HomeMy WebLinkAbout2007 12-27 EDAP r
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EDA SPECIAL MEETING
City of Brooklyn Center
December 27, 2007 AGENDA
l. Call to Order 6:00 p.m.
—The EDA requests that attendees turn off cell phones and pagers during the meeting. A
copy of the full EDA packet is available to the public. The packet ring binder is located at
the front of the Council Chambers by the Secretary.
2. Roll Call
3. Commission Consideration Item
a. Resolution Approving a Third Amendment to a Development Agreement and Certain
Lender Consents/Subordinations and Authorizing the EDA Executive Director to
Execute Certain Documents
•Requested Commission Action:
—Motion to adopt resolution.
4. Adjournment
COUNCIL ITEM MEMORANDUM
To: Curt Boganey, City Manager
FROM: Tom Bublitz, Community Development Specialist
i
DATE: December 21, 2007
SUBJECT: Resolution Approving a Third Amendment to a Development Agreement and
Certain Lender Consents/Subordinations And Authorizing the EDA Executive
Director to Execute Certain Documents
Recommendation:
Recommend approval of Resolution Approving a Third Amendment to a Development
Agreement and Certain Lender Consents/Subordinations And Authorizing the EDA
Executive Director to Execute Certain Documents
Background:
The resolution before the EDA provides for certain actions to be taken by the EDA in order
to close on the Phase I hotel (Embassy Suites) property with Brooklyn Hotel Partners.
An identical resolution (except for the authorization of the EDA Executive Director to sign
documents relative to the real estate closing) has also been prepared for the Ciry Council,
since the City is also a party to the Development Agreement.
The approvals contemplated by the EDA and Council resolutions consist of the following:
1. Approving a third amendment to the October 23, 2006 Development Agreement
with Brooklyn Hotel Partners, LLC. The third amendment addresses the
business subsidy provided in the development agreement to both Phase I and
Phase II parcels. The business subsidy consists of a write down of the market
value ($2,165,000) of the EDA property and the tax abatements for both Phase I
and II, which are capped at $2,600,000 as per the terms of the development
agreement.
The third amendment would provide for the following:
Section 4.11 (a) (attached) of the Development Agreement would be
amended to provide that the total $2,165,000 in market value of the
development propertyis allocated $1,428,900 to the Phase I property and
$736,100 to the Phase II property. The allocation is based on the
respective square footages of each parceL
Section 4.11 (c) (attached) of the Development Agreement would be
amended to provide that the total 30 full time equivalent permanent
employee positions to be provided within two years of the benefit date, as
per the terms of the Development Agreement, is allocated 23 jobs to the
Phase I property and 7 jobs to the Phase Ii property (75%/25% split).
Section 5.1 (attached) of the Development Agreement would be amended
to provide that the $2,600,000 cap regarding tax abatements would be
allocated $1,950,000 to the Phase I property and $650,000 to the Phase II
property. This allocation is based on a 75 percent/25 percent split
between Phase I and Phase II and is premised on the assumption that the
Phase I property will be substantially more valuable than the Phase II.
Tax abatements received will, of course, be based on the actual market
value of the respective properties but the cap placed on the tax
abatennents will be set at the allocated levels.
The third amendment also addresses a housekeeping item which would
verify that the City, along with the EDA, is in agreement with the
amendments relative to the first and second amendment and also the
Right of Early Start Agreement.
2. Approves the "assignment and subordination" of Development Agreement in
favor of the Prudential Insurance Company of America. This assignment and
subordination document does the following:
Consents to rantin of a securi interest in the Develo ment A reement
g g tY p g
in favor of the lender (Prudential Insurance Company).
Subordinates the Development Agreement to the lender's mortgage.
Developer continues to be liable to the EDA/City even if the property is
foreclosed upon by lender
The EDA/City is required to give notice to the lender of the developer's
default (lender is not bound if the notice is not given to lender).
Lender is not bound by amendments to Development Agreement to
which it does not consent.
Lender can cure developer defaults with additional time if needed.
If Development Agreement is extinguished by lender's foreclosure, the
EDA/City will enter into a replacement Development Agreement with the
lender.
If the developer defaults are cured by the lender, the lender is entitled to
the business subsidy.
There is no obligation of lender to perform the Development Agreement,
but if lender fails to do so, no business subsidy would be realized.
The lender and any successors, if it builds and completes a hotel, would
be required to build and pay for the pedestrian connection to the Heritage
Center.
The EDA and City are party to the "Assignment and Subordination".
3. A roves the "consent" in favor of the Hurlbut-Ze a Charitable Trust AR
PP PP
(Assignment of Right to Receive Tax Abatement Payments). The consent does
the following:
Consents to granting of a security interest in the tax abatement payments
under Article V(attached) of the Development Agreement in favor of the
lend r. The lender is loanin mone based on the antici ated tax
e g y p
abatements.
The consent does not amend the developer's obligations under the
Development Agreement.
Lender agrees to give the EDA notice of any developer defaults under the
developer's assignment to the lender.
Developer agrees to waive claims against the EDA and City and to
indemnify the EDA and City from all claims of lender in connection with
the payment by the EDA and /or City of tax abatements to lender.
The EDA and City are not party to any agreements with the lender and
provide their consent only.
Copies of all documents addressed in the Third Amendment are attached,
along with copies of relevant sections of the Development Agreement
cited in the staff inemorandum.
Budget Issues: There are no budget issues.
EXCERPTS FROM DEVELOPMENT AGREEMENT FOR REFERENCE TO 12-21-07 MEMORANDUM
Section 411 Business Subsidv Aereement.
a In order to satisfy the provisions of Minnesota Statutes, Section 116J.994
ct" the Develo er acknowled es and a ees that th� amount of the
t e Business Subsid A g
h P
Y
amount ofthe Tax
B u s i n e s s S u b s i d y g r an t e d t o t h e D e v e l o p e r u n d e r t h i s A g r e e m e n t i s t h e
e Develo ment
e v e l o e r l u s 2 1 6 5 0 0 0 t h e m a r k e t v a l u e o f t h p
t aid to the D
.�lbatemen s p p p
Property and that the Business Subsidy is needed because the Project is not sufficiently feasible
for the Developer to undertake without the Business Suhsidy.
(b) The public purpose of the Subsidy is to further provide ad.ditional
commercial facilities in the City, increase the tax base and to create jobs.
(c) For its "Job Goals" under this Section 4.11 the Developer covena.nts that it
will provide or cause to be provided 30 full-time equivalent permanent employee positions
within two yeazs of the Benefit Date, with these jobs having wage levels of at least $7.00 per
hour, exclusive of benefits.
(d) For purposes of Section 116].994, Subdivision 3, of the Subsidy Law, the
goals of the Subsidy are the construction of the Minimum Improvements a.nd ownership thereof
by the Developer for at least five years after the "Benefit Date" of the Subsidy, as defined in tlae
Subsidy Law, which is hereby deternuned to be the date of the issuance of a certificate of
occupancy for the Minimum Improvements.
(e) For purposes of the Subsidy Law, the Subsidy shall be considered to be a
forgivable loan to the Developer &om the Authority and the City. It is agreed, as required by
Section 116J.494 Subdivision 6 if the Develo er is in default under this Section 4.11, subject to
P
any remedial provisions of the Subsidy Law as may be applicable, the Developer shall be
obligated to repay the Subsidy plus interest from the Closing Date on all such amounts
at the
'nnesota Statutes Section 275.70, Sub
division 2. If
unphcrt pnce deflator, as defined under Mi
the Developer meets some but not all of its Job Goals hereinafter defined, the Developer may
and Auth
ori and Ci ma
a ee in the absolute discretion of the Boazd of
re uest in writin ty tY Y�
q g
er ro rat e. if
evelo
ommissioners and Ci Council, that the Subsidy be repaid by the D p p a, 8
C ry
evelo er would r a
50% of
e Pro' ect the D Y
evelo er created onl 15 af the 30 �obs at th p eP
the D p y J
the Subsidy paid to the Developer, plus accrued interest thereon. The Subsidy is needed in order
to induce the Developer to construct and occupy the Project. The Developer covenants that it
e Pro'ect for at least five eazs aft
er the Benefit Date.
o t' u e t o o w n an d o c c u t h Y
w i l l c n i n p y J
The Developer represents that it has no parent corporation.
The Developer represents that the following a.re all of the State of
g)
Minnesota and "local govemment agency" grants (other than the Subsidy hereunder) to the
Minimum Improvements:
1912113v7 1 7
Grantor Value
Grantor Value
(h) The Developer represents that it is not in default on the date hereof on any
subsidy agreement entered into by the Developer under the Subsidy Law.
(i) The Subsidy is needed to encourage the development of a hotels to
provide accommodations for those utilizing the Earle Brown Heritage Center.
(j) The Developer shall complete and file with the Authority and City from
time to time the report in the form of the attached Exhibit I. The Subsidy Law provides that if
the Developer does not make such reports, when due, the Authority or the City must mail the
Developer a warning within one week of the required filing date, and if, after 14 days after the
postmark date of that wazning, the Developer continues to fail to report, then the Developer is
required to and shall pay the Authority or the City a penalty of $100 for each subsequent day
until the report is filed, up to a maximum of $1,000. The Developer shall file these reports with
the Authority and the City, in care of the Executive Director and City Clerk, (1) on March 1 of
each year, beginning with the March 1 immediately following the Benefit Date, and (2) within
30 days after the "Compliance Date," hereby defined to be the date which is two years after the
Benefit Date. Each March 1 report shall report on the prior calendaz year, and each other report
shall report on the period since the last reporting period.
(k) This Section 4.11 is intended to be the "subsidy agreement required by
Section 116J.994, Subdivision 3, of the Subsidy Law. In the event that any provision of this
Section 4.11 is inconsistent or in conflict with any provision of the Subsidy Law, and in the
event that any provision of the Subsidy Law provides additional requirements, the provisions of
the Subsidy Law shall apply and govern. In addition to all reporting obligations of the
Developer under this Section 4.11 a.nd Exhibit I, the Developer agrees to provide the Authority
and the City with any additional information which may be required in order for the Authority
and the City to comply with its reporting requirements, as they may exist or be amended from
time to time, under the Subsidy Law.
(1) Nothing in this Section 4..11 is intended to limit or otherwise amend the
other terms of this Agreement; provided, however, that to the extent that provisions in this
Section 4.11 are more extensive or restrictive than any related term elsewhere in this Agreement,
the provisions hereof shall govem. The above commitment of the Developer to own the
Minimum Improvements for at least five yeazs from the Benefit Date is a requirement of the
Subsidy Law (subject to procedures therein allowing relaxation or waiver of said requirement)
and shall apply and govern.
(m) If the Developer shall default under its agreement in this Section 4.11, the
Developer shall then be required to repay the Subsidy to the Authority and the City, plus interest
at no less than the implicit price deflator, as defined under Minnesota Statutes, Section 275.70,
Subdivision 2 from the date of said default and continue paying interest thereon at such rate until
the Subsidy is paid in full.
191�113v7 1 8
ARTICLE V
TAX ABATEMENTS; NO PUBLIC IMPROVEMENTS
Section 5.1 Pavment of Ta�c Abatements bv Citv. Unless an Event of Default has
occurred and is continuing, the City shall pay to the Developer, on an annual basis, not later than
February 1 of the year following the tax collections (a) the City's portion of the increased real
estate taxes paid on the increased market value of the Phase I Development Property in the taxes
payable years 2010 to 2019, and (b) the City's portion of the increased real estate taxes on the
Phase II Development Property for up to 10 yeazs, commencing with the taxes payable year
immediately after completion of the Phase II Development and ending in any event not any later
than 2024 (collectively, the "Ta�c Abatements"). In no event shall the aggregate total of Tax
Abatements paid to the Developer hereunder exceed $2,600,000 in total.
Section 5.2 No Public ImUrovements. Neither the Authority nor the City shall have
any �bligation to construct, install, improve or modify any public improvements (including
without limitation streets, sidewalks, curbs or utility services) in connection with the
Development; the Developer acknowledging that all of such improvements or modifications, if
any, shall be a part of the Minimum Improvements.
1912113v7 2�
Commissioner introduced the following resolution and moved its
adoption:
EDA RESOLUTION NO.
RESOLUTION APPROVING A THIltD AMENDMENT TO A DEVELOPMENT
AGREEMENT AND CERTAIN LENDER CONSENTS/SUBORDINATIONS AND
AUTHORIZING THE EDA EXECUTIVE DIltECTOR TO EXECUTE CERTAIN
DOCUMENTS
WHEREAS, the Economic Development Authority of Brooklyn Center (the
"Authority") and the City of Brooklyn Center (the "City") have heretofore entered into a
Development Agreement dated October 23, 2006, as amended (the "Dev�lopment Agreement")
between the Authority, the City and Brooklyn Hotel Partners, LLC, a Minnesota limited liability
company (the "Developer") in connection with two hotel developments to be constructed by the
Developer.
WHEREAS, the City, the Authority and the Developer desire to further amend the
Development Agreement and the City desires to confirm its joinder in all prior amendments to
the Development Agreement.
NOW, THEREFORE, BE IT RESOLVED by the Economic Development
Authority in and for the City of Brooklyn Center, Minnesota as follows:
1. The Authority hereby approves the Third Amendment to the Development
Agreement in the form on file with the City Clerk, with such changes thereto as may
hereafter be approved by the Executive Director of the Authority.
2. The Authority hereby approves (a) the Assignment and Subordination of
Development Agreement in favor of The Prudential Insurance Company of
America, and (b) the Consent in favor of Hurlbut-Zeppa Charitable Trust AR, in the
forms on file with the City Clerk, with such changes thereto as may hereafter be
approved by the Executive Director of the Authority.
3. The EDA Executive Director is hereby authorized and directed to execute the
necessary documents relative to the conveyance of the Phase 1 hotel property to the
Developer pursuant to the terms and conditions of the Development Agreement.
Date President
The motion for the adoption of the foregoing resolution was duly seconded by commissioner
and upon vote being taken thereon, the following voted in favor thereo£
and the following voted against the same:
whereupon said resolution was declared dulypassed and adopted.
THIRD AMENDMENT TO
DEVELOPMENT AGREEMENT
BY AND BETWEEN
ECONOMIC DEVELOPMENT AUTHORITY QF BROOKLYN CENTER,
CITY OF BROOKLYN CENTER
AND
BROOKLYN HOTEL PARTNERS, LLC
This document drafted by:
BRIGGS AND MORGAN (DGG)
Professional Association
2200 IDS Center
80 South Eighth Street
Minneapolis, MN 55402-2157
ziiss�s�i
THIRD AMENDMENT TO DEVELOPMENT AGREEMENT
THIS THIRD AMENDMENT TO DEVELOPMENT AGREEMENT (the "Third
Amendment" made as of the day of December, 2007, by and between the Economic
Development Authority of Brooklyn Center, Minnesota, a body corporate and politic organized
and existing under the laws of the State of Minnesota (the "Authority"), City of Brooklyn Center,
a Minnesota municipal corporation (the "City"), and Brooklyn Hotel Partners, LLC, a Minnesota
limited liability company (the "Developer").
WITNESSETH:
WHEREAS, the Authority, the City and the Developer have previously entered into a
Development Agreement dated as of October 23, 2006, as amended July 23, 2007 and October 8,
2007 (as amended, the "Development Agreement"), pursuant to which the Authority and City
agreed to, among other things, abate certain taa�es to the Developer to assist with certain public
redevelopment costs of a project undertaken by the Developer in the City; and
WHEREAS, the Developer, Authority and City desire to further amend the Development
Agreement to provide for an allocation of certain benefits and requirements for the two phases of
the development;
NOW, THEREFORE, in consideration of the premises and the mutual obligations of the
parties hereto, each of them does hereby covenant and agree with the other that the Development
Agreement is hereby amended as follows:
1. Section 4.11(a) of the Development Agreement is amended to provide that the
total of $2,165,000 market value of the Development Property is allocated $1,428,900 to the
Phase I Property, and $736,100 to the Phase II Properiy.
2. Section 4.11(c) of the Development Agreement is amended to provide that the
tota130 full-time equivalent permanent employee positions to be provided within two years of
the Benefit Date is allocated 23 such employee positions to the Phase I Property, and 7 such
employee positions to the Phase II Property.
3. Section 5.1 of the Development Agreement is amended to provide that the
$2,600,000 aggregate total of T� Abatements paid to Developer shall be allocated, and shall not
exceed $1,950,000 for the Phase I Property, and shall not exceed $650,000 for the Phase II
Property.
4. It is hereby acknowledged and agreed that the City consents to and joins in, as
fully as if the City had originally executed and delivered, the following documents pertaining to
the Development Agreement and the development described therein: (a) the First Amendment to
Development Agreement dated July 23, 2007, (b) the Second Amendment to the Development
Agreement dated October 2007, and (c) the Right of Entry/Early Start Agreement dated
October 8, 2007, effective as of the respective dates of such amendments and agreement.
5. This Third Amendment may be executed in any number of counterparts, each of
which shall constitute one and the same instrument.
21i3875vi 1
ird Amendment will be overned and construed in accordance with the
6. This Th g
laws of the State.
7. Except as herein amended, all other terms and provisions of the Development
Agreement shall remain in full force and effect.
[End of Page]
2113875v1 2
IN WIT'NESS WHEREOF, the Authority, the City and the Developer have caused this
Third Amendment to Development Agreement to be duly executed in their respective names on
or as of the date first above written.
BROOKLYN CENTER ECONOMIC
DEVELOPMENT AUTHORITY
By
Its
CITY OF BROOKLYN CENTER
By
its
By
Its
This is a signature page to the Third Amendment to Development Agreement dated
December 2007, by and between the Economic Development Authority of Brooklyn Center,
City of Brooklyn Center and Brooklyn Hotel Partners, LLC.
zi�3s�s�i 3
I
BR OKLYN HOTEL PARTNERS LLC
O
By
Its
This is a signature page to the Third Amendment to Development Agreement dated
December 2007, by and between the Brooklyn Center Economic Development Authority,
City of Brooklyn Center and Brooklyn Hotel Partners, LLC.
2113875v1 4
Prudential Loan No. 706107575
PREPARED BY AND
WHEN RECORDED MAIL TO:
Seyfarth Shaw LLP
One Peachtree Pointe, Suite 700
1545 Peachtree Street, N .E.
Atlanta, Georgia 30309-2401
Attention: Cristina E. O'Brien, Esq.
ASSIGNMENT AND SUBORDINATION OF
DEVELOPMENT AGREEMENT
THIS ASSIGNMENT AND SUBORDINATION OF DEVELOPMENT AGREEMENT
("AgreemenY') is made as of the day of December, 2007, by and among THE PRUDENTIAL
INSURANCE COMPANY OF AMERICA (together with its successors or assigns in interest,
collectively, "Lender"), BROOKLYN HOTEL PARTNERS, LLC (`Borrower"), ECONOMIC
DEVELOPMENT AUTHORITY OF BROOKLI'N CENTER ("Development Authority"), and CITY
OF BROOKLYN CENTER ("City"; Development Authority, together with City, are "Authority").
RECITALS:
A. Lender is the owner and the holder of a loan (the "Loan") evidenced by a promissory
note (the "Note") made by Borrower dated of substantially even date herewith, in the face amount of
$21,000,000.00. The Note is secured by, inter alia. that certain Mortgage and Security Agreement and
Fixture Financing Statement (the "5ecurity InstrumenY') dated of even date with the Note, and to be
recorded in the office of the Registrar of Titles of Hennepin Counry, Minnesota, covering the real
property described therein (the "Mortgaged Premises").
B. Borrower, Development Authority and City are parties to that certain Development
Agreement dated as of October 23, 2006, as amended by that certain First Amendment to Development
Agreement dated as of July 23,2007, as further amended by that certain Second Amendment to
Development Agreement dated as of October 8, 2007, and as further amended by that certain Third
Amendment to Development Agreement dated as of 2007, and as affected by that
certain Right of Entry/Early Start Agreement dated as of October 29, 2007 and executed by Borrower,
Development Authority and City (as amended and affected, and as may be further amended, the
"Development AgreemenY'), pursuant to which Borrower agreed to develop and construct a certain hotel
project on the Mortgaged Premises (the "ProjecY'), and in consideration thereof, City and Development
Authority agreed to, among other things, abate certain real estate taxes to Borrower to assist with certain
public redevelopment costs of the Project. The Mortgaged Premises is referred to as the "Phase I
Property" in the Development Agreement. For purposes of this Agreement, reference to the Development
Agreement shall mean and refer to only those provisions of the Development Agreement relating to the
Phase I Property, and shall not include provisions applicable to the "Phase II Property" as therein
described.
C. Development Authority, City, Borrower and Lender desire to confirm their understanding
with respect to the Development Agreement and the Security Instrument.
D. All capitalized terms used herein but not defined shall have the meaning assigned to them
in the Development Agreement.
1
2098172v6
THEREFORE, in consideration of the mutual covenants and agreements herein contained and
other good valuable consideration, the receipt and sufficiency of which are hereby acknowledged by all
parties, Lender, Borrower, Development Authority and City agree as follows:
1. Consent and Mort�aee Execution. and Continuine Liabilitv.
(a) Consent and Subordination. Authority consents to the granting of the Security
Instnunent by Borrower to Lender and to the lien, operation and effect of the Security Instnunent in and
to the fee estate and rights of Borrower in the Mortgaged Premises, and the execution of Bonower of the
Security Instrument will' not constitute a default by Borrower under the Development Agreement. The
Development Agreement is now, and will at all times and for all purposes be, subject, in every respect, to
the Security Instniment, with the provisions of the Security Insmxment and this Agreement controlling
over inconsistent provisions of the Development Agreement. The Development Agreement is subject, in
each and every respect, to any and all increases, renewals, modifications, extensions, substitutions,
replacements and/or consolidations of the Security Instrument (collectively a"Modification"), and all
other loan documents securing the Note.
(b) Continuin� Liabilitv. Notwithstanding that Authority (i) consents to the granting of the
Security Instrument by Borrower to Lender, and (ii) subjects its interests under the Development
Agreement to the lien of the Securiry Instrument, Borrower expressly agrees and acknowledges that the
provisions and agreements of this Agreement and/or the subsequent foreclosure of the lien represented by
the Security Instrument or trustee's sale, exercise of any power of sale, succession by deed in lieu or other
conveyance of the Mortgaged Premises shall not extinguish, modify, diminish or release (x) Borrower
from any of its obligations, duties, responsibilities and liabilities to Development Authority and/or City
under the Development Agreement and all such obligations, duties, responsibilities and liabilities shall
continue as originally set forth in the Development Agreement and shall survive any such foreclosure,
sale, exercise, succession or conveyance, and (y) any remedies Development Authority and/or City may
have against Borrower under the Development Agreement. Upon request of Development Authority
and/or City, Borrower shall, from time to time, execute and deliver to Development Authority and City a
written confirrnation of such continuing liability; provided, however, that once Lender has obtained title
and the legal right to occupy and use the Mortgaged Premises, Borrower shall not be permitted to have
access to the Mortgaged Premises for purposes of perforxning Borrower's obligations on or to the
Mortgaged Premises, including, but not limited to, any and all construction obligations.
2
2098172v6
2. Authoritv's Representations. Authority represents to Lender, as of the date hereof, that to
the knowledge of Authority (a) Authority has no fee or leasehold interest in the Mortgaged Premises, nor
is it the holder of any loan with respect to the Mortgaged Premises except with respect to the Business
Subsidy, (b) a true, correct and complete copy of the Development Agreement is attached hereto as
Exhibit "A". (c) Borrower is not in default under the Development Agreement, nor does Authority have
knowledge of any existing condition as of the date hereof which, with the passage of time or giving of
notice or both, would become a default under the Development Agreement, (d) neither Authority nar
Borrower is entitled to assert any defense, off-set, or penalty with respect to the Development Agreement
or their respective obligations thereunder with respect to any fact, condition or occurrence in existence on
the date hereof, (e) no litigation or arbitration presently exists between Authority and Borrower with
regard to the Development Agreement or the performance thereof, fl the Construction Plans for the
Phase I Minimum Improvements have been approved by Development Authority, (g) the contingencies
1 ment
e f in i f h De elo ment A eement have be
en satisfied h the Deve o
s t orth Sect on 3 8(b) o t e v p gr p
Agreement is validly executed by Authority and in full force and effect, (i) all conditions applicable to the
Authority to the effectiveness or continuing effectiveness of the Development Agreement required to be
satisfied as of the date hereof have been satisfied, and (j) Authority expressly consents to the Loan and
Borrower's execution and performance of the Note, the Security Instrument, and all other documents
securing the Note, copies of which have been provided by Borrower to Authority (collectively, the "Loan
Documents"). Authority acknowledges and represents to Lender that it has not subordinated the
Development Agreement or any of its rights under the Development Agreement to any lien, mortgage or
deed of tnzst other than the Security Instrument. For purposes of this Agreement "to the lrnowledge of
Authority" or wards of similar meaning or import shall mean the actual present knowledge of Cornelius
L. Boganey, the Executive Director of Development Authority, who is a person familiar with the Project
and the Development Agreement, without duty of inquiry or investigation.
3. Certain Agreements of Authoritv and Lender.
(a) Notices. Authority agrees to provide Lender with each notice of Borrower default and
cure right to be provided by Authority under the Development Agreement to a"Construction Lender",
any holder of a"Mortgage", or any maker of a"Construction Mortgage Loan", as such terms are defined
in Section 1.1 of the Development Agreement, in accordance with and subject to the special notice
provisions of Section 8 hereof, prior to exercising any remedies it may have under the Development
Agreement, except that, in a potential forfeiture of rights or emergency situation, no such prior notice
shall be required for Authority to take any action and/or enforce any remedies as are deemed reasonably
necessary by Authority to preserve its right, title and interest in and to the Mortgaged Premises and the
Project or to protect the health and welfare of persons on or about the Mortgaged Premises. Without
limitation to the foregoing, Authority agrees that no default under the Development Agreement shall be
effective as to Lender unless notice shall have been given to Lender in accordance with the terms hereof.
Authority agrees to furnish to Lender copies of all written notices received by Authority from Borrower
relating to any default, teimination, or material modification of the Development Agreement. Lender
agrees to copy Authority on any notice it delivers to Borrower under the Loan Documents at the same
time it gives such notice to Borrower, and to provide Authority with reasonable prior notice of any
foreclosure action regarding the Mortgaged Premises, subject to the limitations set forth in Section 8
herein.
(b) Amendment of Develonment Aereement. Authoriry agrees that it will not agree or
consent to any material amendment or modification (including, but not limited to, amendments or
modifications that materially increase the obligations of Borrower or materially decrease the obligations
of Authority), or ternunation of the Development Agreement without the prior written consent of Lender,
which consent shall not be unreasonably withheld, conditioned or delayed, and any such action taken
without Lender's prior written consent shall not be binding upon Lender.
3
2098172v6
(c} Certain Cure Riehts Lender. Authority agrees that until the Security Instrument is
released of record, Authority will not ternunate the Development Agreement by reason of defaults by
Borrower which are cured by Lender within the applicable Borrower cure period as provided in the
Development Agreement, as such cure period may be extended hereunder. As to such defaults as cannot
be cured by Lender within such cure period despite the use of commercially reasonable efforts of Lender
to cure the same, Lender will be granted an additional reasonable period of time to make such cure,
provided that Lender has commenced the cure within such cure period and diligently prosecutes the same;
and if the default cannot be cured by Lender despite the use of cominercially reasonable efforts to cure
such default because Lender is not in title to the Mortgaged Premises, Lender shall be granted and an
additional reasonable period of time to acquire title to the Mortgaged Premises from Borrower and to
make such cure, provided that Lender diligently, in good faith and using commercially reasonable efforts
takes such action as is necessary to acquire such title.
(d) Certain Cure Riehts Authoritv. Authority shall have the right (but not the obligation) to
cure any Borrower default within the applicable cure period cited in the Loan Documents, including any
grace periods afforded Borrower under the Loan Documents.
(e) Succession. If the Development Agreement is terminated by Authority for any reason,
and/or if Lender or any other party succeeds to the interest of Borrower in the Mortgaged Premises ar
under the Development Agreement in any manner, including but not limited to foreclosure, trustee's sale,
exercise �of any power of sale, succession by deed in lieu or other conveyance (any such succession a
"Succession"), upon the request of Lender, Authority will enter into a new development agreement with
Lender or its designee solely with respect to the Phase I Property (Borrower, Authority and Lender hereby
acknowledging and agreeing that the Phase I Property and the Mortgaged Premises are one in the same)
for the remainder of the term of Development Agreement upon the same terms and conditions of the
Development Agreement (a "Replacement Development AgreemenY'), except that Lender shall have no
obligations with respect to the Phase II Property. Authority acknowledges that Lender has no obligation
or duty to cure or cause to be cured any act or event of default of Borrower under the Development
Agreement relating to the Phase I Property unless Lender elects to enter into a Replacement Development
Agreement. If Lender does not elect to enter into a Replacement Development Agreement, it may
terminate the Development Agreement by notifying Authority upon Succession, and Lender, subject to
the terms and requirements of Section 7(b) hereof, shall take the Mortgaged Premises free and clear of
any obligation, duty, responsibility or liability set forth in the Development Agreement, including, but not
limited to, the obligation to create jobs as required in Section 4.11 of the Development Agreement or to
repay any portion of the Business Subsidy as provided in said Section 4.1 L
fl Lender Reliance. Authority acknowledges that Lender is relying upon the agreements,
consents and representations of Authority set forth in this Agreement, and that Lender would not extend
the Loan unless Authority execute and deliver this Agreement to Lender.
4. Certificate of Release of Forfeiture: Revestine Ri�hts. As of the date hereof,
Development Authority has fizrnished to Borrower a Certificate of Release of Forfeiture. Any and all
rights of Development Authority (under Section 11.4 of the Development Agreement or otherwise) to re-
enter and take possession of the Mortgaged Premises and to terminate and revest in Development
Authority any portion of the Mortgaged Premises have terminated and/or expired and, as of the date
hereof, are null and void and of no further force and effect. Notwithstanding any provision of this
Agreement to the contrary, nothing herein shall preclude, limit or modify the right of Development
Authority, pursuant to the terms of the Development Agreement, to re-enter and take possession of the
Phase II Property, and to terminate and revest in Development Authority any portion of such Phase II
Property.
4
2098172v6
5. Business Subsidv. Authority and Borrower acknowledge and agree that the Business
Subsidy, including the Tax Abatement is intended to benefit and to be allocated to both the Phase I
Property and the Phase II Property as set forth in the Development Agreement. Following a Succession,
and provided Lender fulfills, on a continuing basis, all Developer obligations under the Development
Agreement or, if applicable, the Replacement Development Agreement, with respect to the Phase I
Property, including without limitation, the curing of any and all defaults of Developer occurring prior to
such Succession, Lender shall be entitled to receive remaining benefits of the Business Subsidy associated
with the Phase I Property, and the remaining Business Subsidy applicable to the Phase I Property will be
paid to Lender, subject to and as provided in the Development Agreement or the Replacement
Development Agreement, as applicable. In the event of a Succession, neither Lender ar any designee,
successor or assign of Lender shall be required to own and occupy the Mortgaged Premises far any
particular period of time in order to receive the benefits of the Business Subsidy (as required of Borrower
in Section 4.11 (e) of the Development Agreement).
6. Tax Abatement Loan. Authority expressly agrees to permit Borrower to obtain a loan
(the "Tax Abatement Loan") from a lender (the "Tax Abatement Lender") secured by the income
stream of the Ta1c Abatement. All documents that the Tax Abatement Lender and/or Lender request to be
signed by Authority in connection with the Tax Abatement Loan shall be subject to Authority's approval.
Lender's approval of such Ta�: Abatement Loan is subject to its receipt, as of the date hereof, of an
intercreditor agreement with such Tax Abatement Lender in form and substance acceptable to Lender (the
"Intercreditor AgreemenY'). Notwithstanding the assignment of the Development Agreement by
Borrower to Lender as set forth herein and in the Security Instnunent, Lender acknowledges and agrees
that the right to receive the Tax Abatement has been assigned by Borrower to Tax Abatement Lender and
that the relative rights of Talc Abatement Lender to the T� Abatement are dictated by the Intercreditor
Agreement.
7. Limitation On Lender's Liabilitv: Connection.
(a) Limitation on Lender's Liabilitv. Upon any Succession, and subject to the provisions of
Section 7(b) relating to construction of a pedestrian connection, Lender shall not be: (a) liable for any act
or omission of Borrower under the Development Agreement occurring prior to Succession unless
expressly assumed by Lender in writing, (b) bound by any material amendment or modification of the
Development Agreement (including, but not limited to, amendments or modifications that materially
increase the obligations of Borrower or materially decrease the obligations of Authority) made without
Lender's prior written consent, which consent shall not be unreasonably withheld, conditioned or delayed.
Except as set forth in Section '7(b), neither Lender nor any party taking under a Succession shall be liable
for the performance of the obligations of Borrower under the Development Agreement; "except, if Lender
enters into a Replacement Development Agreement, for those obligations which arise during the period of
Lender's or such entity's or person's ownership of the Mortgaged Premises, ar unless expressly assumed
in writing. The liability of Lender (or any other party taking under a Succession) shall be limited to its
interest in the Mortgaged Premises. Authority will accept cure of any Borrower default by Lender,
provided such cure is made within the applicable cure period as provided in the Development Agreement,
or any such applicable extended cure period as provided in this Agreement.
(b) Connection. Notwithstanding any provision of this Agreement to the contrary (including
without limitation the provisions of Sections 3(e) and 7(a)), in the event Lender or any other person or
entity becomes the owner of the Mortgaged Premises by Succession or otherwise (a "Successor"), and the
Successor constructs or completes the construction of a hotel on the Mortgaged Premises or acquires such
a hotel on the Mortgaged Premises, the Successor shall, at its sole cost and expense, construct and install
on the Mortgaged Premises and the adjoining property owned by City the pedestrian link connection (the
"Connection" as defined in the Development Agreement) pursuant to the Construction Plans for the Phase
5
2098172v6
I Minimum Improvements approved by Development Authority pursuant to the Development
Agreement. This provision shall be binding upon Lender and Successor and their respective successors
and assigns and shall nui with the Mortgaged Premises.
8. Notices.
Development Authority's address for notice is: With a copy to:
Economic Development Authoriry of Brooklyn Briggs and Morgan, P.A.
Center 2200 IDS Center
6301 Shingle Creek Parkway 80 South Eighth Street
Brooklyn Center, Minnesota 55430-2199 Attn: Minneapolis, MN 55402-2157
Executive Director Attn: David G. Greening
City's address for notice is: With a copy to:
City of Brooklyn Center Briggs and Morgan, P.A.
6301 Shingle Creek Parkway 2200 IDS Center
Brooklyn Center, Minnesota 55430-2199 80 South Eighth Street
Attn: Ciry Manager Minneapolis, MN 55402-2157
Attn: David G. Greening
Lender's address far notice is: With a copy to:
THE PRUDENTIAL INSUR.ANCE THE PRUDENTIAL INSURANCE COMPANY
COMPANY OF AMERICA OF AMERICA
Prudential Asset Resources Prudential Asset Resources
2200 Ross Avenue, Suite 4900E 2200 Ross Avenue, Suite 4900E
(after 2/15/08; 2100 Ross Avenue, Suite 2500) (after 2/15/08; 2100 Ross Avenue, Suite 2500)
Dallas, Texas 75201 Dallas, Texas 75201
Attention: Asset Management Department Attention: Legal Deparhnent
Reference Loan No. 706107575 Reference Loan No. 706107575
Except for notices to Lender that are required to comply with the Special Notice Provisions set forth
below, notices shall be given in the same manner as notices to Borrower pursuant to the notice provisions
contained in the Security Instrument. Lender shall give Authority copies of notices as set forth in Section
3(a) of this Agreement; provided that failure of Lender to do so shall not impair the effectiveness of the
notice, impose any liability on Lender, or hinder or impair any foreclosure action. With respect to notices
to Lender regarding a Borrower default under the Development Agreement, the following shall apply (the
"Special Notice Provisions"):
(a) The notice must be in writing, and copies of the notice must be sent to both Lender's
asset management and legal departments in accordance with this Section 8.
(b) The notice must contain a blank sheet on the top of it with only the following language
appearing in the middle of the sheet, with the number of days or date by which Lender has to cure the
Borrower default completed (as set forth in the Development Agreement):
PRUDENTIAL MUST CURE THE BORROWER DEFAULT REFERENCED HEREIN
[WITHIN BUSINESS DAYS] OR [BY 20� OR
6
2098172v6
PRUDENTIAL SHALL BE DEEMED TO HAVE WAIVED IT'S RIGHT TO CURE
SUCH BORROWER DEFAULT.
(c) Each such request shall reasonably detail the Borrower default.
(d) In the event that Authority fails to comply with the Special Notice Provisions, (i) Lender
shall not be required to cure within the specific period of time, and (ii) Lender's right to cure will not be
deemed waived if Lender fails to cure with the specific period of time.
9. Comnlete Aereement. This Agreement supersedes, as between the parties hereto, all of
the terms and provisions of the Development Agreement which are inconsistent herewith.
10. No Oral Modification/Bindins Effect. This Agreement may not be modified orally or in
any manner other than by an agreement in writing signed by the parties hereto or their respective
successors in interest. Notwithstanding the foregoing, any amendments heretofore or hereafter made to
any of the Loan Documents, other than this Agreement and any other Loan Documents to which it is a
party, shall not require the consent of Authority. This Agreement shall inure to the benefit of and be
binding upon the parties hereto and their successors and assigns.
11. Counteroarts. This Agreement may be executed in any number of counterparts, each of
which shall be considered an original for all purposes; provided, however, that all such counterparts shall
constitute one and the same instrument. This Agreement may not be modified except by written
agreement of the parties. This Agreement shall be binding upon the successors and assigns of each of the
parties.
12. Laws. This Agreement shall be construed in accordance with the laws of the State of
Minnesota.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
[SIGNATURES BEGIN ON FOLLOWII�TG PAGE]
7
2098172v6
IN WITNESS WHEREOF, the arties hereto have caused this A eement to be dul executed the
P Y
day and year first above written.
BORROWER:
BROOKLYN HOTEL PARTNERS, LLC, a
Minnesota limited liability company
B:
Y
Name:
Title:
State of Minnesota
County of
This instnzment was acknowl
ed ed before me on December 2007, b as
g Y
of Brooklyn Hotel Partners, LLC, a Minnesota limited liability company, on behalf of the
limited liability company.
[NOTARY SEAL]
Signature of Notarial Officer
Printed Name of Notary Public
My Commission expires:
[SIGNATURES CONTINUED ON NEXT PAGE]
i
g
2098172v6
SIGNATURES CONTINUED FROM PREVIOUS PAGE]
[SIGNATURE PAGE TO ASSIGNMENT AND SUBORDINATION OF DEVELOPMENT
AGREEMENT]
DEVELOPMENT AUTHORITY:
ECONOMIC DEVELOPMENT AUTHORITY OF
BROOKLYN CENTER, a body corporate and
politic organized under the laws of the State of
Minnesota
By:
Name:
Title:
State of Minnesota
County of Hennepin
This instxument was acknowledged before me on December 2007, by as
of Economic Development Authority of Brooklyn Center, a body corporate and politic
organized under the laws of the State of Minnesota, on behalf of the corporate and politic body.
[NOTARY SEAL]
Signature of Notarial Officer
Printed Name of Notary Public
My Comxnission expires:
[SIGNATURES CONTINUED ON NEXT PAGE]
i
9
2098172v6
[SIGNATURES CONTINUED FROM PREVIOUS PAGE]
[SIGNATURE PAGE TO ASSIGNMENT AND SUBORDINATION OF DEVELOPMENT
AGREEMENT]
CITY:
CITY OF BROOKLYN CENTER, a municipal
organization under the laws of the State of
Minnesota
B
Name:
Title:
State of Minnesota
County of Hennepin
This instrument was acknowledged before me on December 2007, by as
of City of Brooklyn Center, a Minnesota municipal organization, on behalf of the
municipal organization.
(NOTARY SEAL]
Signature of Notarial Officer
Printed Name of Notary Public
My Commission expires:
10
2098172v6
[SIGNATURES CONTINUED FROM PREVIOUS PAGE]
[SIGNATURE PAGE TO ASSIGNMENT AND SUBORDINATION OF DEVELOPMENT
AGREEMENT]
LENDER:
THE PRUDENTIAL 1NSURANCE COMPANY OF
AMERICA, a New Jersey corporation
By:
Name:
Title: Vice President
[CORPOR.ATE SEAL]
State of 1
County of 1
This instrument was acknowledged before me on December 2007, by as Vice
President of The Prudential Insurance Company of America, a New Jersey corporation, on behalf of the
corporation.
[NOTARY SEAL]
Signature of Notarial OfFicer
Printed Name of Notary Public
My Commission expires:
11
20981'72v6
EXHIBIT "A"
(copy of Development Agreement)
2098172v6 A-1
ASSIGNMENT OF
RIGHT TO RECEIVE TAX ABATEMENT PAYMENTS
(Srooklyn Center Embassy Suites)
This Assignment of Development Agreement (this "Assignment") is made as of
Novernber 2007 by BROOKLYN HOTEL PARTNERS, LLC, a Minnesota limited liability
company (the 'Borrower") in favor of HIJRLBUT-ZEPPA CHARITABLE TRUST AR (the
"Lender").
PREAMBLE
A. The Lender has agreed to make available to the Borrower a loan in the amount of
under a TAX ABATEMENT Note of even date herewith (the 'Note")
which Note is secured by a Secunity Agreement and this Assignment as aI1 of the same may be
amended, renewed or supplemented from time ta time (collectively, the "Loan Documents"}.
B. The Borrower has entered into agreements with the Economic Development
Authority of Brooklyn Center, Minnesota including a DeveIopment Agreement by and between the
Economic Development Authority of Brooklyn Center, Minnesota, the City of Brooklyn Center and
Brookly,n Hotel Partners, LLC dated October 23, 2006, as amended by the First Arnendment to
Development Agreement by and between Economic Developrnent Authority of Brooklyn Center
and Brooklyn Hotel Parfners, LLC dated July 23, 2007 (the "Development Agreement").
C. The Lender has r�uested and the Bonrower has agreed to assign the right to receive
Tax Abaternents under Article V of the Development Agreement ("ttle Tax Abatement Payments")
to the Lender on the terms and conditions of this Assignment.
D. The Borrower has granted to Prudential Insurance Company ("First Mortgage
Lender") a first mortgage upon the Brooklyn Center Embassy Suites Hotel ("the Project") project
which is a subject of the Development Agreement, and First Mortgage Lender's rights pursuant to
the first martgage loa� shall be senior and have a priority in all respects to Lender's interest
pursuant to the Loan Documents except with respect over Lender's rights in Tax Abatement
Payments.
AGREEMENT
In consideration of the premises and rnutual covenants herein contained, the parties,
intending to be legally bound, agree as follows:
1. AssiQnment. For the purpose of secnring payment and performance of the obligatians
of the Borrower to the Lender pursuant to the Loan Documents, the Bonower hereby assigns,
transfers and sets over unto the Lender and grants a securiry interest in all of the Borrower's right,
title and interest in and to the Tax Abatement Payments. Upon the occurrence of an event of
default, following aIl applicable notice and cure periods, and during the cantinuatian thereof under
any Loan Document, the Lender may upon written notice ta the Borrower, either exercise u� the
name and right of the Borrower, or in the name and right of Lender as assignee hereunder, all rights
aass69.�
I
and remedies of the Borrower under the Development Agreement relating to the Tax Abatement
Payments.
2. Effect of First Mortea�e Foreclosure. Upon foreclosure by Lender pursuant to the
Loan Documents, Lender shall have all rights to the Tax Abatement Pa}nnents, with Fixst Mortgage
Lender having no rights to its Ta�c Ahatement Payments, pro�vided, however, that follovving a
foreclosure by First Mortgage Lender of i�s fust Mortgage Property, First Mortgage Lender sha11
have no obligation ta undertake any steps, actions or requirements to maintain the tax abatement
income stream, and if the Tax Abatement Payment stream ends for any reason, Barrower and
Lender agree that First Martgage Lender sha11 have no liabiliiy therefore to Borrower or Lender.
3. Renresentations and Warranties. The Borrower hereby warrants and represents to the
Lender that except as permitted under the Agreement (a) the copies of the Development Agreement,
and any docuinents related thereto delivered to the Lender by the Borrower were then and are now
true and correct copies thereof and include any and all amendments and modificatians thereto
through the date of this Assignment, (b) the Development Agreement is in full force and effect, and
is the valid and binding obligation of each of the parties thereto, enforceable against each of thern,
respectively, in accordance with its terms and the Borrower has fulfilled all of its obligations as of
the date hereaf under the Developrnent Ageement, (c) the Borrower has not previously assigned,
sold, pledged, transferred, mortgaged, hypothecated or otherwise encumbered the Tax Abatement
Payments, or its right, title and interest therein, nor agreed to do so in the future to a party other than
the Lender, (d) the Borrower is not in default under the Development Agreement and no other party
to the Developrnent Agreement is in default thereunder.
4. Actions Re�arding Develonment A�areernent. The Borrower will not cancel,
fierminate, amend or modify ar consent to any cancellation, ternunation, amendment or modification
of the Development Agreement withaut the Lender's prior written consent. Tbe Borrower wil�
provide the Lender with copies of all notices from any person with respect to axiy default under any
Development Ageement pramptly upon the receipt of such notices. The Bono�ver will, at its own
expense, conform and comply with all af the terms azxd conditions af the Development Agreement
and will take all actian to that end as the Lender may reasonably request fram time to time. The
Borrower will execute and deliver such insfiruments and documents as the Lender may from time to
time reasonably request in order to fiarther effect the purpose of the assignment contained in this
Assignment. Except in connection with the first mortgage loan, the Borrower will not assign,
pledge, transfer or otherwise encurnber its interest in the Developrnent Agreement so long as this
Assignment remains in effect.
5. Annointment of Lender as Attornev-in-Fact. The Borrower hereby irrevocably
appoints the Lender as its attorney-in-fact, coupled with an interest, to exercise the rights and
remedies contained in this Assignment with respect to the Tax Abaternent Payments at, any time
after the accurrence of an event of default under any of the Loan Documents.
6. Notices. All notices, demands, requests, consents, approvals and other
communications required or permitted hereunder must be in writing and will be effective upon
receipt if delivered personaily ta the Borrower or the Lender, or if sent by facsunile transmission
with confirmation af delivery, or by nationally recognized overnight courier service, to the address
4485G9.1 2
set forth belaw or to such other address as the Borrower or the Lender may give to the other in
writing for such purpose.
If to the Lender: If to the Borrower:
Hurlbut-Zeppa Charitable Trust AR Brooklyn Hotel Partners, LLC
222 East Su�erior Street, Suite 202 5629 Grand Avenue
Duluth, MN 55802 Duluth, MN 55$07
Attn: Keir Johnson Attn: Kent Oliver
Facsimile: (218) 726-5431 Facsimile: (2I8) 624-2724
With a copy to: With a copy to:
Johnson, Killen Seiler, P.A. Hanf� Fride
230 W. Superior Street, Ste 800 1000 US Bank Place
Duluth, MN 55802 Duluth, MN 55802
Attn: 7ohn N. Nys Attn.: Mark Pilon
Facsimile: 218-722-6331 Facsimile: 218-529-2401
First Mortgage Lender shall receive copies of With a capy to:
notices sent by either Borrower or Lender, to be
delivered as follows:
Arin:
Facsimile:
7. Miscellaneous. This Assignment (a) may be amended or waived only by a
wriring signed by each of the parties; (b) may not be assigned, pledged or otherwise transferred,
whether by operation of law or otherwise, without the prior written consent of the other party; {c)
may be executed in several counterparts, each of which shall be deemed an original, but all of
which shall consritute one and the saxne instrument; (d} contains the entire agreement of the
parties with respect to the transactions contemplated hereby and supersedes all prior written and
oral agreements, and all contemporaneous oral agreements, relating to such transactions; (e) shall
he governed by, and construed and enforced in accordance with, the laws of the State of
Minnesota without giving effect to any conflict of laws rrzles; and fl sha11 be hinding upon, and
inure to the benefit of, the parties and their respective successors and assigns.
This Assignment is �ecuted as of the date first written above.
BROOKLYN HOTEL PARTNERS, LLC
By:
Its:
448569.1 3
STATE OF
)ss.
COUNTY OF
The foregoing instrument was acknowledged before me this day of
2007 by the of Brooklyn Hotel Partners, LLC, a
Minnesota limited liability company on beha.lf of the company.
Notary Public
4485G9.1 4
CONSENT
This Assignment, pertaining to the assignment, for security purposes, of certain rights
under Article V of the Development Agreement is hereby consented to by the Economic
Development Authority of Brooklyn Center, a body corporate and politic organized under the
laws of the State of Minnesota (`BDA") and the City of Brooklyn Center, a Minnesota municipal
tion 10.2 of the Develo ment
organization (the City pursuant to and in compliance with Sec p
Agreement. Except for the EDA's and City's consent to the granting of a security interest in
favor of Lender, and the irrevocable appointment of the Lender as Borrower's attorney in fact as
set forth in paragraph 5 of this Agreement, nothing herein shall (i) be deemed to be a
modification of the terms of the Development Agreement or Borrower's obligations or the rights
and remedies of the EDA or the City thereunder, or (ii) be deemed to constitute the consent or
approval of any term or provision of this Assignment or any of the other Borrower loan
documents. The consent herein granted by the EDA and the City is conditioned upon and
subject to (a) the agreement of Lender to provide to the EDA and City, in a prompt manner,
written notice of any default by Borrower under the terms of this Assignment or any of the other
Borrower loan docurnents, and (b) the agreement of Borrower to waive any and all claims
Borrower may have, and to indemnify, defend and hold harmless EDA and City from, all claims
of Lender, in connection with the payment by EDA and/or City of Tax Abatements to Lender.
Borrower's and Lender's execution of this Assignment shall constitute their acknowledgement
and agreement to the terms and provisions of this Consent.
Dated: 2007
Address for Notices: Economic Development Authority of
Econornic Development Authority of Brooklyn Center
Brooklyn Center
6301 Shingle Creek Parkway
Brooklyn Center, MN 55430-2199 By:
Attn: Executive Director Its: Executive Director
Addresses far Notices: City of Brooklyn Center
Cit of Brookl n Center
Y Y
Brooklyn Center City Hall By:
6301 Shingle Creek Parkway Its:
Brooklyn Center, MN 55430-2199
Attn: City Manager
By:
Its:
i
2I09826v2
TAX ABATEMENT NOTE
AMOUNT:
DATE: November 2007
DATE OF MATUR�TY: February 15, 2019
INTEREST RATE: Interest will accrue on the unpaid outstanding Principal Amount at
a fixed rate of twelve percent (12.0%) per anrium
FOR VALUE RECEIVED, undersigned (the "Maker"} hereby covenaxzts and promises
to pay to Hurlbut-Zeppa Charitable Trust AR, or to its successors or assigns (collectively
"Payee"), as provided belaw and on the Date of Maturity, at 222 East Superiar Street, Suite 202,
Duiuth, Minnesota, or at such other place as Payee may designate to the undersigned Maker in
writing from time to time, in legal tender of the United States, the Amount of this TAX
ABATEMENT Note (the "Note") ar so much thereof as is advanced as provided below (the
"Principal Axnount"), together with interest at the Interest Rate on the unpaid balance of the
Principal Amount.
On September 34, 2008, and in quarterly installments payable on December 31,
March 31, June 30 and September 30 thereafter, a payment of accrued interest shali be due
and payable.
There shall also be payable with each installment as an additional payment all amounts
received by Maker from the City of Brooklyn Center under Article V of the Development
Agreement by and between the Economic Development Authority of Brooklyn Center, Minnesota,
the City of Brooklyn Centex and Brooklyn Ho#el Partners, LLC dated October 23, 2006, as amended
hy the First Amendment dated Yuly 23, 2007 (the "Development Agreement") as Tax Abatements
(as that term is defined in the Development Agreement). AIl outstanding principal and accrued
interest shall be due in fit11 on the Date of Maturity above sta.ted.
The Borrower has gxanted to Prudential Insurance Company {"First Mortgage Lender") a
first mortgage upon the Brooklyn Center Embassy Suites Hatel ("the Project"} project which is a
subject of the Development Agreement, and First Mortgage Lender's rights pursuant to the first
Mortgage loa.n shall be ser�or and have a priarity in all respects to Payee's interest pursuant to tlie
Loan Documents except with respect to First Mortgage Lender's rights in Tax Abatement
Payments.
Tf any payment is not paid on or before the 15th day after it is due, a late payment charge
of 5% af the unpaid payment, but in no event shall such charge be less than $50, will be charged
to defray the expenses incurred by the Payee in handling and processing the delinquent payment
and such amounts shall be an additional obligation secured by the Security Agreement and the
other loan documents. Any payment received after the 15th day after its due date shall be
applied first to the late charge, then to interest, and the remainder, if any, to the outstanding
principal balance of the Note.
i
448G93.1
i
Borrower may prepay principal on this Note in any amaunt a# any time. In consideration
of Lender praviding this prepayment option to Borrower, or if this Note shall becorne due and
payable at any time prior to the maturity date hereof by acceleration or otherwise, Borrower shall
pay to Lender, at the time of such prepayment, a prepayment fee in an amount equai to two
o
percent (2 /o) of the principal aznount prepaid.
Borrower aclrnowledges that prepayment of such a.mount may result in Lender incurring
additiona.l costs, expenses and/or liabilities, and that it is difficult to ascertain the full extent of
such costs, expenses and/ar Iiabilities. Borrower, therefore, agrees to pay the above-described
prepayrnent fee and agrees that said arr�ourxt represents a reasonable estimate of the prepayment
costs, expenses and/or liabilities of Lender. If Borrower fails to pay any prepayment fee when
due, the amount of such prepayment fee shall thereafter bear interest until paid at the rate of
interest applicable to unpaid principal after maturity of this Nate.
All prepayments of principal shall be applied on the most remote principal installment or
installments then unpaid.
The following documents {the "Loan Documents") are delivered, or to be delivered, in
connection with this Note:
1. Security Agreement from Maker.
2. Assignment of Development Agreement
3. Documents evidencin authorit of the Maker to execute and deliver the documents
g Y
executed and delivered by ifi.
This Nota is secured by the Security Agreement and Assignment of Development
Agreement.
The unpaid balance of the Principal Amount, p2us accrued interest, shall become due and
payable at the option of Payee upon the happening of any event by which said balance shall or
may become due and payable under the terms of the Security Agreement. If suit is brought to
collect this Note, the Payee shall be entitled to collect all zeasanable costs and expenses of suit,
including, but not lirnited to, reasonable attorneys' fees.
The Payee may change any terms of payment of this Note, including extensions of time
and renewals, and release any security for, or any party to, this Note without notifying or
releasing any accommodation maker, endorser or guarantor frorn liability on this Note.
In the event the Maker sells, conveys, transfers or otherwise disposes of, or encumbers,
an art of its interest in the Pro'ect ro e consistin of the Pra'ect as defined in the
YP J P PrtY g J
Developnnent Agreement, whether voluntarily, involuntarily or by operation of law, without the
prior vvritten consent of Payee, Payee shall have the option to declare the unpaid Principal
Amount together with interest due and payable immediately due and payable without notice.
Tncluded within the foregoing actions requiring prior written consent of Payee are: (a} sale by
deed or contract far deed; (b) mortgaging or granting a lien on the Project praperty other than the
First Mortgage Loan; and (c) a transfer which changes (i) the present Chief Manager or (ii) other
448G93.1 2
transfer which changes controt of Maker except for transfers to related or affiliated entities. The
Maker shall give notice of any proposed changes in its present Chief Manager to holder at least
thirty (30) days prior to take such action. Maker shall pay all costs and expenses incurred by
holder in evaluating any such action. Holder may condition such consent upon modifica�ion of
the Loan Docurnents or payment of fees. No such action shall relieve Maker from liability for
the Obligations. The consent by holder to any action shall not constitute a waiver of the
necessity of such consent to any subsequent action.
This Note will be construed and enforced pursuant ta the laws of the State of Mu�nesota.
This Note may not be changed orally, but anly by written agreement, signed by the party
against whom enforcement of any waiver, change, modificatian, or discharge is sought.
All parties to this Note, whether undersigned Maker, principal surety, guarantor ar
endorser, hereby waive demand, notice, and protest.
The security of the Maker for the payment of any amount payable hereunder or any
obligation set forth herein shall be only in the collateral subject to the Assignment of Right to
Receive Tax Abatement Payments (the "Assignment") and the Security Agreement. Neither the
Payee nor any subsequent holder of this Note shall have any right to seek collection of this Note
or the performance af any obligation hereunder out of the assets (personal or otherwise} of any
partner, member, stockholder, officer or director of the Maker.
Brooklyn Center Partners, LLC
By:
Its:
448693.1 g