EXHIBIT 10.16
NOTICE OF CONFIDENTIALITY RIGHTS: IF YOU ARE A NATURAL PERSON, YOU MAY REMOVE OR
STRIKE ANY OF THE FOLLOWING INFORMATION FROM THIS INSTRUMENT BEFORE IT IS FILED
FOR RECORD IN THE PUBLIC RECORDS: YOUR SOCIAL SECURITY NUMBER OR YOUR DRIVER'S
LICENSE NUMBER
FORM OF ASSUMPTION AGREEMENT
(WITH NOVATION)
This Assumption Agreement ("Agreement") is dated as of the 12th day of April,
2004 among STATE FARM LIFE INSURANCE COMPANY, an Illinois corporation
("Lender"), BEHRINGER HARVARD ENCLAVE S LP, a Texas limited partnership
("BHES"), BEHRINGER HARVARD ENCLAVE H LP, a Texas limited partnership ("BHEH")
(BHES and BHEH shall be collectively referred to herein "Original Borrower"),
BEHRINGER HARVARD HOLDINGS, LLC, a Texas limited liability company ("BHH"), a
____________ ("Assuming Borrower"), and _______________ ("Principal"). Lender,
Original Borrower, BHH, Assuming Borrower and Principal sometimes may be
referred to collectively as the "Parties" or individually as a "Party."
RECITALS
A. Lender made a loan (the "Loan") to Original Borrower in the amount of
$20,000,000 (the "Loan Amount") as evidenced by a Promissory Note dated
April 12, 2004 in the principal amount of the Loan Amount (the "Note"),
in which Original Borrower is the maker in favor of Lender, as payee.
B. The Note is secured by the following documents:
1. That certain Deed of Trust and Security Agreement dated
of even date with the Note, granted by Original Borrower in
favor of State Farm (the "Lien Agreement"), encumbering the real
property described in Exhibit A attached hereto (and by this
reference incorporated herein) (the "Property");
2. That certain Assignment of Rents and Leases dated of
even date with the Note (the "Assignment of Rents"), from
Original Borrower as assignor in favor of Lender as assignee;
and
3. Two Uniform Commercial Code Financing Statements, (Forms
UCC-1 and UCC-2), in which Original Borrower is the debtor and
the Lender is the secured party, and which were, respectively,
recorded in the office of the Secretary of State of Texas and in
the office of the Xxxxxx County Recorder's Office (collectively,
the "UCCs").
C. The Original Borrower also entered into that certain Environmental
Indemnification Agreement of even date with the Note, for the benefit of
the Lender (the "Environmental Indemnity"), which Environmental
Indemnity was delivered contemporaneously with the closing of the Loan.
D. As additional consideration to Lender for its agreement to make the
Loan, BHH entered into the Environmental Indemnity and that certain
Limited Guaranty of even date with the Note, in favor of Lender
(collectively, the "Guaranty"), which Guaranty was delivered
contemporaneously with the closing of the Loan.
E. The Lien Agreement, the Assignment of Rents, and the UCCs, are
collectively called the "Security Documents." The Note, the
Environmental Indemnity, the Guaranty, the Security Documents, and all
other agreements securing, evidencing, or relating to Original
Borrower's and/or BHH's obligations under the Loan are collectively
called the "Loan Documents."
F. BHES and Assuming Borrower have entered into a Purchase Agreement and
Escrow Instructions, dated April 8, 2004 (the "Purchase Agreement"), in
which, among other things, BHES has agreed to sell a ___% undivided
interest in the Property (the "Undivided Interest") to the Assuming
Borrower.
G. In connection with the purchase of the Undivided Interest in the
Property by Assuming Borrower, the Parties agree, subject to the terms
and conditions set forth in this Agreement, that (i) Assuming Borrower
shall assume its pro rata share of the Loan, and (ii) Principal shall
assume a corresponding pro rata share of obligations of BHH under the
Guaranty and the Environmental Indemnity; provided, however, that
Principal shall not be liable for the acts of BHH, but will only be
fully liable for its own acts and omissions under the Guaranty and the
Environmental Indemnity.
AGREEMENTS
NOW, THEREFORE, in consideration of the following mutual agreements and other
valuable consideration, the receipt and sufficiency of which are acknowledged
and intending to be legally bound, the Parties agree as follows:
1. INCORPORATION OF RECITALS AND EXHIBITS
The Recitals are incorporated as part of this Agreement, and the
Parties agree that the above Recitals are accurate.
2. OUTSTANDING BALANCE AND LOAN STATUS
The Parties agree that, as of the Effective Date (as hereinafter
defined), the outstanding principal balance of the Loan is
$20,000,000.00; interest is paid
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to April 30, 2004; and the next installment payment of principal
and interest in the amount of $112,931.18 is due on or before
JUNE 1, 2004.
[Check for insurance and tax escrows]
3. ASSUMING BORROWER'S COVENANT TO PERFORM
Assuming Borrower hereby unconditionally assumes, covenants, and
agrees to timely pay and perform all Indebtedness and
Obligations under the Loan Documents, and to comply with all of
the terms, covenants, and conditions of those Loan Documents to
which BHES is a party as if Assuming Borrower originally had
executed such Loan Documents (including, without limitation, the
Note and the Environmental Indemnity), instead and in the place
of BHES. Assuming Borrower is familiar with all terms,
conditions, and provisions of the Loan Documents, and fully
comprehends the same, as modified by this Agreement. The
Parties, however, recognize and acknowledge the qualified
"limited recourse" nature of the Note and the Loan. Lender
agrees that notwithstanding anything to the contrary contained
in the Loan Documents, Assuming Borrower's liability under the
"limited recourse" provisions in the Note (Paragraph V) and in
the Lien Agreement (Section 8.11), and under and pursuant to the
Environmental Indemnity (the "Borrower's Recourse Liability
Sections"), shall be several (and not joint) and shall be
limited to _____% of the total liability under the Borrower's
Recourse Liability Sections, but in any event Assuming Borrower
shall only be responsible for such liabilities to the extent
caused by its own actions.
4. PRINCIPAL'S COVENANT TO PERFORM
Principal hereby unconditionally assumes, covenants, and agrees
to timely pay and perform all the Guaranteed Indebtedness (as
defined in the Guaranty) and the obligations of BHH under the
Guaranty and the Environmental Indemnity, and to comply with all
of the terms, covenants, and conditions of the Guaranty and the
Environmental Indemnity as if Principal originally had executed
the Guaranty and the Environmental Indemnity, instead and in the
place of BHH and, with respect to the Guaranty, liable for its
acts and omissions to the extent that such acts and omissions
cause Losses in accordance therewith. Principal is familiar with
all terms, conditions, and provisions of the Loan Documents, and
fully comprehends the same, as modified by this Agreement. The
Parties, however, recognize and acknowledge the qualified
"limited recourse" nature of the Guaranty and the Loan. Lender
agrees that notwithstanding anything to the contrary contained
in the Loan Documents and this Agreement, Principal shall not be
liable for the acts and omissions of any other guarantor or
borrower of the Guaranteed Indebtedness under the Guaranty, or
pursuant to the Environmental Liability (the "Guarantor's
Recourse Liability Sections"), provided, however, that Principal
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acknowledges and agrees that it shall be fully liable under the
Guarantor's Recourse Liability Sections but only for each and
every act and omission by Principal.
5. INTENTIONALLY DELETED.
6. ACKNOWLEDGMENTS, REPRESENTATIONS, AND AGREEMENTS
Original Borrower, Assuming Borrower, to Assuming Borrower's
current actual knowledge, and Principal, to Principal's current
actual knowledge, acknowledge, represent, warrant, and agree (on
behalf of itself only and not on behalf of the other party) as
follows:
6.1 There exists no defense, offset or counterclaim with
respect to the payment of the Loan or with respect to
the payment or performance by Original Borrower or
Assuming Borrower of the Indebtedness and Obligations
under the Loan, this Agreement, the Note, the
Environmental Indemnity, the Security Documents, or any
of the Loan Documents, including, without limitation,
any claim for breach of contract, failure to act in good
faith, lack of fair dealing, misrepresentation, breach
of fiduciary duty, fraud, or negligence. None of
Original Borrower, BHH, Assuming Borrower, or Principal
has any claim, defense, abatement, offset, or
counterclaim against Lender or otherwise applicable to
the Loan. If any such claims, defenses, abatements,
offsets, or counterclaims, do presently exist, as
additional consideration for this Agreement, Original
Borrower, BHH, Assuming Borrower and Principal hereby
waive and release them to the fullest extent permitted
by applicable law;
6.2 Lender has not breached any duty to Original Borrower,
BHH, Assuming Borrower or Principal in connection with
the Loan. Lender has timely and fully performed all
obligations which Lender may have had or now has to
Original Borrower, BHH, Assuming Borrower and Principal
in connection with the Loan;
6.3 Lender has no obligation whatsoever to make any other
loans or advances to or for the benefit of Original
Borrower, BHH, Assuming Borrower or Principal or to
grant any modifications or extensions in connection with
the Loan, except as may be set forth specifically in the
Loan Documents and this Agreement;
6.4 Original Borrower and Assuming Borrower acknowledge that
Lender has a properly perfected, xxxxxx, absolute and
present first priority lien on, and Assignment of Rents
relating to the Property, except for the lien for real
and personal property taxes not yet due and payable, as
provided by applicable law;
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6.5 Assuming Borrower is a limited partnership, and as of
the Effective Date, if Principal is not an individual,
is qualified to transact business in Texas. Assuming
Borrower has all requisite power and authority to enter
into this Agreement and to perform all actions required
or contemplated by any provision contained in this
Agreement or the Loan Documents. Principal is a
________________, and as of the Effective Date is
qualified to transact business in each jurisdiction
where the nature of its business or the ownership of
property so requires. Principal has all requisite power
and authority to enter into this Agreement and to
perform all actions required or contemplated by any
provision contained in this Agreement or the Loan
Documents, as applicable. This Agreement and the Loan
Documents are and shall be legal, valid, and binding
obligations of Assuming Borrower and Principal, as
applicable;
6.6 Assuming Borrower will hold title to the Undivided
Interest in the Property in fee simple as of the date
the same is transferred to the Assuming Borrower by BHES
upon the closing of the Purchase Agreement;
6.7 There is no legal or other action, proceeding or
investigation pending or threatened against the Assuming
Borrower, Principal or the Property before any court,
administrative agency or arbitrator that might in any
way adversely affect either Assuming Borrower's or
Principal's ability to fulfill its obligations under
this Agreement or any of the Loan Documents;
6.8 Neither Assuming Borrower, nor Principal is involved as
a debtor in any state or federal bankruptcy,
reorganization, arrangement, insolvency proceedings,
receivership, or any other debtor-creditor proceeding,
and neither Assuming Borrower, nor Principal has made
any assignment for the benefit of creditors;
6.9 All information and documentation supplied by Assuming
Borrower and Principal to or for the benefit of Lender
in connection with this assumption is true and correct
in all material respects;
6.10 None of Original Borrower, BHH, Assuming Borrower or
Principal is aware of the existence of any Hazardous
Materials at or near the Property which would violate
the provisions of the Loan Documents, or of the need for
any Remedial Work at the Property;
6.11 Neither Assuming Borrower, nor Principal is a foreign
corporation, foreign partnership, foreign limited
partnership, foreign trust or foreign estate (as those
terms are defined in the United States Internal Revenue
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Code and Income Tax Regulations). Assuming Borrower's
current U.S. Taxpayer Identification Number is:
________________. Principal's current U.S. Taxpayer
Identification Number is: ________________. The
respective addresses of Principal and Assuming Borrower
address are set forth in paragraph 12. Each of Assuming
Borrower and Principal understands that this
certification as to non-foreign status may be disclosed
by Lender to the United States Internal Revenue Service
and that any false statements contained herein could be
punished by fine, imprisonment, or both; and
6.12 This Agreement is not intended for, and shall not be
construed to be for, the benefit of any person or entity
not a signatory hereto.
7. CONSENT TO TRANSFER BY LENDER
As required by the Lien Agreement, Lender consents to the sale
or transfer of the Undivided Interest in the Property from
Original Borrower to Assuming Borrower, subject to the terms and
conditions of this Agreement. Lender's consent to such sale or
transfer shall not constitute, however, its consent to any
subsequent or other sales or transfers of the Property, and
Lender retains all its rights under the Lien Agreement to
approve, disapprove, or impose conditions upon any subsequent or
other sale or transfer.
8. CONDITIONS TO THE LEGAL EFFECT OF THIS AGREEMENT
This Agreement shall become operative and legally binding on the
Parties hereto as of the Effective Date, when, and only when,
Lender shall have received each of the following in form and
substance satisfactory to Lender and its counsel:
8.1 A complete counterpart of this Agreement
executed and acknowledged by all of the Parties, and
properly recorded in the official records of the Xxxxxx
County Recorder's Office;
8.2 Two Uniform Commercial Code Financing Statements
(Forms UCC-1 and UCC-2) executed by Assuming Borrower,
in substantially the same form as the original UCCs and
properly recorded in the appropriate local and state
governmental offices;
8.3 An acceptable assumption/modification
endorsement to its original loan policy of title
insurance issued by Commonwealth Land Title Insurance
Company (the "Original Loan Policy"); the Original Loan
Policy, as endorsed, (the "Title Policy") shall insure
the continued first priority lien of the Lien Agreement
as affected by this Agreement, be written by a title
insurance company acceptable to Lender, be effective as
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of the date this Agreement is recorded, and otherwise
contain only those exceptions to the Title Policy which
are acceptable to Lender;
8.4 [Intentionally deleted]
8.5 Evidence satisfactory to Lender that Assuming
Borrower is in good standing in the state of formation,
and authorized to transact business in Texas; that
Principal is in good standing in the state of formation,
to the extent Principal is not an individual, and
authorized to transact business Texas; that Assuming
Borrower and Principal has each authorized the execution
of this Agreement, and that the persons executing this
Agreement on behalf of the Assuming Borrower and
Principal, respectively, have full power and authority
to bind the Assuming Borrower and Principal to the same;
8.6 As soon as the same shall become available after
the closing of the Purchase Agreement, a copy of the
recorded vesting deed that transfers title to the
Undivided Interest in the Property to Assuming Borrower,
a copy of which, along with a copy of the Purchase
Agreement, shall have been provided to Lender prior to
the closing under the Purchase Agreement.
8.7 Such other documents as Lender may reasonably
have requested at any time at or prior to the closing of
the Purchase Agreement; and
8.8 Payment by Original Borrower, BHH, Assuming
Borrower and Principal of all costs, premiums, fees, and
expenses (including, without limitation, reasonable
attorneys' fees) incurred by Lender in the negotiation
and preparation of this Agreement and the other
documents described herein, including any Title Policy.
Within fifteen (15) days after the written request of Original
Borrower or BHH, Lender will either (i) confirm that all of the
conditions set forth in this paragraph have been satisfied or
are deemed satisfied, or (ii) specify which conditions remain
outstanding.
9. CLOSING
Closing under this Agreement shall occur contemporaneously with
the closing under the Purchase Agreement. If the Purchase
Agreement does not itself close, and/or all the conditions set
forth in paragraph 8 are not satisfied, then this Agreement
automatically shall terminate, and none of the Parties shall
have any further liability or obligation to one another under
this Agreement, and the respective rights, duties, and
obligations of the Parties shall continue unmodified
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as if this Agreement had never been negotiated or executed,
except for the continuing obligation of the Original Borrower,
BHH, Assuming Borrower and/or Principal to pay all costs, fees,
and expenses (including attorneys' fees) incurred by Lender in
connection with the negotiation and preparation of this
Agreement and the other documents described therein.
10. AFFIRMATION
Original Borrower, BHH, Assuming Borrower, to Assuming
Borrower's current actual knowledge, and Principal, to
Principal's current actual knowledge, hereby affirm (on behalf
of itself only and not on behalf of the other party) that, as of
the Effective Date, the representations and warranties of
Original Borrower set forth in the Loan Documents are and remain
true and correct as though made on and as of the Effective Date
and are hereby affirmed, ratified, and confirmed by Assuming
Borrower. Assuming Borrower will immediately notify Lender of
any change or discovered inaccuracy in the representations and
warranties contained in the Loan Documents, provided that
Assuming Borrower's duty to notify Lender of any such inaccuracy
shall only apply to presently existing inaccuracies which
existed before the Effective Date or any future inaccuracies.
Assuming Borrower and Principal hereby confirm that the Loan
Documents to which they are a party are and shall remain
enforceable against them in accordance with their respective
terms, shall continue to be in full force and effect, and are
hereby confirmed and ratified in all respects. Assuming Borrower
and Principal agree that this Agreement shall not impair the
Security Documents, the Environmental Indemnity or any lien
securing the Note, that such liens are not waived, released, or
extinguished in any manner, and that such liens are hereby
acknowledged to be valid and existing and shall continue to
secure payment of the Note and all other obligations under the
Loan Documents.
11. SECURITY
Assuming Borrower's performance under this Agreement, the Note
and all other Loan Documents shall continue to be secured by the
Security Documents, including without limitation the Lien
Agreement and the Assignment of Rents. After the Effective Date,
all references to the Loan Documents shall include this
Agreement.
12. NOTICES, CONSENTS, AND APPROVALS
Any notice, consent, or approval that Lender or Assuming
Borrower may desire or be required to give to the other shall be
in writing and shall be mailed or delivered to the intended
recipient thereof at its address set forth below or at such
other address as such intended recipient may, from time to time,
by notice in writing, designate to the sender pursuant hereto.
Any such notice, consent, or
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approval shall be deemed effective (a) if given by nationally
recognized overnight courier for next day delivery, one (1)
business day after delivery to such courier, or (b) if given by
United States mail (registered or certified), two (2) business
days after such communication is deposited in the mails or (c)
if given in person, when written acknowledgment of receipt
thereof is given. Except as otherwise specifically required
herein, notice of the exercise of any right or option granted to
Lender by this Agreement is not required to be given.
(a) If to Lender:
State Farm Life Insurance Company
Xxx Xxxxx Xxxx Xxxxx
Xxxxxxxxxxx, XX 00000-0000
Attention: Corporate Law--Investments E-3
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
With copy to:
Xxxxxxxxx & Xxxxxxxxx, L.L.P.
000 X. Xxxxx, Xxxxx 0000
Xxxxxx, XX 00000
Attention: Xxxxxx X. Xxxx
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
(b) If to Assuming Borrower:
____________________________________
____________________________________
____________________________________
Attention: _________________________
Telephone No.: _____________________
Telecopy No.: _____________________
(c) If to Principal:
____________________________________
____________________________________
____________________________________
Attention: _________________________
Telephone No.: _____________________
Telecopy No.: _____________________
(d) With a copy to:
Behringer Harvard TIC Management Services
0000 X. Xxxxxxxx Xxxxxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
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13. CONSTRUCTION
Captions and headings are for convenience and reference only and
do not define, limit, or affect the contents of this Agreement.
Reference to "paragraphs" or "sections" refer to this Agreement
unless stated otherwise. All grammatical usage shall be deemed
to refer to the masculine, feminine, neuter, singular, or plural
as the context and identity of any persons may require.
Capitalized terms not otherwise defined in this Agreement shall
have the meanings set forth in the Loan Documents.
14. SEVERABILITY AND INTERPRETATION
The invalidity or unenforceability of any provision of this
Agreement does not affect the remaining provisions. This
Agreement shall be construed as if it excluded any invalid or
unenforceable provision, which shall be severed from this
Agreement. Whenever possible, this Agreement shall be
interpreted so as to be valid under applicable law, and shall
not be construed strictly in favor of or against any particular
Party, including any Party who drafted or prepared this
Agreement, but instead according to its plain meaning to give
effect to its intended purposes.
15. GOVERNING LAW
This Agreement is governed by the laws of the State of Texas,
including its choice of law principles. The Parties consent and
submit to the non-exclusive jurisdiction of the courts of the
State of Texas and the United States District Court for the
Southern District of Texas, to be venued in Xxxxxx County,
Texas, concerning any action or proceeding involving the Lender
and arising under this Agreement, the Loan Documents, or the
Loan.
16. COUNTERPARTS
This Agreement may be executed in identical counterparts, each
of which upon execution shall be deemed an original, but all of
which together shall constitute one document. Partially executed
signature or acknowledgment pages of any one counterpart may be
combined with or attached to any other partially executed
counterpart of this Agreement.
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17. ENTIRETY; MODIFICATION
This Agreement constitutes the entire agreement of the Parties
with respect to the assumption contemplated hereby of the Loan.
There are no verbal agreements between the Parties. This
Agreement and the Loan Documents as amended by this Agreement
may be amended or modified only by a written document signed by
all the Parties.
18. TIME
TIME IS OF THE ESSENCE FOR THE PERFORMANCE OF EACH PROVISION OF
THIS AGREEMENT. If this Agreement requires any action to be
performed on a date which is not a "business" day (a Saturday,
Sunday, or federal or state legal holiday), such action shall be
validly performed on the next succeeding business day.
19. NEGOTIATED AGREEMENT
This Agreement is the result of arms-length negotiations between
the Parties, each of whom has been represented by counsel, and
no Party has acted under duress or compulsion, whether legal,
economic, or otherwise.
20. BINDING EFFECT
This Agreement is binding upon and inures to the benefit of the
Parties and their respective permitted successors and assign.
However, this provision shall not be deemed to be a consent by
Lender to any further sale or transfer of the Property by
Assuming Borrower.
21. EFFECTIVE DATE
This Agreement is effective as of April 12, 2004 (the "Effective
Date"), which is the date of closing under the Purchase
Agreement described above.
22. FURTHER ASSURANCES
On the date hereof, or thereafter, if necessary, Assuming
Borrower agrees to execute and deliver to or cause to be
executed and delivered to Lender such further instruments as the
Lender may reasonably request and take such other action as the
Lender may reasonably require to carry out more effectively the
transactions contemplated by this Agreement.
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ORIGINAL BORROWER:
BEHRINGER HARVARD ENCLAVE S LP,
a Texas limited partnership
By: Behringer Harvard Enclave S, LLC,
a Texas limited liability company,
its general partner
By:_______________________________________
Xxxxxx X. Xxxxxxx, III, Secretary
BEHRINGER HARVARD ENCLAVE H LP,
a Texas limited partnership
By: Behringer Harvard Enclave H, LLC,
a Texas limited liability company,
its general partner
By:_______________________________________
Xxxxxx X. Xxxxxxx, III, Secretary
BHH:
BEHRINGER HARVARD HOLDINGS, LLC,
a Texas limited liability company
By:____________________________________________
Name:__________________________________________
Title:_________________________________________
ASSUMING BORROWER:
_____________________________________
By: _____________________________________
Name: _____________________________________
Title: _____________________________________
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PRINCIPAL:
_____________________________________
By: _____________________________________
Name: _____________________________________
Title: _____________________________________
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LENDER:
STATE FARM LIFE INSURANCE COMPANY,
AN ILLINOIS CORPORATION
By: _____________________________________
Name: _____________________________________
Title: _____________________________________
By: _____________________________________
Name: _____________________________________
Title: _____________________________________
THE STATE OF ILLINOIS ss.
ss.
COUNTY OF _____________ ss.
This instrument was acknowledged before me on __________________, 2004
by ______________________, ___________________ of State Farm Life Insurance
Company, an Illinois corporation, on behalf of said corporation.
______________________________________
[NOTARIAL SEAL] Notary Public in and for The State of Illinois
Print Name: ________________________
My Commission Expires: _________________
THE STATE OF ILLINOIS ss.
ss.
COUNTY OF ___________ ss.
This instrument was acknowledged before me on __________________, 2004
by ______________________, ___________________ of State Farm Life Insurance
Company, an Illinois corporation, on behalf of said corporation.
______________________________________
[NOTARIAL SEAL] Notary Public in and for The State of Illinois
Print Name: ________________________
My Commission Expires: _________________
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