Document:

Exhibit 10.3

 

SENIOR MEZZANINE PROMISSORY NOTE

	
  $6,850,000

  	
   

  	
  September 22, 2006

  

 

GC 128 Voss SM LLC, a Delaware
limited liability company (“Borrower”), FOR
VALUE RECEIVED, promises to pay to the order of Behringer Harvard Alexan Voss,
LLC, a Delaware limited liability company or its assigns (“Lender”),
at such place as Lender may from time to time designate in writing, the
principal sum of Six Million Eight Hundred Fifty Thousand Dollars ($6,850,000.00)
or so much thereof as may from time to time have been advanced to Borrower
under this Note with Interest (as defined below) on the outstanding principal
amount at the rates set forth herein.

DEFINITIONS

For the purpose of this Note capitalized terms not
defined below will be as defined in the Loan Agreement:

“Default
Interest” shall mean any interest accruing at the Default Interest
Rate and payable pursuant to the terms hereof or of the other Loan Documents.

“Default
Interest Rate” shall mean a rate of interest per annum equal to the
lesser of either (a) thirteen percent (13%) or (b) the maximum rate
of interest which may be collected from Borrower under applicable law.

“Interest”
shall mean any interest accruing at the Interest Rate or the Default Interest
Rate, as applicable and payable pursuant to the terms hereof or of the other
Loan Documents.

“Interest
Rate” shall mean a rate of interest per annum equal to the lesser
of: (a) ten and one half percent (10.5%) or (b) the maximum rate of interest
which may be collected from Borrower under applicable law.

“Late Charge”
shall mean the lesser of (a) five percent (5%) of any unpaid amount, or (b) the
maximum late charge permitted to be charged under applicable law.

“Loan Agreement”
shall mean that certain Senior Mezzanine Loan Agreement, between Lender and
Borrower, dated of even date herewith, corresponding to this Note, as the same
may hereafter be amended, modified and restated from time to time.

“Maturity
Date” shall mean March 22, 2012.

“Net Cash
Flow” shall mean the
amount by which (i) gross income of the Project (which shall include, without
limitation, all income received by Borrower from and in connection with any
leasing activity) exceeds (ii) operating expenses (which shall mean the actual
cash operating expenses of the Project incurred during the period in question
and which are consistent with generally accepted operating practices for
similar properties) excluding Interest paid or payable under this Note to the
extent included in operating expense, plus any payments of Interest and/or
principal pursuant to the Senior Loan.

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“Payment Date”
shall mean the first day of each calendar month, commencing on the date
set forth in Section 1.1, and the Maturity Date (or, if any such date is not a
Business Day, then the first Business Day immediately before such date).

SECTION 1 - STATED MATURITY;
INTEREST AND PRINCIPAL PAYMENTS.

1.1           Payment
of Interest.  Interest shall accrue on this Note at the
Interest Rate or, during any time at which an Event of Default is continuing,
at the Default Interest Rate.  Commencing
on November 1, 2006, and continuing monthly on the same date of each calendar
month thereafter up to and until the Maturity Date, an installment of accrued
and unpaid Interest shall be due and payable to Lender to the extent required
by the following:

(a)                                  until
the Completion (as defined in the Senior Mezzanine Completion Guaranty) no
payment will be required and the Interest shall accrue; and

(b)                                 after
Completion, Borrower shall only be required to pay, on each such payment date,
an amount equal to the then available Net Cash Flow (i.e.
Net Cash Flow through the end of the second preceding calendar month not
previously paid to Lender), or the total of all accrued Interest that then
remains unpaid, if less, and the excess of such installment of Interest over
the amount of available Net Cash Flow (if any) so deferred shall accrue as set
forth herein.

On the Maturity
Date, all accrued but unpaid Interest, shall be due and payable in full.  It is the intent of Borrower and Lender that
this Note shall be treated as a security that satisfies the requirements of
Section 856(m)(1)(A) and Section 856(m)(2) of the Internal Revenue Code of
1986, as amended (the “Code”) (the “Straight Debt Safe Harbor”). 
Accordingly, notwithstanding any indication herein to the contrary, (i)
Borrower and Lender agree that the terms of this Note shall be interpreted in
such a manner that the Note satisfies the Straight Debt Safe Harbor and (ii) the
terms of this Note shall be applied such that the Note has a constant effective
yield to maturity, as determined under Section 1272 of the Code, at a fixed
rate over the entire term of the Note equal to the Interest Rate; provided,
however, that such construction shall not alter the dates of the principal or Interest
payments (described in Section 1.1 above), or the amounts of principal or Interest
payments required to be paid hereunder.

1.2           Payments of Principal.  On the Maturity Date, the unpaid principal
balance, together with all accrued but unpaid Interest, shall be due and
payable in full.

1.3           Payment on Stated Maturity Date.  Any remaining unpaid Indebtedness shall be
due and payable in full at the Maturity Date.

1.4           Computation of Interest.  Subject to the provisions of Section 1.8, Interest
under this Note shall be paid as set forth herein and shall be calculated based
on actual days elapsed and a three hundred sixty (360) day year.  Subject to the provisions of Section 1.8,
Interest that becomes due under this Note and remains unpaid shall be
compounded monthly and shall itself

 

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bear Interest (without becoming part of the principal
balance of this Note) at the Interest Rate such that the Note has a constant
effective yield to maturity at the Interest Rate as described in Section 1.1.
hereof (or, during any time at which an Event of Default is continuing, at the
Default Interest Rate).

 

1.5           Method of Payment.  Each payment due hereunder shall not be
deemed received by Lender until received on a Business Day (as hereafter
defined) in Federal funds in lawful money of the United States of America
immediately available to Lender prior to 2:00 p.m. local time at the place then
designated by Lender.  Any payment
received on a Business Day after the time established by the preceding sentence,
shall be deemed to have been received on the immediately following Business Day
for purposes of determining interest accruals and Late Charges.

1.6           Application of Payments.  Payments under this Note shall be applied
first to the payment of Late Charges and Default Interest and other costs and
charges due in connection with this Note, as Lender determines in its sole
discretion, then to the payment of accrued but unpaid Interest, and then to
reduction of the outstanding principal balance. 
No principal amount repaid may be reborrowed.  All amounts due under this Note shall be
payable without setoff, counterclaim or any other deduction whatsoever.

1.7           Prepayment.  No prepayment of this Note shall be permitted
without Lender’s approval in writing in Lender’s sole discretion except (1) in
connection with the sale of all of the equity interests in Mortgagor and
Borrower by Principal to Lender (the “Option Interests”)
after Completion pursuant to the Option Agreement or the Put Option (as defined
in the Option Agreement) or (ii) at any time after 150 days after Completion.   Borrower shall be required to prepay this Note
upon earlier to occur of: (a) the sale of the Option Interests to Lender or its
assignee pursuant to the Option Agreement or the Put Option, (b) an uncured
default by Principal under the Option Agreement and the commencement of the
pursuit by Lender or its assignee of its remedies in connection with such
default, (c) the sale of the Option Interests (other than in connection with
the Option Agreement or Put Option) or the sale of the Property or (d) the
event of an uncured default by Borrower under the Loan Agreement (after the
expiration of any applicable grace and cure periods).

1.8           No Usury.  The provisions of this Note and of all other agreements between
Borrower and Lender, whether now existing or hereafter arising and whether
written or oral, including, but not limited to, the Loan Documents, are hereby
expressly limited so that in no contingency or event whatsoever, whether by
reason of demand or acceleration of the maturity of this Note or otherwise,
shall the amount contracted for, charged, taken, reserved, paid, or agreed to
be paid to Lender for the use, forbearance, retention or detention of the money
loaned under this Note and related indebtedness exceed the maximum amount
permissible under applicable law.  If,
from any circumstance whatsoever, performance or fulfillment of any provision
hereof or of any agreement between Borrower and Lender shall, at the time
performance or fulfillment of such provision shall be due, exceed the limit for
interest prescribed by law or otherwise transcend the limit of validity
prescribed by applicable law, then ipso facto the obligation to be performed or
fulfilled shall be reduced to such limit; and if, from any circumstance
whatsoever, Lender shall ever receive anything of value deemed interest by
applicable law in excess of the

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maximum lawful amount, an amount equal to any excessive interest shall
be applied to the reduction of the principal balance owing under this Note in
the inverse order of its maturity (whether or not then due) or at the option of
Lender be paid over to Borrower, and not to the payment of interest.  All Interest (including any amounts or
payments judicially or otherwise under the law deemed to be interest)
contracted for, charged, taken, reserved, paid or agreed to be paid to Lender
shall, to the extent permitted by applicable law, be amortized, prorated,
allocated and spread throughout the full term of the Note, including any
extensions or renewals thereof, until payment in full of the Indebtedness so
that the Interest thereof for such full period will not exceed at any time the
maximum amount permitted by applicable law. 
To the extent that Lender is relying on Chapter 303, as amended, of
the Texas Finance Code to determine the maximum amount of interest permitted by
applicable law on the principal of the Loan, Lender will utilize the weekly
rate ceiling from time to time in effect as provided in such Chapter 303,
as amended.  To the extent United States
federal law permits a greater amount of interest than is permitted under Texas
law, Lender will rely on United States federal law instead of such
Chapter 303, as amended, for the purpose of determining the maximum amount
permitted by applicable law. 
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 lawful rate under such Chapter 303, as
amended, or under other applicable law by giving notice, if required, to
Borrower as provided by applicable law now or hereafter in effect.  This paragraph 1.8 will control all
agreements between Borrower and Lender.

 

SECTION 2 - DEFAULT; REMEDIES

2.1           Acceleration.  Lender may, by notice to Borrower at any time
during the existence of an Event of Default, declare immediately due and
payable the entire principal amount outstanding hereunder together with all Interest
and other charges due hereunder including, without limitation, all Late Charges
and Default Interest.

2.2           Default Interest Rate; Late
Charges.  (a) After an Event of
Default, the Default Interest Rate shall apply, in place of the Interest Rate,
to all amounts outstanding under the Loan. 
Such Default Interest shall be compounded on the monthly anniversary of
such Event of Default until paid in full.

(b)           If any monthly installment of Interest
due hereunder is not received by Lender on or before the tenth (10th) day after such installment
becomes due, Borrower shall pay to Lender, immediately and without demand by
Lender, the Late Charge on such outstanding monthly.  Borrower acknowledges that its failure to
make timely payments will cause Lender to incur additional expenses in
servicing and processing the Loan, and that it is extremely difficult and impractical
to determine those additional expenses. 
Borrower agrees that any such Late Charges payable pursuant to this
Section 2.2(b) represents a fair and reasonable estimate, taking into account
all circumstances existing on the date hereof, of the additional expenses
Lender will incur by reason of such late payment.  Any such Late Charge is payable in addition
to, and not in lieu of, any Interest payable at the Default Rate pursuant to
Section 2.2(a).

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2.3           Remedies.  The remedies of Lender as provided herein, or
in the Loan Documents, or at law or in equity shall be cumulative and
concurrent, and may be pursued singularly, successively, or together at the
sole discretion of Lender, and may be exercised as often as occasion therefor
shall occur.  The failure at any time to
exercise any right or remedy shall not constitute a waiver of the right to
exercise the right or remedy at any other time.

SECTION 3 - SECURITY

Borrower’s obligations under this Note are secured by,
among other instruments, the Pledge Agreement and other Loan Documents.  The covenants of the Pledge Agreement and the
Loan Agreement are incorporated by reference into this Note.

SECTION 4 - WAIVER

Presentment for payment, demand, notice of dishonor,
protest, and notice of protest and stay of execution are hereby waived by
Borrower.  No extension or indulgence or
release of collateral granted from time to time shall be construed as a
novation of this Note or as a reinstatement of the indebtedness evidenced
hereby or as a waiver of the rights of Lender herein.

SECTION 5 - EXCULPATION

5.1           Lender Exculpation.  Notwithstanding anything to the contrary
contained in this Note, no present or future shareholder, director, officer,
member or partner of Lender or of any entity which is now or hereafter a
shareholder, director, officer, member or partner of Lender (or of any entity
which is now or hereafter a shareholder, director, officer, member or partner
of a shareholder, director, officer, member or partner of Lender) shall have
any personal liability, directly or indirectly, under or in connection with
this Note or any agreement made or entered into under or in connection with the
provisions of this Note, or any amendment or amendments to any of the foregoing
made at any time or times, heretofore or hereafter, and Borrower hereby forever
and irrevocably waives and releases any and all such personal liability.  In addition, neither Lender nor any successor
or assign of Lender shall have at any time or times hereafter any personal
liability, directly or indirectly, under or in connection with any agreement,
lease, instrument, encumbrance, claim or right affecting or relating to the Project
or to which the Project is now or hereafter subject.  The limitation of liability provided in this
paragraph is in addition to, and not in limitation of, any limitation on
liability applicable to Lender provided by law or by any other contract,
agreement or instrument.

5.2           Borrower Exculpation.  Borrower’s liability in connection with this
Note and the other Loan Documents (including Borrower’s liability for all
amounts due hereunder or thereunder) is collectible only from the collateral
against which a security interest is created by the Pledge Agreement.  In no case will any person who holds a direct
or indirect ownership interest in Borrower, or any officer, director, manager,
trustee, employee, agent or affiliate of Borrower or any such direct or
indirect owner, have any responsibility for Borrower’s obligations in
connection with this Note and the other Loan Documents (including Borrower’s
liability for any amounts due hereunder or thereunder); provided, however, that
nothing in this

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Section 5.2 limits the liability of any person under a guaranty or
other agreement executed by such person.

 

SECTION 6 - GOVERNING LAW; SUBMISSION TO JURISDICTION;
WAIVER OF JURY TRIAL; SEVERABILITY

6.1           Governing Law.  This Note shall be governed by, and construed
in accordance with, the substantive law of the State of Texas without regard to
the application of choice of law principles.

6.2           SUBMISSION TO
JURISDICTION/SERVICE OF PROCESS. 
BORROWER HEREBY IRREVOCABLY SUBMITS TO THE PERSONAL JURISDICTION OF THE
STATE COURTS OF THE STATE OF TEXAS LOCATED IN DALLAS COUNTY, TEXAS FOR THE
PURPOSES OF ANY SUIT, ACTION OR OTHER PROCEEDING ARISING OUT OF OR BASED UPON
THIS NOTE, THE SUBJECT MATTER HEREOF, OR THE LOAN. BORROWER TO THE EXTENT
PERMITTED BY APPLICABLE LAW (A) HEREBY WAIVES, AND AGREES NOT TO ASSERT, BY WAY
OF MOTION, AS A DEFENSE, OR OTHERWISE, IN ANY SUCH SUIT, ACTION OR OTHER
PROCEEDING BROUGHT IN THE ABOVE-NAMED COURTS ANY CLAIM THAT IT IS NOT SUBJECT
PERSONALLY TO THE JURISDICTION OF SUCH COURTS, THAT THE SUIT, ACTION OR
PROCEEDING IS BROUGHT IN AN INCONVENIENT FORUM, THAT THE VENUE OF THE SUIT,
ACTION OR PROCEEDING IS IMPROPER OR THAT THIS 
NOTE, THE SUBJECT MATTER HEREOF, OR THE OTHER LOAN (AS APPLICABLE) MAY
NOT BE ENFORCED IN OR BY SUCH COURT AND (B) HEREBY WAIVES THE RIGHT TO REMOVE
ANY SUCH ACTION, SUIT OR PROCEEDING INSTITUTED BY LENDER IN THE ABOVE NAMED
COURTS.  BORROWER HEREBY CONSENTS TO
SERVICE OF PROCESS BY MAIL AT THE ADDRESS TO WHICH NOTICES ARE TO BE GIVEN TO
IT PURSUANT TO SECTION 7 HEREOF, BUT SERVICE SO MADE WILL BE EFFECTIVE ONLY ON
DELIVERY AT SUCH ADDRESS.  BORROWER
AGREES THAT ITS SUBMISSION TO JURISDICTION AND CONSENT TO SERVICE OF PROCESS BY
MAIL IS MADE FOR THE EXPRESS BENEFIT OF LENDER. 
FINAL JUDGMENT AGAINST BORROWER IN ANY SUCH ACTION, SUIT OR PROCEEDING
SHALL BE CONCLUSIVE, AND MAY BE ENFORCED IN ANY OTHER JURISDICTION (X) BY SUIT,
ACTION OR PROCEEDING ON THE JUDGMENT, A CERTIFIED OR TRUE COPY OF WHICH SHALL
BE CONCLUSIVE EVIDENCE OF THE FACT AND OF THE AMOUNT OF INDEBTEDNESS OR
LIABILITY OF BORROWER THEREIN DESCRIBED, OR (Y) IN ANY OTHER MANNER PROVIDED BY
OR PURSUANT TO THE LAWS OF SUCH OTHER JURISDICTION, PROVIDED, HOWEVER,
THAT THE LENDER MAY AT ITS OPTION BRING SUIT, OR INSTITUTE OTHER JUDICIAL
PROCEEDINGS, AGAINST BORROWER OR ANY OF ITS ASSETS IN ANY STATE OR FEDERAL
COURT OF THE UNITED STATES OR OF ANY COUNTRY OR PLACE WHERE THE SUBMITTING
PARTY OR SUCH ASSETS MAY BE FOUND.

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6.3           WAIVER WITH RESPECT TO DAMAGES.  BORROWER ACKNOWLEDGES THAT LENDER DOES NOT
HAVE ANY FIDUCIARY RELATIONSHIP WITH, OR FIDUCIARY DUTY TO, BORROWER ARISING
OUT OF OR IN CONNECTION WITH THIS NOTE OR ANY OTHER LOAN DOCUMENT AND THE RELATIONSHIP
BETWEEN LENDER AND BORROWER IN CONNECTION HEREWITH AND THEREWITH IS SOLELY THAT
OF DEBTOR AND CREDITOR.  TO THE EXTENT
PERMITTED BY APPLICABLE LAW, BORROWER SHALL NOT ASSERT, AND BORROWER HEREBY
WAIVES, ANY CLAIMS AGAINST LENDER, ON ANY THEORY OF LIABILITY, FOR SPECIAL,
INDIRECT, CONSEQUENTIAL OR PUNITIVE DAMAGES (AS OPPOSED TO DIRECT OR ACTUAL
DAMAGES) ARISING OUT OF, IN CONNECTION WITH, OR AS A RESULT OF, THIS NOTE, ANY
OTHER LOAN DOCUMENT, ANY AGREEMENT OR INSTRUMENT CONTEMPLATED HEREBY OR THEREBY,
OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.

6.4           Waiver of Jury Trial.  BORROWER HEREBY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVES ANY RIGHT THAT BORROWER MAY HAVE TO A TRIAL BY JURY IN ANY
LITIGATION ARISING IN ANY WAY IN CONNECTION WITH THIS NOTE OR ANY OF THE OTHER
LOAN DOCUMENTS, OR ANY OTHER STATEMENTS OR ACTIONS OF THE LENDER IN CONNECTION
WITH THIS NOTE OR ANY OF THE OTHER LOAN DOCUMENTS.  BORROWER ACKNOWLEDGES THAT THIS WAIVER IS A
MATERIAL INDUCEMENT FOR THE LENDER TO DISBURSE THE MONEY EVIDENCED BY THIS NOTE
AND TO ENTER INTO THE OTHER LOAN DOCUMENTS.

6.5           Severability.  If any provision of this Note is held to be
invalid or unenforceable by a court of competent jurisdiction, the other
provisions of this Note shall remain in full force and effect.

SECTION 7 - NOTICES

7.1           Notices.  All notices, demands and other communications
(“Notice”) under or concerning this Note
shall be in writing.  Each Notice shall
be addressed to the intended recipient at its address set forth in the Loan Agreement.  Each Notice shall be deemed given on the
earliest to occur of (1) the date when the Notice is received by the addressee;
(2) the first (1st) Business Day after the Notice is delivered to a recognized
overnight courier service, with arrangements made for payment of charges, for
next Business Day delivery; or (3) the third Business Day after the Notice is
deposited in the United States mail with postage prepaid, certified mail,
return receipt requested.

7.2           Any party to this Agreement may
change the address to which Notice is intended for it are to be directed by
means of Notice given to the other party in accordance with this Section 7.  Each party agrees that it will not refuse or
reject delivery of any Notice given in accordance with this Section 7, that it
will acknowledge, in writing, the receipt of any Notice upon request by the
other party and that any Notice rejected or refused by it shall be deemed for
purposes of this Section 7 to have been received by the rejecting party on the
date so refused or rejected, as conclusively established by the records of the
U.S. Postal Service or the courier

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service. Any Notice under any other Loan Document
which does not specify how Notices are to be given shall be given in accordance
with this Section 7.

SECTION 8 - MISCELLANEOUS

8.1           Costs.  If, and as often as, this Note is referred to
an attorney for the collection of any sum payable hereunder, or to defend or
enforce any of Lender’s rights hereunder, or to commence an action,
cross-claim, third-party claim or counterclaim by Lender against Borrower
relating to this Note, Borrower agrees to pay to Lender all costs reasonably incurred
in connection therewith, including reasonable attorney’s fees (including such
fees incurred in appellate, bankruptcy or insolvency proceedings), with or
without the institution of any action or proceeding.

8.2           Modification.  Neither this Note nor any of the terms hereof
may be terminated, amended, supplemented, waived or modified orally, but only
by an instrument in writing executed by the party against which enforcement of
the termination, amendment, supplement, waiver or modification is sought.

8.3           Successors.  As used herein, the terms “Borrower” and “Lender”
shall be deemed to include their respective successors and assigns whether by
voluntary action of the parties or by operation of law.  All of the rights, privileges and obligations
hereof shall inure to the benefit of and bind such successors and assigns.

8.4           Loan Agreement.  To the extent not expressly stated otherwise
herein, all of the terms and conditions of the Loan Agreement shall survive the
execution of this Note and shall remain in full force and effect; provided,
however, to the extent of any irreconcilable conflict between the terms and
conditions of the Loan Agreement and this Note, the terms and provisions of
this Note shall govern and control.

8.5           No Waiver.  No failure or delay by Lender in exercising
any right, power or privilege hereunder shall operate as a waiver thereof, nor
shall any single or partial exercise of any right, power or privilege hereunder
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege.  Without
limiting the foregoing, no disbursement by Lender after a default by Borrower
hereunder shall constitute a waiver of any of the Lender’s remedies established
or referred to hereunder or shall obligate Lender to make any further
disbursement.  No waiver, consent or
approval of any kind by Lender shall be effective unless (and it shall be
effective only to the extent) expressly set out in a writing signed and
delivered by Lender.  No notice to or
demand on Borrower in any case shall entitle Borrower to any other notice or
demand in similar or other circumstances, nor shall such notice or demand
constitute a waiver of the rights of Lender to any other or further
actions.  In its sole discretion, Lender
may, at any time and from time to time, waive any one or more of the
requirements contained herein, but such waiver in any instance or under any
particular circumstances shall not be considered a waiver of such requirement
or requirements in any other instance or under any other circumstance.

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8.6           Sole and Absolute Discretion.  Any option, consent, approval, discretion or
similar right of Lender set forth in this Note may be exercised by Lender in
its sole and absolute discretion, unless the provisions of this Note or another
Loan Document specifically require another standard.

[Signature follows
on next page.]

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IN WITNESS WHEREOF, the undersigned has duly executed
and delivered this Note as of the date first set forth above.

	
  

  	
  BORROWER

  
	
   

  	
   

  
	
   

  	
  GC 128 VOSS SM LLC

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  GC 129 Voss JM, LLC, a Delaware limited liability

  company, its sole member

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
  GC 123 Voss Limited Partnership, a Delaware

  limited partnership, its sole member

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  By:

  	
  GC 112 Development 2006 GP LLC, a

  Delaware limited liability company, its

  general partner

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Timothy J. Hogan, Vice President

  

 

 10Exhibit 10.4

 

JUNIOR MEZZANINE PROMISSORY NOTE

	
  $6,153,689

  	
   

  	
  September 22, 2006

  

 

GC 129 Voss JM LLC, a Delaware
limited liability company (“Borrower”), FOR
VALUE RECEIVED, promises to pay to the order of Behringer Harvard Alexan Voss,
LLC, a Delaware limited liability company or its assigns (“Lender”),
at such place as Lender may from time to time designate in writing, the
principal sum of Six Million One Hundred Fifty Three Thousand Six Hundred Eighty
Nine Dollars ($6,153,689.00) or so much thereof as may from time to time have
been advanced to Borrower under this Note with Interest (as defined below) on
the outstanding principal amount at the rates set forth herein.

DEFINITIONS

For the purpose of this Note capitalized terms not
defined below will be as defined in the Loan Agreement:

“Default
Interest” shall mean any interest accruing at the Default Interest
Rate and payable pursuant to the terms hereof or of the other Loan Documents.

“Default
Interest Rate” shall mean a rate of interest per annum equal to the
lesser of either (a) thirteen percent (13%) or (b) the maximum rate
of interest which may be collected from Borrower under applicable law.

“Interest”
shall mean any interest accruing at the Interest Rate or the Default Interest Rate,
as applicable and payable pursuant to the terms hereof or of the other Loan
Documents.

“Interest
Rate” shall mean a rate of interest per annum equal to the lesser
of: (a) ten and one half percent (10.5%) or (b) the maximum rate of interest
which may be collected from Borrower under applicable law.

“Late Charge”
shall mean the lesser of (a) five percent (5%) of any unpaid amount, or (b) the
maximum late charge permitted to be charged under applicable law.

“Loan Agreement”
shall mean that certain Junior Mezzanine Loan Agreement, between Lender and
Borrower, dated of even date herewith, corresponding to this Note, as the same
may hereafter be amended, modified and restated from time to time.

“Maturity
Date” shall mean March 22, 2012.

“Net Cash
Flow” shall mean the
amount by which (i) gross income of the Project (which shall include, without
limitation, all income received by Borrower from and in connection with any
leasing activity) exceeds (ii) operating expenses (which shall mean the actual
cash operating expenses of the Project incurred during the period in question
and which are consistent with generally accepted operating practices for
similar properties) excluding Interest paid or payable under this Note to the
extent included in operating expenses, plus any payments of Interest and/or
principal pursuant to the Senior Loan and Senior Mezz Loan.

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“Payment Date”
shall mean the first day of each calendar month, commencing on the date
set forth in Section 1.1, and the Maturity Date (or, if any such date is not a
Business Day, then the first Business Day immediately before such date).

SECTION 1 - STATED MATURITY;
INTEREST AND PRINCIPAL PAYMENTS.

1.1   Payment of
Interest.  Interest shall accrue on this Note at the
Interest Rate or, during any time at which an Event of Default is continuing,
at the Default Interest Rate.  Commencing
on November 1, 2006, and continuing monthly on the same date of each calendar
month thereafter up to and until the Maturity Date, an installment of accrued
and unpaid Interest shall be due and payable to Lender to the extent required
by the following:

(a)                                                                                  until
the Completion (as defined in the Junior Mezzanine Completion Guaranty) no
payment will be required and the Interest shall accrue; and

(b)                                                                                 after
Completion, Borrower shall only be required to pay, on each such payment date,
an amount equal to the then available Net Cash Flow (i.e.
Net Cash Flow through the end of the second preceding calendar month not
previously paid to Lender), or the total of all accrued Interest that then remains
unpaid, if less, and the excess of such installment of Interest over the amount
of available Net Cash Flow (if any) so deferred shall accrue as set forth
herein.

On the Maturity
Date, all accrued but unpaid Interest, shall be due and payable in full.  It is the intent of Borrower and Lender that
this Note shall be treated as a security that satisfies the requirements of
Section 856(m)(1)(A) and Section 856(m)(2) of the Internal Revenue Code of
1986, as amended (the “Code”) (the “Straight Debt Safe Harbor”). 
Accordingly, notwithstanding any indication herein to the contrary, (i)
Borrower and Lender agree that the terms of this Note shall be interpreted in
such a manner that the Note satisfies the Straight Debt Safe Harbor and (ii) the
terms of this Note shall be applied such that the Note has a constant effective
yield to maturity, as determined under Section 1272 of the Code, at a fixed
rate over the entire term of the Note equal to the Interest Rate; provided,
however, that such construction shall not alter the dates of the principal or Interest
payments (described in Section 1.1 above), or the amounts of principal or Interest
payments required to be paid hereunder.

1.2   Payments of Principal.  On the Maturity Date, the unpaid principal
balance, together with all accrued but unpaid Interest, shall be due and
payable in full.

1.3   Payment on Stated Maturity Date.  Any remaining unpaid Indebtedness shall be
due and payable in full at the Maturity Date.

1.4   Computation of Interest.  Subject to the provisions of Section 1.8, Interest
under this Note shall be paid as set forth herein and shall be calculated based
on actual days elapsed and a three hundred sixty (360) day year.  Subject to the provisions of Section 1.8,
Interest that becomes due under this Note and remains unpaid shall be
compounded monthly and shall itself bear Interest (without becoming part of the
principal balance of this Note) at the Interest Rate such that the Note has a
constant effective yield to maturity at the Interest Rate as described in

 2
 

 

 

Section 1.1 hereof (or, during any
time at which an Event of Default is continuing, at the Default Interest Rate).

1.5   Method of Payment.  Each payment due hereunder shall not be
deemed received by Lender until received on a Business Day (as hereafter
defined) in Federal funds in lawful money of the United States of America
immediately available to Lender prior to 2:00 p.m. local time at the place then
designated by Lender.  Any payment
received on a Business Day after the time established by the preceding
sentence, shall be deemed to have been received on the immediately following
Business Day for purposes of determining interest accruals and Late Charges.

1.6   Application of Payments.  Payments under this Note shall be applied
first to the payment of Late Charges and Default Interest and other costs and
charges due in connection with this Note, as Lender determines in its sole
discretion, then to the payment of accrued but unpaid Interest, and then to
reduction of the outstanding principal balance. 
No principal amount repaid may be reborrowed.  All amounts due under this Note shall be
payable without setoff, counterclaim or any other deduction whatsoever.

1.7   Prepayment.  No prepayment of this Note shall be permitted
without Lender’s approval in writing in Lender’s sole discretion except (1) in
connection with the sale of all of the equity interests in Mortgagor and Senior
Mezz Borrower by Borrower to Lender (the “Option Interests”)
after Completion pursuant to the Option Agreement or the Put Option (as defined
in the Option Agreement) or (ii) at any time after 150 days after Completion.   Borrower shall be required to prepay this Note
upon earlier to occur of: (a) the sale of the Option Interests to Lender or its
assignee pursuant to the Option Agreement or the Put Option, (b) an uncured
default by Borrower under the Option Agreement and the commencement of the
pursuit by Lender or its assignee of its remedies in connection with such
default, (c) the sale of the Option Interests (other than in connection with
the Option Agreement or Put Option) or the sale of the Property or (d) the
event of an uncured default by Borrower under the Loan Agreement (after the
expiration of any applicable grace and cure periods).

1.8   No Usury.  The provisions of this Note and of all other agreements between
Borrower and Lender, whether now existing or hereafter arising and whether
written or oral, including, but not limited to, the Loan Documents, are hereby
expressly limited so that in no contingency or event whatsoever, whether by
reason of demand or acceleration of the maturity of this Note or otherwise,
shall the amount contracted for, charged, taken, reserved, paid, or agreed to
be paid to Lender for the use, forbearance, retention or detention of the money
loaned under this Note and related indebtedness exceed the maximum amount
permissible under applicable law.  If,
from any circumstance whatsoever, performance or fulfillment of any provision
hereof or of any agreement between Borrower and Lender shall, at the time performance
or fulfillment of such provision shall be due, exceed the limit for interest
prescribed by law or otherwise transcend the limit of validity prescribed by
applicable law, then ipso facto the obligation to be performed or fulfilled
shall be reduced to such limit; and if, from any circumstance whatsoever,
Lender shall ever receive anything of value deemed interest by applicable law
in excess of the maximum lawful amount, an amount equal to any excessive
interest shall be applied to the reduction of the principal balance owing under
this Note in the inverse order of its maturity (whether or not then due) or at
the option of Lender be paid over to Borrower, and not to the

 3
 

 

payment of interest.  All Interest (including any amounts or
payments judicially or otherwise under the law deemed to be interest)
contracted for, charged, taken, reserved, paid or agreed to be paid to Lender
shall, to the extent permitted by applicable law, be amortized, prorated,
allocated and spread throughout the full term of the Note, including any
extensions or renewals thereof, until payment in full of the Indebtedness so
that the Interest thereof for such full period will not exceed at any time the
maximum amount permitted by applicable law. 
To the extent that Lender is relying on Chapter 303, as amended, of
the Texas Finance Code to determine the maximum amount of interest permitted by
applicable law on the principal of the Loan, Lender will utilize the weekly
rate ceiling from time to time in effect as provided in such Chapter 303,
as amended.  To the extent United States
federal law permits a greater amount of interest than is permitted under Texas
law, Lender will rely on United States federal law instead of such
Chapter 303, as amended, for the purpose of determining the maximum amount
permitted by applicable law. 
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 lawful rate under such Chapter 303, as
amended, or under other applicable law by giving notice, if required, to
Borrower as provided by applicable law now or hereafter in effect.  This paragraph 1.8 will control all
agreements between Borrower and Lender.

SECTION 2 - DEFAULT; REMEDIES

2.1   Acceleration.  Lender may, by notice to Borrower at any time
during the existence of an Event of Default, declare immediately due and
payable the entire principal amount outstanding hereunder together with all Interest
and other charges due hereunder including, without limitation, all Late Charges
and Default Interest.

2.2   Default Interest Rate; Late Charges.  (a) After an Event of Default, the Default
Interest Rate shall apply, in place of the Interest Rate, to all amounts
outstanding under the Loan.  Such Default
Interest shall be compounded on the monthly anniversary of such Event of
Default until paid in full.

(b)  If any monthly installment of Interest due
hereunder is not received by Lender on or before the tenth (10th) day after such installment
becomes due, Borrower shall pay to Lender, immediately and without demand by
Lender, the Late Charge on such outstanding monthly.  Borrower acknowledges that its failure to
make timely payments will cause Lender to incur additional expenses in
servicing and processing the Loan, and that it is extremely difficult and
impractical to determine those additional expenses.  Borrower agrees that any such Late Charges
payable pursuant to this Section 2.2(b) represents a fair and reasonable
estimate, taking into account all circumstances existing on the date hereof, of
the additional expenses Lender will incur by reason of such late payment.  Any such Late Charge is payable in addition
to, and not in lieu of, any Interest payable at the Default Rate pursuant to
Section 2.2(a).

2.3   Remedies.  The remedies of Lender as provided herein, or
in the Loan Documents, or at law or in equity shall be cumulative and
concurrent, and may be pursued singularly, successively, or together at the
sole discretion of Lender, and may be exercised as often as occasion therefor
shall occur.  The failure at any time to
exercise any right or remedy shall not constitute a waiver of the right to
exercise the right or remedy at any other time.

 4
 

 

SECTION 3 - SECURITY

Borrower’s obligations under this Note are secured by,
among other instruments, the Pledge Agreement and other Loan Documents.  The covenants of the Pledge Agreement and the
Loan Agreement are incorporated by reference into this Note.

SECTION 4 - WAIVER

Presentment for payment, demand, notice of dishonor,
protest, and notice of protest and stay of execution are hereby waived by
Borrower.  No extension or indulgence or
release of collateral granted from time to time shall be construed as a
novation of this Note or as a reinstatement of the indebtedness evidenced
hereby or as a waiver of the rights of Lender herein.

SECTION 5 - EXCULPATION

5.1   Lender Exculpation.  Notwithstanding anything to the contrary
contained in this Note, no present or future shareholder, director, officer,
member or partner of Lender or of any entity which is now or hereafter a
shareholder, director, officer, member or partner of Lender (or of any entity
which is now or hereafter a shareholder, director, officer, member or partner
of a shareholder, director, officer, member or partner of Lender) shall have
any personal liability, directly or indirectly, under or in connection with
this Note or any agreement made or entered into under or in connection with the
provisions of this Note, or any amendment or amendments to any of the foregoing
made at any time or times, heretofore or hereafter, and Borrower hereby forever
and irrevocably waives and releases any and all such personal liability.  In addition, neither Lender nor any successor
or assign of Lender shall have at any time or times hereafter any personal
liability, directly or indirectly, under or in connection with any agreement,
lease, instrument, encumbrance, claim or right affecting or relating to the Project
or to which the Project is now or hereafter subject.  The limitation of liability provided in this
paragraph is in addition to, and not in limitation of, any limitation on
liability applicable to Lender provided by law or by any other contract,
agreement or instrument.

5.2   Borrower Exculpation.  Borrower’s liability in connection with this
Note and the other Loan Documents (including Borrower’s liability for all
amounts due hereunder or thereunder) is collectible only from the collateral
against which a security interest is created by the Pledge Agreement.  In no case will any person who holds a direct
or indirect ownership interest in Borrower, or any officer, director, manager,
trustee, employee, agent or affiliate of Borrower or any such direct or
indirect owner, have any responsibility for Borrower’s obligations in
connection with this Note and the other Loan Documents (including Borrower’s
liability for any amounts due hereunder or thereunder); provided, however, that
nothing in this Section 5.2 limits the liability of any person under a guaranty
or other agreement executed by such person.

 5
 

 

SECTION
6 - GOVERNING LAW; SUBMISSION TO JURISDICTION; WAIVER OF JURY TRIAL;
SEVERABILITY

6.1   Governing Law.  This Note shall be governed by, and construed
in accordance with, the substantive law of the State of Texas without regard to
the application of choice of law principles.

6.2   SUBMISSION TO
JURISDICTION/SERVICE OF PROCESS. 
BORROWER HEREBY IRREVOCABLY SUBMITS TO THE PERSONAL JURISDICTION OF THE
STATE COURTS OF THE STATE OF TEXAS LOCATED IN DALLAS COUNTY, TEXAS FOR THE PURPOSES
OF ANY SUIT, ACTION OR OTHER PROCEEDING ARISING OUT OF OR BASED UPON THIS NOTE,
THE SUBJECT MATTER HEREOF, OR THE LOAN. BORROWER TO THE EXTENT PERMITTED BY
APPLICABLE LAW (A) HEREBY WAIVES, AND AGREES NOT TO ASSERT, BY WAY OF MOTION,
AS A DEFENSE, OR OTHERWISE, IN ANY SUCH SUIT, ACTION OR OTHER PROCEEDING
BROUGHT IN THE ABOVE-NAMED COURTS ANY CLAIM THAT IT IS NOT SUBJECT PERSONALLY
TO THE JURISDICTION OF SUCH COURTS, THAT THE SUIT, ACTION OR PROCEEDING IS
BROUGHT IN AN INCONVENIENT FORUM, THAT THE VENUE OF THE SUIT, ACTION OR
PROCEEDING IS IMPROPER OR THAT THIS 
NOTE, THE SUBJECT MATTER HEREOF, OR THE OTHER LOAN (AS APPLICABLE) MAY
NOT BE ENFORCED IN OR BY SUCH COURT AND (B) HEREBY WAIVES THE RIGHT TO REMOVE
ANY SUCH ACTION, SUIT OR PROCEEDING INSTITUTED BY LENDER IN THE ABOVE NAMED
COURTS.  BORROWER HEREBY CONSENTS TO
SERVICE OF PROCESS BY MAIL AT THE ADDRESS TO WHICH NOTICES ARE TO BE GIVEN TO
IT PURSUANT TO SECTION 7 HEREOF, BUT SERVICE SO MADE WILL BE EFFECTIVE ONLY ON
DELIVERY AT SUCH ADDRESS.  BORROWER
AGREES THAT ITS SUBMISSION TO JURISDICTION AND CONSENT TO SERVICE OF PROCESS BY
MAIL IS MADE FOR THE EXPRESS BENEFIT OF LENDER. 
FINAL JUDGMENT AGAINST BORROWER IN ANY SUCH ACTION, SUIT OR PROCEEDING
SHALL BE CONCLUSIVE, AND MAY BE ENFORCED IN ANY OTHER JURISDICTION (X) BY SUIT,
ACTION OR PROCEEDING ON THE JUDGMENT, A CERTIFIED OR TRUE COPY OF WHICH SHALL
BE CONCLUSIVE EVIDENCE OF THE FACT AND OF THE AMOUNT OF INDEBTEDNESS OR
LIABILITY OF BORROWER THEREIN DESCRIBED, OR (Y) IN ANY OTHER MANNER PROVIDED BY
OR PURSUANT TO THE LAWS OF SUCH OTHER JURISDICTION, PROVIDED, HOWEVER,
THAT THE LENDER MAY AT ITS OPTION BRING SUIT, OR INSTITUTE OTHER JUDICIAL
PROCEEDINGS, AGAINST BORROWER OR ANY OF ITS ASSETS IN ANY STATE OR FEDERAL
COURT OF THE UNITED STATES OR OF ANY COUNTRY OR PLACE WHERE THE SUBMITTING
PARTY OR SUCH ASSETS MAY BE FOUND.

6.3   WAIVER WITH RESPECT TO DAMAGES.  BORROWER ACKNOWLEDGES THAT LENDER DOES NOT
HAVE ANY FIDUCIARY RELATIONSHIP WITH, OR FIDUCIARY DUTY TO, BORROWER ARISING
OUT OF OR IN CONNECTION WITH THIS NOTE OR ANY OTHER LOAN DOCUMENT AND THE
RELATIONSHIP BETWEEN LENDER AND BORROWER IN CONNECTION HEREWITH AND THEREWITH
IS SOLELY THAT OF DEBTOR AND CREDITOR. 
TO

 6
 

 

THE EXTENT PERMITTED BY
APPLICABLE LAW, BORROWER SHALL NOT ASSERT, AND BORROWER HEREBY WAIVES, ANY
CLAIMS AGAINST LENDER, ON ANY THEORY OF LIABILITY, FOR SPECIAL, INDIRECT,
CONSEQUENTIAL OR PUNITIVE DAMAGES (AS OPPOSED TO DIRECT OR ACTUAL DAMAGES)
ARISING OUT OF, IN CONNECTION WITH, OR AS A RESULT OF, THIS NOTE, ANY OTHER
LOAN DOCUMENT, ANY AGREEMENT OR INSTRUMENT CONTEMPLATED HEREBY OR THEREBY, OR
THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.

6.4   Waiver of Jury Trial.  BORROWER HEREBY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVES ANY RIGHT THAT BORROWER MAY HAVE TO A TRIAL BY JURY IN ANY
LITIGATION ARISING IN ANY WAY IN CONNECTION WITH THIS NOTE OR ANY OF THE OTHER
LOAN DOCUMENTS, OR ANY OTHER STATEMENTS OR ACTIONS OF THE LENDER IN CONNECTION
WITH THIS NOTE OR ANY OF THE OTHER LOAN DOCUMENTS.  BORROWER ACKNOWLEDGES THAT THIS WAIVER IS A
MATERIAL INDUCEMENT FOR THE LENDER TO DISBURSE THE MONEY EVIDENCED BY THIS NOTE
AND TO ENTER INTO THE OTHER LOAN DOCUMENTS.

6.5   Severability.  If any provision of this Note is held to be
invalid or unenforceable by a court of competent jurisdiction, the other
provisions of this Note shall remain in full force and effect.

SECTION 7 - NOTICES

7.1   Notices.  All notices, demands and other communications
(“Notice”) under or concerning this Note
shall be in writing.  Each Notice shall
be addressed to the intended recipient at its address set forth in the Loan
Agreement.  Each Notice shall be deemed
given on the earliest to occur of (1) the date when the Notice is received by
the addressee; (2) the first (1st) Business Day after the Notice is delivered
to a recognized overnight courier service, with arrangements made for payment
of charges, for next Business Day delivery; or (3) the third Business Day after
the Notice is deposited in the United States mail with postage prepaid,
certified mail, return receipt requested.

7.2   Any party to this Agreement may change the
address to which Notice is intended for it are to be directed by means of Notice
given to the other party in accordance with this Section 7.  Each party agrees that it will not refuse or
reject delivery of any Notice given in accordance with this Section 7, that it
will acknowledge, in writing, the receipt of any Notice upon request by the
other party and that any Notice rejected or refused by it shall be deemed for
purposes of this Section 7 to have been received by the rejecting party on the
date so refused or rejected, as conclusively established by the records of the
U.S. Postal Service or the courier service. Any Notice under any other Loan
Document which does not specify how Notices are to be given shall be given in
accordance with this Section 7.

 7
 

 

SECTION 8 - MISCELLANEOUS

8.1   Costs. 
If, and as often as, this Note is referred to an attorney for the
collection of any sum payable hereunder, or to defend or enforce any of Lender’s
rights hereunder, or to commence an action, cross-claim, third-party claim or
counterclaim by Lender against Borrower relating to this Note, Borrower agrees
to pay to Lender all costs reasonably incurred in connection therewith,
including reasonable attorney’s fees (including such fees incurred in
appellate, bankruptcy or insolvency proceedings), with or without the
institution of any action or proceeding.

8.2   Modification.  Neither this Note nor any of the terms hereof
may be terminated, amended, supplemented, waived or modified orally, but only
by an instrument in writing executed by the party against which enforcement of
the termination, amendment, supplement, waiver or modification is sought.

8.3   Successors.  As used herein, the terms “Borrower” and “Lender”
shall be deemed to include their respective successors and assigns whether by
voluntary action of the parties or by operation of law.  All of the rights, privileges and obligations
hereof shall inure to the benefit of and bind such successors and assigns.

8.4   Loan Agreement.  To the extent not expressly stated otherwise
herein, all of the terms and conditions of the Loan Agreement shall survive the
execution of this Note and shall remain in full force and effect; provided,
however, to the extent of any irreconcilable conflict between the terms and
conditions of the Loan Agreement and this Note, the terms and provisions of
this Note shall govern and control.

8.5   No Waiver.  No failure or delay by Lender in exercising
any right, power or privilege hereunder shall operate as a waiver thereof, nor
shall any single or partial exercise of any right, power or privilege hereunder
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege.  Without
limiting the foregoing, no disbursement by Lender after a default by Borrower
hereunder shall constitute a waiver of any of the Lender’s remedies established
or referred to hereunder or shall obligate Lender to make any further
disbursement.  No waiver, consent or
approval of any kind by Lender shall be effective unless (and it shall be
effective only to the extent) expressly set out in a writing signed and
delivered by Lender.  No notice to or
demand on Borrower in any case shall entitle Borrower to any other notice or
demand in similar or other circumstances, nor shall such notice or demand
constitute a waiver of the rights of Lender to any other or further
actions.  In its sole discretion, Lender
may, at any time and from time to time, waive any one or more of the
requirements contained herein, but such waiver in any instance or under any
particular circumstances shall not be considered a waiver of such requirement
or requirements in any other instance or under any other circumstance.

8.6   Sole and Absolute Discretion.  Any option, consent, approval, discretion or
similar right of Lender set forth in this Note may be exercised by Lender in
its sole and absolute discretion, unless the provisions of this Note or another
Loan Document specifically require another standard.

[Signature Follows
on Next Page.]

 8

IN WITNESS WHEREOF, the undersigned has duly executed
and delivered this Note as of the date first set forth above.

	
  

  	
  BORROWER

  
	
   

  	
   

  
	
   

  	
  GC 129 VOSS JM LLC

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  GC 123 Voss Limited Partnership,

  a Delaware limited partnership,

  its sole member

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
  GC 112 Development 2006 GP LLC,

  a Delaware limited liability company,

  its general partner

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  Timothy J. Hogan, Vice President

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