Simmons Pet Food, Inc.: Subordination of Consent Rights Under Development Agreement_InitiateCity of Dubuque
City Council Meeting
Copyrighted
July 19, 2021
Items to be set for Public Hearing # 1.
ITEM TITLE: Simmons Pet Food, Inc.: Subordination of Consent Rights Under
Development Agreement, Payment Direction and Estoppel Certificate
SUMMARY: City Manager recommending that a public hearing be set for August 2,
2021 to consider City Council approval of the Subordination of Consent
Rights under the Development Agreement with Simmons Pet Food, I nc.
SUGGESTED
DISPOSITION:
ATTACHMENTS:
Description
RESOLUTION I ntent to dispose of an interest in real property by
Subordination of Consent Rights Under Development Agreement,
Payment Direction and Estoppel Certificate with Simmons Pet Foods,
I nc.
Receive and File; Adopt Resolution(s), Set Public Hearing for August 2,
2021 Suggested Disposition:
Simmons Consent top Subordination- MVM Memo
Simmons Pet Food Inc Memo
Resolution
Type
City Manager Memo
Staff Memo
Resolutions
Subordination Supporting Documentation
Dubuque
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TO: The Honorable Mayor and City Council Members
FROM: Michael C. Van Milligen, City Manager
SUBJECT: Simmons Pet Food, Inc.: Subordination of Consent Rights Under
Development Agreement, Payment Direction and Estoppel Certificate
DATE: July 14, 2021
City Attorney Crenna Brumwell recommends City Council approval of the subordination
of Consent Rights under the Development Agreement with Simmons Pet Food, Inc.
Simmons Pet Food, Inc.'s lenders have made or are contemplating a loan to Simmons
evidenced by a Credit Agreement secured by, among other security, a certain Real
Property Mortgage and Assignment of Leases and Rents (the Mortgage) encumbering
Lot 4.
Simmons has asked the City to subordinate the City's consent rights under Section 6.10
to the Mortgage pursuant to the Subordination of Consent Rights Under Development
Agreement, Payment Direction and Estoppel Certificate.
The Subordination of Consent Rights does not waive the City's rights to exercise any of
the City's default rights in the Amended and Restated Development Agreement with
respect to Lot 4, Lot 5 or Lot 5A. With respect to the City's rights under the Amended
and Restated Development Agreement, the City will remain in the same security
position it would be in as if it had not agreed to the Subordination of Consent Rights, but
subject to the priority of the Mortgage.
I concur with the recommendation and respectfully request Mayor and City Council
approval.
Mic ael C. Van Milligen
MCVM:jh
Attachment
cc: Crenna Brumwell, City Attorney
Cori Burbach, Assistant City Manager
THE CITY OF
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CRENNA M. BRUMWELL ESQ.
CITY ATTORNEY
To: Michael C. Van Milligen
City Manager
DATE: July 14, 2021
RE: Simmons Pet Food, Inc.: Subordination of Consent Rights Under
Development Agreement, Payment Direction and Estoppel Certificate
Simmons Pet Food, Inc. (Simmons) and the City of Dubuque, Iowa entered into an
Amended and Restated Development Agreement, dated for reference purposes the 17tn
day of December, 2020, for Lot 4, Lot 5 and Lot 5A of Dubuque Industrial Center South
First Addition in the City of Dubuque, Iowa.
Lot 4, Lot 5 and Lot 5A are referred to in the Amended and Restated Development
Agreement as "the Property." Simmons acquired Lot 4 from Flexsteel Industries, Inc. Lots
5 and 5A were purchased from the City.
The Amended and Restated Development Agreement between the City and
Simmons Pet Foods, Inc. (Simmons) provides in Section 6.10 as follows:
6.10 Transferability. During the Term of this Agreement, this Agreement
may not be assigned and the Property and any portion of the Property may
not be sold or otherwise transferred by Developer without the prior written
consent of City in City's sole discretion. City has no obligation to consent to
any assignment or sale.
Simmons' lenders have made or are contemplating a loan to Simmons evidenced
by a Credit Agreement secured by, among other security, a certain Real Property
Mortgage and Assignment of Leases and Rents (the Mortgage) encumbering Lot 4.
Simmons has asked the City to subordinate the City's consent rights under Section
6.10 to the Mortgage pursuant to the attached Subordination of Consent Rights Under
Development Agreement, Payment Direction and Estoppel Certificate.
05052021BAL
OFFICE OF THE CITY ATTORNEY DUBUQUE, IOWA
SUITE 330, HARBOR VIEW PLACE, 300 MAIN STREET DUBUQUE, IA 52001-6944
TELEPHONE (563) 589-4381 / FAx (563) 583-1040 / EMAIL cbrumwel@cityofdubuque.org
Because the Simmons' Credit Agreement and Mortgage include confidential and
proprietary financial information related to many of the Simmons' properties, Senior
Counsel Barry Lindahl and I have reviewed the Credit Agreement and Mortgage pursuant
to a confidentiality agreement. The Credit Agreement and Mortgage will not be included
as an agenda item.
The Mortgage provides that upon default by Simmons, Simmons' lenders may take
certain actions with respect to secured property —Lot 4, including foreclosing the
Mortgage, requesting the appointment of a receiver, and selling Lot 4. These are standard
mortgage terms. Section 6.10 of the Amended and Restated Development Agreement
would require the City of Dubuque to consent to any such actions. The Subordination of
Consent Rights would waive the requirement of such consent for Lot 4.
The Subordination of Consent Rights does not waive the City's rights to exercise
any of the City's default rights in the Amended and Restated Development Agreement
with respect to Lot 4, Lot 5 or Lot 5A. With respect to the City's rights under the Amended
and Restated Development Agreement, the City will remain in the same security position
it would be in as if it had not agreed to the Subordination of Consent Rights, but subject
to the priority of the Mortgage.
The Subordination of Consent Rights also provides that in the event of a default
under the Mortgage, the City will be required to make the Economic Development Grants
due to Simmons under the Amended and Restated Development Agreement to the entity
as directed by Simmons' lenders.
Finally, the Subordination of Consent Rights requires the City to state that there is
no uncured default or breach by Simmons under the Amended and Restated
Development Agreement.
We approve the Subordination of Consent Rights Under Development Agreement,
Payment Direction and Estoppel Certificate and recommend that it be submitted to the
City Council for approval at the required public hearing.
2
Prepared by Barry A. Lindahl 300 Main Street Suite 330 Dubuque IA 52001 563 583-41 13
RESOLUTION NO. 253-21
INTENT TO DISPOSE OF AN INTEREST IN REAL PROPERTY BY SUBORDINATION
OF CONSENT RIGHTS UNDER DEVELOPMENT AGREEMENT, PAYMENT
DIRECTION AND ESTOPPEL CERTIFICATE WITH SIMMONS PET FOODS, INC.
WHEREAS, the City of Dubuque, Iowa (City) entered into an Amended and Restated
Development Agreement (the Agreement) with Simmons Pet Foods, Inc. (Simmons) for
the property legally described as follows:
Lot 4, Lot 5 and Lot 5A of Dubuque Industrial Center South First Addition in
the City of Dubuque, Iowa
(the Property); and
WHEREAS, the Agreement between City and Simmons provides in Section 6.10
as follows:
6.10 Transferability. During the Term of this Agreement, this Agreement
may not be assigned and the Property and any portion of the Property may
not be sold or otherwise transferred by Developer without the prior written
consent of City in City's sole discretion. City has no obligation to consent to
any assignment or sale.
; and
WHEREAS, Simmons has requested that City subordinate City's consent rights
under Section 6.10 to Simmons' Mortgage pursuant to the attached Subordination of
Consent Rights Under Development Agreement, Payment Direction and Estoppel
Certificate attached hereto; and
WHEREAS, the Simmons' Mortgage and the Subordination of Consent Rights
Under Development Agreement, Payment Direction and Estoppel Certificate have been
reviewed and approved by the City Attorneys Office; and
WHEREAS, the City Council of City believes it is in the best interests of City to approve
the Subordination of Consent Rights Under Development Agreement, Payment Direction
and Estoppel Certificate.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF
DUBUQUE, IOWA:
Section 1. The City Council of City, intends to dispose of City's interest in the
foregoing -described real property pursuant to the Subordination of Consent Rights Under
Development Agreement, Payment Direction and Estoppel Certificate.
Section 2. The City Clerk is hereby authorized and directed to cause this Resolution
and a Notice to be published as prescribed by Iowa Code §364.7 of a public hearing on
City's intent to dispose of the foregoing -described real property, to be held on the 2nd day of
August, 2021, at 6:30 o'clock p.m. in the City Council Chambers at the Historic Federal
Building, 350 W. 61h Street, Dubuque, Iowa
Passed, approved and adopted this 19M day of July, 2021.
C1!
Roy D. ol, Mayor
Attest:
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Trish L. Gleason, Assistant City Clerk
SUBORDINATION OF CONSENT RIGHTS UNDER DEVELOPMENT AGREEMENT,
PAYMENT DIRECTION AND ESTOPPEL CERTIFICATE
This Subordination of Consent Rights under Development Agreement, Payment
Direction and Estoppel Certificate (the "Agreement") is made this FX day of July, 2021, by
and between the City of Dubuque, Iowa, a municipality ("City") and Simmons Pet Food, Inc., an
Arkansas corporation ("Developer").
RECITALS
City and Flexsteel Industries, Inc. (predecessor in interest to Simmons Pet Food,
Inc.) are parties to that certain Development Agreement dated June 5, 2017 (as
amended, the "Development Agreement") pertaining to that certain real property
commonly known as 501 Seippel Road, Dubuque, Iowa and legally described on
Exhibit A hereto (the "Premises"). Capitalized terms set forth herein shall have
the meanings ascribed thereto in the Development Agreement.
II. Wells Fargo Bank, National Association, a national banking association, as
Administrative Agent ("Agent"), for certain Lenders (as such term is defined in
the Credit Agreement), have made or are contemplating a loan (the "Loan") to
Developer and certain affiliates thereof evidenced by a Credit Agreement (the
"Credit Agreement") secured by, among other security, a certain Real Property
Mortgage and Assignment of Leases and Rents (the "Mortgage") encumbering
the Premises.
IIl. Agent and Lenders are relying on this Agreement in making the Loan.
IV. NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, the receipt and sufficiency of which are hereby acknowledged,
City and Developer hereby agree and covenant as follows.
AGREEMENTS
City acknowledges and agrees that the consent right (the "Consent Right") in favor
of the City arising under Section 6.10 (Transferability) of the Development
Agreement is and shall at all times be subject and subordinate in all respects to the
Mortgage and all renewals, modifications and extensions thereof. The City further
acknowledges and agrees that the Consent Right is inapplicable and of no force or
effect with respect to a foreclosure of the Mortgage, a deed -in -lieu thereof or the
exercise of any other remedies of Agent and/or Lenders under the Mortgage.
2. City and Developer hereby agree and acknowledge that Agent and Lenders shall not
be deemed to have assumed any of the obligations or liabilities of Developer under
the Development Agreement by reason of this Agreement and Developer further
agrees to indemnify, protect, defend and hold Agent and Lenders harmless from and
against any claims or demands in respect of the Development Agreement or by virtue
of this Agreement.
3. Upon notification from Agent to City that an event of default has occurred under the
Mortgage, City shall thereafter make all Economic Development Grants payments to
Agent or as otherwise directed by Agent. Upon receipt of such notice City shall make
all future payments of Economic Development Grants due Developer under the
Development Agreement to Agent (or at Agent's direction) until notified otherwise in
writing by Agent. Developer, by its execution of this Agreement hereby consents to
such direct payments to Agent (or at Agent's direction) and hereby release and
discharges City from all liability on account of such payments.
4. City agrees to copy Agent on any notice of Developer's default under the
Development Agreement.
5. Estoppel:
a. There are no amendments, supplements or modifications of any kind to the
Development Agreement except as set forth on Schedule I.
b. To the best of City's knowledge, no uncured default or breach by Developer
exists under- the Development Agreement.
6. This Agreement shall be binding upon the parties hereto, and their successors and
assigns. This agreement shall run with the land.
7. This Agreement shall be governed by the laws of the State of Iowa.
8. City and Developer acknowledge and agree that Agent and Lenders and their
respective successors and assigns shall be entitled to rely on the agreements and
certifications set forth herein in connection with the financing of the above referenced
Premises.
[Signature Page to Follow]
2
IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by the
undersigned as of , 2021.
CITY OF DUBUQUE, IOWA
I
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Lo
Roy D. Buol, Mayor
Kevin S. Firnstahl, City Clerk
SIMMONS PET FOOD, INC., an Arkansas
corporation
By:
Name: Kerry L Hairston
Title: Senior Vjce President of Finance and
Treasurer
Signature Page to Subordination of Consent Right
STATE OF ARKANSAS )
) SS
COUNTY OF BENTON )
On this day before me, a Notary Public, duly commissioned, qualified and
acting, personally appeared Kerry L. Hairston, who acknowledged him to be the Senior
Vice President of Finance and Treasurer of Simmons Pet Food, Inc., an Arkansas
corporation, and that he, as such officer, being authorized so do to, executed the
foregoing instrument for the purposes and consideration therein contained by signing
the naive of the corporation by him as such officer.
IN W TNESS WHEREOF, I hereunto set my hand and official seal this
day of , 2021.
My Commission Expires:
RENA ANN SASNETT
Notary Public - Arkansas
Benton County
Commission 8 12399563
My Commission Expires Aug 11]2024wo
Notary ublic
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Acknowledgement Page to Subordination of Consent Right
STATE OF
) SS
COUNTY OF
ACKNOWLEDGMENT
On this day before me, a Notary Public, duly commissioned, qualified and acting,
personally appeared Roy D. Buol, who acknowledged him to be the Mayor of the City of
Dubuque, Iowa and that he, as such officer, being authorized so do to, executed the foregoing
instrument for the purposes and consideration therein contained by signing the name of the city
by him as such officer.
IN WITNESS WHEREOF, I hereunto set my hand and official seal this day of
, 2021.
Notary Public
My Commission Expires:
ACKNOWLEDGMENT
STATE OF
SS
COUNTY OF )
On this day before me, a Notary Public, duly commissioned, qualified and acting,
personally appeared Kevin S. Firnstahl, who acknowledged him to be the City Clerk of the City
of Dubuque, Iowa and that he, as such officer, being authorized so do to, executed the foregoing
instrument for the purposes and consideration therein contained by signing the name of the city
by him as such officer.
IN WITNESS WHEREOF, I hereunto set my hand and official seal this day of
52021.
Notary Public
My Commission Expires:
Acknowledgement Page to Subordination of Consent Right
EXHIBIT A
LEGAL DESCRIPTION
Lot 4 of the Final Plat of Dubuque Industrial Center South First Addition in the City of Dubuque,
Iowa, according to the recorded plat thereof, recorded February 13, 2014, as File Number 2014-
00001397.
I'i
SCHEDULEI
AMENDMENTS AND MODIFICATIONS
Amended Memorandum of Development Agreement recorded on December 21, 2020, as File
Number 202000020396.
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