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MANAGEMENT SUBORDINATION AGREEMENT
 
Dated as of ________, 2011
 
SB Partners Real Estate Corporation
1251 Avenue of the Americas
New York, New York 10020
Attn: George N. Tietjen, III
(Hereinafter referred to as “Manager”)

SB Partners
1251 Avenue of the Americas
New York, New York 10020
Attn: George N. Tietjen, III
(Hereinafter referred to as “Borrower”)
 
Wells Fargo Bank, National Association
375 Park Avenue, 5th Floor
MAC: J0127-051
New York, NY 10152
Attn: Michael Cook
(Hereinafter referred to as “Lender”)
 
This Agreement refers to the loan made by Lender to Borrower (the “Loan”) as
evidenced by that certain Promissory Note, dated September 17, 2007 (the
“Original Note”) which is or has been replaced by two promissory notes
(collectively, the “Replacement Notes”) dated as of even date herewith, and on
terms and conditions set forth in, that certain Loan Agreement dated as of
__________, 2011 (the “Effective Date”) (as modified from time to time, the
“Loan Agreement”).  Capitalized terms used herein but not otherwise defined
shall be as defined in the Loan Agreement.  The Replacement Notes, the Loan
Agreement and all other documents executed and/or delivered in connection with
the Loan are hereinafter collectively referred to as the “Loan Documents”.
 
Manager is the manager of Borrower pursuant to that certain Management Contract
dated as of December 4, 1970 with Borrower (the “Management Agreement”). Under
the terms of the Loan Documents, Borrower has agreed to cap the fee payable to
Manager (the “Management Fee”) as follows:  as of the 12 month period ended
December 31, 2010, the annual Management Fee was $852,483, provided, however, so
long as the Loan shall be outstanding such Management Fee shall not exceed 50%
of the lesser of (a) the Management Fee as calculated pursuant to the Management
Agreement or (b) $852,483, during any 12 month period commencing on the
Effective Date (the “Management Fee Cap”).  The annual Fund Management Fee and
shall not be changed except with the consent of Lender, which consent Lender may
withhold in its sole discretion
 
In consideration of Lenders providing the Loan to Borrower, Manager hereby
agrees as follows:
 
REPRESENTATIONS AND AGREEMENTS. Representation. Manager hereby represents and
warrants that a true and correct copy of the Management Agreement is attached as
Exhibit A hereto and the Management Agreement has not been amended or modified
or assigned except as set forth in said Exhibit A. Manager represents and
warrants that (a) the Management Agreement is in full force and effect, (b) to
Manager’s knowledge neither Manager nor Borrower is in default under the
Management Agreement, (c) neither Manager nor Borrower has given or received any
notice for the purpose of terminating the Management Agreement, (d) sums due and
payable to Manager under the Management Agreement as of the date hereof have
been paid in full, except for pending amounts relating to the current payment
cycles, (e) Manager is duly organized and validly existing under the laws of the
State of its formation and has all necessary power and authority to enter into
and perform its obligations under this Agreement and the Management Agreement,
and (f) that pursuant to the Management Agreement the annual Management Fee is
equal to (x) 2% of the sum of the average daily Aggregate Capital Investment
Account and the average daily Amortization Account of Borrower and (y) ½ of 1%
of the average daily Capital Cash Account of Borrower, which as of the 12 month
period ended December 31, 2010 was $852,483.  Borrower represents and warrants
that (a) the Management Agreement is in full force and effect and has not been
amended or modified or assigned except as set forth in this Assignment, (b) to
Borrower’s knowledge neither Manager nor Borrower is in default under the
Management Agreement, (c) neither Manager nor Borrower has given or received any
notice for the purpose of terminating the Management Agreement, (d) sums due and
payable to Manager under the Management Agreement as of the date hereof have
been paid in full, except for pending amounts relating to the current payment
cycles, (e) Borrower is duly organized and validly existing under the laws of
the State of its formation and has all necessary power and authority to enter
into and perform its obligations under this Agreement and the Management
Agreement, and (f) that pursuant to the Management Agreement the annual
management fee is equal to (x) 2% of the sum of the average daily Aggregate
Capital Investment Account and the average daily Amortization Account of
Borrower and (y) ½ of 1% of the average daily Capital Cash Account of Borrower,
which as of the 12 month period ended December 31, 2010 was $852,483.  Consent.
Manager hereby consents to the Management Fee Cap and agrees not to accept any
amounts with respect to the Management Fee in excess of the Management Fee Cap.
Notice. In the event of a default by Borrower under the Management Agreement,
Manager shall promptly give written notice of such default to Lender and
Borrower.  Borrower Default. During the continuation of a Default under the
Loan, Lender may deliver written notice of the same to
Manager.  Subordination.  The Management Fee and other compensation due and
owing to Manager pursuant to the Management Agreement shall be and remain
inferior and subordinate to any liens, security interests, judgment liens,
charges or other encumbrances upon Borrower’s assets securing payment of the
Loan, regardless of whether such encumbrances in favor of Lender presently exist
or are hereafter created or attach.  Without the prior written consent of
Lender, Manager shall not (i) exercise or enforce any creditor’s right it may
have against Borrower, or (ii) foreclose, repossess, sequester or otherwise take
steps or institute any action or proceedings (judicial or otherwise, including
without limitation the commencement of, or joinder in, any liquidation,
bankruptcy, rearrangement, debtor’s relief or insolvency proceeding) to enforce
any liens, mortgages, deeds of trust, security interests, collateral rights,
judgments or other encumbrances on assets of Borrower held by Manager.  Except
as otherwise expressly provided in this Section, the Management Agreement and
all of Manager’s rights thereunder are, and at all times shall be,
unconditionally junior and subordinate to the terms of the Loan
Documents.  Funds Held in Trust.  Notwithstanding anything to the contrary in
the foregoing or in the Management Agreement, in the event that Manager
nonetheless receives fees in excess of the Management Fee Cap, then (a) such
amounts shall be held in trust for the benefit, and as the property, of Lender,
(b) such amounts shall not be commingled with any other funds or property of
Borrower or Manager, and (c) Borrower or Manager shall turn over such amounts to
Lender within one (1) business day of receipt thereof, which amounts shall be
applied in accordance with the order of priority set forth in the Loan
Agreement.  Bankruptcy.  In any bankruptcy or other proceeding in which the
filing of claims is required by law, Manager shall file all claims which Manager
may have against Borrower and shall assign to Lender all rights of Manager
thereunder as security to Lender for the payment of Borrower’s obligations with
respect to the Loan.  If Manager does not file any such claim, within 10 days
after notice and demand given by Lender to Manager, Lender, as attorney-in-fact
for Manager, is hereby authorized to do so in the name of Manager or, in
Lender’s discretion, to assign the claim to a nominee and to cause one or more
proof(s) of claim to be filed in the name of Lender’s nominee.  The foregoing
power of attorney is coupled with an interest and cannot be revoked.  Lender or
its nominee shall have the right, in its sole discretion, to accept or reject
any plan proposed in such proceeding and to take any other action which a party
filing a claim is entitled to do.  In all such cases, whether in administration,
bankruptcy or otherwise, the person or persons authorized to pay such claim
shall pay to Lender the amount payable on such claim and, to the full extent
necessary for that purpose, Manager hereby assigns to Lender all of Manager’s
rights to any such payments or distributions; provided, however, Manager’s
obligations hereunder shall not be satisfied except to the extent that Lender
receives cash by reason of any such payment or distribution.  If Lender receives
anything hereunder other than cash, the same shall be held as collateral for
amounts due under the Loan.
 
MISCELLANEOUS. Assignment. This Agreement and other Loan Documents shall inure
to the benefit of and be binding upon the parties and their respective heirs,
legal representatives, successors and assigns. Lender’s interests in and rights
under this Agreement and other Loan Documents are freely assignable, in whole or
in part, by Lender. Applicable Law. This Agreement shall be governed by and
construed under the laws of the State of New York. Severability. If any
provision of this Agreement shall be prohibited or invalid under applicable law,
such provision shall be ineffective but only to the extent of such prohibition
or invalidity, without invalidating the remainder of such provision or the
remaining provisions of this Agreement. Notices. All notices, requests, demands,
statements, authorizations, approvals, directions, consents and other
communications provided for herein shall be given or made in writing and shall
be deemed sufficiently given or served for all purposes as of the date (a) when
hand delivered (provided that delivery shall be evidenced by a receipt executed
by or on behalf of the addressee), (b) three (3) days after being sent by
postage pre-paid registered or certified mail, return receipt requested, (c) one
(1) business day after being sent by reputable overnight courier service (with
delivery evidenced by written receipt), or (d) with a simultaneous delivery by
one of the means in clauses (a), (b) or (c) above, by facsimile, when sent, with
confirmation, in each case addressed to the intended recipient at the address
set forth on in the preamble hereof, or, as to any party, at such other address
as shall be designated by such party in a notice to each other party hereto.
Notices to Lender must include the mail code. Binding Contract.  Manager by
execution of and Lender by acceptance of this Agreement agree that each party is
bound to all terms and provisions of this Agreement. Amendments. No waivers,
amendments or modifications of this Agreement shall be valid unless in writing
and signed by an officer of Lender.
 
WAIVER OF JURY TRIAL. TO THE EXTENT PERMITTED BY APPLICABLE LAW, EACH OF MANAGER
BY EXECUTION HEREOF AND LENDER BY ACCEPTANCE HEREOF, KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL
PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT,
ANY OF THE OTHER LOAN DOCUMENTS, OR THE TRANSACTIONS CONTEMPLATED HEREBY
(WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A)
CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE
EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES
THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS
AGREEMENT AND CONTINUE THE OTHER LOAN DOCUMENTS BY, AMONG OTHER THINGS, THE
MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.
 
[SIGNATURE PAGE FOLLOWS]

858883v5   012381.0100
 
 

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              IN WITNESS WHEREOF, Manager has caused this Agreement to be
executed on the day and year first written above.
 

 
MANAGER:
 
SB PARTNERS REAL ESTATE CORPORATION, a New York corporation
 
By:           /s/ George N. Tietjen III
 
Name:           George N. Tietjen, III
 
Title:           Vice President
 

 
BORROWER:
 
SB PARTNERS, a New York limited partnership

 
By:  SB Partners Real Estate Corporation, a New York corporation, its sole
general partner

       By: /s/ George N. Tietjen III
       Name: George N. Tietjen III
       Title: Vice President
 

 

858883v5   012381.0100
 
 

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EXHIBIT A
 
Management Agreement
 
See Attached.
 

 

858883v5   012381.0100
 
 

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