CONDITIONAL ASSIGNMENT OF MANAGEMENT AGREEMENT
EXHIBIT
10.26
This
CONDITIONAL ASSIGNMENT OF MANAGEMENT AGREEMENT (this “Agreement”)
is
made as of the 30th day of June, 2006, by SCOTSDALE
MI LLC (“Scotsdale”),
CARRIAGE
PARK MI LLC (“Carriage
Park”),MACOMB
MANOR MI LLC
(“Macomb
Manor”), and CARRIAGE
HILL MI LLC (“Carriage
Hill”), each
a
Delaware limited liability company, having its principal place of business
c/o
Lightstone Holdings LLC, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
(hereinafter collectively referred to as the “Borrower”;
references herein to the Borrower unless otherwise specifically stated, shall
also mean and refer to each and every one of Scotsdale, Carriage Park, Macomb
Manor and Carriage Hill, jointly and severally)
in favor
of CITIGROUP
GLOBAL MARKETS REALTY CORP.,
a New
York corporation,
its
transferees, successors and assigns, having an address at ▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇,
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
(“Lender”),
and
is acknowledged and consented to by Beacon Property Management, LLC
(“Agent”).
RECITALS
A. This
Agreement is being executed in connection with Lender’s making a mortgage loan
to Borrower in the original principal amount of Fifty-Two Million and No/100
Dollars ($52,000,000.00) (the “Loan”).
The
Loan is being made pursuant to the terms of a Loan and Security Agreement (the
“Loan
Agreement”)
of
even date herewith, executed by Lender and Borrower; is evidenced by a certain
Promissory Note (the “Note”)
of
even date herewith, made by Borrower in favor of Lender; and is secured by,
among other things, those certain Mortgages (collectively, the “Instrument”),
also
of even date herewith, executed by each Borrower in favor of Lender (the Loan
Agreement, the Note, the Instrument, this Agreement, and all other documents
executed in connection with the Loan are collectively referred to as the
“Loan
Documents”).
Capitalized terms used herein but not otherwise defined shall have the
respective meanings assigned to such terms in the Loan Agreement.
B. The
proceeds of the Loan will be used for the financing of a multi-family
portfolio project
situated on the land described in each Instrument (the “Property”).
C. Pursuant
to a certain Management
Agreement
between
Borrower and Agent (the “Management
Agreement”)
(a
true and correct copy of which Management Agreement is attached hereto as
Exhibit
A),
Borrower employed Agent exclusively to rent, lease, operate and manage the
Property.
D. Lender
requires as a condition to the making of the Loan that Borrower assign the
Management Agreement as set forth below.
NOW,
THEREFORE, in consideration of the above and the mutual promises contained
in
this Agreement, the receipt and sufficiency of which are acknowledged, the
parties hereto agree as follows:
1. Assignment
of Management Agreement.
As
additional collateral security for the Loan Agreement, Borrower hereby
conditionally transfers, sets over and assigns to Lender all of Borrower’s
right, title and interest in and to the Management Agreement, said transfer
and
assignment to automatically become a present, unconditional assignment, at
Lender’s option, upon the occurrence of an Event of Default.
2. Termination.
At
such
time as the Loan is paid in full and the Instrument is released of record,
this
Agreement and all of Lender’s right, title and interest hereunder with respect
to the Management Agreement shall terminate.
3. Borrower’s
Covenants.
Borrower
hereby covenants with Lender that during the term of this Agreement: (a)
Borrower shall not transfer the responsibility for the management of the
Property from Agent to any other person or entity without the prior written
consent of Lender, which consent may be withheld by Lender in Lender’s sole
discretion; (b) Borrower shall not terminate or amend any of the terms or
provisions of the Management Agreement without the prior written consent of
Lender, which consent may be withheld by Lender in Lender’s sole discretion; and
(c) Borrower shall, in the manner provided for in this Agreement, give notice
to
Lender of any notice or information that Borrower receives which indicates
that
Agent is terminating the Management Agreement or that Agent is otherwise
discontinuing its management of the Property.
4. Agreement
by Borrower and Agent.
Borrower
and Agent hereby agree that in the event of an Event of Default, Lender shall
have the right to, at the option of Lender exercised by written notice to
Borrower and Agent: (a) require all rents, security deposits, issues, proceeds,
revenues, awards and profits of the Property collected by Agent, after payment
of all costs and expenses of operating the Property (including, without
limitation, operating expenses, real estate taxes, insurance premiums, repairs
and maintenance and the fees and commissions payable under the Management
Agreement), to be applied in accordance with Lender’s written directions to
Agent; and (b) exercise its rights under this Agreement and immediately
terminate the Management Agreement and require Agent to transfer its
responsibility for the management of the Property to a management company
selected by Lender in Lender’s sole and absolute discretion.
5. Lender’s
Right to Replace Agent.
In
addition to the foregoing, Lender shall have the right to require Borrower
to
replace Agent with a Person chosen by Lender, upon the earliest to occur of
any
one or more of the following events (each an “Agent
Replacement Event”):
(i)
the occurrence and continuance of an Event of Default; (ii) thirty (30) days
after notice from Lender to Borrower that Agent has engaged in fraud, gross
negligence, malfeasance or willful misconduct arising from or in connection
with
its performance under the Management Agreement, or Agent’s default under the
Management Agreement which is not cured within any applicable cure period
provided under the Management Agreement; (iii) a change in control of Agent,
or
(iv) if Borrower’s Debt Service Coverage Ratio shall be less than the Minimum
DSCR Threshold. If an Agent Replacement Event occurs, then Borrower shall enter
a new management agreement with a property management company acceptable to
Lender.
-2-
6. Subordination
of Management Fees and Management Agreement.
Agent
agrees that: (a) any and all fees, commissions, compensation and other amounts
due and payable to the Agent pursuant to the Management Agreement (collectively,
“Manager’s
Fees”)
are
and shall at all times continue to be subject and subordinate in all respects
to
the Loan, the Instrument and the liens and security interests of Lender created
thereunder, and (b) the Management Agreement and all of the terms, covenants
and
provisions thereof and all rights, remedies and options of Agent thereunder
are
and shall at all times continue to be subject and subordinate in all respects
to
the Loan Documents and all terms, covenants and conditions set forth therein,
including, without limitation, all renewals, increases, modifications,
spreaders, consolidations, replacements and extensions thereof and to all sums
secured thereby and the liens and security interests of Lender created
thereunder.
7. Prohibited
Payment and Receipt of Manager’s Fees.
Borrower and Agent hereby agree that Agent shall not be entitled to receive
any
Manager’s Fees for and during any period of time that an Event of Default exists
or any amount due and owing Lender under the Loan Agreement, the Note or any
other Loan Document is not paid when due. However, Agent shall not be obligated
to Lender to return or refund any Manager’s Fee to the extent that the same is
(i) received by Agent prior to the occurrence of such Event of Default, and
(ii)
duly owing to Agent, and (iii) duly allocable to the time prior to such Event
of
Default. Further, if any such Event of Default is cured and Lender accepts
such
cure (and Lender shall have no obligation to accept any cure other than as
expressly provided in the Note and Instrument and under applicable law), then
Agent may receive and retain any Manager’s Fee payable to Agent that accrued
during the Event of Default, subject to the prior provisions of this
paragraph.
8. Consent
and Agreement by Agent.
Agent
hereby acknowledges and consents to this Agreement and agrees that Agent will
act in conformity with the provisions of this Agreement and Lender’s rights
hereunder or otherwise related to the Management Agreement. Agent further
covenants with Lender that during the term of this Agreement, Agent shall not
amend any of the terms or provisions of the Management Agreement without the
prior written consent of Lender, which consent may be withheld by Lender in
Lender’s sole discretion. In the event that the responsibility for the
management of the Property is transferred from Agent in accordance with the
provisions hereof, Agent shall, and hereby agrees to, fully cooperate in
transferring its responsibility to a new management company and effectuate
such
transfer no later than thirty (30) days from the date the Management Agreement
is terminated. Further, Agent hereby agrees (a) not to contest or impede the
exercise by Lender of any right Lender has under or in connection with this
Agreement; and (b) that it shall, in the manner provided for in this Agreement,
give at least thirty (30) days prior written notice to Lender of Manager’s
intention to terminate the Management Agreement or otherwise discontinue its
management of the Property. In the event Agent gives notice of its intention
to
terminate the Management Agreement, Lender shall have the right, but not the
obligation, to cure Borrower’s defaults thereunder, and Agent agrees to accept
such cure and not terminate the Management Agreement as a result of such
defaults. In the event that Lender elects to not terminate the Management
Agreement in the event it acquires title to the Property through foreclosure,
exercise of a power of sale, acceptance of a deed in lieu of foreclosure or
otherwise, Agent agrees to attorn to Lender and continue to operate the Property
pursuant to the Management Agreement provided that all Manager’s Fees due and
payable to Agent are paid.
-3-
9. Lender’s
Agreement.
Any sums
due to Borrower under the Management Agreement shall be distributed to Borrower
in accordance with the terms of the Loan Agreement.
10. Notice.
All
notices given under this Agreement shall be in writing, and sent to the other
party at its address set forth below or at such other address as such party
may
designate by notice to the other party. Such notices shall be deemed given
in
accordance with the criteria set forth in the Instrument.
To
Borrower:
At the
address set forth in the Loan Agreement.
To
Lender:
At the
address set forth in the Loan Agreement.
To
Agent:
______________________________
______________________________
______________________________
Attn:
__________________________
Telephone
No.: __________________
Facsimile
No.: ___________________
Any
party
may change the address at which it is to receive notices hereunder by giving
written notice of such new address in accordance with the notice criteria set
forth in the Instrument.
11. Binding
Nature of Agreement.
This
Agreement shall be binding upon and shall inure to the benefit of the parties
hereto and their respective successors and assigns.
12. Counterparts.
This
Agreement may be executed in any number of counterparts all of which taken
together shall constitute one and the same instrument.
13. Governing
Law.
This
Agreement shall be governed by the laws of the state in which the Property
is
located and applicable federal law.
14. Non-Recourse.
This
Agreement is being executed in connection with the making of the Loan pursuant
to the terms of the Loan Agreement and the Note. Borrower’s liability under this
Agreement shall be limited to the same extent provided in Article XII of the
Loan Agreement.
[Signature
Page Follows]
-4-
IN
WITNESS WHEREOF, this Agreement has been executed by Borrower and Agent
effective as of the date and year first written above.
|
BORROWER:
|
||
|
SCOTSDALE
MI LLC,
a Delaware limited liability
company
|
||
| |
||
| By: | LVP Michigan Multifamily Portfolio LLC, a Delaware limited liability company, | |
| its sole Managing Member | ||
| By: | /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ | |
| Name: | ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ | |
| Title: | President |
|
CARRIAGE
PARK MI LLC,
a
Delaware limited liability company
|
||
| |
||
| By: | LVP Michigan Multifamily Portfolio LLC, a Delaware limited liability company, | |
| its sole Managing Member | ||
| By: | /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ | |
| Name: | ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ | |
| Title: | President |
|
MACOMB
MANOR MI LLC,
a
Delaware limited liability company
|
||
| |
||
| By: | LVP Michigan Multifamily Portfolio LLC, a Delaware limited liability company, | |
| its sole Managing Member | ||
| By: | /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ | |
| Name: | ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ | |
| Title: | President |
|
CARRIAGE
HILL MI LLC,
a
Delaware limited liability company
|
||
| |
||
| By: | LVP Michigan Multifamily Portfolio LLC, a Delaware limited liability company, | |
| its sole Managing Member | ||
| By: | /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ | |
| Name: | ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ | |
| Title: | President |
EXHIBIT
A
Management
Agreement