EXHIBIT 10.9
ASSIGNMENT OF MANAGEMENT AGREEMENT
THIS ASSIGNMENT OF MANAGEMENT AGREEMENT (this "ASSIGNMENT") is made and
entered into as of April 1, 2002 by and among (i) CENTURY III ASSOCIATES LIMITED
PARTNERSHIP (the "GUARANTOR"), a Maryland limited partnership (II) XXXXXX
MORTGAGE CAPITAL CORPORATION (the "LENDER"), a Virginia corporation, and (iii)
BRI OP LIMITED PARTNERSHIP (the "MANAGER"), a Delaware limited partnership.
RECITALS:
A. Guarantor is the owner of a multifamily residential apartment project
located in Cockeysville (Baltimore County), Maryland (the "MORTGAGED PROPERTY").
B. Manager is the managing agent of the Mortgaged Property pursuant to a
Management Agreement dated as of April 27, 2000, between Guarantor and Manager
(the "MANAGEMENT AGREEMENT").
C. Lender is about to make a loan to KR5 Acquisition, L.L.C., a Delaware
limited liability company ("BORROWER") in the amount of $22,800,000.00 (the
"LOAN"). The Loan will be evidenced by a Multifamily Note and will be guaranteed
by Guarantor pursuant to a Guaranty, which will be secured by an Indemnity
Multifamily Deed of Trust, Assignment of Rents and Security Agreement (the
"SECURITY INSTRUMENT") which encumbers the Mortgaged Property.
D. Guarantor is willing to assign its rights under the Management
Agreement to Lender as additional security for the Loan.
E. Manager is willing to consent to this Assignment and to attorn to
Lender upon a default by Borrower or Guarantor under the documents evidencing
and relating to the Loan, and perform its obligations under the Management
Agreement for Lender, or its successors in interest, or to permit Lender to
terminate the Management Agreement without liability.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and intending to be legally bound,
Guarantor, Lender and Manager agree as follows:
1. Guarantor hereby transfers, assigns and sets over to Lender, its
successors and assigns, all right, title and interest of Guarantor in and to the
Management Agreement. Manager hereby consents to the foregoing assignment. The
foregoing assignment is being made by Guarantor to Lender as collateral security
for the full payment and performance by Guarantor of all of its obligations
under the loan documents relating to the Loan to which Guarantor is a party.
However, until the occurrence of an Event of Default (as such term is defined in
the loan documents evidencing and securing the Loan) Guarantor may exercise all
rights as owner of the Mortgaged Property under the Management Agreement, except
as otherwise provided in this Assignment. The
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foregoing assignment shall remain in effect as long as the Loan, or any part
thereof, remains unpaid, but shall automatically terminate upon the release of
the Security Instrument as a lien on the Mortgaged Property.
2. Guarantor and Manager represent and warrant to Lender that (i) the
Management Agreement is unmodified and is in full force and effect, (ii) the
Management Agreement is a valid and binding agreement enforceable against the
parties in accordance with its terms, and (iii) neither party is in default in
performing any of its obligations under the Management Agreement.
3. Guarantor hereby covenants with Lender that during the term of this
Assignment: (a) Guarantor shall not transfer the responsibility for management
of the Mortgaged Property from Manager to any other person or entity without the
prior written consent of Lender; (b) Guarantor shall not terminate or amend any
of the terms or provisions of the Management Agreement without the prior written
consent of Lender; and (c) Guarantor shall give Lender written notice of any
notice or information that Guarantor receives which indicates that Manager is
terminating the Management Agreement or that Manager is otherwise discontinuing
its management of the Mortgaged Property.
4. Upon receipt by Manager of written notice from Lender that an Event
of Default (as that term is defined in the loan documents evidencing and
securing the Loan) has occurred and is continuing, Lender shall have the right
to exercise all rights as owner of the Mortgaged Property under the Management
Agreement.
5. After the occurrence of an Event of Default, Lender (or its nominee)
shall have the right any time thereafter to terminate the Management Agreement,
without cause and without liability, by giving written notice to Manager of its
election to do so. Lender's notice shall specify the date of termination, which
shall not be less than 30 days after the date of such notice.
6. On the effective date of termination of the Management Agreement,
Manager shall turn over to Lender all books and records relating to the
Mortgaged Property (copies of which may be retained by Manager, at Manager's
expense), together with such authorizations and letters of direction addressed
to tenants, suppliers, employees, banks and other parties as Lender may
reasonably require: Manager shall cooperate with Lender in the transfer of
management responsibilities to Lender or its designee. A final accounting of
unpaid fees (if any) due to Manager under the Management Agreement shall be made
within 60 days after the effective date of termination, but Lender shall not
have any liability or obligation to Manager for unpaid fees or other amounts
payable under the Management Agreement which accrue before Lender (or its
nominee) acquires title to the Mortgaged Property, or Lender becomes a mortgagee
in possession.
7. Manager's address for notice is c/o Berkshire Realty Group, Xxx
Xxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000. All notices to be given by Lender to
Manager shall
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be given in the same manner as notices to Guarantor pursuant to the notice
provisions contained in the Security Instrument.
8. Modifications (if any) to this Assignment are attached on Exhibit A
to this Assignment.
9. This Assignment may be executed in any number of counterparts, each
of which shall be considered an original for all purposes; provided, however,
that all such counterparts shall constitute one and the same instrument.
IN WITNESS WHEREOF, Guarantor, Lender and Manager have executed this
Assignment as of the day and year first above written.
GUARANTOR:
CENTURY III ASSOCIATES LIMITED
PARTNERSHIP, a Maryland limited
partnership
By: /s/ Xxxxx X. Xxxxx
-------------------------------
Xxxxx X. Xxxxx
Vice President
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LENDER:
XXXXXX MORTGAGE CAPITAL
CORPORATION, a Virginia corporation
By: /s/ Xxxx X. Xxxxxx
---------------------------------
Xxxx X. Xxxxxx
Assistant Vice President
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MANAGER:
BRI OP LIMITED PARTNERSHIP, a
Delaware limited partnership
By: Berkshire Apartments, L.L.C.,
General Partner
By: /s/ Xxxxx X. Xxxxx
---------------------------------
Name:
Title:
EXHIBIT A
MODIFICATIONS TO ASSIGNMENT OF MANAGEMENT AGREEMENT
The following modifications are made to the text of the Assignment that precedes
this Exhibit:
The Assignment is modified by adding a new Section 10 and a new Section 11 as
follows:
"10. Manager agrees that:
(a) (i) any fees payable to Manager pursuant to the
Management Agreement are and shall be subordinated in right of payment,
to the extent and in the manner provided in this Assignment, to the
prior payment in full of the Indebtedness (as defined in the Security
Instrument), and (ii) the Management Agreement is and shall be subject
and subordinate in all respects to the liens, terms, covenants and
conditions of the Security Instrument and the other loan documents
evidencing and securing the Loan and to all advances heretofore made or
which may hereafter be made pursuant to the Security Instrument
(including all sums advanced for the purposes of (x) protecting or
further securing the lien of the Security Instrument, curing defaults
by Guarantor under the Security Instrument of for any other purposes
expressly permitted by the Security Instrument, or (y) constructing,
renovating, repairing, finishing, fixturing or equipping the Mortgaged
Property);
(b) if, by reason of its exercise of any other right or
remedy under the Management Agreement, Manager acquires by right of
subrogation or otherwise a lien on the Mortgaged Property which (but
for this subsection) would be senior to the lien of the Security
Instrument, then, in that event, such lien shall be subject and
subordinate to the lien of the Security Instrument;
(c) until Manager receives notice (or otherwise acquires
actual knowledge) of an Event of Default, Manager shall be entitled to
retain for its own account all payments made under or pursuant to the
Management Agreement;
(d) after Manager receives notice (or otherwise acquires
actual knowledge) of an Event of Default, it will not accept any
payment of fees under or pursuant to the Management Agreement without
Lender's prior written consent;
(e) if, after Manager receives notice (or otherwise
acquires actual knowledge) of an Event of Default, Manager receives any
payment of fees under the Management Agreement, or if Manager receives
any other payment or distribution of any kind from Guarantor or from
any other person or entity in connection with the Management Agreement
which Manager is not permitted by this Assignment to retain for its own
account, such payment or other distribution will be received and held
in trust for Lender and unless Lender otherwise notifies
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Manager, will be promptly remitted, in cash or readily available funds,
to Lender, properly endorsed to Lender, to be applied to the principal
of, interest on and other amounts due under the loan documents
evidencing and securing the Loan in such order and in such manner as
Lender shall determine in its sole and absolute discretion. Manager
hereby irrevocably designates, makes, constitutes and appoints Lender
(and all persons or entities designated by Lender) as Manager's true
and lawful attorney in fact with power to endorse the name of Manager
upon any checks representing payments referred to in this subsection;
(f) Manager shall notify (telephonically, followed by
written notice) Lender of Manager's receipt from any person or entity
other than Guarantor or Borrower of a payment with respect to
Guarantor's and Borrower's obligations under the loan documents
evidencing and securing the Loan, promptly after Manager obtains
knowledge of such payment; and
(g) during the term of this Assignment Manager win not
commence, or join with any other creditor in commencing any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings with
respect to Guarantor, without Lender's prior written consent.
11. Guarantor agrees that after Guarantor receives notice (or otherwise has
actual knowledge) of an Event of Default, it will not make any payment
of fees under or pursuant to the Management Agreement without Lender's
prior written consent."
/s/ DCQ
--------------------------------
Guarantor Initials
/s/ MEG
--------------------------------
Lender Initials
/s/ DCQ
---------------------------------
Manager Initials
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