Theisen Supply Subordination AgreementTHE CITY OF
DUB E
~,-~-~
MEMORANDUM
April 12, 2007
TO: The Honorable Mayor and City Council Members
FROM: Michael C. Van Milligen, City Manager
SUBJECT: Theisen Supply, Inc.
City Attorney Barry Lindahl is recommending City Council approval of the Subordination
Agreement in favor of Theisen's first mortgage lender, U.S. Bank, N.A. pursuant to the
June 19, 2006 Development Agreement between the City of Dubuque, Chavenelle
Warehouse Development, LLC, and Theisen Supply, Inc.
I concur with the recommendation and respectfully request Mayor and City Council
approval.
Michael C. Van Milligen
MCVM/jh
Attachment
cc: Barry Lindahl, City Attorney
Cindy Steinhauser, Assistant City Manager
BARRY A. LINDAH
CITY ATTORNEY
MEMO
To: Michael C. Van Milligen
City Manager
DATE: March 30, 2007
RE: Theisen Supply, Inc.
Pursuant to the Development Agreement dated June 19, 2006 by and among the City of
Dubuque, Chavenelle Warehouse Development, LLC (Chavenelle) and Theisen Supply,
Inc. (Theisen) the City conveyed title to the property in the Dubuque Industrial Center
West to Chavenelle. Chavenelle entered in to an agreement with Theisen for the
construction of a corporate office/industrial facility by Chavenelle. Upon completion of
the construction of the facility, Chavenelle agreed to convey the property to Theisen.
The construction of the facility has now been completed and Chavenelle will be
transferring title to Theisen.
The Development Agreement also provided that the City would subordinate the
Development Agreement to a mortgage lender.
Theisen is now requesting that the City approve the attached Subordination Agreement
in favor of Theisen's first mortgage lender, U.S. Bank, N.A.
The form of the Subordination Agreement is acceptable.
I recommend that the Subordination Agreement be submitted to the City Council for
consideration and approval.
Attachment
cc: Peter Arling, Esq.
Brian Kane, Esq.
OFFICE OF THE CITY ATTORNEY DUBUQUE, IOWA
SUITE 330, HARBOR VIEW PLACE, 300 MAIN STREET DUBUQUE, IA 52001-6944
TELEPHONE (563) 583-4113 / FAx (563) 583-1040 / EMAIL balesq@cityofdubuque.org
This Instrument Prepared by: Loris Reins-Schweer, Simmons Perrine P.L.C., 115 Third
Street S.E., Suite 1200, Cedar Rapids, IA 52401-1266; telephone: 319/366-7641
Recordation Requested by: U.S. Bank N.A., 270 W. 7th Street, Dubuque, IA 52001
Return Document to: U.S. Bank N.A., 270 W. 7"' Street, Dubuque, IA 52001
SUBORDINATION AGREEMENT
This Subordination Agreement (the "Agreement") is made and executed by and between
the City of Dubuque, Iowa, (the "City") and U.S. Bank N.A. (the "Lender"}.
RECITALS
WHEREAS, a Development Agreement was entered into on or about June 19, 2006 (the
Development Agreement) by and among the City of Dubuque, Iowa, Chavenelle Warehouse
Development, LLC (the "Developeri'), and Theisen Supply, Inc. for real estate legally described
as:
Lot One (1 } of Lot Two (2) of Dubuque Industrial Center West 5~' Addition in the City of
Dubuque, Iowa, according to the recorded plat thereof, subject to easements of record
(the "Real Estate").
WHEREAS, the Development Agreement provides that the City wilt convey title to the
Real Estate to the Developer.
WHEREAS, the Developer and Leo A. Theisen ("Theisen") entered into an agreement for
the construction of a corporate office/industrial facility on the Real Estate.
WHEREAS, the Developer will be transferring title to the Real Estate to Theisen on March
30, 2007 (the "Closing"}.
WHEREAS, at the time of Closing, the Lender intends to make a loan to Theisen in the
amount of $3,300,000 (the "Loan") pursuant to a Note dated March 30, 2007 (the "Note") to
provide financing to Theisen. The Note will be secured by a Mortgage, Security Agreement and
Assignment of Leases.
WHEREAS, the landscaping on the Real Estate has not been completed and will not be
completed at the time of Closing.
WHEREAS, pursuant to Section 2.4 of the Development Agreement, the City is to provide
the Developer with a Certificate of Completion upon completion of the Minimum Improvements.
Such Certificate of Completion has not been provided by the City as the Minimum
Improvements (landscaping) have not yet been fully completed.
WHEREAS, Section 5.3 of the Development Agreement states in part "[I]n the event that,
subject to conveyance of the Property to Developer by City, and prior to receipt by Developer of
the Certificate of Completion, but subject to the terms of the mortgage granted by Developer to
secure a loan obtained by Developer from a commercial lender or other financial institution to
fund the acquisition of Property or construction of the Minimum improvements (the Mortgage),
an Event of Default under Section 5.1 of this Agreement occurs and is not cured within the time
specified in Section 5.2, then City shall have the right to re-enter and take possession of the
Property ..."
WHEREAS, Section 5.3 further recites that "[Njotwithstanding the foregoing, however, City
agrees to execute a Subordination Agreement in favor of Developer's first mortgage lender, in a
form reasonably acceptable to City and to Developer's first mortgage lender."
WHEREAS, the Lender will make the Loan upon, among other things, the execution and
delivery of this Agreement by the City.
IN EXCHANGE FOR GOOD AND VALUABLE CONSIDERATION, the sufficiency and
receipt of which are hereby acknowledged, the City agrees as follows:
1. Subordination. The City hereby unconditionally and irrevocably subordinates to
Lender and waives any priority of lien it may have in the Real Estate by virtue of the
Development Agreement to a Mortgage, Security Agreement and Assignment of Rents dated
March 30, 2007 given to the Lender from Leo A. Theisen and Marita E. Theisen.
2. Entire Agreement; Waiver; Successors and Assigns. This Agreement contains
the entire agreement of the City with the Lender regarding subordination. Any failure by the
Lender to exercise any right hereunder shall not be construed as a waiver of the right to
exercise the same, and such rights shall be cumulative and not exclusive. Knowledge by the
Lender of any breach or other nonobservance by the City of the terms, of this Agreement will not
constitute a waiver thereof or of any obligations to be performed by the City hereunder. This
Agreement will be binding upon the City and its successors and assigns.
3. Applicable Law and Jurisdiction; Interpretation and Modification. This
Agreement will be governed by and interpreted in accordance with the laws of the state of Iowa,
except to the extent superseded by Federal law. THE CITY HEREBY CONSENTS TO THE
EXCLUSIVE JURISDICTION OF ANY STATE OR FEDERAL COURT SITUATED IN THE
COUNTY OR FEDERAL JURISDICTION OF THE LENDER'S BRANCH WHERE THE LOAN
WAS ORIGINATED, AND WAIVES ANY OBJECTION BASED ON FORUM NON
CONVENIENS, WITH REGARD TO ANY ACTIONS, CLAIMS, DISPUTES OR
PROCEEDINGS RELATING TO THIS AGREEMENT, THE REAL ESTATE OR ANY
TRANSACTIONS ARISING THEREFROM, OR ENFORCEMENT AND/OR INTERPRETATION
OF ANY OF THE FOREGOING. Nothing herein will affect the Lender's rights to serve process
in any manner permitted by law, or limit the Lender's right to bring proceedings against the City
in the competent courts of any other jurisdiction or jurisdictions. This Agreement and any
2
amendments hereto (regardless of when executed} will be deemed effective and accepted only
at the Lender's offices, and only upon the Lender's receipt of the executed originals thereof.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
2007.
CITY OF DUBUQUE, IOWA
By: Roy D. Buol
It's Mayor
U.S. BANK N.A.
By:
Its:
STATE OF IOWA )
ss:
COUNTY OF DUBUQUE }
This instrument was acknowledged before me on April 16, 2007, by
Roy D . Buol as Mayor of the
City of Dubuque, Iowa.
Notary Public, State of Iowa
My Commission Expires: JEANNE F. SCNNEIDER
COMMISSION N0.709027
STATE OF IOWA } MY Commission EXPIRES
3/28/10
) SS:
COUNTY OF DUBUQUE • )
This instrument was acknowledged before me on , 2007, by
as of U.S.
Bank N.A.
Notary Public, State of Iowa
My Commission Expires: