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1996-60627 HRA RESOLUTION NO. 606 RESOLUTION AUTHORIZING EXECUTION OF SUBORDINATION AGREEMENT, RELEASE OF MORTGAGES AND ACCEPTANCE OF ALTERNATE SECURITY WHEREAS, the Housing and Redevelopment Authority in and for the City of Richfield (the "HRA") did, on or about April 29, 1994, execute and enter into a contract for private redevelopment (the "Contract") with CSM Corporation; and WHEREAS, CSM Corporation by instrument dated August 1, 1994 assigned its interest under the Contract to CSM Investors, Inc., a Minnesota corporation (the "CSM"); and WHEREAS, pursuant to the requirements of section 3.2(d)(3) of the Contract, CSM has given the HRA security interests in the form of first mortgages covering the Phase II Property; and WHEREAS, the HRA and CSM aze desirous of releasing the Phase II Property from the lien of the mortgages and accepting as alternate security, CSM's irrevocable letter of credit; and WHEREAS, the HRA has reviewed CSM's potential liability remaining under the Contract with respect to Phase II, and has determined that security in the form a letter of credit in the total amount of $2,000,000 will be sufficient to adequately protect the HRA. NOW, THEREFORE, be it resolved by the Housing and Redevelopment Authority in and for the City of Richfield, Minnesota as follows: 1. The Executive Director and Commission Chair aze hereby authorized to execute and deliver to CSM Investors, Inc. a Subordination Agreement in substantially the form of the attached Exhibit A. 2. The Executive Director and Commission Chair aze further authorized to execute and deliver to CSM Investors, Inc., releases and satisfactions of the mortgages on the Phase II Property and running in favor of the HRA. 3. Such releases and satisfactions aze.only to be executed and delivered upon receipt from CSM of an irrevocable letter of credit in the face amount of $2,000,000 and containing HRA Resolution No. 606 _2_ terms and conditions reasonably acceptable to the HRA as evidenced by the written acceptance of the executive director. Adopted by the Housing and Redevelopment Authority in and for the City of Richfield, Minnesota this 7th day of October, 1996 Thomas E. Harms, Chairperson ATTEST: ~. Vern Luettinger, ~, Exhibit A HRA Resolution No. 606 ~~, SUBORDINATION AGREEMENT This Agreement is made effective as of the day of .1996, by and among THE HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF RICHFIELD, MINNESOTA (the "Authority"), FIRST BANK NATIONAL ASSOCIATION, a national banking association (the "Lender") and CSM INVESTORS, INC., a Minnesota corporation (the "Developer") . RECITALS The Authority and CSM Corporation ("CSM Corporation") entered into a Contract For Private Redevelopment dated April 29, 1994 (the "Development Contract"), whereby the Authority agreed to provide certain aid and assistance to the developer under the Development Contract through use of public funds to finance certain costs of development of the Phase II Property (as defined in the Development Contract). Pursuant to an Assignment and Assumption dated as of August 1, 1994, CSM Corporation assigned all of its rights end interests in the Development -Contract to the Developer and the Developer assumed all of CSM Corporation's obligations under the Development Contract. The Development Contract was amended by a letter amendment by and among CSM Corporation, the Authority and the Developer, dated November 1, 1994. Certain provisions of the Development Contract are incorporated by reference in Exhibit B to that certain Deed from the Authority to'the Developer, dated July 12, 1995, and recorded on October 6, 1995, as Document No. 2642457, covering the Phase II Property, and are thereby imposed as Deed Restrictions upon the Phase II Property ("Deed Restrictions"). Pursuant to the Development Contract, the Authority has executed and delivered to the Developer a Limited Revenue Tax Increment Note (Phase II) (the "Revenue Note"), in the face principal amount of $1,125,759.00, pursuant to which the Authority will make installment payments to the Developer as therein provided, and which has been assigned and endorsed by the Developer to the Lender to secure the Lender Loan (defined below). The Lender has entered into a Revolving Construction Loan Agreement dated as of .1996 with the Developer, as supplemented by a Project Addendum dated as of , 1996 (collectively the "Lender Loan Agreement"), under which the Lender has agreed to make advances to the Developer in a maximum aggregate amount of up to $10,000,000.00 (the "Lender Loan") to finance the construction of a retail shopping center facility located on the land described in Exhibit attached hereto and any other land acquired by the Developer after the date of this Agreement in connection with the Project (defined below), and any appurtenant easement for the benefit of any of the foregoing land granted or obtained before or after the date of this Agreement over the Phase I Property (as defined in the Development Agreement), including, without limitation, any such appurtenant easement for access and parking (collectively, the foregoing land and easements are called the "Land"); collectively, the retail shopping center facility and any other improvements now existing or to be constructed on the Land are called the "Project"). Each advance under the Lender Loan Agreement is evidenced by the Developer's Revolving Note in the face principal amount of $15,000,000.00, dated as of 1996, payable to the order of the Lender (the "Lender Note"). The Developer's obligations under the Lender Note and the Lender Loan Agreement are secured by, among other things, a Combination Mortgage, Security Agreement and Fixture Financing Statement dated as of , 1996 (the "Lender Mortgage"), and by an Assignment of Leases and Rents dated as of .1996 (the "Lender Assignment of Rents"; collectively, the Lender Note, the Lender Loan Agreement, the Lender Mortgage and the Lender Assignment of Rents are collectively called the "Lender Loan Documents"). As a condition to entering into the Lender Loan Agreement and making any advances to the Developer under the Lender Loan Agreement, the Lender has required that the Authority (i) fully subordinate all of the terms, covenants, conditions and restrictions contained in the Development Contract and all rights and interests of the Authority in or to the Project or the Land (collectively, the Project and the Land are called the "Premises") of any kind whatsoever under the Development Contract, under the Deed Restrictions or otherwise to the lien of the Lender Mortgage and the Lender Assignment of Rents and to any other lien or security interest at any time hereafter acquired by the Lender in all or any portion of the Premises, and (ii) upon receipt of written notice from the Lender certifying that an event of default as defined in the Lender Loan Agreement or the Lender Mortgage has occurred, make all future payments becoming due and payable under the Revenue Note to the Lender or to any transferee of the Lender. Accordingly, the Authority, the Developer and the Lender hereby agree as follows: 1. The Authority acknowledges and agrees that all rights and interests of the Authority under the Development Contract, under the Deed Restrictions or otherwise in or to the Premises are and shall remain fully subordinate and subject to the liens of the Lender Mortgage and the Lender Assignment of Rents and all liens or security interests now held or at any time , -2- hereafter acquired by the Lender to secure other loans or extensions of credit made by the Lender to facilitate completion of the Project in accordance with the Lender Loan Agreement. In further clarification of the subordination accomplished by the preceding sentence, and not in limitation thereof, the Authority acknowledges and agrees that (i) any right which the Authority has under Section 3.3 of the Development Contract or otherwise to utilize or sell the Premises after default by the Developer is fully subordinate to and subject to the lien of the Lender Mortgage and the Lender Assignment of Rents, (ii) any right which the Authority has under Section 6.2 of the Development Contract to receive insurance proceeds or to require the Premises to be rebuilt in the event of a casualty to the Premises is fully subordinate to and subject to the rights of the Lender under the Lender Mortgage and the Lender Assignment of Rents, and (iii) notwithstanding the provisions of Sections 8.3 and 10.2 of the Development Contract, either before or after foreclosure by the Lender or action in lieu thereof, the Lender or the Lender's assignee may, without assuming any of the obligations of the Developer under ~ the Development Contract and without any consent from the Authority, undertake to continue to complete construction of the Project with such changes to the Project as the Lender deems necessary or appropriate, and (iv) notwithstanding the provisions of Section 8.4 of the Development Contract, the Lender shall have no obligation to provide to the Authority any notice of any event of default on the part of the Developer under the Lender Loan Agreement or the Lender Mortgage (except as provided in Paragraph 7 below), and the Authority shall have no right to cure any event of default on the part of the Developer under the Lender Loan Agreement or the Lender Mortgage. 2. The Authority hereby acknowledges that the Revenue Note has been or will be pledged, endorsed and assigned to the Lender as additional collateral for payment of the Lender Loan made by the Lender to the Developer under the Lender Loan Agreement and hereby consents to said pledge, endorsement and assignment. If in the future there is an event of default by the Developer under the Lender Loan Agreement or the Lender Mortgage, the Lender, at its option may require that all subsequent payments due under the Revenue Note be paid solely and directly to the Lender or to the Lender's assignee. Upon the Authority's receipt of any such notification to that effect, the Developer hereby authorizes and directs the Authority, and the Authority hereby agrees, that all subsequent payments due to the Developer under the terms and conditions of the Revenue Note will be paid solely and exclusively to the Lender or to any such assignee, as the case may be. The Developer further agrees that this Agreement shall constitute an irrevocable direction and full grant of authority to the Authority to pay .all such amounts to the Lender upon receipt of notice from the Lender directing the Authority to do so, without proof of the event of default relied upon in any such notice. The Authority is hereby irrevocably authorized to rely upon and comply with (and shall be fully protected in so doing) any notice or demand by the Lender for the payment to the Lender of any amounts due to the Developer under the -3- Revenue Note and the Authority shall have no duty or obligation to inquire as to whether any event of default under the Lender Loan Agreement or the Lender Mortgage has actually occurred or is then existing. The Developer agrees to indemnify and hold the Authority harmless from all claims, demands, and judgments recovered against the Authority and any costs or expenses incurred by the Authority which arise as a result of the Authority making payments under the Revenue Note to the Lender as provided in this Paragraph 2. Notwithstanding any other provision in this Agreement to the contrary, the Authority, the Developer and the Lender acknowledge and agree that the Authority shall have no obligation to make any payments under the Revenue Note to the Lender if an Event of Default (as defined in the Development Contract) has occurred under the Development Contract on the part of the Developer and such Event of Default has not been waived by the Authority or cured by the Developer within the time period permitted under the Development Contract or cured by the Lender within a reasonable time. 3. The Authority and the Developer each acknowledge that the Development Contract is its valid, legal, binding and enforceable obligation, and, as of the date hereof, has not been assigned (except to the Developer as described in the Recitals), r~todii~ied, supplemented or amended (except as described in the Recitals). 4. To the best of the Authority's knowledge and to the best of the Developer's knowledge, no Event of Default (as defined in the Development Contract) or event, which with the passage of time or the giving of notice, or both, would be such an Event of Default, has occurred and is continuing under the Development Contract as of the date hereof. 5. If an Event of Default (as defined in the Development Contract) shall occur under the Development Contract, the Authority shall give written notice thereof to the Lender and the Lender shall have the right, but no obligation, to cure such Event of Default within a reasonable time thereafter. Any notice given to the Lender pursuant to this Paragraph 5 shall be sent by certified or registered mail to the Lender at the following address: First Bank National Association First Bank Place - NIPFP0802 601 Second Avenue South Minneapolis, Minnesota 55402-4302 Attention: Real Estate Banking Division Head. 6. The Authority acknowledges receipt of copies of the Lender Mortgage, the Lender Assignment of Rents and the Lender Loan Agreement and acknowledges that the Lender Mortgage, the Lender Assignment of Rents, the Lender Loan Agreement and the development of the Premises contemplated by the -4- Lender Loan Agreement are authorized by and approved under the Development Contract. 7. The Lender agrees to provide written notice to the Authority of the occurrence of an event of default on the part of the Developer under the Lender Loan Agreement or the Lender Mortgage prior to commencing any foreclosure proceeding with respect to the Premises or prior to accepting a deed in lieu of foreclosure with respect to the Premises. Any notice given to the Authority pursuant to this Paragraph 7 shall be sent by registered or certified mail to the Authority at the following address: The Housing and Redevelopment Authority in and for the City of Richfield 6700 Portland Avenue South Richfield, Minnesota 5523 Attention: Executive Director. 8. During the forty-five (45) day period (the "Option Period") commencing on the date when the Lender sends to the Authority the written notice described in Paragraph 7 above, the Authority shall have the option to purchase the Lender Loan and the related Lender Loan Documents from the Lender, without representation or recourse. of any kind by the Lender and pursuant to assignment documentation acceptable to the Lender, for a purchase price equal to the outstanding principal balance of the Lender Loan plus all accrued and unpaid interest thereon and any other premiums, penalties, fees, costs and expenses owing to the Lender under the Lender Loan Documents as of the date of funding of such purchase. The Authority acknowledges and agrees that the Lender may commence foreclosure proceedings and may exercise other rights and remedies available to the Lender under the Lender Loan Documents during the Option Period; provided, however, that the Lender shall not accept a deed in lieu of foreclosure with respect to the Premises until after the expiration of the Option Period. The Authority further acknowledges that if the Authority elects to exercise its option to purchase the Lender Loan under this Paragraph 8, the funding of such purchase must occur prior to 5:00 p.m. (Minneapolis time) or the last day of the Option Period. The Lender further agrees that during the Option Period, the Authority may propose for the Lender's consideration a substitute developer who, among other things, would assume all of the obligations of the Developer under the Development Contract and under the Lender Loan Documents; provided, however, that the Lender shall have no obligation to either consider or accept any such substitute developer, and, provided, further, in the event that the Lender, in its sole discretion, shall determine to consider or accept such substitute developer, such consideration and/or acceptance shall be on such terms as the Lender shall determine in its sole ~ discretion. -5- 9. If, following any event of default (as defined under the Lender Loan Agreement or the Lender Mortgage) under the Lender Loan Agreement or the Lender Mortgage, the Lender obtains title to the Premises through foreclosure or by accepting a deed to the Premises from the Developer, the Authority agrees that upon expiration of all redemption periods, in the case of a foreclosure, or upon the recording of such deed, in the case of a deed in lieu of foreclosure, as the case may be, all rights and interests of the Authority under the Development Contract and in and to the Premises under the Development Contract, under the Deed Restrictions or otherwise, including, without limitation, all restrictive covenants contained therein, shall be automatically null and void without the need for the execution or recording of any other document; provided, however, that at the written request of the Lender, the Authority shall execute such documents evidencing the full termination, satisfaction and/or release thereof as the Lender may reasonably request. 10. The Authority acknowledges that the Developer has been selected as the developer for the Phase II Property. The Authority further acknowledges that in accordance with the provisions of Section 3.2A(e) of the Development Contract, the Authority has notified the Developer in writing to proceed with Phase II under the Development Contract. 11. The Authority represents to the Lender and the Developer that the making, delivery and performance of this Agreement have been duly authorized by all necessary action and this Agreement, when executed and delivered, shall be the valid and binding obligation of the Authority, enforceable in accordance with its terms. 12. The Lender represents to the Authority and the Developer that the making, delivery and performance of this Agreement have been duly authorised by all necessary action, and, when executed and delivered, will constitute the legal, valid and binding obligation of the Lender enforceable in accordance with its terms. 13. The Developer represents to the Authority and the Lender that the making, delivery and performance of this Agreement have been duly authorized by all necessary action, and, when executed and delivered, will constitute the legal, valid and binding obligation of the Developer enforceable in accordance with its terms. 14. The Authority, the Developer, and the Lender acknowledge that the Lender is not a party to the Development Contract and that this Agreement, and the Assignment of Development Contract by the Developer to the Lender of even date herewith, contain the entire Agreement between the Authority and the Lender with respect to any rights or obligations either might otherwise have with respect to -6- the other under the Development Contract and under the Deed Restrictions, and that this Agreement may be amended only in writing signed by the parties hereto. By executing and delivering this Agreement, the Lender shall not incur any obligations to the Authority or to the Developer of any kind whatsoever, except those to the Authority which are expressly set forth herein, and the Lender may administer its extension of credit under the Lender Loan Documents in such manner as it shall deem appropriate without any notice to or consent from the Authority. 15. The Authority agrees that the Lender, at any time and from time to time, may extend the maturity, modify the interest rate or agree to alter any of the terms of payment of the Lender Loan evidenced by the Lender Loan Documents, or release parties liable for payment thereof, or alter, amend, waive or supplement, in any way, any of the terms and provisions of the Lender Loan Agreement, the Lender Mortgage, the Lender Assignment of Rents and all related documents, all without any notice to or consent of the Authority. 16. This Agreement shall be binding upon and inure to the benefit of the Authority, the Lender and the Developer and their respective successors and assigns. Executed as of the day and year first above written. THE HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF RICHFIELD By J Its Chairperson Its Executive Director sy FIRST BANK NATIONAL ASSOCIATION, a national banking association sy Its -~- CSM INVESTORS, I1VC. By Its - STATE OF MINNESOTA ) ss. COUNTY OF ) The foregoing instrument was acknowledged before me this day of .1996, by .the Chairperson and . the Executive Director of The Housing and Redevelopment Authority in and for the City of Richfield, Minnesota, on behalf of said Authority. Notary Public STATE OF 1~uNNESOTA ~~ _i ss. COUNTY OF ) The foregoing instrument was acknowledged before me this day of . 1996, by . a of First Bank National Association, a national banking association, on behalf of said association. Notary Public J -s- STATE OF MIlVNESOTA ) ss. COUNTY OF ) The foregoing instrument was acknowledged before me this day of . 1996, by ,the of CSM Investors, Inc., a Minnesota corporation, on behalf of said corporation. Notary Public This instrument was drafted by Dorsey & Whitney LLP 220 South Sixth Street Minneapolis, Minnesota 55402 -9-