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HomeMy WebLinkAboutC6 Reading File 4- Assignment of Hotel Management Agreement CONDITIONAL ASSIGNMENT OF HOTEL MANAGEMENT AGREEMENT THIS CONDITIONAL ASSIGNMENT OF HOTEL MANAGEMENT AGREEMENT (this “Assignment”) is made as of __________, 201__, by GARDEN STREET SLO PARTNERS, L.P., a California limited partnership, having its principal place of business at c/o Westpac Investments, LLC, 895 Aerovista Place, Suite 100, San Luis Obispo, CA 93401, as grantor (“Borrower” ) to THE CITY OF SAN LUIS OBISPO, a municipal corporation and charter city with an address of 990 Palm Street, San Luis Obispo, CA 93401 Attention: Katie Lichtig, City Manager, as beneficiary (together with its successors and assigns, “Lender”) and is acknowledged and consented to by _________________________________, a _______________________________ having an address at _________________________________________ (together with its successors and assigns, “Hotel Manager”). RECITALS: A. Borrower by that certain Promissory Note of even date herewith given to Lender (the note together with all extensions, renewals, modifications, substitutions, replacements, restatements and amendments thereof shall collectively be referred to as the “Note”) is indebted to Lender in the principal sum of up to Five Hundred Thousand Dollars ($500,000.00) in lawful money of the United States of America, with interest from the date thereof at the rates set forth in the Note (the indebtedness evidenced by the Note, together with such interest accrued thereon, shall collectively be referred to as the “Loan”), principal and interest to be payable in accordance with the terms and conditions provided in the Note and the Security Instrument (defined below). B. The Loan is secured by, among other things, a certain Deed of Trust, Assignment of Leases and Rents, Security Agreement and Fixture Filing (together with any and all extensions, renewals, substitutions, replacements, amendments, modifications and/or restatements thereof, the “Security Instrument”), dated as of the date hereof, which grants Lender a lien on the property encumbered thereby (the “Property”). The Note, the Security Instrument, this Assignment and any and all documents now or hereafter executed by Borrower and/or others and by or in favor of Lender, which state that they wholly or partially secure or guarantee payment of the Note or are otherwise executed and/or delivered in connection with the Loan, together with any and all extensions, renewals, substitutions, replacements, amendments, modifications and/or restatements thereof, are referred to as the “Loan Documents.” All capitalized terms not otherwise defined herein have the meanings set forth in the Note or in the Security Instrument. C. Pursuant to that certain ______________________________ dated as of ___________________________________, between Borrower and Hotel Manager (the “Hotel Management Agreement”) (a true and correct copy of which Hotel Management Agreement is attached hereto as Exhibit A), Borrower employed Hotel Manager exclusively to rent, lease, operate and manage the hotel located on the Property. D. Lender requires as a condition to the making of the Loan that Borrower assign the Hotel Management Agreement as set forth below. -2- AGREEMENT: For good and valuable consideration the parties hereto agree as follows: 1. Assignment of Hotel Management Agreement. As additional collateral security for the Loan, Borrower hereby conditionally transfers, sets over and assigns to Lender all of Borrower’s right, title and interest in and to the Hotel Management Agreement, said transfer and assignment to automatically become a present, unconditional assignment, at Lender’s option exercised by written notice to Borrower and Hotel Manager, upon the occurrence and during the continuance of event of default under the Note, the Security Instrument or any of the other Loan Documents, or under the Environmental Indemnity. After exercise of Lender’s rights under this Paragraph 1, Hotel Manager shall, subject to the terms and conditions contained herein, continue to provide management services in accordance with, and to the extent provided for in, the Hotel Management Agreement. 2. Termination. At such time as the Loan is paid in full, Lender shall cause the Security Instrument to be released of record, and this Assignment and all of Lender’s right, title and interest hereunder with respect to the Hotel Management Agreement shall terminate. 3. Borrower’s Covenants. Borrower hereby covenants with Lender that during the term of this Assignment: (a) Borrower shall not transfer the responsibility for the management of hotel located on the Property from Hotel Manager to any other person or entity without prior written notification to Lender and, to the extent required pursuant to the terms of the Security Instrument and the other Loan Documents, the prior written consent of Lender, which consent shall not be unreasonably withheld, conditioned or delayed; (b) Borrower shall not terminate or amend any of the terms or provisions of the Hotel Management Agreement in any material respect without the prior written consent of Lender, which consent shall not be unreasonably withheld, conditioned or delayed; and (c) Borrower shall, in the manner provided for in this Assignment, give notice to Lender of any notice or information that Borrower receives which indicates that Hotel Manager is terminating the Hotel Management Agreement or that Hotel Manager is otherwise discontinuing its management of the Property. 4. Agreement by Borrower and Hotel Manager. Borrower and Hotel Manager hereby agree that upon the occurrence and during the continuance of an event of default, at the option of Lender exercised by written notice to Borrower and Hotel Manager, all rents, security deposits, issues, proceeds and profits of the Property collected by Hotel Manager, 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 Hotel Management Agreement), shall be held, at Lender’s election, by Hotel Manager, or by a receiver or other designee of Lender, and applied to the obligations of Borrower under the Loan Documents in accordance with the Deed of Trust and applicable law. 5. Lender’s Right to Replace Hotel Manager. Borrower, upon the request of Lender, shall terminate the Hotel Management Agreement and replace Hotel Manager, without penalty or fee, if at any time during the Loan: (a) Hotel Manager shall become insolvent or a debtor in (i) any involuntary bankruptcy or insolvency proceeding that is not dismissed within -3- ninety (90) days of the filing thereof, or (ii) any voluntary bank ruptcy or insolvency proceeding; (b) there exists an event of default which remains uncured and is continuing; (c) there exists a default by Hotel Manager beyond all applicable notice and cure periods under the Hotel Management Agreement. At such time as Hotel Manager may be removed pursuant to this Paragraph 5, a Qualified Hotel Manager shall assume management of the Property and shall receive a property management fee not to exceed then current market rates. The term “Qualified Hotel Manager” as used herein shall mean a reputable and experienced professional hotel management organization approved by Lender. 6. Subordination of Hotel Management Agreement and Management Fees. Borrower and Hotel Manager hereby agree that at all times prior to the termination of this Assignment, the Hotel Management Agreement shall be subordinate, inferior and subject to the lien, payment priority and terms of this Assignment, the Note, the Security Instrument and the other Loan Documents. Borrower and Hotel Manager further agree that Hotel Manager shall not be entitled to receive any fee, commission or other amount payable to Hotel Manager under the Hotel Management Agreement (including, without limitation, incentive management fees, if any) for and during any period of time that an Event of Default has occurred and is continuing; provided, however, that Hotel Manager shall not be obligated to return or refund to Lender any fee, commission or other amount already received by Hotel Manager, and to which Hotel Manager was entitled under this Assignment. 7. Consent and Agreement by Hotel Manager. Hotel Manager hereby acknowledges and consents to this Assignment and agrees that Hotel Manager will act in conformity with the provisions of this Assignment and Lender’s rights hereunder or otherwise related to the Hotel Management Agreement. In the event that the responsibility for the management of the Property is transferred from Hotel Manager in accordance with the provisions hereof, Hotel Manager 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 Hotel Management Agreement is terminated. Further, Hotel Manager hereby agrees (a) not to contest or impede the exercise by Lender of any right it has under or in connection with this Assignment; and (b) that it shall, in the manner provided for in this Assignment, give at least thirty (30) days’ prior written notice to Lender of its intention to terminate the Hotel Management Agreement or otherwise discontinue its management of the Property. 8. GOVERNING LAW. THIS ASSIGNMENT SHALL BE DEEMED TO BE A CONTRACT ENTERED INTO PURSUANT TO THE LAWS OF THE STATE OF CALIFORNIA AND APPLICABLE LAWS OF THE UNITED STATES OF AMERICA. 9. Notices. All notices required or permitted hereunder shall be given and shall become effective as provided in the Deed of Trust. All notices to Hotel Manager shall be addressed as follows: __________________________ __________________________ -4- __________________________ Attention: Email: 10. No Oral Change. This Assignment, and any provisions hereof, may not be modified, amended, waived, extended, changed, discharged or terminated orally or by any act or failure to act on the part of Borrower or Lender, but only by an agreement in writing signed by the party against whom enforcement of any modification, amendment, waiver, extension, change, discharge or termination is sought. 11. Liability. If Borrower consists of more than one person, the obligations and liabilities of each such person hereunder shall be joint and several. This Assignment shall be binding upon and inure to the benefit of Borrower, Hotel Manager and Lender and their respective successors and assigns forever. 12. Inapplicable Provisions. If any term, covenant or condition of this Assignment is held to be invalid, illegal or unenforceable in any respect, this Assignment shall be construed without such provision. 13. Headings, etc. The headings and captions of various paragraphs of this Assignment are for convenience of reference only and are not to be construed as defining or limiting, in any way, the scope or intent of the provisions hereof. 14. Duplicate Originals; Counterparts. This Assignment may be executed in any number of duplicate originals and each duplicate original shall be deemed to be an original. This Assignment may be executed in several counterparts, each of which counterparts shall be deemed an original instrument and all of which together shall constitute a single Assignment. The failure of any party hereto to execute this Assignment, or any counterpart hereof, shall not relieve the other signatories from their obligations hereunder. 15. Number and Gender. Whenever the context may require, any pronouns used herein shall include the corresponding masculine, feminine or neuter forms, and the singular form of nouns and pronouns shall include the plural and vice versa. 16. Miscellaneous. Wherever pursuant to this Assignment it is provided that Borrower pay any costs and expenses, such costs and expenses shall include, but not be limited to, reasonable legal fees and disbursements of Lender, whether with respect to retained firms, the reimbursement for the expenses of in-house staff or otherwise. [NO FURTHER TEXT ON THIS PAGE] -5- IN WITNESS WHEREOF, the undersigned have executed this Assignment as of the date and year first written above. BORROWER: GARDEN STREET SLO PARTNERS, L.P., a California limited partnership By: Downtown Investors, LLC, a California limited liability company, its general partner By Hamish Marshall, its Manager LENDER: CITY OF SAN LUIS OBISPO, a municipal corporation and charter city By:_________________________________ Name: Title: HOTEL MANAGER: ____________________________________ By:_________________________________ Name: Title: EXHIBIT A -1- EXHIBIT A HOTEL MANAGEMENT AGREEMENT (attached hereto)