Document:

Unassociated Document

    EXHIBIT 10.17

     

    EXCEPTIONS TO NON-RECOURSE
GUARANTY

     

    This
EXCEPTIONS TO NON-RECOURSE GUARANTY (this “Guaranty”) is
entered into as of June 30, 2006, by LIGHTSTONE HOLDINGS, LLC, a Delaware
corporation, having an address at 326 Third
Street, Lakewood, New Jersey 08701
(“Guarantor”), for
the benefit of CITIGROUP GLOBAL MARKETS REALTY CORP., a New York corporation,
having an address at 388 Greenwich Street, 19th Floor, New York, New York 10013,
and/or any subsequent holder of the Note (“Lender”).

     

    RECITALS

     

    A.  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, 326 Third Street, Lakewood, New Jersey 08701
(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), has
requested that Lender make a loan to Borrower in the amount of $52,000,000.00
(the “Loan”). The
Loan will be evidenced by that certain Promissory Note, dated of the date of
this Guaranty, made by Borrower to Lender (the “Note”), and a
Loan and Security Agreement by and between Borrower and Lender (the
“Loan
Agreement”). The
Loan will be evidenced by a Promissory Note from Borrower to Lender dated as of
the date of this Guaranty (the “Note”) and a
Loan and Security Agreement by and between Borrower and Lender (the
“Loan
Agreement”). The
Note will be secured by, among other things, those certain Mortgages dated the
same date as the Note (collectively, the “Instrument”),
encumbering certain real properties and improvements described in each
Instrument (collectively, the “Property”). As
used herein, the term “Loan
Documents” shall
mean the Note, the Loan Agreement, the Instrument, and any other documents or
instruments given by Borrower or others and accepted by Lender for the purposes
of evidencing, securing, or guaranteeing the Loan. All capitalized terms not
defined herein shall have the respective meanings set forth in the Loan
Agreement.

     

    B.  As a
condition to making the Loan to Borrower, Lender requires that Guarantor execute
this Guaranty.

     

    C.  Guarantor
will derive substantial benefits from Lender’s making the Loan to
Borrower.

    
      

NOW,
THEREFORE, in order to induce Lender to make the Loan to Borrower, and in
consideration thereof, Guarantor agrees as follows:

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    1.  As used
herein, “Indebtedness” shall
mean all obligations evidenced by the Note and secured by the Instrument or the
other Loan Documents.

     

    2.  Guarantor
hereby absolutely, unconditionally and irrevocably guarantees to Lender the full
and prompt payment when due, whether at maturity or earlier, by reason of
acceleration or otherwise, and at all times thereafter, and the full and prompt
performance when due, of all of the following:

     

    (a)  All
amounts which are stated to be obligations of Guarantor under the terms of
Article XII of the Loan Agreement; and

     

    (b)  All costs
and expenses, including reasonable fees and out of pocket expenses of attorneys
and expert witnesses, incurred by Lender in enforcing its rights under this
Guaranty.

     

    For
purposes of determining Guarantor’s liability under this Guaranty, all payments
made by Borrower with respect to the Indebtedness and all amounts received by
Lender from the enforcement of its rights under the Instrument shall be applied
first to the portion of the Indebtedness for which neither Borrower nor
Guarantor has personal liability.

     

    Guarantor
hereby promises to pay and perform, as and when due (whether by acceleration, at
maturity, or otherwise) and at all times thereafter, each and all of the items
and obligations which are stated to be guaranteed hereunder but which are
obligations for which Guarantor is primarily liable or are not obligations of
others. Guarantor hereby agrees that any such sums shall accrue interest at the
Default Rate until paid if not paid as and when due and that such sums, together
with any accrued interest thereon, shall become part of Guarantor’s obligations
hereunder.

     

    3.  The
obligations of Guarantor under this Guaranty shall survive any foreclosure
proceeding, any foreclosure sale, any delivery of any deed in lieu of
foreclosure, any release of record of the Instrument and any repayment or
discharge of the Indebtedness and will not be reduced, discharged or released
because or by reason of any existing or future offset, claim or defense of
Borrower or any other party against Lender or against payment of the obligations
of Guarantor under this Guaranty.

     

    4.  Guarantor’s
obligations under this Guaranty constitute an unconditional guaranty of payment
and not merely a guaranty of collection. This Guaranty may not be revoked by
Guarantor and shall continue to be effective after any attempted revocation by
Guarantor. 

     

    5.  The
obligations of Guarantor under this Guaranty shall be performed without demand
by Lender and shall be unconditional irrespective of the genuineness, validity,
regularity or enforceability of any of the Loan Documents, and without regard to
any other circumstance which might otherwise constitute a legal or equitable
discharge of a surety or a guarantor. Guarantor shall be liable even if Borrower
had no liability at the time of execution of the Loan Documents, or thereafter
ceases to be liable. Guarantor hereby agrees that Guarantor’s liability may be
larger in amount and more burdensome than that of Borrower. Guarantor hereby
waives the benefit of all principles or provisions of law, statutory or
otherwise, which are or might be in conflict with the terms of this Guaranty and
agrees that Guarantor’s obligations shall not be affected by any circumstances,
whether or not referred to in this Guaranty, which might otherwise constitute a
legal or equitable discharge of a surety or a guarantor. Guarantor hereby waives
the benefits of any right of discharge under any and all statutes or other laws
relating to guarantors or sureties and any other rights of sureties and
guarantors thereunder. Without limiting the generality of the foregoing,
Guarantor hereby waives, to the fullest extent permitted by law, diligence in
collecting the Indebtedness, presentment, demand for payment, protest, all
notices with respect to the Note, the Loan Agreement, this Guaranty, or any
other Loan Document which may be required by statute, rule of law or otherwise
to preserve Lender’s rights against Guarantor under this Guaranty, including,
but not limited to, notice of acceptance, notice of any amendment of the Loan
Documents, notice of the occurrence of any default, notice of intent to
accelerate, notice of acceleration, notice of dishonor, notice of foreclosure,
notice of protest, and notice of the incurring by Borrower of any obligation or
indebtedness. Guarantor also waives, to the fullest extent permitted by law, all
rights to require Lender to (a) proceed against Borrower or any other
guarantor of Borrower’s payment or performance with respect to the Indebtedness
(an “Other
Guarantor”),
(b) if Borrower or any Other Guarantor is a partnership, proceed against
any general partner of Borrower or the Other Guarantor, (c) proceed against
or exhaust any collateral held by Lender to secure the repayment of the
Indebtedness, (d) pursue any other remedy it may now or hereafter have
against Borrower (or, if Borrower is a partnership, any general partner of
Borrower) or (e) resort to any other means of obtaining payment of Guarantor’s
obligations under this Guaranty. 

     

    
      
        
        

      

      
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    6.  Guarantor
understands that the exercise by Lender of certain rights and remedies contained
in the Loan Agreement and the Instrument (such as a nonjudicial foreclosure
sale) may affect or eliminate Guarantor’s right of subrogation against Borrower
and that Guarantor may therefore incur a partially or totally nonreimbursable
liability under this Guaranty. Nevertheless, Guarantor hereby authorizes and
empowers Lender to exercise, in its sole and absolute discretion, any right or
remedy, or any combination thereof, which may then be available, since it is the
intent and purpose of Guarantor that the obligations under this Guaranty shall
be absolute, independent and unconditional under any and all circumstances.
Guarantor expressly waives any defense (which defense, if Guarantor had not
given this waiver, Guarantor might otherwise have) to a judgment against
Guarantor by reason of a judicial or nonjudicial foreclosure. Without limiting
the generality of the foregoing, Guarantor hereby expressly waives any and all
benefits under any applicable law which, if Guarantor had not given this waiver,
(i) would otherwise limit Guarantor’s liability after a foreclosure sale to
the difference between the obligations of Guarantor under this Guaranty and the
fair market value of the property or interests sold at such nonjudicial
foreclosure sale, (ii) would otherwise limit Lender’s right to recover a
deficiency judgment after a foreclosure sale, and (iii) would otherwise
require Lender to exhaust all of its security before a personal judgment could
be obtained for a deficiency. Notwithstanding any foreclosure of the lien of the
Instrument, whether by the exercise of the power of sale contained in the
Instrument, by an action for judicial foreclosure or by Lender’s acceptance of a
deed in lieu of foreclosure, Guarantor shall remain bound under this Guaranty.
Guarantor waives all rights and defenses that Guarantor may have because
Borrower’s obligations are secured by real property. This means, among other
things:

     

    
      
        
        

      

      
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    (a)  Lender
may collect from Guarantor without first foreclosing on any real or personal
property collateral pledged by Borrower or others; and

     

    (b)  If Lender
forecloses on any real property collateral pledged by Borrower or others:
(i) the amount of the debt may be reduced only by the price for which that
collateral is sold at the foreclosure sale, even if the collateral is worth more
than the sale price; and (ii) Lender may collect from Guarantor even if
Lender, by foreclosing on the real property collateral, has destroyed any right
Guarantor may have to collect from Borrower.

     

    This is
an unconditional and irrevocable waiver of any rights and defenses that
Guarantor may have because Borrower’s obligations are secured by real
property.

     

    7.  Guarantor
also waives any right or defense based upon an election of remedies by Lender,
even though such election (e.g.,
nonjudicial foreclosure with respect to any collateral held by Lender to secure
repayment of the Indebtedness) destroys or otherwise impairs the subrogation
rights of Guarantor or the right of Guarantor (after payment of the obligations
guaranteed by Guarantor under this Guaranty) to proceed against Borrower for
reimbursement, or both.

     

    8.  Guarantor
shall have no right to assert or exercise, or attempt to assert or exercise, and
hereby waives any right to assert or attempt to assert any claim for,
subrogation, reimbursement, indemnification, and contribution against Borrower
and against any general partner, member or other constituent of Borrower, and
against any other person or any collateral or security for the Indebtedness,
until the Indebtedness has been indefeasibly paid and satisfied in full, all
obligations owed to Lender under the Loan Documents have been fully performed,
and Lender has released, transferred or disposed of all of its right, title and
interest in such collateral or security, and there has expired the maximum
possible period thereafter during which any payment made by Borrower or others
to Lender with respect to the Indebtedness could be deemed a preference under
the United States Bankruptcy Code (the “Code”).

     

    9.  It is the
intention of the parties that Guarantor shall not be deemed a “creditor” or
“creditors” (as defined in Section 101 of the Code) of Borrower, or any Other
Guarantor, by reason of the existence of this Guaranty, in the event that
Borrower or any Other Guarantor becomes a debtor in any proceeding under the
Code, and in connection herewith, Guarantor hereby waives any such right as a
“creditor” under the Code. After the Indebtedness has been satisfied in full,
this waiver shall be deemed terminated.

     

    10.  At any
time or from time to time and any number of times, without notice to Guarantor
and without affecting the liability of Guarantor hereunder, (a) the time
for payment of the principal of or interest on the Indebtedness may be extended
or the Indebtedness may be renewed in whole or in part; (b) the time for
Borrower’s performance of or compliance with any covenant or agreement contained
in the Note, the Loan Agreement, the Instrument or any other Loan Document,
whether presently existing or hereinafter entered into, may be extended or such
performance or compliance may be waived; (c) the maturity of the
Indebtedness may be accelerated as provided in the Note, the Loan Agreement, the
Instrument, or any other Loan Document; (d) the Note, the Loan Agreement,
the Instrument, or any other Loan Document may be modified or amended by Lender
and Borrower in any respect, including, but not limited to, an increase in the
principal amount; and (e) any security or guaranty for the Indebtedness may
be modified, exchanged, surrendered or otherwise dealt with or additional
security may be pledged or mortgaged for the Indebtedness.

     

    
      
        
        

      

      
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    11.  If more
than one person executes this Guaranty, the obligations of those persons under
this Guaranty shall be joint and several. Lender, in its sole and absolute
discretion, may (a) bring suit against Guarantor, or any one or more of the
persons constituting Guarantor, and any Other Guarantor, jointly and severally,
or against any one or more of them; (b) compromise or settle with any one
or more of the persons constituting Guarantor for such consideration as Lender
may deem proper; (c) release one or more of the persons constituting
Guarantor, or any Other Guarantor, from liability; and (d) otherwise deal
with Guarantor and any Other Guarantor, or any one or more of them, in any
manner, and no such action shall impair the rights of Lender to collect from
Guarantor any amount guaranteed by Guarantor under this Guaranty. Nothing
contained in this paragraph shall in any way affect or impair the rights or
obligations of Guarantor with respect to any Other Guarantor.

     

    12.  Any
indebtedness of Borrower held by any Guarantor now or in the future is and shall
be subordinated to the Indebtedness and any such indebtedness of Borrower shall
be collected, enforced and received by such Guarantor, as trustee for Lender,
but without reducing or affecting in any manner the liability of Guarantor under
the other provisions of this Guaranty.

     

    13.  If any
payment by Borrower is held to constitute a preference under any applicable
bankruptcy, insolvency, or similar laws, or if for any other reason Lender is
required to refund any sums to Borrower, such refund shall not constitute a
release of any liability of Guarantor under this Guaranty. It is the intention
of Lender and Guarantor that Guarantor’s obligations under this Guaranty shall
not be discharged except by Guarantor’s performance of such obligations and then
only to the extent of such performance.

     

    14.  Guarantor
shall from time to time, upon request by Lender, deliver to Lender such
financial statements as Lender may reasonably require.

     

    15.  Guarantor
represents and warrants to Lender as follows:

     

    (a)  Guarantor
is an affiliate of Borrower, is the owner of a direct or indirect interest in
Borrower, and has received, or will receive, direct or indirect benefit from the
making of this Guaranty.

     

    (b)  Guarantor
is familiar with, and has independently reviewed books and records regarding,
the financial condition of Borrower and is familiar with the value of any and
all collateral intended to be created as security for the payment of the Note;
however, Guarantor is not relying on such financial condition or the collateral
as an inducement to enter into this Guaranty.

     

    (c)  Neither
Lender nor any other party has made any representation, warranty or statement to
Guarantor in order to induce Guarantor to execute this Guaranty.

     

    
      
        
        

      

      
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    (d)  As of the
date hereof, and after giving effect to this Guaranty and the contingent
obligation evidenced hereby, Guarantor is, and will be, solvent, and has and
will have assets which, fairly valued, exceed its obligations, liabilities
(including contingent liabilities) and debts, and has and will have property and
assets sufficient to satisfy and repay its obligations and
liabilities.

     

    (e)  All
representations and warranties made by Guarantor herein shall survive the
execution hereof.

     

    (f)  Guarantor
has examined all of the Loan Documents.

     

    (g)  Except as
otherwise disclosed to Lender, there are no proceedings pending or, so far as
Guarantor knows, threatened before any court or administrative agency which, if
decided adversely to Guarantor, would materially adversely affect the financial
condition of Guarantor or the authority of Guarantor to enter into, or the
validity or enforceability of, this Guaranty.

     

    (h)  Guarantor
has filed all required federal, state and local tax returns and has paid all
taxes as shown on such returns as they have become due. No claims have been
assessed and are unpaid with respect to such taxes.

     

    (i)  This
Guaranty has been duly authorized, executed and delivered by Guarantor and
constitutes the valid and binding obligation of Guarantor, and is enforceable
against Guarantor in accordance with its terms. No approval, consent, order or
authorization of any governmental authority and no designation, registration,
declaration or filing with any governmental authority is required in connection
with the execution and delivery of this Guaranty by Guarantor. Guarantor has no
defense or offset to the enforcement of this Guaranty. The execution and
delivery of this Guaranty will not violate or contravene in any way the articles
of incorporation or bylaws or partnership agreement, articles of organization or
operating agreement, as the case may be, of Guarantor or any indenture,
agreement or instrument to which Guarantor is a party or by which it or its
property may be bound, or be in conflict with, result in a breach of or
constitute a default under any such indenture, agreement or other instrument,
result in the creation or imposition of any lien, charge or encumbrance of any
nature whatsoever upon any of the property or assets of Guarantor, except as
contemplated by the provisions of the Loan Documents, and no action or approval
with respect thereto by any third person is required.

     

    16.  Lender
may assign its rights under this Guaranty in whole or in part and, upon any such
assignment, all the terms and provisions of this Guaranty shall inure to the
benefit of such assignee to the extent so assigned. The terms used to designate
any of the parties herein shall be deemed to include the heirs, legal
representatives, successors and assigns of such parties; and the term “Lender”
shall include, in addition to Lender, any lawful owner, holder or pledgee of the
Note.

     

    17.  This
Guaranty and the other Loan Documents represent the final agreement between the
parties and may not be contradicted by evidence of prior, contemporaneous or
subsequent oral agreements. There are no unwritten oral agreements between the
parties. All prior or contemporaneous agreements, understandings,
representations, and statements, oral or written, are merged into this Guaranty
and the other Loan Documents. Guarantor acknowledges that it has received copies
of the Note, the Loan Agreement, the Instrument and all other Loan Documents.
Neither this Guaranty nor any of its provisions may be waived, modified,
amended, discharged, or terminated except by an agreement in writing signed by
the party against which the enforcement of the waiver, modification, amendment,
discharge, or termination is sought, and then only to the extent set forth in
that agreement.

     

    
      
        
        

      

      
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    18.  Lender
may, at any time, sell, transfer or assign the Note, the Loan Agreement, the
Instrument and the Loan Documents, or any part thereof, 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”). In
connection with any of the foregoing, promptly following request from Lender,
Guarantor shall furnish and certify as true and complete, such information
concerning Guarantor as Lender may reasonably request. Without limitation,
Guarantor agrees that it will be reasonable to request (and Guarantor shall
furnish) resumes, financial statements, tax returns, key principal
questionnaires, and credit reports. Guarantor authorizes Lender to forward the
same to any purchaser, transferee, assignee, servicer, participant, investor in
such Securities or any rating agency rating such Securities (singularly, an
“Investor,” and
collectively, the “Investors”) and
each prospective Investor.

     

    19.  No
failure to exercise, and no delay in exercising, on the part of Lender, any
right hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right. The rights of Lender hereunder shall be in addition
to all other rights provided by law. No modification or waiver of any provision
of this Guaranty, nor consent to departure therefrom, shall be effective unless
in writing and no such consent or waiver shall extend beyond the particular case
and purpose involved. No notice or demand given in any case shall constitute a
waiver of the right to take other action in the same, similar or other instances
without such notice or demand.

     

    20.  Any
notice, demand, statement, request or consent made hereunder shall be in writing
and shall be deemed to be received by the addressee on the day such notice is
tendered to a nationally recognized overnight delivery service or on the third
day following the day such notice is deposited with the United States Postal
Service first class certified mail, return receipt requested, in either
instance, addressed to the address, as set forth below, of the party to whom
such notice is to be given, or to such other address as either party shall in
like manner designate in writing. The addresses of the parties hereto are as
follows:

     

    Guarantor:

     

    Lightstone
Holdings LLC

    326 Third
Street

    Lakewood,
New Jersey 08701

    Attention:
David Lichtenstein

     

    
      
        
        

      

      
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    With a
copy to:

    

    Herrick,
Feinstein LLP 

    2 Park
Avenue 

    New York,
New York 10016

    Attention:
Sheldon Chanales, Esq.

     

    Lender:

     

    Citigroup
Global Markets Realty Corp.

    388
Greenwich Street, 19th Floor

    New York,
New York 10013 

    Attn:
Mortgage Loan Department

     

    21.  Guarantor
agrees that this Guaranty and the obligations arising hereunder shall be
governed by and construed in accordance with the laws of the State of New York
(“State of
Jurisdiction”) and
any applicable laws of the United States of America. The state and federal
courts and authorities with jurisdiction in the State of Jurisdiction shall have
exclusive jurisdiction over all controversies which shall arise under or in
relation to this Guaranty. Guarantor irrevocably consents to service,
jurisdiction, and venue of such courts for any litigation and waives any other
venue to which it might be entitled by virtue of domicile, habitual residence or
otherwise.

     

    22.  GUARANTOR AND LENDER EACH
(A) AGREES NOT TO ELECT A TRIAL BY JURY WITH RESPECT TO ANY ISSUE ARISING
OUT OF THIS GUARANTY OR THE RELATIONSHIP BETWEEN THE PARTIES AS GUARANTOR AND
LENDER THAT IS TRIABLE OF RIGHT BY A JURY AND (B) WAIVES ANY RIGHT TO TRIAL
BY JURY WITH RESPECT TO SUCH ISSUE TO THE EXTENT THAT ANY SUCH RIGHT EXISTS NOW
OR IN THE FUTURE. THIS WAIVER OF RIGHT TO TRIAL BY JURY IS SEPARATELY GIVEN BY
EACH PARTY, KNOWINGLY AND VOLUNTARILY, WITH THE BENEFIT OF COMPETENT LEGAL
COUNSEL.

     

    [SIGNATURE
PAGE FOLLOWS]

    
      
        
        

      

      
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    IN WITNESS WHEREOF,
Guarantor has executed and delivered this Guaranty as of the date first written
above.

    
      	 	 	 
	 	
              GUARANTOR:

            
	 	 
	 	
              LIGHTSTONE
      HOLDINGS LLC, a Delaware

              limited
      liability company  

            
	 
 	 
 	 
 
	
            	By:  	 /s/ David
      LichtensteinUnassociated Document

    EXHIBIT 10.18

     

    CONDITIONAL ASSIGNMENT OF MANAGEMENT
AGREEMENT

     

    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, 326 Third Street, Lakewood, New Jersey 08701
(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 388
Greenwich Street, 19th Floor,
New York, New York 10013
(“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/ David
      Lichtenstein
	 	 Name:	David
      Lichtenstein
	 	 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/ David
      Lichtenstein
	 	 Name:	David
      Lichtenstein
	 	 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/ David
      Lichtenstein
	 	 Name:	David
      Lichtenstein
	 	 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/ David
      Lichtenstein
	 	 Name:	David
      Lichtenstein
	 	 Title:	President

                    

                         

                  

                

              

            

          

        

      

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

     

    EXHIBIT A

     

    Management
Agreement

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