Common use of Prohibition of Assignments by Borrower Clause in Contracts

Prohibition of Assignments by Borrower. (a) Except for Permitted Transfers, Borrower will not cause or permit (i) the Property or any interest in the Property to be conveyed, transferred, assigned, encumbered, sold or otherwise disposed of; or (ii) any transfer, assignment or conveyance of any direct or indirect interest in Borrower or in the members, or partners or stockholders, or beneficiaries of, Borrower; or (iii) any merger, reorganization, dissolution or other change in the ownership structure of Borrower or any of the members, partners, stockholders or beneficiaries of Borrower (each a “Transfer”) without in each case the prior written consent of Lender, in Lender’s sole discretion, until the provisions of this Loan have been fully complied with and the Loan and all other sums evidenced by the Note and/or secured by the Security Instrument and other Loan Documents, have been repaid in full. (b) If Lender approves a Transfer, other than a Permitted Transfer, of all or any part of the Property, or a change in ownership, control or management of Borrower, Lender reserves the right to (i) charge Borrower an assumption fee of up to one percent (1%) of the then outstanding principal balance of the Note, or (ii) require that the all of the obligations of Indemnitor be assumed by additional or substitute Indemnitor(s) satisfactory to Lender, in Lender’s sole discretion. Prior to Lender’s consideration for approval of any Transfer of all or any part of the Property, or a change in the ownership, control or management of Borrower, other than a Permitted Transfer, Lender must receive for its review copies of all Transfer and other documents, including without limitation any documents reasonably required to ascertain the creditworthiness and experience of any proposed transferee. Any transferee (and any additional or substitute Indemnitor(s)) must agree to assume in writing all obligations of Borrower, Indemnitor, under the Loan Documents, and Borrower must pay all costs and expenses in connection with such transfer and assumption, including without limitation all fees and expenses incurred by Lender. As further conditions to any such Transfer, Borrower shall not be in default under any of the Loan Documents at the time of the proposed Transfer and Lender may further require a date down endorsement to the Lender’s policy of the title insurance and an opinion of Borrower’s counsel, each in form and substance satisfactory to Lender. (c) Notwithstanding the foregoing, the following Transfers are permitted (herein referred to as “Permitted Transfers”) without Lender’s prior written consent and without a fee other than third party costs, if any: (i) The issuance or transfer of common stock or other equity interests in Whitestone REIT or other beneficial interest or other forms of securities, including all varieties of convertible debt, equity or other securities; (ii) The issuance or transfer of limited partnership interests in Whitestone REIT Operating Partnership, L.P. so long as such transfers do not exceed 49% of the ownership interest as of the date hereof, and does not result in a change in control. In the event any one entity assumes more than 25% ownership interest, Borrower must deliver notice thereof to Lender and a search confirming that the new partner is not on the list of Specially Designated Nationals or other blocked persons published by the U.S. Office of Foreign Assets Control; (iii) A merger in which Whitestone REIT or Whitestone Operating Partnership, L.P. is the survivor so long as such merger does not result in a change of control. The term “change of control” shall be deemed to have occurred if, after any such transfer, Whitestone REIT or Whitestone Operating Partnership, L.P. does not control at least 51% of the ownership interest in Borrower or does not continue to manage the day to day operations of the Borrower or the Property. Except with respect to Transfers described in Section 6.2(c)(i) or Transfers described in Section (ii) by parties other than Whitestone REIT, promptly after such transfer, Borrower shall provide Lender with (i) a description of the transfer, including, if the transfer is of an interest in Borrower, a description of the nature and amounts of the ownership interests transferred; (ii) documentation related to the transferee as required by Lender in its reasonable discretion, including without limitation, organizational documents, certificates of existence and opinions of counsel; (iii) copies of the transfer documents pursuant to which the transfer was effectuated; and (iv) any additional information reasonably requested by Lender regarding the transfer.