NEGATIVE PLEDGE
2130941v.3 2477/0194
After Recording Return To:
McGuire, Craddock & Strother, P.C.
2501 N. Harwood, Suite 1800
Dallas, Texas 75201
Attention: Kim Buhrow
NEGATIVE PLEDGE
THIS NEGATIVE PLEDGE (this “Pledge”), dated July 31, 2015, is executed by HARTMAN ASHFORD CROSSING, LLC, a Texas limited liability company (the “Hartman Ashford Crossing”), and HARTMAN XX LIMITED PARTNERSHIP, a Texas limited partnership (“Hartman Partnership”), in favor of TEXAS CAPITAL BANK, NATIONAL ASSOCIATION (together with its successors and assigns, the “Lender”).
RECITALS
WHEREAS, Lender and Hartman Partnership, among others, are parties to that certain Loan Agreement (as amended from time to time, the “Loan Agreement”) dated May 10, 2012 regarding a revolving line of credit (the “Loan”); and
WHEREAS, Lender has made an advance of the Loan to Hartman Partnership in the amount of $6,900,000 (the “Advance”) and, with the consent of Lender, the proceeds of such Advance will be used by Hartman Partnership to make an advance to Hartman Ashford Crossing, a wholly-owned subsidiary of Hartman Partnership, for the purpose of the acquisition by Hartman Ashford Crossing of the real property located at 1880 South Dairy Ashford Road, Houston, Texas 77077 in Harris County, Texas and more particularly described on Exhibit A attached hereto and made a part hereof (together with any and all improvements thereon, collectively, the “Property”); and
WHEREAS, the Lender is willing to make the Advance in connection with the Loan provided Hartman Ashford Crossing and Hartman Partnership agree not to transfer or encumber the Property except as expressly permitted herein.
AGREEMENT
NOW, THEREFORE, for and in consideration of the Advance and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, each of Hartman Ashford Crossing and Hartman Partnership agrees as follows:
1.
Property. For so long as any part of the Advance remains outstanding, Hartman Ashford Crossing will not, without first obtaining the prior written consent of the Lender, transfer, sell, assign or in any manner dispose of all or any portion of the Property; create or permit any lien, encumbrance, assignment, charge, or security interest of any kind to exist on the Property; or enter into any agreement (excluding this Pledge) prohibiting the creation or assumption of any lien, encumbrance, charge, or security interest of any kind on the Property, except as follows:
(a)
that certain Deed of Trust dated on or about even date herewith executed by Hartman Ashford Crossing for the benefit of Hartman Partnership (the “Hartman Partnership Deed of Trust”);
(b)
liens in favor of Lender;
NEGATIVE PLEDGE – Page 1
(c)
encumbrances consisting of minor easements, zoning restrictions, or other restrictions on the use of real property that do not (individually or in the aggregate) materially affect the value of the assets encumbered thereby or materially impair the ability of Borrower to use such assets in its business, and none of which is violated in any material respect by existing or proposed structures or land use;
(d)
liens for taxes, assessments, or other governmental charges which are not delinquent or which are being contested in good faith and for which adequate reserves have been established; and
(e)
liens of mechanics, materialmen, warehousemen, carriers or other similar statutory liens securing obligations that are not yet due and payable or which are being contested in good faith and for which adequate reserves have been established.
In addition, for so long as any part of the Advance remains outstanding, Hartman Partnership will not, without first obtaining the prior written consent of the Lender, transfer, sell, assign or in any manner dispose of all or any portion of its interest in the Property; create or permit any lien, encumbrance, assignment, charge, or security interest of any kind to exist on its interest in the Property; or enter into any agreement (excluding this Pledge) prohibiting the creation or assumption of any lien, encumbrance, charge, or security interest of any kind on its interest in the Property.
2.
Recording. Lender is hereby authorized and permitted to cause this Pledge (and any amendment hereto) to be recorded at such time and at such place as Lender may elect.
3.
Representations and Warranties of Hartman Ashford Crossing. Each of Hartman Ashford Crossing and Hartman Partnership represents and warrants to the Lender as follows:
(a)
Hartman Ashford Crossing owns good and indefeasible title to the Property, subject to valid building setback lines, utility easements and similar encumbrances and other matters of record, if any, affecting the Property as the same appear of record as of the date hereof.
(b)
Except for the Hartman Partnership Deed of Trust, there are no existing liens on, or security interests in, the Property, other than the lien for general real estate taxes for the current and subsequent years, and no deed of trust, financing statement or similar document covering the Property or any part thereof has been filed.
(c)
The execution and delivery by Hartman Ashford Crossing and Hartman Partnership of this Pledge and the performance of the obligations hereunder have been duly authorized. This Pledge constitutes the legal valid and binding obligation of Hartman Ashford Crossing and Hartman Partnership enforceable in accordance with its terms. The execution and delivery of this Pledge and the compliance with the provisions thereof will not conflict with or constitute a breach of, or default under, any of the provisions of any other agreement to which Hartman Ashford Crossing or Hartman Partnership is a party or the Property may be bound.
The continued validity in all material respects of the aforesaid representations and warranties shall be a condition precedent to the Lender’s obligation to fund, and continue to fund, the Loan.
4.
Covenants of Hartman Ashford Crossing and Hartman Partnership. Each of Hartman Ashford Crossing and Hartman Partnership covenants and agrees to (a) promptly furnish Lender with any information or writings which Lender may reasonably request concerning the Property or any part thereof, (b) allow Lender to inspect all records of Hartman Ashford Crossing relating to the Property or
NEGATIVE PLEDGE – Page 2
any part thereof, (c) promptly notify Lender of any change in any fact or circumstances warranted or represented by Hartman Ashford Crossing or Hartman Partnership in this Pledge or in any other writing furnished by Hartman Ashford Crossing or Hartman Partnership to Lender in connection with the Loan, the Property or any part thereof, (d) promptly notify Lender of any material claim, action or proceeding affecting title to the Property or any part thereof, and (e) pay to Lender the amount of all court costs and reasonable attorneys’ fees assessed by a court and incurred by Lender following default hereunder.
5.
Default. Each of Hartman Ashford Crossing and Hartman Partnership acknowledges and agrees that any failure by the Hartman Ashford Crossing or Hartman Partnership to comply with the terms of this Pledge shall constitute an “Event of Default” under the Loan Agreement. It is expressly acknowledged by Hartman Ashford Crossing and Hartman Partnership that any such failure shall cause the Lender irreparable damage for which legal remedies are inadequate to protect the Lender; the Lender shall have the right, in addition to such other remedies as may be available, to injunctive relief enjoining such breach of this Pledge; and neither the Hartman Ashford Crossing, Hartman Partnership, nor any of their respective officers, directors, members, managers, partners, employees, agents or representatives shall urge that such remedy is not appropriate under the circumstances.
6.
Termination. This Pledge shall remain in full force and effect until the Advance has been paid in full (the “Termination Event”). Upon the occurrence of such Termination Event, Lender agrees, at the expense of Hartman Ashford Crossing and Hartman Partnership, to promptly execute a release, in recordable form, evidencing termination of this Pledge.
7.
Miscellaneous. If any term or provision hereof is declared by a court of competent jurisdiction to be illegal or invalid, such illegal or invalid term or provision shall not affect the balance of the terms and provisions hereof. In the event any action or suit is brought by reason of any breach of this Pledge or any other dispute between the parties concerning this Pledge, then the prevailing party shall be entitled to have and recover from the other party all costs and expenses of suit, including reasonable attorneys’ fees. This Pledge shall be governed by and construed and enforced in accordance with the laws of the State of Texas. This Pledge is to be deemed to have been prepared jointly by the parties hereto, and if any inconsistencies or ambiguities exist herein, they shall not be interpreted or construed against either party as the drafter. The parties shall take such actions and execute such documents as each may reasonably request, to carry out the purposes of this Pledge. Any waiver, amendment, discharge, termination, consent or approval of any kind by Lender must be in writing and shall be effective only to the extent set forth in such writing. This Pledge shall inure to the benefit of Lender, its successors and assigns and shall be binding upon Hartman Ashford Crossing, Hartman Partnership and their successors and assigns; provided, however, that nothing contained in this paragraph or in this Pledge shall permit any transfer or assignment of this Pledge by Hartman Ashford Crossing or Hartman Partnership, or any transfer, sale, assignment, disposal, lien, encumbrance, or security interest of any of Hartman Ashford Crossing’s or Hartman Partnership’s rights or interest in the Property or any part thereof, except as set forth herein. All paragraph headings are inserted for convenience only and shall not be used in any way to modify, limit, construe or otherwise affect this Pledge.
8.
Notices. All notices, requests and demands which any party is required or may desire to give to any other party under any provision of this Pledge must be in writing delivered to each party in the manner set forth in the Loan Agreement, which the notice address for Hartman Ashford Crossing being the same as the notice address for Hartman Partnership.
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NEGATIVE PLEDGE – Page 3
IN WITNESS WHEREOF, each Hartman Ashford Crossing and Hartman Partnership has caused this Pledge to be executed by their duly authorized representatives.
HARTMAN ASHFORD CROSSING:
HARTMAN ASHFORD CROSSING, LLC,
a Texas limited liability company
By:
Allen R. Hartman, President
HARTMAN PARTNERSHIP:
HARTMAN XX LIMITED PARTNERSHIP,
a Texas limited partnership
By:
Hartman XX REIT GP LLC,
a Texas limited liability company,
its sole general partner
By:
Allen R. Hartman, President
STATE OF TEXAS
§
§
COUNTY OF HARRIS
§
This instrument was acknowledged before me on the __ day of July, 2015, by Allen R. Hartman, as President of Hartman Ashford Crossing, LLC, a Texas limited liability company, on behalf of said entity.
Notary Public, State of Texas
STATE OF TEXAS
§
§
COUNTY OF HARRIS
§
This instrument was acknowledged before me on the __ day of July, 2015, by Allen R. Hartman, as President of Hartman XX REIT GP, LLC, a Texas limited liability company and sole general partner of Hartman XX Limited Partnership, a Texas limited partnership, on behalf of said entities.
Notary Public, State of Texas
NEGATIVE PLEDGE – Signature Page
EXHIBIT A
PROPERTY DESCRIPTION
