40 Main LLC_Third Amendment to Development AgreementMasterpiece on the Mississippi
TO: The Honorable Mayor and City Council Members
FROM: Michael C. Van Milligen, City Manager
DATE: October 12, 2010
Currently, the $600,000 in TIF Bond proceeds from this project is structured as a
$300,000 forgivable loan and a $300,000 0% interest loan.
Several conditions have changed to warrant this change:
Dubuque
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SUBJECT: Resolution Authorizing the Third Amendment to the Development
Agreement with 40 Main, LLC and Allow for Refinancing of the Project
Economic Development Director Dave Heiar recommends City Council approval of the
Third Amendment to the Development Agreement with 40 Main, LLC and authorize
agreements to allow for refinancing of the project.
The 40 Main, LLC project is one of the redevelopment projects that has delivered 18
much needed rental units in the downtown area. All of these residential units are
leased. The developers are working on securing a tenant for the first floor of this
building and securing financing for the second phase of the is project, 44 Main, which
will create an additional 24 apartments.
This was the first market rate residential project in which the City had partnered. As the
project continues to evolve, it is necessary to make certain changes to the Development
Agreement. It has been requested to change the $300,000 0% interest loan into a
forgivable loan, making the 10 -Year TIF bond proceeds go directly to the project.
1) The Developer anticipated receiving State Historic Tax Credits at the completion
of the 40 Main project, but the State has decided that these credits will not be
paid until the entire building is completed. This has caused a cash flow problem
for securing conventional funding on the 44 Main project.
2) The Developer is working on securing a commercial tenant for the first floor and
this added assistance will provide financial assistance to secure this tenant to the
downtown area.
3) Changing the loan to a forgivable loan gives the bank more confidence in the
updated proforma and helps assure financing for the second phase of the
project, 44 Main, create an additional 24 apartments in the downtown area.
4) The need for additional rental housing continues and this project began before
the Downtown Housing Incentive Program was created, therefore this project did
not receive a 15 year TIF benefit and $10,000 incentive for each new residential
unit in the Urban Renewal District. This change helps make the City's incentive
more equitable with our current incentives.
I concur with the recommendation and respectfully request Mayor and City Council
approval.
Michael C. Van itligen
MCVM:jh
Attachment
cc: Barry Lindahl, City Attorney
Cindy Steinhauser, Assistant City Manager
David J. Heiar, Economic Development Director
Masterpiece on the Mississippi
TO: Michael Van Milligen, City Manager
FROM: David Heiar, Economic Development Director
SUBJECT: Resolution authorizing the Third Amendment to the Development
Agreement with 40 Main, LLC and allow for refinancing of the project
DATE: October 8, 2010
Dubuque
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INTRODUCTION
This memorandum presents for City Council adoption a resolution approving an
amendment to the Development Agreement with 40 Main LLC, a mixed use
redevelopment of the building at 40 Main Street and allow for refinancing of the project.
BACKGROUND
On January 15, 2009, the City Council approved a Development Agreement with 40
Main, LLC. That Agreement set the terms for the redevelopment of property located at
40 Main Street. The Agreement stipulates the City will provide an Economic
Development Grant and loan to 40 Main, LLC in an amount estimated at $600,000 (half
loan, half grant). The City's intention is to use the Tax Increment revenues from the 40
Main rehabilitation project to retire debt on the Urban Renewal Tax Increment Revenue
Note, which is being used as the tool to provide the Economic Development Grant and
Loan to the Company. The Development Agreement also provides for a $300,000
UDAG 0% loan to 40 Main, LLC.
On June 15, 2009, the City Council held a public hearing on the proposed issuance of
bonds to pay the costs of an urban renewal project in the Greater Downtown Urban
Renewal District, specifically funding an economic development grant and loan to the 40
Main, LLC. 40 Main, LLC negotiated the purchase of the bonds with Premier Bank at
an annual interest rate of 6.5 %.
The City has required that the Company execute a Minimum Assessment Agreement,
and the City pledges only the taxes generated from the new value of the project. There
is no City Guarantee involved.
A second amendment to the Development Agreement was made to convert the
Economic Development grant to a forgivable loan. This change would have no impact
on the City, but has positive tax implications for the developer. Also, the amendment
eliminated interest on the $300,000 TIF loan. After reviewing the pro forma for this
project it became apparent that the developer will have a very marginal cash flow.
DISCUSSION
The 40 Main, LLC project is one of the redevelopment projects that has delivered 18
much needed rental units in the downtown area. All of these residential units are
leased. The developers are working on securing a tenant for the first floor of this
building and securing financing for the second phase of the is project, 44 Main, which
will create an additional 24 apartments.
Currently, the $600,000 in TIF Bond proceeds from this project is structured as a
$300,000 forgivable loan and a $300,000 0% interest loan.
This is the first market rate residential project in which the City has partnered. As the
project continues to evolve, it is necessary to make certain changes to the Development
Agreement. It has been requested to change the $300,000 0% interest loan into a
forgivable loan, making the 10 -Year TIF bond proceeds go directly to the project.
Several conditions have changed to warrant this change:
1) The Developer anticipated receiving State Historic Tax Credits at the completion
of the 40 Main project, but the State has decided that these credits will not be
paid until the entire building is completed. This has caused a cash flow problem
for securing conventional funding on the 44 Main project.
2) The Developer is working on securing a commercial tenant for the first floor and
this added assistance will provide financial assistance to secure this tenant to the
downtown area.
3) Changing the loan to a forgivable loan gives the bank more confidence in the
updated proforma and helps assure financing for the second phase of the
project, 44 Main, create an additional 24 apartments in the downtown area.
4) The need for additional rental housing continues and this project began before
the Downtown Housing Incentive Program was created, therefore this project did
not receive a 15 year TIF benefit and $10,000 incentive for each new residential
unit in the Urban Renewal District. This change helps make the City's incentive
more equitable with our current incentives.
The 40 Main project is also planning to refinance the building with American Trust &
Savings Bank, who will also be the bank for the 44 Main project. To allow the refinance,
the Bank is requesting three documents be approved by the City:
Intercreditor Agreement — This document defines that the Bank has a priority
lien on the building and that the City's loans to the project are subsidiary to the
Bank's lien. This is the same position the City currently has with Premier Bank.
Collateral Assignment of Real Estate Contract — 40 Main has a contract with
the City to purchase the parking area around both the 40 and 44 Main buildings.
American Trust would be able to assume that contract with this agreement.
City's Consent Regarding the Development Agreement — This agreement
outlines that the City will notify the Bank if 40 Main LLC is in default of provisions
in the Development Agreement and offer at least 30 days for the Bank to remedy
the default of the agreement.
RECOMMENDATION /ACTION STEP
I recommend that the City Council approve a resolution authorizing the Third
Amendment to the Development Agreement with 40 Main, LLC and authorize
agreements to allow for refinancing of the project.
Attachment
Prepared /Return to: David Heiar, Economic Development, 50 W. 13 Street, Dubuque, IA 52001 (563) 589 -4393
RESOLUTION NO 414 -10
RESOLUTION APPROVING THE THIRD AMENDMENT TO THE 40 MAIN LLC
DEVELOPMENT AGREEMENT
Whereas, a Development Agreement (the Agreement), dated January 15, 2009,
was entered into by and between the City of Dubuque, a municipal corporation of the
State of Iowa (City), and 40 Main LLC (Developer); and
Whereas, this Development Agreement was amended (First Amendment) on
May 18, 2009; and
Whereas, this Development Agreement was further amended (Second
Amendment) on August 3, 2009; and
Whereas, City and 40 Main LLC now desire to amend the Development
Agreement as set forth attached Third Amendment, and
Whereas, 40 Main LLC desires to refinance the project with American Trust &
Savings Bank (Bank) and the Bank requires certain agreements to be approved.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY
OF DUBUQUE, IOWA:
Section 1. That the Third Amendment of the 40 Main LLC Development
Agreement is hereby approved.
Section 2. That the Mayor is hereby authorized and directed to execute said
Third Amendment on behalf of the City of Dubuque and the City Clerk is authorized and
directed to attest to his signature.
Section 3. That the City Manager is authorized to take such actions as are
necessary to implement the terms of the Third Amendment as herein approved.
Section 4. That the Mayor is authorized to execute the City's Consent
Regarding the Development Agreement.
Section 5. That the City Manager is authorized to execute the Intercreditor
Agreement with the Bank.
Section 6. That the City Manager is authorized to execute the Collateral
Assignment of Real Estate Contract.
At -s
Passed, approved and adopted this 18 day of ectober 2010.
I
Jeanne F. Schneider, City Clerk
F: \USERS \Econ Dev \40 Main \Development Agreement\20101018 40 Main 3rd amendment reso.doc
Roy D. Buol, Mayor
THIRD AMENDMENT
TO
DEVELOPMENT AGREEMENT
BETWEEN
THE CITY OF DUBUQUE
AND 40 MAIN, LLC
The Third Amendment to the Development Agreement, dated for reference
purposes the 19th day of October, 2010, is made and entered into by and
between the City of Dubuque, Iowa (City) and 40 Main, LLC (Developer).
Whereas City and Developer previously entered into a Development Agreement
dated the 15 of January, 2009 (the Development Agreement) and later amended on
May 18, 2009, and again amended on August 3, 2009; and
Whereas the Development Agreement provides in Section 2.1 for Minimum
Improvements less than four million dollars ($4,000,000) to improve the Property
creating eighteen (18) apartments for market -rate rental and seven thousand eight
hundred (7,800) square feet of retail space.
Whereas City and Developer have agreed to amend the Development
Agreement to revise the grant and loan agreements; and
Whereas the parties desire to amend the Development Agreement to set forth
such amendment in writing.
THEREFORE, in consideration of the mutual terms and covenants contained
herein, the parties agree as follows:
1. Section 3.3. Section 3.3 is hereby amended by striking such provision and in
lieu thereof placing the following:
Second Economic Development Loan to Developer.
For and in consideration of Developer's commitments as provided herein,
City agrees (subject to the conditions set forth in this Section) to make an
Economic Development Loan to Developer on the Closing Date or such
other date as the parties shall mutually agree upon in writing ( "Funding
Date "). The Economic Development Loan shall be in the amount of
$300,000.00. The interest rate on the loan shall equal the rate of interest
on the Urban Renewal Tax Increment Revenue Bonds or Notes as
described in Section 3.4. This loan shall be funded solely and only from
the proceeds of the sale of Urban Renewal Tax Increment Revenue
Bonds or Notes by City as described in Section 3.4 hereof, and not from
any other source. The loan shall be repayable in 120 installments, paid
monthly on the first day of each month with the first such payment due on
the 1 day of the 36 month following execution of the Loan documents.
The loan shall be secured by a mortgage and personal guaranties in a
form acceptable to City. There shall be credited against Developer's
obligations for payments of principal and interest due under the loan,
each payment of principal and /or interest made by City to the holder of the
Urban Renewal and Tax Increment Revenue Bonds or Notes, with the
same force and effect as if such payments were made by Developer under
this loan, it being agreed that all such payments under the Urban Renewal
and Tax Increment Bonds or Notes shall be deemed to be and constitute
payments on account of the loan.
2. Except as modified herein, the Development Agreement shall remain in full
force and effect.
CITY OF DU UE, OWA
By: By: 40 main MM, LLC
By
Roy D. Mayor
Jeanne F. Schneider, City Clerk
40 MAIN, LLC
Its managing member
By:
Christopher A. Miller
Its managing member
F: \USERS \Econ Dev \40 Main \Development Agreement\20101008 40 Main Third Amendment to DA.doc
092810ba1
Prepared by and Return To: D. Flint Drake, 1005 Main Street, Suite 200, Dubuque, IA 52001 (563) 582 -2000
INTERCREDITOR AGREEMENT
This Intercreditor Agreement (the "Agreement ") dated as of , 2010, is
entered into by and between AMERICAN TRUST & SAVINGS BANK, an Iowa domestic
bank, and its successors, assigns and participants, if any, ( "Bank ") and THE CITY OF
DUBUQUE, IOWA, an Iowa municipality ( "City ").
RECITALS
A. Bank has entered into that certain Loan Agreement dated as of
(as may be amended, modified, restated, supplemented or extended, the
"Bank Loan Agreement ") with 40 Main, LLC, an Iowa limited liability company, and its
affiliated entities (the "Borrower "). Pursuant to the Bank Loan Agreement, Bank will make
certain loans to Borrower secured by a lien on the assets of Borrower as set forth in Exhibit A
(the "Assets ") attached hereto and a mortgage on property set forth on Exhibit B attached hereto
(the "Real Estate "), for the purpose of refinancing existing debt on property locally known as
40 -42 Main Street (the "Project "). Under the terms of the Bank's Loan Agreement, Borrower
shall execute certain loan documents including, but not limited to, a Promissory Note, Mortgage
and Security Agreement (all such loan documents, in the aggregate, shall hereinafter be referred
to as the Loan Documents);
B. City has entered into that certain Development Agreement dated as of the 15 day of
January, 2009, and amended by First Amendment dated May 18, 2009 and as may be further
amended by mutual agreement of the parties (the "Development Agreement ") with Borrower.
Pursuant to the Development Agreement, City has made certain loans to Borrower secured by a
lien on certain property of the Borrower, including the Real Estate; and
C. Bank and City desire to enter into this Agreement for the purpose of establishing the
priority of the respective security interests in the Assets and the Real Estate and for the purpose
of setting forth certain other agreements between them with respect to the transactions
contemplated by the Bank Loan Agreement and the Development Agreement.
NOW THEREFORE, in consideration of the mutual terms and covenants contained
herein, the parties agree as follows:
1. Priority. Bank and City agree at all times, whether before, during or after the
pendency of any bankruptcy, reorganization or other insolvency proceeding, and notwithstanding
the priorities that ordinarily would result under the Uniform Commercial Code or other
applicable law related to the order of granting or perfecting of any security interest, that Bank's
security interest in the Assets and the Real Estate shall constitute a first priority lien and security
interest in such collateral, fully senior to any lien of any security interest of City for all purposes
to the extent of the amount then outstanding under that certain Promissory Note dated the _ day
of , 2010, in the original principal amount of $ . City agrees that
this Agreement shall constitute a Subordination Agreement for purposes of subordinating City's
interest in the Assets and the Real Estate to the interest of Bank to the extent provided for herein.
The parties each shall cooperate to effect the agreement expressed in this paragraph, and from
time to time shall execute such other and further documents, including Subordination
Agreements, proofs of claim, assignments of claim and otherwise as may be necessary or
appropriate to implement the provisions of this Agreement.
2. Limitation With Respect to Future Advances. The parties agree and acknowledge that
pursuant to the Loan Documents, Bank may, but is not required to, make future advances to
Borrower. Bank agrees that any future advances made by Bank under the Loan Documents, as
such documents now exist or may later be amended or modified, shall be for purposes of the
Project only and no such advances shall be made for any other property or project of Borrower or
any other party, except with the prior written consent of City.
In the event Bank provides advances to Borrower in contravention of the limitation
established in this paragraph, the security of Bank with respect to any such advances shall be
subject to and subordinate to the security interest of City with respect to such advances only. In
such event, any advances made by Bank to Borrower related to the Project shall remain secured
by a security interest prior and superior to that of City to the extent provided for herein.
Notwithstanding anything herein to the contrary, Bank remains free to enter into separate
agreements with Borrower with respect to loans related to projects other than the Project.
3. Continuing Agreement. The agreements and priorities set forth herein shall remain in
full force and effect regardless of whether either party hereto in the future seeks to rescind,
amend, terminate, or reform, through litigation or otherwise, its agreements with Borrower.
4. Amendment of the Loan Documents. This Agreement shall constitute a continuing
agreement of subordination and Bank may, upon prior written notice to the City, but without
consent by City, modify any term of the Loan Documents in reliance upon this Agreement.
5. Relationship of the Parties. This Agreement is entered into solely for the purposes set
forth herein and except as expressly provided herein, neither party assumes any of the duties or
responsibilities to the other regarding the financial condition of Borrower or regarding any
collateral, or regarding any other circumstances bearing upon the risk of non - payment of the
obligations of Borrower under any of the Agreements herein referred to. Each party shall be
responsible for managing its credit relationships with Borrower and neither party shall be
deemed to be the agent of the other for any purpose.
6. Benefit of Agreement. This Agreement is entered into solely for the benefit of Bank
and City, and their respective successors, assigns and participants, and none of Borrower or any
other persons or entities whatsoever shall have any right, benefit, priority or interest under or
because of existence of this Agreement.
7. Notices. (a) Each party agrees to give the other any notice of default, termination,
demand for payment, acceleration, disposition of collateral, or other exercise of remedies under
any Loan Document or the Development Agreement, as the case may be, not more than two (2)
business days after such notice is delivered to Borrower.
(b) Each notice, request, demand, consent, approval or other communication required to
permitted to be given hereunder shall be in writing and shall be sent by telefax, overnight courier
or the United States mail, registered or certified, return receipt requested, postage prepaid, to the
intended addressee. Notices, consents, demands, requests or other communication shall be
deemed given or served on the day when sent by telefax, one (1) business day after deposit with
any overnight courier or three (3) business days after deposit in the United States mail. For
purposes of notice, the addresses of Bank and City shall be as set forth below, provided, however
that either party shall have the right to change such parties= address for notice hereunder to any
other location within the continental United States by the giving of thirty (30) days notice to the
other party in the manner set forth herein:
If to Bank:
AMERICAN TRUST & SAVINGS BANK
Attn: Mr. Darin P. Fischer
895 Main Street
Dubuque, IA 52001
If to City:
City Manager
50 W. 13 Street
City Hall
Dubuque, IA 52001
Facsimile: (563) 589 -4149
STATE OF IOWA )
COUNTY OF DUBUQUE ) ss.
With Copy to:
City of Dubuque
City Attorney
Barry A. Lindahl
Harbor View Place
300 Main Street, Suite 330
Dubuque, IA 52001
Facsimile: (563) 583 -1040
(c) Notwithstanding the foregoing, the parties acknowledge and agree that any failure by
Bank or City to provide notice as such party may be required to provide under this Intercreditor
Agreement shall not prejudice the rights of Bank or City herein, nor otherwise adversely affect
Bank or City' s rights under this Agreement, so long as Bank or City, as the case may be, has
undertaken good faith, reasonable efforts to provide such notice in the manner so required.
8. Miscellaneous. (a) This Agreement may be amended, modified or terminated only by
a written instrument signed by both parties hereto. No waiver of any term or provision of this
Agreement shall be effective unless it is in writing and signed by the party against whom such
waiver is sought to be enforced;
(b) This Agreement constitutes the entire Agreement between the parties hereto with
respect to the subject matter hereof;
(c) This Agreement shall be binding upon the parties hereto and their respective
successors and assigns;
(d) This Agreement shall be governed by and construed in accordance with the laws of
the State of Iowa;
(e) If the subordination provisions of any instrument evidencing the Bank loan or the City
loans conflict with the terms of this Agreement, the terms of this Agreement shall govern the
relationship between Bank and City.
AMERICAN TRUST & SAVINGS BANK
By:
Its
On this day of , 2010, before me, a Notary Public in and for
the State of Iowa, personally appeared , to me personally known, who being
by me duly sworn did say that (he) (she) is the of AMERICAN
TRUST & SAVINGS BANK and that said instrument was signed on behalf of said AMERICAN
TRUST & SAVINGS BANK by authority of its board of directors and that said
acknowledged the execution of said instrument to be the
voluntary act and deed of AMERICAN TRUST & SAVINGS BANK, by it voluntarily executed.
STATE OF IOWA
COUNTY OF DUBUQUE )
)
)
Notary Public in and for State of Iowa
CITY OF DUBUQUE, IOWA
By:
Michael Van Milligen
On this day of , 2010, before me, , a Notary
Public in and for the State of Iowa, personally appeared MICHAEL VAN MILLIGEN to me
personally known, and, who, being by me duly sworn, did say that he is the City Manager, of the
City of Dubuque, Iowa; that the seal affixed to the foregoing instrument is the corporate seal of
the corporation, and that the instrument was signed and sealed on behalf of the corporation by
authority of its City Council and he acknowledged the execution of the instrument to be his
voluntary act and deed and the voluntary act and deed of the corporation, by it voluntarily
executed.
Notary Public in and for State of Iowa
BORROWER'S ACKNOWLEDGMENT
The undersigned hereby acknowledges receipt of a copy of the Intercreditor Agreement.
The undersigned agrees that it will cooperate in all respects to effectuate the provisions of this
Agreement and will take no actions contrary to its provision.
40 MAIN, LLC.
By: 40 Main MM, LLC, Its Manager
STATE OF IOWA )
COUNTY OF DUBUQUE ) ss:
F: \USERS\ECON DEV \40 MAIN\20101011 INTERCREDITOR
AGREEMENT092810BAL.DOC
By
Patrick Duffy, Its Manager
On this day of , 2010, before me, a Notary Public in and for
the State of Iowa, personally appeared PATRICK DUFFY, to me personally known, who being
by me duly sworn did say that he is the Manager of the manager of said limited liability
company, that no seal has been procured by the said limited liability company and that said
instrument was signed on behalf of said limited liability company by authority of its managers
and the said PATRICK DUFFY acknowledged the execution of said instrument to be the
voluntary act and deed of said limited liability company, by it voluntarily executed.
Notary Public in and for
State of Iowa
EXHIBIT A
ASSETS
1. Accounts and Other Rights to Payments
2. Inventory
3. Equipment
4. Instruments and Chattel Paper
5. General Intangibles
6. Documents
7. Assignments of Life Insurance for Christopher A. Miller, Patrick J. Duffy, Jr. and Jay
J. Freebery
8. Assignment of Development Agreement with the City of Dubuque
9. Assignment of Owners Interest in Management Agreement
10. Collateral Assignment of Leases and Rents
11. Collateral Assignment of Sub - Leases and Rents
12. Consultant's Assignment, Consent and Certificate
13. Assignment of Enterprise Zone Benefits and Covenant Regarding Federal and State
Historic Tax Credit Funds
092810ba1
CITY'S CONSENT REGARDING DEVELOPMENT AGREEMENT
The undersigned, CITY OF DUBUQUE, IOWA, an Iowa municipal corporation
( "City ") hereby consents to the attached Assignment of Development Agreement by 40 MAIN,
LLC ( "Owner ") and each and every term thereof, as an inducement to AMERICAN TRUST &
SAVINGS BANK, an Iowa banking corporation ( "Bank ") to make, and in consideration of Bank
making, loans to Owner, agrees with Bank as follows:
1. City shall immediately notify Bank in writing of any default by Owner under the
Development Agreement between Owner and City dated the day of , 20
(the "Development Agreement "). All notices to Bank pursuant hereto shall be delivered to:
AMERICAN TRUST & SAVINGS BANK
895 Main Street
Dubuque, IA 52001
2. Subject to the terms and conitions of the Deevelopment Agreement, Bank, or its
designee may enjoy the benefits of and enforce the obligations of the Development Agreement
with the same force and effect as if enforced by Owner and Bank may perform the obligations of
Owner thereunder, and City will accept such performance in lieu of performance by Owner in
satisfaction of Owner's obligations thereunder. In the event Bank or Bank's designee
( "Assuming Administrative Agent ") expressly elects in writing to assume Owner's obligations
under the Development Agreement, Assuming Administrative Agent shall perform and be liable
for all obligations of Owner under the Development Agreement to the same extent as Owner.
3. City will not terminate the Development Agreement on account of any default of
Owner thereunder without written notice to Bank expressly stating that City intends to terminate
the Development Agreement by first providing to Bank a reasonable opportunity (but not less
than thirty (30) days) to, at the option of Bank: (a) effect a cure of the default, if curable; or (b) to
declare Owner in default under the Assignment and commence to complete or cause a
completion of construction of the Project (defined as rehabilitation of the building locally known
as 40 Main Street, Dubuque, Iowa) by expressly assuming the Development Agreement in
writing. In the event Assuming Administrative Agent so elects to complete or cause the
completion of the Project and assumes the Development Agreement, City agrees not to terminate
the Development Agreement so long as the material defaults of Owner thereunder are cured by
Assuming Administrative Agent within the time allowed under the Development Agreement (but
in no event less than thirty (30) days). However, nothing herein shall require Bank to cure any
default of Owner under the Development Agreement, but only gives Bank the option to do so.
4. Notwithstanding anything in the Development Agreement or herein to the contrary,
Bank shall not have any personal liability to City, unless Bank expressly elects in writing to
assume the Development Agreement, and City shall look solely to Owner for satisfaction of any
and all claims which City may have against Owner under the Development Agreement.
Page 1 of 2
Dated the _ day of , 2010.
CITY OF DUBUQUE, IOWA
By:
Roy D. Buol, Mayor
By:
Jeanne F. Schneider, City Clerk
Page 2 of 2
092810ba1
THIS DOCUMENT PREPARED BY
AND AFTER RECORDING RETURN
DOCUMENT TO:
D. Flint Drake
DRAKE & FREUND, P.C.
1005 Main Street, Suite 200
Dubuque, IA 52001
(563) 582 -2000
COLLATERAL ASSIGNMENT OF REAL ESTATE CONTRACT
Name of Grantor:
Name of Grantee:
Dated as of , 2010
40 MAIN, LLC
an Iowa limited liability company
AMERICAN TRUST & SAVINGS BANK,
an Iowa banking corporation
Legal Description: Lot 1 of 10A, Lot 1 of 12A and Lot 1 of 17A all in the West Half
of Block 1 and Lot 1 of 1A in the West Half of Block 10 all in Dubuque Harbor
Company's Addition, in the City of Dubuque, Dubuque County, Iowa.
COLLATERAL ASSIGNMENT OF REAL ESTATE CONTRACT
THIS COLLATERAL ASSIGNMENT OF REAL ESTATE CONTRACT is
made and entered into as of the day of , 2010 by and between 40
MAIN, LLC, an Iowa limited liability company ( "Grantor "), and AMERICAN TRUST
& SAVINGS BANK, an Iowa banking corporation, ( "Grantee ").
RECITALS:
A. Grantor and Grantee have entered into a certain Commercial Loan
Agreement dated the day of , pursuant to which
Grantee made to Grantor a certain loan (the "Loan") in the aggregate
principal amount of $ and, of even date therewith,
Grantor and Grantees entered into a Commercial Loan Agreement,
Promissory Note, Mortgage, Security Agreement and other loan
documents (the "Loan Documents ");
B. Grantor and the City of Dubuque, Iowa ( "City ") entered into a Real Estate
Contract (the "Contract ") pursuant to which Grantor is purchasing from
City the property legally described as follows: : Lot 1 of 10A, Lot 1 of
12A and Lot 1 of 17A all in the West Half of Block 1 and Lot 1 of 1A
in the West Half of Block 10 all in Dubuque Harbor Company's
Addition, in the City of Dubuque, Dubuque County, Iowa (the
"Parking Property ") . The Contract was recorded November 30, 2009 as
Instrument No. 2009 - 00021857 in the records of the Dubuque County
Recorder. As collateral for the Loan Grantee has requested and Grantor
desires to provide an assignment of Grantor's rights under the Contract.
THEREFORE, in consideration of the foregoing recitals and for other
good and valuable consideration, the receipt of which is hereby
acknowledged, the parties agree upon the following mutual terms and
conditions:
1. Assignment. Grantor hereby grants, transfers and assigns to Grantee,
Grantor's interest in and to the Contract, together with the structures,
fixtures, additions, enlargements, repairs, replacements and improvements
now or hereafter located upon the Parking Property subject thereto.
2. Indebtedness Secured. (a) This Assignment is made for the purpose of
securing the payment, when due, of the Loan including, without limitation,
the principal sum, interest and all other sums evidenced by the Promissory
Note and any other sums due from Grantor to Grantee under any of the other
Loan Documents; and
(b) The payment, performance and discharge, when due, of each and every
obligation, covenant and agreement of Grantor under any Loan
Document with Grantee.
3. Grantor's Warranties. Grantor represents and warrants to Grantee that: (i)
Grantor is the sole owner of the entire purchaser's interest in the Contract
and has good title and good right to assign the Contract hereby assigned and
no other person or entity has any right, title or interest therein; (ii) the
Contract is in all material respects valid and enforceable and has not been
altered, modified or amended in any manner since the date of recording; (iii)
the Contract has not been assigned or otherwise pledged or hypothecated;
Grantor has full power and authority to execute and deliver this Assignment
and the execution and delivery of this Assignment has been duly authorized
and does not conflict with or constitute a default under any law, judicial
order or other agreement affecting Grantor or the Parking Property which is
the subject of the Contract; (iv) Grantor has duly and punctually performed
all of the terms, covenants, conditions and warranties of the Contract that
were to be kept, observed and performed by it to date; (v) Grantor has not
performed any act or executed any other instrument which might prevent
Grantee from enjoying and exercising any of its rights and privileges
evidenced hereby; and (vi) Grantor shall execute and deliver at the request
of Grantee all such further assignments and other documents, instruments
and assurances with respect to the Contract as Grantee shall from time to
time require in order to effectuate the purposes of this Agreement.
4. Present and Absolute Assignment/Remedies of Grantee. Grantor does
hereby absolutely and unconditionally assign to Grantee all of Grantor's
right, title and interest in the Contract. Nothing herein shall be construed to
bind Grantee to the performance of any of the covenants, conditions, or
provisions contained in the Contract or otherwise to impose any obligations
upon Grantee. Grantor shall make all payments and comply in all respects
with purchaser's obligations under the Contract and shall hold all right and
title to the Parking Property subject to the Contract in trust as security for
Grantor's obligations to Grantee. Grantor shall, concurrent herewith,
execute a Quit Claim Deed to Grantee for the Real Estate which Deed shall
be held in escrow by Grantee. Upon an Event of Default (as defined in the
Loan Documents), the license granted to Grantor herein shall automatically
terminate and Grantee shall be immediately entitled to receive all benefits of
purchaser under the Contract. Upon or any time after an Event of Default,
Grantee may record the Quit Claim Deed and proceed as purchaser under
the terms of the Contract. Grantee may take such action without notice and
without regard to the adequacy of the security for the Debt. Grantee does
not waive any other rights Grantee may have at law, equity or pursuant to
the terms of the Loan Documents. Notwithstanding any other remedies
available to Grantee, in the event Grantee proceeds to record the Quit Claim
Deed and proceed as purchaser under the terms of the Contract, Grantee
may take possession of the Parking Property subject to the Contract and
have, hold, manage, lease and operate such Parking Property on such terms
and for such period of time as Grantee may deem proper, subject to the
terms and conditions of the Development Agreement between Owner and
the City of Dubuque, Iowa, dated the day of , 20 .. Grantee
may apply any rents or sale proceeds associated with the Parking Property
obtained by Grantee to the payment of the following in such manner and
order as Grantee in its sole and absolute discretion may determine, any law,
custom or use to the contrary notwithstanding: (a) all expenses of securing,
managing, operating and maintaining the Parking Property including,
without limitation, the salaries, fees and wages of a managing agent and
such other employees or agents as Grantee may deem necessary or
desirable; all taxes, charges, claims, assessments, water charges, sewer rents
and any other liens; premiums for all insurance which Grantee may deem
necessary or desirable; the cost of all alterations, renovations, repairs or
replacements; and all expenses incident to taking and retaining possession of
the Parking Property; and (b) the Loan, together with all court costs and
attorney fees, receiver fees and all other costs and expenses incurred by
Grantee.
5. No Liability of Grantee. GRANTEE SHALL NOT BE LIABLE FOR
ANY LOSS SUSTAINED BY GRANTOR RESULTING FROM
GRANTEE'S USE OF THE PARKING PROPERTY OR ANY PART
THEREOF, OR FROM ANY OTHER ACT OR OMISSION OF
GRANTEE UNDER OR RELATING TO THE PARKING
PROPERTY OR THE CONTRACT AND RELATED AGREEMENTS
(REGARDLESS OF WHETHER SUCH LOSS IS THE RESULT OF
GRANTEE'S NEGLIGENCE) UNLESS SUCH LOSS IS CAUSED BY
THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF
GRANTEE, NOR SHALL GRANTEE BE OBLIGATED TO
PERFORM OR DISCHARGE ANY OBLIGATION, DUTY OR
LIABILITY UNDER THE CONTRACT BY REASON OF THIS
INSTRUMENT OR THE EXERCISE OF RIGHTS OR REMEDIES
HEREUNDER. Grantor hereby agrees to hold Grantee harmless from any
and all liability, loss or damage (including attorney fees and the costs of
defense) from any and all claims and demands whatsoever asserted against
Grantee pursuant to the Contract or this Assignment, including, without
limitation, any claims or demands related to any alleged obligations or
alleged undertakings on Grantee's part to perform or discharge any of the
terms, covenants or agreements contained in the Contract. Grantor shall
reimburse Grantee immediately upon demand for the amount of any such
liability, loss or damage, the payment of which shall be secured by this
Assignment and by any of the other Loan Documents. This Assignment
shall not obligate or make Grantee liable for (i) the control, care,
management or repair of the Parking Property; (ii) the carrying out of any of
the terms and conditions of the Contract; (iii) any waste committed on such
Parking Property by any party; (iv) any dangerous or defective condition of
such Parking Property, including without limitation the presence of any
Hazardous Material; or (v) any negligence in the management, upkeep,
repair or control of such the Parking Property resulting in loss or injury or
death to any tenant, licensee, employee or stranger. THE RELEASES
AND INDEMNITIES CONTAINED IN THIS PARAGRAPH SHALL
INCLUDE CLAIMS, DEMANDS, LIABILITIES, LOSSES,
DAMAGES, CAUSES OF ACTION, JUDGMENTS, PENALTIES,
COSTS AND EXPENSES (INCLUDING, WITHOUT LIMITATION,
REASONABLE ATTORNEYS' FEES) RESULTING FROM THE
NEGLIGENCE OF GRANTEE OR ANY STRICT LIABILITY, BUT
NOT THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT
OF GRANTEE.
6. Other Security. Grantee may take or release other security for the payment
of the Loan, may release any party primarily or secondarily liable therefor
and may apply any other security held by it to the reduction or satisfaction
of the Loan without prejudice to any of its rights under this Assignment.
7. Other Remedies. Nothing contained in this Assignment and no act done or
omitted by Grantee pursuant to the power and rights granted to Grantee
hereunder shall be deemed to prejudice or waive Grantee's rights and
remedies under the Loan Documents. Grantee's right to collect the Loan
and to enforce any other security held by it may be exercised by Grantee
either prior to, simultaneously with, or subsequent to any action taken by it
hereunder.
8. No Mortgagee -in- Possession. Nothing herein contained shall be construed
as constituting Grantee a "mortgagee -in- possession" or "beneficiary-in -
possession" in the absence of the taking of actual possession of the Parking
Property by Grantee. Grantor hereby expressly waives and releases all
claims and liability against Grantee in Grantee's exercise of its rights and
powers hereunder.
9. Conflict of Terms. In case of any conflict between the terms of this
Assignment and the terms of any other Loan Document, the terms of this
Assignment shall prevail.
10. Miscellaneous. This Assignment shall be governed by and construed in
accordance with the laws of the State of Iowa. Grantor hereby submits to
personal jurisdiction in the state courts located in Dubuque County, Iowa for
the enforcement of Grantor's obligations hereunder and waives any and all
personal rights under the law of any other state or jurisdiction to object to
jurisdiction with such state courts for the purposes of any action, suit,
proceeding or litigation to enforce such obligations of Grantor. Upon
payment in full of the Loan, or any modifications, extensions, renewals or
refinancings thereof this Assignment shall be null and void and of no further
effect. Grantee shall have the right to assign or transfer its rights under this
Assignment without limitation. This Assignment, together with the
covenants and warranties herein contained, shall inure to the benefit of
Grantee and any subsequent holder of the Loan Documents and shall be
binding upon Grantor, its heirs, executors, administrators, successors and
assigns and any subsequent owner of the Parking Property.
11. City Consent. The City of Dubuque, Iowa, joins in this agreement for the
sole purpose of consenting to the Collateral Assignment of Real Estate
Contract and for no other purpose.
STATE OF IOWA
COUNTY OF DUBUQUE
) ss:
40 MAIN, LLC, an Iowa limited liability
company
By: 40 Main MM, LLC
By:
Name: Patrick Duffy
Title: Manager
On this day of , 2010, before me, a Notary Public in
and for the State of Iowa, personally appeared PATRICK DUFFY, to me personally
known, who being by me duly sworn did say that he is the Manager of said limited
liability company, that no seal has been procured by the said limited liability company
and that said instrument was signed on behalf of said limited liability company by
authority of its managers and the said PATRICK DUFFY acknowledged the execution of
said instrument to be the voluntary act and deed of said limited liability company, by it
voluntarily executed.
STATE OF IOWA )
COUNTY OF DUBUQUE ) ss:
Notary Public in and for
State of Iowa
AMERICAN TRUST & SAVINGS BANK, an
Iowa banking corporation
By:
On this day of , 2010, before me, the undersigned, a
Notary Public in and for the State of Iowa, personally appeared to me
personally known, who being by me duly sworn, did say that is the
, of said corporation executing the within and foregoing instrument;
that the instrument was signed on behalf of said corporation by authority of its Board of
Directors; and the said acknowledged the execution of said instrument to be the
voluntary act and deed of said corporation, by it and by them voluntarily executed.
Notary Public
in and for State of Iowa
STATE OF IOWA )
)
COUNTY OF DUBUQUE )
THE CITY OF DUBUQUE, IOWA
By:
Michael Van Milligen, City Manager
On this day of , 2010, before me, , a
Notary Public in and for the State of Iowa, personally appeared MICHAEL VAN
MILLIGEN to me personally known, and, who, being by me duly sworn, did say that he
is the City Manager, of the City of Dubuque, Iowa; that the seal affixed to the foregoing
instrument is the corporate seal of the corporation, and that the instrument was signed and
sealed on behalf of the corporation by authority of its City Council and he acknowledged
the execution of the instrument to be his voluntary act and deed and the voluntary act and
deed of the corporation, by it voluntarily executed.
Notary Public in and for State of Iowa