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HomeMy WebLinkAbout2010-013 EDAR Commissioner Kay Lasman introduced the following resolution and moved its adoption: EDA RESOLUTION NO. 2010 -13 RESOLUTION APPROVING DEVELOPMENT AGREEMENT SUBORDINATION AGREEMENT AND AGREEMENT REGARDING COVENANT AND RESTRICTION WITH RESPECT TO THE PAYMENT OF REAL ESTATE TAXES AND AUTHORIZING EXECUTION OF CLOSING DOCUMENTS A. WHEREAS, the Economic Development Authority of the City of Brooklyn Center, Minnesota (the "Authority ") and the United States of America, acting by and through the U.S. General Services Administration (the "GSA ") have heretofore entered into a Real Estate Option Agreement (as amended, the "Option Agreement ") providing for the Authority's conveyance of certain real property (as defined in the Development Agreement, the "Development Property ") to the GSA for the purpose of constructing office space containing up to approximately 173,572 square feet of rentable space with an onsite parking facility structure having a minimum of 347 secured and visitor parking spaces (the "Project ") within the City of Brooklyn Center, Minnesota (the "City "). B. WHEREAS, by that certain Assignment of Option Agreement dated effective as of June 19, 2009, the GSA assigned its rights under Option Agreement to Barry Minneapolis, LLC (`Barry ") C. WHEREAS, Barry exercised the option granted in the Option Agreement by delivering to the Authority, inter alia, that certain Development Agreement dated October 16, 2009 (the "Development Agreement "). D. WHEREAS, the Authority and Barry have amended the Development Agreement pursuant to that First Amendment to Development Agreement dated effective as of February 22, 2010 and that Second Amendment to Development Agreement dated effective as of April 27, 2010. E. WHEREAS, PH LLC, a Nevada limited liability company ( "PH "), and Barry entered into that certain Purchase Agreement dated as of December 21, 2009, as amended by that certain First Amendment to Purchase Agreement dated as of January 15, 2010, as amended by that certain Second Amendment to Purchase Agreement, dated March 29, 2010 (collectively, the "Purchase Agreement "), which Purchase Agreement will be assigned by PH to PH Minneapolis, LLC, a Nevada limited liability company (such entity referred to herein as the "Developer "). F. WHEREAS, pursuant to a certain Assignment and Assumption Agreement, previously approved by the Authority, Barry will assign to Developer all of Barry's rights and obligations under the Development Agreement (the "Assignment "). EDA RESOLUTION NO. 2010 -13 G. WHEREAS, Developer is obtaining financing for the construction of the Project from Teacher's Insurance and Annuity Association of American, a New York corporation ( "Lender); H. WHEREAS, as a condition to providing such financing of the construction of the Project, Lender requires the Authority's agreement to subordinate certain rights of the Authority under the Development Agreement and the Deed, as contemplated in the Development Agreement, and to further modify certain provisions of the Development Agreement, as set forth in that certain Development Agreement Subordination Agreement and Agreement Regarding Covenant and Restriction with Respect to the Payment of Real Estate Taxes (the "Subordination Agreement "). I. WHEREAS, Developer and Lender have agreed that, in consideration of the Authority's execution of the Subordination Agreement, the Developer shall execute and record that certain Covenant and Restriction with Respect to the Payment of Real Estate Taxes (the "Tax Covenant "), which obligates Developer and its successors and assigns, including Lender, to pay real estate taxes on the Project and prohibits the application by any such owner to apply for tax- exempt status for the Project. J. WHEREAS, Section 3.9(b)(iv) of the Development Agreement requires the Authority to provide a resolution of the Authority authorizing the Authority's conveyance of the Development Property to Developer (the "Conveyance ") and identifying the individuals authorized to execute the Deed (as defined in the Development Agreement) to be granted in connection with the Conveyance and any other documents required under the Development Agreement in connection with the Conveyance (together with the Deed, the "Closing Documents "). NOW, THEREFORE, BE IT RESOLVED by the Board of Commissioners of the Authority of Brooklyn Center, Minnesota, as follows: 1. The Board of Commissioners hereby approves the Subordination Agreement and Tax Covenant, including the documents in substantially the form submitted, and the President and Executive Director are hereby authorized and directed to execute the Subordination Agreement, including implicit modifications of the Development Agreement, and the Tax Covenant on behalf of the Authority. 2. The Board of Commissioners hereby approves the Conveyance, including the execution of the Closing Documents and any documents reasonably required in connection therewith, and the President and Executive Director are hereby authorized and directed to execute any document required to complete the Conveyance on behalf of the Authority. EDA RESOLUTION NO. 2010 -13 3. The Board of Commissioners recognizes that the Developer's obligation to close on the purchase of the Development Property on or before the Closing Date set forth in the Development Agreement is contingent on Developer closing on financing for the Project, as set forth in Section 3.8(a)(i) of the Development Agreement, further recognizes that Developer was unable to close on such financing on or before June 10, 2010, and hereby approves an extension of the Closing Date to occur on or before June 18, 2010. 4. The approval hereby given to the Subordination Agreement, Tax Covenant and the Conveyance (including the execution of any and all Closing Documents) includes approval of such additional details contained in the documents related thereto as may be necessary and appropriate and such modifications thereof, deletions therefrom and additions thereto as may be necessary and appropriate and approved by the Authority officials authorized by this resolution to execute documents required in connection with the Authority's consent to the Assignment and with the Conveyance. The execution of such documents by the appropriate officer or officers of the Authority shall be conclusive evidence of the approval of the Assignment and Conveyance (including the execution of any and all Closing Documents) in accordance with the terms hereof. June 14, 2010 Date President The motion for the adoption of the foregoing resolution was duly seconded by commissioner Mark Yelich and upon vote being taken thereon, the following voted in favor thereof: Tim Willson, Kay Lasman, Tim Roche, Dan Ryan, and Mark Yelich; and the following voted against the same: none; whereupon said resolution was declared duly passed and adopted. EDA RESOLUTION NO. 2010 -13 STATE OF MINNESOTA COUNTY OF HENNEPIN CITY OF BROOKLYN CENTER I, the undersigned, being the duly qualified and acting Secretary of the Economic Development Authority of Brooklyn Center, Minnesota, also known as the Economic Development Authority in and for the City of Brooklyn Center, DO HEREBY CERTIFY that I have carefully compared the attached and foregoing extract of minutes with the original minutes of a meeting of the Board of Commissioners of the City held on the date therein indicated, which are on file and of record in my office, and the same is a full, true and complete transcript therefrom insofar as the same relates to a Resolution Approving Development Agreement Subordination Agreement and Agreement Regarding Covenant and Restriction with Respect to the Payment of Real Estate Taxes and Authorizing Execution of Closing Documents. WITNESS my hand as such Secretary of the Board of Commissioners of the Economic Development Authority of the City of Brooklyn Center, Minnesota this 14 day of June, 2010. Secretary • The area above is reserved for Recorder's use DEVELOPMENT AGREEMENT SUBORDINATION AGREEMENT AND AGREEMENT REGARDING COVENANT AND RESTRICTION WITH RESPECT TO THE PAYMENT OF REAL ESTATE TAXES THIS DEVELOPMENT AGREEMENT SUBORDINATION AGREEMENT AND AGREEMENT REGARDING COVENANT AND RESTRICTION WITH RESPECT TO THE PAYMENT OF REAL ESTATE TAXES (this "Agreement ") is made and entered into as of the day of June, 2010, by and between PH MINNEAPOLIS, LLC, a Nevada limited liability company ( "Developer "), TEACHERS INSURANCE AND ANNUITY ASSOCIATION OF AMERICA, a New York corporation (together with its successors and assigns, "Lender "), WELLS FARGO BANK NORTHWEST, NATIONAL ASSOCIATION, as collateral trustee for Lender (together with its successors and assigns, the "Collateral Trustee "), and ECONOMIC DEVELOPMENT AUTHORITY OF BROOKLYN CENTER, MINNESOTA, a public body corporate and politic organized and existing under the laws of the State of Minnesota (the "Authority "). . RECITALS 15699253.11.BUSINESS A. The Authority and Barry Minneapolis, LLC ( " Barry ") are parties to that certain Development Agreement dated October 16, 2009, as amended by that certain First Amendment • to Development Agreement, by and between the Authority and Barry dated as of February 22, 2010 and as further amended by that certain Second Amendment to Development Agreement, by and between the Barry and the Authority dated as of April 27, 2010 (as amended, and as may from time to time be amended, supplemented, restated or otherwise modified, the "Development Agreement "); B. On the date hereof, all of Barry's rights and obligations in and to the Development Agreement have been transferred and assigned to Developer pursuant to that certain Assignment and Assumption Agreement (the "Assignment and Assumption Agreement ") dated as of the date hereof, a true, correct and complete copy of which is attached hereto as Exhibit A ; C. In connection with the execution hereof, Lender is making a loan (the "Loan ") in the original principal amount of up to a maximum of approximately $62,500,000 to Developer, which such Loan is secured by, among other things, a certain Mortgage, Assignment of Development Agreements and Rents, Security Agreement and Fixture Filing (the "TIAA Mortgage ") from Developer in favor of Collateral Trustee which encumbers the real property set forth on Exhibit B attached hereto (the "Property") as more particularly described therein; D. The Loan is and/or will be cross - collateralized and cross - defaulted with certain other loans made or to be made by Lender or certain of its affiliates to certain affiliates of Developer as described on Exhibit C attached hereto (such loans, collectively, the "Other • Loans "); E. In connection with the sale of the Property from the Authority to the Developer, Authority and Developer executed that certain Covenant and Restriction With Respect To the Payment of Real Estate Taxes (the "Covenant "), which such Covenant is intended to be filed in the applicable local land records and encumber the Property; F. As a condition of the Loan's funding and the execution of the documents evidencing the Loan, Lender has required that Developer and the Authority execute this Agreement; and NOW, THEREFORE, in consideration of the foregoing and of the mutual covenants herein contained, the parties agree as follows: AGREEMENT 1. Development Agreement The Authority and Developer each hereby represents and warrants that (a) the Development Agreement is presently in full force and effect and has not been amended or modified in any way (other than implicit amendments resulting from the execution of this Agreement), and (b) a complete, true and correct copy of the Development Agreement, including all amendments (other than implicit amendments resulting from the execution of this Agreement), is attached hereto as Exhibit D . i 15699253.11.BUS INESS • 2. Acknowledgement of Assignment The Authority hereby consents to the assignment of the Development Agreement from Barry to Developer pursuant to the Assignment and Assumption Agreement and hereby recognizes the Developer as the "Developer" as described in the Development Agreement. 3. Subordination of Development Agreement The Authority hereby subordinates the Development Agreement and all of its ht, title and interest thereto and therein to the lien of P �' right, the TIAA Mortgage and acknowledges that the Development Agreement and each and every term and condition therein is expressly subject and subordinate to the terms of the TIAA Mortgage and all other documents and instruments evidencing or securing the Loan (collectively, the "Loan Documents "). 4. Subordination of Business Subsidy The Authority hereby subordinates the Business Subsidy (as defined in the Development Agreement) and all of its rights and remedies (including any right to payment) with respect thereto to the Developer's payment and performance of the Loans and the Other Loans. Notwithstanding anything to the contrary contained in the Development Agreement, no Successor Owner shall have any obligation or liability under Section 4.9 of the Development Agreement or otherwise with respect to any Business Subsidy. S. No Default The Authority and Developer each hereby represents to the best of their actual knowledge that neither the Authority nor the Developer are in default or Event of • Default under the terms and conditions of the Development Agreement or the Covenant and no event has occurred which with the giving of notice or passage of time would constitute such a default or Event of Default. 6. Consent to Mortgage The Authority hereby represents and warrants that neither the Loan nor the execution, delivery or recording of the TIAA Mortgage and related Loan Documents or the documents evidencing or securing the Other Loans (a) constitutes a prohibited assignment or other transfer of the Development Agreement or an assignment or other transfer requiring the Authority's consent, or (b) violates the terms of Section 6.1 of the Development Agreement. , 7. No Other Mortgage The Authority hereby represents and warrants that the Authority has received no notice of and has no knowledge of any Construction Mortgage (as defined in the Development Agreement) or Mortgage (as defined in the Development Agreement) encumbering the Property (other than the TIAA Mortgage). 8. No Notices; No Right to Cure Loan. Notwithstanding anything to the contrary contained in the Development Agreement (including, without limitation, Section 6.4 and Section 10.4 thereof), the Authority hereby agrees that the Authority shall have no right to cure any default or event of default under the Loan or the Other Loans and Lender shall have no obligation to accept any such cure from the Authority it being understood and agreed that nothing contained in the Development Agreement shall in any way hinder or delay the Lender's (or Collateral Trustee's) right to exercise all rights and remedies under the TIAA Mortgage and . the other Loan Documents (provided the foregoing shall not be deemed to limit the Authority's rights set forth in Section 15, below). Neither Lender nor Collateral Trustee shall have any 15699253.11.BUSINESS obligation under the Development Agreement to provide the Authority with any notice sent • under the TIAA Mortgage or the other Loan Documents. 9. Intentionally Omitted 10. No Cross Default Notwithstanding anything to the contrary contained in the Development Agreement (including, without limitation, Section 10.1(e) thereof), each of the Authority and the Developer agree that a default or event of default under any of the Loan or the Other Loans shall not, by itself, constitute an Event of Default under the Development Agreement until Lender (or Collateral Trustee) shall have commenced foreclosure proceedings under the TIAA Mortgage (although the circumstances giving rise to such default or event of default may also give rise to an Event of Default under the Development Agreement). 11. No Claims; Defenses As of the date hereof, the Authority hereby represents to the best of its actual knowledge that the Authority has no claims, demands, causes of action, defenses, setoffs or counterclaims against Developer arising out of the Development Agreement or the Covenant or in any way relating thereto, or arising out of any other transaction between the Authority and the Developer. 12. No Amendment The Authority and the Developer hereby agree that neither the Authority nor the Developer shall amend, supplement, restate, terminate or otherwise modify the Development Agreement or the Covenant or the rights and responsibilities of the parties thereto unless Lender shall have granted it prior written consent in each instance, and any amendment, supplement, restatement, termination or modification purported to be effected without Lender's • prior written consent shall not be effective. 13. Copies of Notices The Authority hereby agrees that so long as the TIAA Mortgage remains outstanding, the Authority shall give Lender (and Collateral Trustee) a duplicate copy of any and all notices of default or other notices in writing which the Authority may give or serve upon Developer pursuant to the terms of the Development Agreement or the Covenant, and any such notice shall not be effective until said duplicate copies are delivered to the Lender (and Collateral Trustee). 14. Approval of Preliminary Plans The Authority hereby represents and warrants that it has received the Preliminary Plans and that such Preliminary Plans have been approved by the Authority in accordance with the terms of the Development Agreement. 15. Conditions to Exercise of Rights of Reverter (a) Prior to Foreclosure Sale Notwithstanding anything to the contrary contained in the Development Agreement, so long as the TIAA Mortgage remains outstanding, the Authority will not have the right to enforce its rights of rentry, reverter or revestment described in Section 10.4 of the Development Agreement (the "Rights of Reverter ") (which Rights of Reverter are reserved in the deed conveying the Property from Authority to Developer (the "Deed") recorded in the Hennepin County Registrar of Titles connection with the Developer's acquisition of the Property) prior to a foreclosure sale of the Property pursuant to the TIAA Mortgage (a "Foreclosure Sale ") unless the Authority has the right to exercise its Rights of Reverter under • the Development Agreement at such time and both of the following conditions have been met: 15699253.11.BUSINESS . (i) the Lender (or Collateral Trustee) has failed to pursue a cure of the default under the Development Agreement or foreclosure of the TIAA Mortgage within the time periods established in Section 18, and (ii) the Lease between Developer and The General Services Administration for the premises described therein located at the Property has been terminated. If both such conditions have been met, Authority will have the right to exercise the Rights of Reverter subject to the TIAA Mortgage. Throughout all applicable periods of redemption following a Foreclosure Sale, Authority agrees that the Rights of Reverter are subject to and shall be exercised in accordance with the term and conditions set forth in this Section 15. (b) After a Foreclosure Sale If a Foreclosure Sale shall occur, the Authority shall have the right, for a period of time not to exceed the Developer's statutory redemption period under Minnesota law (the "Redemption Period"), after issuance of the sheriff's certificate of sale evidencing to the winn bidder at such the Foreclosure Sale (the Sheri s Certificate" g g .�' Foreclosure Sale (the "Sheriffs Certificate Holder "), to commence an action in the District Court in Hennepin County seeking to enforce its Rights of Reverter, provided all of the following conditions are satisfied: O The Authority names the Sheriffs Certificate Holder in such action and serves the Sheriff's Certificate Holder with all relevant pleadings; (ii) Before issuance of any order declaring that the Property has reverted to the Authority (the "Order "), Authority first deposits with the District Court Administrator, by wire • deposit (as the District Court Administrator may direct), a sum sufficient to equal or exceed the amount (the "Redemption Amount's necessary to enable the Authority to redeem the Property as successor owner from the Foreclosure Sale and including, without limitation, any costs, advances or other amounts permitted to be included in any redemption price to the extent permitted by court order or ruling); and (iii) The Order requires the simultaneous reversion of title to the Property to the Authority and the District Court Administrator's disbursement to the Sheriff's Certificate Holder, or to the Sheriff of Hennepin County for the benefit of the Sheriff's Certificate Holder, of the Redemption Amount. Any amounts deposited by the Authority in excess of the Redemption Amount shall be disbursed by the District Court Administrator to the Authority as the Authority may direct. 16. Termination of Rights of Reverter Notwithstanding anything to the contrary contained in the Development Agreement or the Deed, the Rights of Reverter shall terminate, extinguish and be of no further force or effect upon the expiration of the Redemption Period without redemption by the Developer. 17. No Violation of Leases Notwithstanding anything to the contrary contained in the Development Agreement, the Authority shall not enforce any right or remedy set forth in the Development Agreement (including, without limitation, Section 10.4 thereof) to the extent any such action would constitute a default or violation of any lease entered into by Developer with respect to the Property. The provisions of this Section 17 shall not, under any circumstances, prohibit the Authority from enforcing the Covenant against the Developer or from enforcing its rights under Section 15 of this Agreement. 15699253.11.BUSINESS 18. Lender's Right to Cure Lender (or Collateral Trustee) may, at its option, within sixty (60) days after the Authority's notice of default under the Development Agreement or the • Covenant to the Lender, pay any amount stipulated to be paid by Developer or do any other act or thing required of the Developer by the terms of the Development Agreement or the Covenant; and all payments so made and all things so done or performed by the Lender shall be as effective as the same would have been if done and performed by Developer. Further, and except as set forth in Section 15, above, the Authority shall not have the right to pursue any enforcement action against Developer for default or Event of Default under the Development Agreement or the Covenant if Lender (or Collateral Trustee) commences, within one hundred twenty (120) days after the Authority's notice of default to Lender, and thereafter continuously and diligently prosecutes (subject to force majeure) the cure of defaults that can reasonably be cured without obtaining possession, and as to defaults that cannot reasonably be cured without obtaining possession, commences within one hundred twenty (120) days after the Authority's notice of default to the Lender and thereafter continuously and diligently prosecutes (subject to force majeure) appropriate proceedings for foreclosure or other enforcement of the TIAA Mortgage and, upon obtaining possession or the appointment of a receiver, promptly commences and thereafter diligently prosecutes the cure of any such defaults; provided however, Lender shall not be obligated to continue such possession or to continue such foreclosure proceedings after such default shall have been cured. Any default by Developer not susceptible of being cured by Lender (or Collateral Trustee) shall be deemed to have been waived by the Authority upon completion of such foreclosure proceeding or upon such acquisition of the Property, it being understood and agreed that any purchaser in any foreclosure sale and any subsequent purchaser of the Property acquiring title from or through the purchaser in any foreclosure sale (each such person, the "Successor Owner "), may become the legal owner and holder of the Property and the • Developer's interest under the Development Agreement through such foreclosure proceedings or acquisition or by assignment of Developer's interest under the Development Agreement in lieu of foreclosure. 19. Right to Enforce Lender (or Collateral Trustee) may enforce its rights under the TIAA Mortgage and acquire title to Developer's interests in the Property in any lawful manner and, pending foreclosure of any TIAA Mortgage and to take possession of the Property (subject to applicable law). If Lender (or Collateral Trustee) shall acquire title to the Property and the Developer's interest in the Development Agreement by foreclosure, such Successor Owner may, subject to the rights of the Authority set forth in Section 15, freely assign its entire interest in the Property and the Development Agreement to any entity and thereupon shall be released from all liability for the performance or observance of the covenants and conditions set forth in the Development Agreement from and after the date of such assignment. 20. Termination; Limitation on Liability Subject to the Authority's rights set forth in Section 15, above, if a Successor Owner shall become the owner of the Property by foreclosure, at Lender's (or Collateral Trustee's) option, the Development Agreement shall terminate and be of no further force or effect. Notwithstanding anything to the contrary set forth herein, no Successor Owner shall be: (a) liable for any default, act or omission of any prior Developer under the Development Agreement under the Covenant; (b) bound by any amendment, restatement modification or supplement to the Development Agreement or the Covenant made without Lender's written consent thereto; (c) liable for any monetary damages or • other amounts owing to the Authority from any prior Developer under the Development 15699253.11.BUSINESS • Agreement or the Covenant, or (d) liable for any Business Subsidy or any obligation or liability of the Developer under Section 4.9 of the Development Agreement. 21. Extension Completion Date Each of the Authority and the Developer agrees that in the event that the maturity date of the Construction Loan (as defined in the TIAA Mortgage) is extended pursuant to the terms of the Loan Documents, the date for required completion of the Minimum Improvements set forth in Section 4.3 of the Development Agreement shall be deemed extended for a period of not less than forty -five (45) days following the maturity date of the Construction Loan as so extended; provided, however, under no circumstances will the maturity date of the Construction Loan be extended beyond February 1, 2013, without the consent of the Authority, which may be granted or withheld in its sole and absolute discretion. 22. Condemnation; Casualty Notwithstanding anything contained in the Development Agreement to the contrary, in the event of any casualty to or condemnation of the Property or any portion thereof during such time as any TIAA Mortgage shall remain unsatisfied, the Lender '(or Collateral Trustee) shall be entitled to receive all insurance proceeds and/or condemnation awards (in an amount not to exceed the amount of the outstanding indebtedness secured by the TIAA Mortgage) otherwise payable to Developer and apply such proceeds in accordance with the TIAA Mortgage and shall have the right, but not the obligation, to restore the Property. 23. Lender's Interest Notwithstanding anything contained herein to the contrary, the Authority's recourse, if any, against the Lender (or Collateral Trustee) under the Development Agreement, the Covenant or otherwise shall be expressly limited to the Lender's (or Collateral Trustee's) interest in the Property, if any, at the time in question. 24. Estoppel Certificate Upon Lender's (or Collateral Trustee's) written request, the Authority shall provide Lender with an estoppel certificate which shall certify to Lender and Collateral Trustee (a) as to the compliance by Developer of the terms and conditions required under the Development Agreement and the Covenant, (b) as to whether Developer is not in default in payment, performance or observance of any other condition or covenant to be performed by Developer under the Development Agreement or the Covenant, (c) as to whether there are any offsets or counterclaims on the part of the Authority under the Development, Agreement or the Covenant, and (d) as to such other matters related to the Development Agreement or the Covenant as Lender may reasonably determine from time to time. i 15699253.11.BUSINESS 25. Notices All notices and other communications under this Agreement are to be in • writing and sent to the addresses as set forth below. Notices shall be deemed to have been duly given upon the earlier of: (i) actual receipt; (ii) one (1) business day after having been timely deposited for overnight delivery, fee prepaid, with a reputable overnight courier service, having a reliable tracking system; (iii) one (1) business day after having been sent by telecopier (with answer back acknowledged) provided an additional notice is given pursuant to (ii); or (iv) three (3) business days after having been deposited in any post office or mail depository regularly maintained by the U.S. Postal Service and sent by certified mail, postage prepaid, return receipt requested, and in the case of clause (ii) and (iv) irrespective of whether delivery is accepted. A new address for notice may be established by written notice to the other parties; provided, however, that no address change will be effective until written notice thereof actually is received by the party to whom such address change is sent. If to Developer: c/o The Molasky Group of Companies 100 City Parkway, Suite 1700 Las Vegas, Nevada 89106 Attn: Vice President and Chief Financial Officer with a courtesy copy to: Lionel Sawyer & Collins 300 South Fourth St. #1700 Las Vegas, Nevada 89101 Attn: Jeffrey P. Zucker If to Lender: Teachers Insurance and Annuity Association 730 Third Avenue New York, New York 10017 Attn: Director, Global Private Markets, Portfolio Management TIAA Authorization #AAA -6965 Investment ID. # 0006743 with a courtesy copy to: Teachers Insurance and Annuity Association 8500 Andrew Carnegie Blvd. Mail Stop C2 -06 Charlotte, North Carolina 28262 Attn: Associate General Counsel and Director, Asset Management Law TIAA Authorization #AAA -6965 Investment ID. # 0006743 • 1569925 3.11. B US INES S • with a copy to: Dechert LLP 200 Clarendon Street 27th Floor Boston, MA 02116 Attention: Matthew Clark with a copy to: Teachers Insurance and Annuity Association of America 730 Third Avenue New York, New York 10017 Attention: David Persky re: FBI Minneapolis CTL with a copy to: Teachers Insurance and Annuity Association of America 8500 Andrew Carnegie Blvd. Mail Stop C2 -06 Charlotte, North Carolina 28262 Attention: Keith Atkinson • with a copy to: Dechert LLP 200 Clarendon Street 27th Floor Boston, MA 02116 Attention: Lewis Burleigh If to Collateral Trustee: Wells Fargo Bank Northwest, National Association 299 South Main Street 12th Floor, MAC: U1228 -120 Salt Lake City, Utah 84111 Attn: Val T. Orton re: NARA If to the Authority: Economic Development Authority of Brooklyn Center, Minnesota 6301 Shingle Creek Parkway Brooklyn Center, MN 55430 -2199 Attn: Executive Director • 15699253.11.BUSINESS agreement 26. Entire Agreement, Modification This Agreement is the entire a g • between the parties hereto with respect to the subject matter hereof, and supersedes and replaces all prior discussions, representations, communications and agreements (oral or written). This Agreement shall not be modified, supplemented, or terminated, nor any provision hereof waived, except by a written instrument signed by the party against whom enforcement thereof is sought, and then only to the extent expressly set forth in such writing. 27. Bindin g Effect; T Obligations Joint and Several This Agreement is binding g upon and inures to the benefit of the parties hereto and their respective heirs, executors, legal representatives, successors, and assigns, whether by voluntary action of the parties or by operation of law. 28. Unenforceable Provisions Any provision of this Agreement which is determined by a court of competent jurisdiction or government body to be invalid, unenforceable or illegal shall be ineffective only to the extent of such determination and shall not affect the validity, enforceability or legality of any other provision, nor shall such determination apply in any circumstance or to any party not controlled by such determination. 29. Duplicate Originals; Counterparts This Agreement may be executed in any number of duplicate originals, and each duplicate original shall be deemed to be an original. This Agreement (and each duplicate original) also may be executed in any number of counterparts, each of which shall be deemed an original and all of which together constitute a fully executed Agreement even though all signatures do not appear on the same document. 30. Governing Law This Agreement shall be interpreted and enforced according to • the laws of the State where the Property is located (excluding any choice of law rules that may direct the application of the laws of another jurisdiction). 31. onsent to Jurisdictio Each art hereto irrevocably C party Y consents and submits to J the exclusive jurisdiction and venue of any state or federal court sitting in the county and state where the Property is located with respect to any legal action arising with respect to this i may have to such jurisdiction and venue. Agreement and waives all objections which t y J g J 32. WAIVER OF JURY TRIAL TO THE FULLEST EXTENT PERMITTED BY LAW, EACH PARTY HERETO WAIVES AND AGREES NOT TO ELECT A TRIAL BY JURY WITH RESPECT TO ANY ISSUE ARISING OUT OF THIS AGREEMENT. 33. Conflicts In the event of a conflict between the terms of this Agreement and the terms of the Development Agreement or the terms of the Covenant, the terms of this Agreement shall govern and control. It is the express intention of the parties hereto that this document shall be deemed to amend and modify the terms of the Development Agreement and the Covenant. 34. Reliance The Authority executes this Agreement with the understanding that all of the Developer's right, title and interest in the Development Agreement will be and/or has been collaterally assigned to Lender (and Collateral Trustee) for the purpose of securing the Loan. This Agreement is binding upon the Authority, its successors and assigns and shall inure to the benefit of Lender and Collateral Trustee and their respective successors and assigns. . 15699253.11.BUSINESS • IN WITNESS WHEREOF, THIS AGREEMENT has been executed by the parties hereto as of the date first above written. DEVELOPER: PH MINNEAPOLIS, LLC, a Nevada limited liability company By: PH Minneapolis MM, Inc., a Nevada corporation, Manager By: Richard S. Worthington, President or Bradley J. Sher, Secretary and Treasurer or Suzanne Sanders, Vice President LENDER: TEACHERS INSURANCE AND ANNUITY ASSOCIATION OF AMERICA, a New York corporation • By. Name: Title: Director AUTHORITY: ECONOMIC DEVELOPMENT AUTHORITY OF BROOKLYN CENTER, MINNESOTA, a public body corporate and politic organized and existing under the laws of the State of Minnesota By: Name: Title: WELLS FARGO BANK NORTHWEST, NATIONAL ASSOCIATION By: Name: Title: • 15699253.11.BUSINESS • STATE OF ) SS: COUNTY OF ) On this day of 2010, before me appeared as of and on behalf of to me personally known, who, being by me duly sworn, did say that said instrument was signed on behalf of said and such person acknowledged said instrument to be the free act and deed of said and that said has no corporate seal. IN TESTIMONY WHEREOF, I have hereunto set my hand and affixed my official seal in the County and State aforesaid, the day and year first above written. Printed Name: Notary Public in and for said State Commission expires: • Notary — please affix seal in area designated above i 15699253.11.BUSINESS • STATE OF ) SS: COUNTY OF ) On this day of , 2010, before me appeared as of and on behalf of , to me personally known, who, being by me duly sworn, did say that said instrument was signed on behalf of said and such person acknowledged said instrument to be the free act and deed of said and that said has no corporate seal. IN TESTIMONY WHEREOF, I have hereunto set my hand and affixed my official seal in the County and State aforesaid, the day and year first above written. Printed Name: Notary Public in and for said State Commission expires: • Notary — please affix seal in area designated above 15699253.11.BUSINESS i • STATE OF ) SS: I COUNTY OF ) On this day of , 2010, before me appeared , as of and on behalf of , to me personally known, who, being by me duly sworn, did say that said instrument was signed on behalf of said and such person acknowledged said instrument to be the free act and deed of said and that said has no corporate seal. IN TESTIMONY WHEREOF, I have hereunto set my hand and affixed my official seal in the County and State aforesaid, the day and year first above written. Printed Name: Notary Public in and for said State Commission expires: • Notary lease affix seal in area designated above Y P g i • 15699253.11.BUSINESS • STATE OF SS: COUNTY OF ) On this day of , 2010, before me appeared , as of and on behalf of , to me personally known, who, being by me duly sworn, did say that said instrument was signed on behalf of said and such person acknowledged said instrument to be the free act and deed of said and that said has no corporate seal. IN TESTIMONY WHEREOF, I have hereunto set my hand and affixed my official seal in the County and State aforesaid, the day and year first above written. Printed Name: Notary Public in and for said State • Commission expires: Notary— please affix seal in area designated above 15699253.11.BUSINESS EXHIBIT A • Assignment and Assumption Agreement • • 15699253.11.BUSINESS • EXHIBIT B Legal Description THE LAND REFERRED TO HEREIN BELOW IS SITUATED IN THE COUNTY OF HENNEPIN, STATE OF MINNESOTA AND IS DESCRIBED AS FOLLOWS: Lot 1, Block 1, Richardson Park 3 rd Addition, according to the recorded plat thereof, Hennepin County, Minnesota, together with the benefits of that certain Grant of Easements for Access and Use, across, through, over and upon Lot 2, Block 1, Richardson Park 3 rd Addition, according to the recorded plat thereof, Hennepin County, Minnesota, dated June , 2010, recorded June , 2010 in the office of the Hennepin County Recorder as Document No. , and in the office of the Hennepin County Registrar of Titles as Document No. i • 15699253.11.BUS INESS EXHIBIT C • Other Loans 1. Loan to PH Cincinnati, LLC in an amount equal to $40,777,599.00. 2. Loan to PH NARA, LLC in an amount equal to approximately $106,000,000. 3. Loan to PH Portland, LLC in an amount equal to approximately $54,730,000. • • 15699253.11.BUSINESS • EXHIBIT D Development Agreement • 15699253.11.BUSINESS • Recording Requested by and when recorded return to: COVENANT AND RESTRICTION WITH RESPECT TO THE PAYMENT OF REAL ESTATE TAXES THIS COVENANT AND RESTRICTION WITH RESPECT TO THE PAYMENT OF REAL ESTATE TAXES (this " Covenant ") is entered into this _ day of June, 2010 (the " Effective Date "), by and between the Economic Development Authority of Brooklyn Center, Minnesota, also known as the Economic Development Authority in and for the City of Brooklyn Center, a public body corporate and politic organized and existing under the laws of the State of Minnesota (the " Authority "), and PH Minneapolis, LLC, a Nevada limited liability company ( " Developer "). The Authority and Developer are together referred to herein as the " Parties ," and, each, a " Party ." • RECITALS A. Concurrently herewith, the Authority is conveying to Developer, by Limited Warranty Deed (the "Deed "), certain real property located in the City of Brooklyn Center, Minnesota, commonly referred to as 1501 Freeway Boulevard, as such real property is more fully described on Exhibit A attached hereto and incorporated herein by reference (the " Property ") B. The Authority is conveying the Property to Developer pursuant to that certain Development Agreement dated October 16, 2009, as amended by that certain First Amendment to Development Agreement dated February 22, 2010 and that certain Second Amendment to Development Agreement dated April 27, 2010 (collectively, the " Development Agreement "), which Development Agreement relates to the conveyance of the Property in connection with the construction of certain improvements on the Property, including, without limitation, the construction of a Class A office building and related improvements (the " Improvements "). C. The Deed reserves to the Authority, upon the occurrence of a "Developer Event of Default," as defined in Section 10.1 of the Development Agreement and Developer fails to cure such default within the period and in the manner stated in Section 10.1, the right to re -enter and take, possession of the Property and, upon re -entry by the Authority, to terminate and revest in the Authority the estate conveyed by the Deed to Developer, its assigns or successors in interest, in accordance with the terms of the Development Agreement (the "Right of Re- entry "). • 2560697v5 • D. Teachers Insurance and Annuity Association of America, a New York corporation ( "Lender ") is making a loan (the "Loan ") in the original principal amount of up to a maximum of $ to Developer, which Loan will be secured by, among other things, a certain Mortgage, Assignment of Leases and Rents, Security Agreement and Fixture Filing (the "TIAA Mortgage ") from Developer in favor of Wells Fargo Bank Northwest, National Association, as collateral trustee for Lender (together with its successors and assigns, the "Collateral Trustee "), which TIAA Mortgage will be recorded against the Property subsequent to this Covenant. E. In connection with the Loan, Lender has requested and the Authority has agreed to execute that certain Development Agreement Subordination Agreement (the "Subordination Agreement ") dated June _, 2010 which is to be recorded in each of the Hennepin County Recorder's Office and the Office of the Hennepin County Registrar of Titles (the "Official Records ") subsequent to the recording of this Covenant. In the Subordination Agreement, the Authority subordinates is rights under the Development Agreement and the Right of Re -entry to the lien of the Mortgage. F. In consideration of the Authority's agreement to execute the Subordination Agreement, the Developer has agreed to execute this Covenant, to be recorded in the Official Records and to bind the Property to the terms and conditions herein for the term stated. NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Parties agree as follows: • 1. Covenant to Pgy Real Estate Taxes During the period from January 1, 2011 to December 31, 2030, Owner (as defined below): (a) will pay or cause to be paid all ad valorem real estate taxes due and payable with respect to the Property and the Improvements and (b) will not apply for or otherwise seek to have the Property or the Improvements exempted from ad valorem real estate taxes. In the event that, for any reason, the Property or Improvements become, in any way, exempt, in whole or in part, from the obligation to pay ad valorem real estate taxes during the period described above, Owner shall make annual payments in lieu of ad valorem real estate taxes to the City of Brooklyn Center on October 16 of each year in an amount equal to the difference between the amount of ad valorem real estate taxes that would have been due and payable in that year with respect to the Property and the Improvements absent the exemption and the amount, if any, of the ad valorem real estate taxes Owner actually paid in that year. Nothing herein shall prevent an Owner from contesting the amount of ad valorem real estate taxes for any reason other than that such Owner is a tax exempt entity. As used in this Covenant, "Owner" shall mean such person or entity as owns fee title to the Property at the relevant time. 2. No Subordination; Survival This Covenant shall be recorded in the Official Records prior to the execution, delivery and recording of the TIAA Mortgage. The parties hereby agree that in no event is this Covenant to be subject to or subordinate to any instrument or agreement securing any financing of the Property or the Improvements. This Covenant shall survive the foreclosure of any mortgage, including the TIAA Mortgage, affecting the Property • and shall survive the Authority's exercise of its Right of Re- entry. 2560697v5 3. Damages, Injunctive Relief In the event of any default of this Covenant by Owner, the Authority shall have the right to seek damages, injunctive relief or any other remedy • available at law or in equity. Notwithstanding anything to the contrary contained herein, the Authority shall have no right to exercise its Right of Re -entry based solely on a default by Developer or Owner under this Covenant. 4. Miscellaneous (a) Binding Effect; Joint and Several Obligations This Covenant runs with title to the Property and the Improvements and is binding upon and inures to the benefit of the parties hereto and their respective heirs, executors, legal representatives, successors, and assigns, whether by voluntary action of the parties or by operation of law, including, without limitation, all successor Owners. (b) Amendment This Covenant may only be amended by a document executed by Owner and the Authority and duly recorded in the Official Records. (c) Governing Law This Covenant shall be governed by and construed in accordance with the substantive and procedural laws of the State of Minnesota. (d) Consent to Jurisdiction Each party hereto irrevocably consents and submits to the exclusive jurisdiction and venue of any state or federal court sitting in the county and state where the Property is located with respect to any legal action arising with respect to this Covenant and waives all objections which it may have to such jurisdiction and venue. • (e) Attorney's Fees Should any Party employ an attorney or attorneys to enforce any of the terms and conditions hereof, or to protect any right, title, or interest created or evidenced hereby, the non - prevailing Party in any action pursued in courts of competent jurisdiction shall pay to the prevailing Party all reasonable costs, damages, and expenses, including attorneys' fees, expended or incurred by the prevailing Party. (f) Conflicts In the event of a conflict between the terms of this Covenant and the terms of the Development Agreement or the terms of the Subordination Agreement, the terms of this Covenant shall govern and control. (g) Counterparts This Covenant may be executed in counterparts. Each counterpart of this Covenant shall constitute an original, and all such counterparts taken together shall constitute one and the same grant. [Signatures appear on the following pages.] 2560697v5 have affixed their si • IN WITNESS WHEREOF, the undersigned natures hereto as of the g date first set forth above. AUTHORITY ECONOMIC DEVELOPMENT AUTHORITY OF BROOKLYN CENTER, MINNESOTA, also known as Economic Development Authority in and for the City of Brooklyn Center, a public body corporate and politic By: Name: Title: By: Name: Title: STATE OF MINNESOTA ) COUNTY OF HENNEPIN ) This Covenant with Respect to the Payment of Real Estate Taxes was acknowledged before me on this day of June, 2010, by Tim Willson and Cornelius Boganey, as President and as Executive Director, respectively of the Economic Development Authority of Brooklyn Center, Minnesota, also known as the Economic Development Authority in and for the City of Brooklyn Center, a public body corporate and politic, on behalf of said body. Notary Public 0 [Authority's Signature Page to Covenant with Respect to the Payment of Real Estate Taxes] 2560697v5 IN WITNESS WHEREOF, the undersigned have affixed their signatures hereto as of the date first set forth above. • DEVELOPER PH MINNEAPOLIS, LLC, a Nevada limited liability company By: PH Minneapolis MM, Inc., a Nevada corporation, Manager By: Richard S. Worthington, President or Bradley J. Sher, Secretary and Treasurer or Suzanne Sanders, Vice President STATE OF ) COUNTY OF ) • This Covenant with Respect to the Payment of Real Estate Taxes was acknowledged before me on this day of June, 2010, by as of PH Minneapolis MM, Inc. a Nevada corporation, the Manager of PH Minneapolis, LLC, a Nevada limited liability company, on behalf of PH Minneapolis, LLC. Notary Public [Grantee's Signature Page to Covenant with Respect to the Payment of Real Estate Taxes] • 2560697v5 Exhibit A Legal Description of Property Lot 1, Block 1, RICHARDSON PARK 3 RD ADDITION, according to the recorded plat thereof, Hennepin County, Minnesota. • Drafted by Briggs and Morgan, P.A (DVD) 2200 IDS Center 80 South Eighth Street Minneapolis, MN 55402 (612) 977 -8400 2560697v5 I SUMMARY OF DEVELOPMENT AGREEMENT SUBORDINATION AGREEMENT AND . AGREEMENT REGARDING COVENANT AND RESTRICTION WITH RESPECT TO THE PAYMENT OF REAL ESTATE TAXES The following is a summary of the provisions of the above - referenced agreement being submitted for approval by the EDA council (the numbering used in this summary is consistent with the section numbering used in the agreement; "PH" refers to the developer): 1. EDA and PH each represent that the Development Agreement is in effect and has not been amended other than the two prior amendments. 2. EDA consents to the assignment of the Development Agreement from Barry Minneapolis, LLC to PH. 3. EDA agrees to subordinate its rights under the Development Agreement to the lien of the mortgage (in exchange, the EDA receives PH's covenant to pay taxes at least through 2031; this document and obligation would survive foreclosure). 4. EDA agrees to subordinate the Business Subsidy to the lien of the mortgage (and agrees that the Business Subsidy is a personal obligation of PH). 5. EDA and PH each represent that there are no defaults under the Development Agreement • (this document and the resolution will cure any technical defaults). 6. EDA consents to the mortgage (required due to mortgage arguably not conforming to requirements of Section 6.1 of the Development Agreement re: cross - collateralization). 7. EDA represents it knows of no other mortgages on the property. 8. EDA agrees that it will receive no notice from lender of PH default and will not have the right to cure a default of PH under its loan documents. 9. Omitted. 10. EDA and PH each agree that a default under the mortgage will not an Event of Default under the Development Agreement (as currently provided) until foreclosure proceedings are commenced. 11. EDA represents it has no current claims or rights of setoff against PH. 12. EDA and PH agree that no amendment to the Development Agreement or Tax Covenant will be binding unless consented to in advance by lender. 13. EDA agrees to provide lender copies of all notices to PH (notice to PH is not effective • until notice to lender is given). 25656080 • 14. EDA has approved preliminary plans. 15. While the mortgage is outstanding, EDA will not enforce its right of reverter prior to a foreclosure sale unless (i) the lender is not pursuing a cure or foreclosure (i.e., they are doing nothing), and (ii) the GSA has terminated its lease. Following a foreclosure sale, EDA may exercise its right of reverter during the redemption period (by going to court), but must follow certain requirements (name the new holder of the sheriff's certificate and serves such party with all pleadings, place the funds required to redeem with the court, and simultaneous reverter and disbursement of funds). 16. The right of reverter terminates at the end of the redemption period (we are asking the lender to carve out redemption by PH, in which case the EDA would retain its right of reverter). 17. EDA agrees not to exercise remedies that would cause a default under the GSA lease (required because the GSA can terminate the lease if, for example, the EDA exercised its right of reverter and became the owner of the property). This does not prevent the EDA from enforcing the tax covenant or exercising reverter rights under Section 15. 18. Lender is provided additional time to cure defaults by PH under the Development Agreement and the EDA agrees not to exercise its remedies under the Development Agreement until the lender has had time to exercise its remedies under the mortgage and loan documents. • 19. Lender may become the owner loses its mortgage, and ma y me o e of the property if rt forecloses y assign the interest in the property and Development Agreement to any entity. The EDA retains its rights under section 15 (it can use reverter if project is not completed). 20. Lender may elect to terminate the Development Agreement after foreclosure. No future owner would be responsible for defaults of developer or lender. The tax covenant would remain in effect. 21. The completion date for the project will be extended if the mortgage is required to be extended, but not past February 1, 2013 (13 months) without the consent of the EDA. The remaining provisions are largely boilerplate, but please let us know if there are any questions. • 2565608v1