INDEMNITY AGREEMENT - BH
INDEMNITY AGREEMENT (the "AGREEMENT") made as of the 19th day of April,
2006 by BEHRINGER HARVARD PACES WEST, LLC, a Delaware limited liability company
("INITIAL BORROWER"), having its principal place of business c/o Behringer
Harvard Funds, 00000 Xxxxxx Xxxxxxx, Xxxxx 000, Xxxxxxx, Xxxxx 00000, and
BEHRINGER HARVARD REIT I, INC., a Maryland corporation having an address c/o
Behringer Harvard Funds, 00000 Xxxxxx Xxxxxxx, Xxxxx 000, Xxxxxxx, Xxxxx 00000
("PRINCIPAL"; Principal and Initial Borrower collectively "INDEMNITOR"), in
favor of BEAR XXXXXXX COMMERCIAL MORTGAGE, INC., a New York corporation, having
an address at 000 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 ("LENDER").
RECITALS:
A. Lender is prepared to make a loan (the "LOAN") to Initial
Borrower pursuant to that certain Loan Agreement of even date herewith (the
"LOAN AGREEMENT"), which loan is evidenced by that certain promissory note of
even date herewith in the initial principal amount of $84,000,000.00 made by
Initial Borrower to Lender (collectively, the "NOTE") and secured by, among
other things, the Mortgage which encumbers the Property. Capitalized terms not
defined herein shall have the meaning attributed to such term in the Loan
Agreement.
B. Lender is unwilling to make the Loan unless Borrower and
Principal agree to provide the indemnification, representations and warranties
and other matters described in this Agreement for the benefit of Lender.
C. Principal has a direct or indirect ownership interest in Initial
Borrower and thus will derive substantial benefit from the Loan. Initial
Borrower and Principal enter into this Agreement to induce Lender to make the
Loan.
D. Initial Borrower may transfer, pursuant to Section 5.2.13 of the
Loan Agreement, some or all of its ownership interest in the Property to one or
more tenants in common, each of whom will assume the Loan on a joint and several
basis to the extent set forth in the Loan Documents. Initial Borrower and/or any
such tenants in common that assume the Loan hereinafter referred to collectively
as the "BORROWER."
AGREEMENT
NOW THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Indemnitor hereby represents, warrants, covenants and agrees for
the benefit of Lender as follows:
1. INDEMNIFICATION. Indemnitor covenants and agrees at its sole
cost and expense, to protect, defend, indemnify, release and hold Lender
harmless from and against any and all
Losses (defined below) imposed upon or incurred by or asserted against Lender
and directly or indirectly arising out of or in any way relating to any one or
more of the following: (i) fraud or intentional misrepresentation by Initial
Borrower or any affiliate of Initial Borrower in connection with the Loan; (ii)
the removal or disposal of any portion of the Property after an Event of Default
by Initial Borrower or any affiliate; (iii) the failure of Initial Borrower to
obtain Lender's prior written consent to any subordinate financing or other
voluntary lien encumbering the Property that is placed on the Property by
Initial Borrower; (iv) the failure of Initial Borrower to obtain Lender's prior
written consent to any assignment, transfer, or conveyance of the Property or
any portion thereof by Initial Borrower as required by the Loan Agreement; (v)
Initial Borrower's violation of any of the Special Purpose Entity covenants and
requirements contained in the Loan Agreement or other Loan Documents other than
sections (xii) and (xxii) in the definition of Special Purpose Entity; (vi) the
breach by Initial Borrower of any representation, warranty, covenant or
indemnification provision in the Loan Agreement or the Mortgage concerning
environmental laws, hazardous substances and asbestos and any indemnification of
Lender with respect thereto in either document; (vii) the filing by Initial
Borrower of any action for partition of the Property; (vii) any election by
Initial Borrower to terminate or not to renew the Property Management Agreement
in a manner not permitted under the Loan Agreement; (viii) the gross negligence
or willful misconduct of Initial Borrower; (ix) the misapplication or conversion
by Initial Borrower of (A) any insurance proceeds paid by reason of any loss,
damage or destruction to the Property, (B) any awards or other amounts received
in connection with the condemnation of all or a portion of the Property, or (C)
any Rents following an Event of Default; and (x) any election by Initial
Borrower to terminate any Tenants-In-Common Agreement without Lender's consent.
As used herein, the term "Losses" includes any and all claims, suits,
liabilities, actions, proceedings, obligations, debts, damages, losses, costs,
expenses, diminutions in value, fines, penalties, charges, fees, expenses,
judgments, awards, amounts paid in settlement, punitive damages, foreseeable and
unforeseeable consequential damages, of whatever kind or nature (including but
not limited to reasonable attorneys' fees and other costs of defense).
2. GUARANTY. Principal absolutely and unconditionally guarantees to
Lender the prompt and full payment of the Debt (as defined in the Loan
Agreement) in the event that (1) Initial Borrower files a voluntary petition
under the Bankruptcy Code or any other Federal or state bankruptcy or insolvency
law, or (2) an involuntary case is commenced against Initial Borrower under the
Bankruptcy Code or any other Federal or state bankruptcy or insolvency law with
the collusion of Initial Borrower or any of its Affiliates.
( ) Principal absolutely and unconditionally guarantees to
Lender the prompt and full payment of (i) any Replacement Reserve Shortfall
payable, pursuant Section 7.3 of the Loan Agreement and (ii) any Rollover
Reserve Shortfall payable, pursuant Section 7.4 of the Loan Agreement.
( ) This is a guaranty of payment and not of collection.
The obligations of Principal hereunder are and shall be absolute under any and
all circumstances, without regard to the validity, regularity or enforceability
of the Note, the Loan Agreement, the Mortgage or the
other Loan Documents. This Agreement shall remain in full force and effect as to
any modification, extension or renewal of the Note, the Loan Agreement, the
Mortgage or any of the other Loan Documents, and notwithstanding any release or
forbearance granted by Lender with respect thereto, all of which may be made,
done or suffered without notice to or further consent of Principal.
3. UNIMPAIRED LIABILITY. The liability of Indemnitor under this
Agreement shall in no way be limited or impaired by, and Indemnitor hereby
consents to and agrees to be bound by, any amendment or modification of the
provisions of the Note, the Loan Agreement, the Mortgage or any of the other
Loan Documents. In addition, the liability of Indemnitor under this Agreement
shall in no way be limited or impaired by (i) any extensions of time for
performance required by the Note, the Loan Agreement, the Mortgage or any of the
other Loan Documents, (ii) any sale or transfer of all or part of the Property,
(iii) any exculpatory provision in the Note, the Loan Agreement, the Mortgage,
or any of the other Loan Documents limiting Lender's recourse to the Property or
to any other security for the Note, or limiting Lender's rights to a deficiency
judgment against Indemnitor, (iv) the accuracy or inaccuracy of the
representations and warranties made by Indemnitor under the Note, the Loan
Agreement, the Mortgage or any of the other Loan Documents or herein, (v) the
release of Indemnitor or any other person from performance or observance of any
of the agreements, covenants, terms or condition contained in the Loan
Agreement, the Mortgage, the Note or the other Loan Documents by operation of
law, Lender's voluntary act, or otherwise, (vi) the release or substitution in
whole or in part of any security for the Note, or (vii) Lender's failure to
record the Loan Agreement, the Mortgage or file any UCC financing statements (or
Lender's improper recording or filing of any thereof) or to otherwise perfect,
protect, secure or insure any security interest or lien given as security for
the Note; and, in any such case, whether with or without notice to Indemnitors
and with or without consideration.
4. ENFORCEMENT. Lender may enforce the obligations of Indemnitor
under this Agreement without first resorting to or exhausting any security or
collateral or without first having recourse to the Note, the Loan Agreement, the
Mortgage, or any other Loan Documents or the Property, through foreclosure
proceedings or otherwise; provided, however, that nothing herein shall inhibit
or prevent Lender from suing on the Note, foreclosing, or exercising any power
of sale under the Loan Agreement, the Mortgage, or exercising any other rights
and remedies thereunder or under the Loan Agreement. It is not necessary for an
Event of Default to have occurred for Lender to exercise its rights pursuant to
this Agreement. Notwithstanding any provision of the Note, the Loan Agreement,
the Mortgage, or any of the other Loan Documents, the obligations pursuant to
this Agreement are exceptions to any non-recourse or exculpation provision
contained therein. Indemnitor is fully and personally liable for such
obligations, and its liability is not limited to the original or amortized
principal balance of the Loan or the value of the Property.
5. SURVIVAL. Subject to Section 19 below, the obligations and
liabilities of Indemnitor under this Agreement shall fully survive indefinitely
notwithstanding any
termination, satisfaction, assignment, entry of a judgment of foreclosure,
exercise of any power of sale, or delivery of a deed in lieu of foreclosure of
the Mortgage.
6. INTEREST. Any amounts payable to any Lender under this Agreement
shall become immediately due and payable on demand and, if not paid within
thirty (30) days of such demand therefor, shall bear interest at a per annum
rate equal to the lesser of (a) 5% plus the Interest Rate or (b) the maximum
interest rate which Indemnitor may by law pay or Lender may charge and collect,
from the date payment was due.
7. WAIVERS. (b) Indemnitor hereby waives (i) any right or claim of
right to cause a marshalling of any Indemnitor's assets or to cause Lender to
proceed against any of the security for the Loan before proceeding under this
Agreement against Indemnitor; (ii) and relinquishes all rights and remedies
accorded by applicable law to Indemnitor, except any rights of subrogation,
reimbursement or contribution which Indemnitor may have, provided that the
indemnity provided for hereunder shall neither be contingent upon the existence
of any such rights of subrogation nor subject to any claims or defenses
whatsoever which may be asserted in connection with the enforcement or attempted
enforcement of such subrogation rights including, without limitation, any claim
that such subrogation, reimbursement or contribution rights were abrogated by
any acts of Lender; (iii) the right to assert a counterclaim, other than a
mandatory or compulsory counterclaim, in any action or proceeding brought
against or by Lender; (iv) notice of acceptance hereof and of any action taken
or omitted in reliance hereon; (v) presentment for payment, demand of payment,
protest or notice of nonpayment or failure to perform or observe, or other
proof, or notice or demand; and (vi) all homestead exemption rights against the
obligations hereunder and the benefits of any statutes of limitations or repose;
and (vii) any rights to require Lender to proceed against an Indemnitor, or to
require Lender to pursue any other remedy or enforce any other right.
Notwithstanding anything to the contrary contained herein, Indemnitor hereby
agrees to postpone the exercise of any rights of subrogation, reimbursement or
contribution with respect to any collateral securing the Loan until the Loan
shall have been paid in full.
( ) INDEMNITOR AND LENDER HEREBY WAIVE, TO THE FULLEST
EXTENT PERMITTED BY LAW, THE RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM, WHETHER IN CONTRACT, TORT OR OTHERWISE, RELATING DIRECTLY OR
INDIRECTLY TO THE LOAN, THE APPLICATION FOR THE LOAN, THE COMMITMENT FOR THE
LOAN, THE LOAN AGREEMENT, THE MORTGAGE, THIS AGREEMENT OR ANY OF THE OTHER LOAN
DOCUMENTS OR ANY ACTS OR OMISSIONS OF ANY LENDER IN CONNECTION THEREWITH.
( ) Indemnitor hereby waives and agrees not to assert or
take advantage of any defense based upon failure of Lender to commence an action
against Borrower. In addition, Indemnitor expressly waives all rights it may
have now or in the future under any statute, or at common law, or at law or in
equity, or otherwise, to compel Lender to proceed in respect of the obligations
guaranteed hereunder against Borrower, or any other party or against any
security for
the payment of the obligations guaranteed hereunder before proceeding against,
or as a condition to proceeding against Indemnitor. It is agreed between
Indemnitor and Lender that the foregoing waivers are of the essence of this
transaction and that, but for this Agreement and such waivers, Lender would
decline to enter into the loan evidenced and secured by the Loan Documents.
8. INDEMNITOR'S REPRESENTATIONS AND WARRANTIES. Indemnitor
represents and warrants that:
( ) if Indemnitor is a corporation, partnership or limited
liability company, it has the full corporate/partnership/limited liability
company power and authority to execute and deliver this Agreement and to perform
its obligations hereunder; the execution, delivery and performance of this
Agreement by Indemnitor has been duly and validly authorized; and all requisite
corporate/partnership/limited liability company action has been taken by
Indemnitor to make this Agreement valid and binding upon Indemnitor, enforceable
in accordance with its terms;
( ) if Indemnitor is an individual, he/she is acting in an
individual capacity and has full power and authority to make this Agreement
valid and binding upon Indemnitor, enforceable in accordance with its terms;
( ) if Indemnitor is a corporation, partnership, limited
liability company or trust its execution of, and compliance with, this Agreement
is in the ordinary course of business of that Indemnitor and will not result in
the breach of any term or provision of the charter, by-laws, partnership or
trust agreement, articles of organization, operating agreement, limited
liability company agreement, or other governing instrument of that Indemnitor or
result in the breach of any term or provision of, or conflict with or constitute
a default under or result in the acceleration of any obligation under any
agreement, indenture or loan or credit agreement or other instrument to which
the Indemnitor or the Property are subject, or result in the violation of any
law, rule, regulation, order, judgment or decree to which the Indemnitor or the
Property are subject;
( ) if Indemnitor is an individual, his/her execution of,
and compliance with, this Agreement will not result in the breach of any term or
provision of, or conflict with or constitute a default under or result in the
acceleration of any obligation under any agreement, indenture or loan or credit
agreement or other instrument to which Indemnitor or the Property are subject,
or result in the violation of any law, rule, regulation, order, judgment or
decree to which the Indemnitor or the Property are subject;
( ) to the Indemnitor's knowledge, there is no action, suit,
proceeding or investigation pending or threatened against it which, either in
any one instance or in the aggregate, may result in any material adverse change
in the business, operations, financial condition, properties or assets of
Indemnitor, or in any material impairment of the right or ability of Indemnitor
to carry on its business substantially as now conducted, or in any material
liability on the part of Indemnitor, or which would draw into question the
validity of this Agreement or of any action taken or to be taken in connection
with the obligations of Indemnitor contemplated
herein, or which would be likely to impair materially the ability of Indemnitor
to perform under the terms of this Agreement;
( ) it does not believe, nor does it have any reason or
cause to believe, that it cannot perform each and every covenant contained in
this Agreement;
( ) no approval, authorization, order, license or consent
of, or registration or filing with, any governmental authority or other person,
and no approval, authorization or consent of any other party is required in
connection with this Agreement;
( ) this Agreement constitutes a valid, legal and binding
obligation of Indemnitor, enforceable against it in accordance with the terms
hereof; and
( ) Indemnitor has filed all federal, state, county,
municipal, and city income and other tax returns required to have been filed by
it and has paid all taxes and related liabilities which have become due pursuant
to such returns or pursuant to any assessments received by it; Indemnitor does
not know of any basis for any additional assessment in respect of any such taxes
and related liabilities for prior years.
9. NO WAIVER. No delay by any Indemnified Party in exercising any
right, power or privilege under this Agreement shall operate as a waiver of any
such privilege, power or right.
10. TRANSFER OF LOAN. (c) Lender may, at any time, sell, transfer or
assign the Note, the Mortgage, this Agreement and the other Loan Documents, and
any or all servicing rights with respect thereto, or grant participations
therein or issue mortgage pass-through certificates or other securities
evidencing a beneficial interest in a rated or unrated public offering or
private placement (the "SECURITIES"). Lender may forward to each purchaser,
transferee, assignee, servicer, participant or investor in such Securities or
any credit rating agency rating such Securities (the foregoing entities
hereinafter collectively referred to as the "INVESTOR") and each prospective
Investor, all documents and information (including financial information) but
not limited to, which Lender now has or may hereafter acquire relating to
Indemnitor and the Property, whether furnished by Indemnitor, any guarantor, or
otherwise, as Lender determines necessary or desirable.
( ) Upon any transfer or proposed transfer contemplated
above and by the Mortgage, at Lender's request, Indemnitor shall provide an
estoppel certificate to the Investor or any prospective Investor in such form,
substance and detail as Lender, such Investor or prospective Investor may
reasonably require.
11. NOTICES. All notices or other written communications hereunder
shall be given in accordance with Section 10.6 of the Loan Agreement, provided
that notices to Indemnitor shall be addressed as set forth on the first page
hereof.
12. SUBMISSION TO JURISDICTION. With respect to any claim or action
arising hereunder, Indemnitor (a) irrevocably submits to the nonexclusive
jurisdiction of the courts of the State of
New York and the United States District Court for the Southern District of New
York, and appellate courts from any thereof, and (b) irrevocably waives any
objection which it may have at any time to the laying on venue of any suit,
action or proceeding arising out of or relating to this Agreement brought in any
such court, and (c) irrevocably waives any claim that any such suit, action or
proceeding brought in any such court has been brought in an inconvenient forum.
13. NO THIRD-PARTY BENEFICIARY. The terms of this Agreement are for
the sole and exclusive protection and use of Lender. No party shall be a
third-party beneficiary hereunder, and no provision hereof shall operate or
inure to the use and benefit of any such third party.
14. DUPLICATE ORIGINALS; COUNTERPARTS. This Agreement may be
executed in any number of duplicate originals and each duplicate original shall
be deemed to be an original. This Agreement may be executed in several
counterparts, each of which counterparts shall be deemed an original instrument
and all of which together shall constitute a single Agreement. The failure of
any party hereto to execute this Agreement, or any counterpart hereof, shall not
relieve the other signatories from their obligations hereunder.
15. NO ORAL CHANGE. This Agreement, and any provisions hereof, may
not be modified, amended, waived, extended, changed, discharged or terminated
orally or by any act or failure to act on the part of any Indemnitor or Lender,
but only by an agreement in writing signed by the party against whom enforcement
of any modification, amendment, waiver, extension, change, discharge or
termination is sought.
16. HEADINGS, ETC. The headings and captions of various paragraphs
of this Agreement are for convenience of reference only and are not to be
construed as defining or limiting, in any way, the scope or intent of the
provisions hereof.
17. NUMBER AND GENDER/SUCCESSORS AND ASSIGNS. All pronouns and any
variations thereof shall be deemed to refer to the masculine, feminine, neuter,
singular or plural as the identity of the person or persons referred to may
require. Without limiting the effect of specific references in any provision of
this Agreement, the term "INDEMNITOR" shall be deemed to refer to each and every
person or entity comprising an Indemnitor from time to time, as the sense of a
particular provision may require, and to include the heirs, executors,
administrators, legal representatives, successors and assigns of Indemnitor, all
of whom shall be bound by the provisions of this Agreement, provided that no
obligation of any Indemnitor may be assigned except with the written consent of
Lender. Each reference herein to Lender shall be deemed to include its
successors and assigns. This Agreement shall inure to the benefit of Lender and
its respective successors and assigns forever.
18. JOINT AND SEVERAL LIABILITY. If Indemnitor consists of more than
one person or entity, the obligations and liabilities of each such person
hereunder are joint and several.
19. RELEASE OF LIABILITY. Any one or more parties liable upon or in
respect of this Agreement may be released without affecting the liability of any
party not so released. In addition, if Initial Borrower, with Lender's consent,
no longer owns any interest in the Property,
Indemnitor shall have no further liability for acts or omissions first arising
after the date on which Initial Borrower conveyed all of its right, title and
interest in the Property to an unaffiliated third party transferee, provided,
however, Indemnitor shall remain liable under this Agreement with respect to
acts or omissions first arising on or prior to such date.
20. RIGHTS CUMULATIVE. The rights and remedies herein provided are
cumulative and not exclusive of any rights or remedies which Lender has under
the Note, the Mortgage, or the other Loan Documents or would otherwise have at
law or in equity.
21. INAPPLICABLE PROVISIONS. If any term, condition or covenant of
this Agreement shall be held to be invalid, illegal or unenforceable in any
respect, this Agreement shall be construed without such provision.
22. GOVERNING LAW. THIS GUARANTY SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK AND THE APPLICABLE LAWS OF
THE UNITED STATES OF AMERICA. ANY LEGAL SUIT, ACTION OR PROCEEDING AGAINST
LENDER OR INDEMNITOR ARISING OUT OF OR RELATING TO THIS GUARANTY MAY AT LENDER'S
OPTION BE INSTITUTED IN ANY FEDERAL OR STATE COURT IN XXX XXXX XX XXX XXXX,
XXXXXX XX XXX XXXX, PURSUANT TO SECTION 5-1402 OF THE NEW YORK GENERAL
OBLIGATIONS LAW, AND INDEMNITOR WAIVES ANY OBJECTIONS WHICH IT MAY NOW OR
HEREAFTER HAVE BASED ON VENUE AND/OR FORUM NON CONVENIENS OF ANY SUCH SUIT,
ACTION OR PROCEEDING, AND INDEMNITOR AND HEREBY IRREVOCABLY SUBMITS TO THE
JURISDICTION OF ANY SUCH COURT IN ANY SUIT, ACTION OR PROCEEDING. INDEMNITOR
DOES HEREBY DESIGNATE AND APPOINT:
CT Corporation System
000 Xxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
AS ITS AUTHORIZED AGENT TO ACCEPT AND ACKNOWLEDGE ON ITS BEHALF SERVICE OF ANY
AND ALL PROCESS WHICH MAY BE SERVED IN ANY SUCH SUIT, ACTION OR PROCEEDING IN
ANY FEDERAL OR STATE COURT IN NEW YORK, NEW YORK, AND AGREES THAT SERVICE OF
PROCESS UPON SAID AGENT AT SAID ADDRESS AND WRITTEN NOTICE OF SAID SERVICE
MAILED OR DELIVERED TO INDEMNITOR IN THE MANNER PROVIDED HEREIN SHALL BE DEEMED
IN EVERY RESPECT EFFECTIVE SERVICE OF PROCESS UPON INDEMNITOR IN ANY SUCH SUIT,
ACTION OR PROCEEDING IN THE STATE OF NEW YORK.
23. MISCELLANEOUS. Wherever pursuant to this Agreement (i) Lender
exercises any right given to it to approve or disapprove, (ii) any arrangement
or term is to be satisfactory to Lender, or (iii) any other decision or
determination is to be made by Lender, the decision of Lender to approve or
disapprove, all decisions that arrangements or terms are satisfactory or not
satisfactory and all other decisions and determinations made by Lender, shall be
in the sole and absolute discretion of Lender and shall be final and conclusive,
except as may be otherwise expressly and specifically provided herein.
IN WITNESS WHEREOF, this Agreement has been executed by Indemnitor and
is effective as of the day and year first above written.
INITIAL BORROWER:
BEHRINGER HARVARD PACES WEST, LLC,
a Delaware limited liability company
By: _________________________________
Xxxxxx X. Xxxxxxx, III
Secretary
PRINCIPAL:
BEHRINGER HARVARD REIT I, INC., a
Maryland corporation
By: _______________________________
Name: Xxxxxx X. Xxxxxxx, III
Title: Vice President
