary bankruptcy or insolvency proceeding of
Property Owner, or Borrower prior to Completion.
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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 Instrument.
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 Instrument, or any
other Loan Document, and without regard to any other circumstance
which might otherwise constitute a