2016-032S: \Legal \Our Documents \Ordinances \16 \4SR Lease (City Hall West relocation) Ordinance.docx
ORDINANCE NO. 2016 -032
AN ORDINANCE OF THE CITY OF DENTON, TEXAS APPROVING AN OFFICE LEASE
AND RIGHT OF FIRST REFUSAL BETWEEN THE CITY OF DENTON AND 4SR
MULBERRY, LLC, AND A SUBORDINATION, NON - DISTURBANCE AND
ATTORNMENT AGREEMENT BETWEEN THE CITY OF DENTON, 4SR MULBERRY LLC,
AND THE NATIONAL BANK OF TEXAS AT FORT WORTH, ALL RELATED TO
PROPERTIES LOCATED AT 215 WEST HICKORY STREET AND 216 WEST MULBERRY
STREET, DENTON, TEXAS, 76201; PROVIDING AUTHORITY FOR THE CITY MANAGER
TO EXECUTE THE AGREEMENTS SUBJECT TO FINAL LANGUAGE APPROVAL BY
THE CITY ATTORNEY; AND PROVIDING AN EFFECTIVE DATE.
WHEREAS, on June 30, 2015, the City Council held a meeting at City Hall West and
directed staff to explore options for leasing office space to relocate department staff from City Hall
West; and
WHEREAS, on August 11, 2015, the City Council held a Work Session discussion on the
cost - benefit of leasing office space versus remaining in City Hall West, and directed staff to pursue
lease options; and
WHEREAS, on September 15, 2015, the City Council adopted the Fiscal Year 2015 -16
Budget which included a funding allocation for a lease of office space for the relocation of staff
from City Hall West to commence on or around July 1, 2016;
WHEREAS, on October 20, 2015, the City Council held a Work Session to consider two
proposals for a lease of space, and selected the proposal for leasing office space, including related
parking lots, located at 215 West Hickory Street and 216 West Mulberry Street, Denton, Texas,
76201;
WHEREAS, the property located at 215 W. Hickory St., 216 W. Mulberry St., and related
parking lots are owned by 4SR Mulberry, LLC, and are encumbered by a deed of trust lien for the
benefit of The National Bank of Texas at Fort Worth; NOW, THEREFORE;
THE COUNCIL OF THE CITY OF DENTON, TEXAS ORDAINS:
SECTION 1. The recitals and findings contained in the preamble of this ordinance are
incorporated into the body of this ordinance.
SECTION 2. After approval by the City Attorney, or her designee, the City Manager, or
his designee, is authorized to (i) negotiate and execute, on behalf of the City of Denton, an Office
Lease between the City of Denton and 4SR Mulberry, LLC; and (ii) carry out the City's
responsibilities and rights under the Office Lease, including without limitation, the authorization
to make the expenditures set forth in the Office Lease.
SECTION 3. After approval by the City Attorney, or her designee, the City Manager, or
his designee, is authorized to (i) negotiate and execute, on behalf of the City of Denton, the Right
SALegal \Our Documents \Ordinances \16 \4SR Lease (City Hall West relocation) Ordinance.docx
of First Refusal between the City of Denton and 4SR Mulberry, LLC; and (ii) carry out the City's
responsibilities and rights under the Right of First Refusal.
SECTION 4. After approval by the City Attorney, or her designee, the City Manager, or
his designee, is authorized to (i) negotiate and execute, on behalf of the City of Denton, the
Subordination, Non - Disturbance and Attornment Agreement between the City of Denton, 4SR
Mulberry, LLC, and The National Bank of Texas at Fort Worth; and (ii) carry out the City's
responsibilities and rights under the Subordination, Non - Disturbance and Attornment Agreement.
SECTION 5. The City Manager, or his designee, is authorized to exercise the City of
Denton's rights and duties set forth in the Office Lease, the Right of First Refusal, and the
Subordination, Non - Disturbance and Attornment Agreement.
SECTION 6. This ordinance shall become effective immediately upon its passage and
approval.
PAS ]" ;" D AND A111"ROVI"M this the
ATTEST:
JENNIFER WALTERS, CITY SECRETARY
Im
Ali
ANITA BURGESS, CITY
BY:
_6Z6_w116
ATTORNEY
Vim, day of _ h_ aA)(_ 2016,
Cl l w ATTS, i"vI:AYOR
Notice of confidentiality rights: if you are a natural person, you may remove or strike any of the
following information from this instrument before it is filed for record in the public records: your
social security number or your driver's license number.
SUBORDINATION, NON - DISTURBANCE AND ATTORNMENT AGREEMENT
This Subordination, Non - Disturbance and Attornment Agreement (this "Agreement ") dated
is made by and among the City of Denton, a Texas home -rule municipal corporation nn � 2016,
to be effective when executed by Tenant, is made this .Z day of
p poration "Tenant "), 4SR
Mulberry, LCC, a Texas limited liability company ( "Landlord "), and The National Bank of Texas at
Fort Worth, a National bank ( "Mortgagee ").
WHEREAS, Mortgagee is the holder of a promissory note (herein, as it may have been or
may be from time to time renewed, extended, amended, supplemented, or restated, called the
"Note ") dated November 10, 2015, executed by Landlord payable to the order of Mortgagee, in the
principal face amount of $3,986,439.10, bearing interest and payable as therein provided, secured
by, among other things, (i) a Deed of Trust, Security Agreement and Financing Statement, (ii) Lease
and Rental Assignment and Security Agreement, and (iii) Warranty Deed with Vendor's Lien (herein,
as it may have been or may be from time to time renewed, extended, amended or supplemented,
called the "Mortgage "), recorded or to be recorded in the land records of Denton County, Texas,
covering, among other property, the land (the "Land ") described in Exhibit "A ", which is attached
hereto and incorporated herein by reference, and the improvements ( "Improvements ") thereon
(such Land and Improvements being herein together called the "Property ");
WHEREAS, Tenant is the tenant under a lease from Landlord of even date herewith (herein,
as it may from time to time be renewed, extended, amended or supplemented, called the "Lease "),
covering a portion of the Property (said portion being herein referred to as the "Premises "); and
WHEREAS, the term "Landlord" as used herein means the present landlord under the Lease
or, if the landlord's interest is transferred in any manner, the successor(s) or assign(s) occupying the
position of landlord under the Lease at the time in question.
NOW, THEREFORE, in consideration of the mutual agreements herein, and for other good
and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties agree as follows:
1. Subordination. Tenant agrees and covenants that the Lease and the rights of Tenant
thereunder, all of Tenant's right, title and interest in and to the property covered by the Lease
(including, without limitation, the Premises), are and shall be subject, subordinate and inferior to (a)
the Mortgage and the rights of Mortgagee thereunder, and all right, title and interest of Mortgagee
in the Property, and (b) all other security documents now or hereafter securing payment of any
indebtedness of the Landlord (or any prior landlord) to Mortgagee which cover or affect the
Property (the "Security Documents," whether one or more). This Agreement is not intended and
shall not be construed to subordinate the Lease to any mortgage, deed of trust or other security
Page 1 of 10 - Subordination, Attomment, and Nondisturbance Agreement (City of Denton, 4SR Mulberry,
LLC, and The National Bank of Texas at Fort Worth) — CITY VERSION NO.2 - 12312015
document other than those referred to in the preceding sentence, securing the indebtedness to
Mortgagee.
2. Non - Disturbance. Mortgagee agrees that so long as the Lease is in full force and effect
and Tenant is not in default in the payment of rent, additional rent or other payments on Tenant's
part to be paid or in the performance of any of the other terms, covenants or conditions of the
Lease on Tenant's part to be performed, beyond the period, if any, specified in the Lease within
which Tenant may cure such default,
(a) Tenant's possession of the Premises under the Lease shall not be disturbed or
interfered with by Mortgagee in the exercise of any of Mortgagee's foreclosure rights under
the Mortgage or conveyance in lieu of foreclosure,
(b) Mortgagee will not join Tenant as a party defendant for the purpose of
terminating Tenant's interest and estate under the Lease in any proceeding for foreclosure
of the Mortgage, and
(c) Tenant's rights under the Lease will be recognized by Mortgagee in the event of
foreclosure of the Mortgage, whether by power of sale or by court action, or upon a
transfer of the Property by conveyance in lieu of foreclosure (the purchaser at foreclosure
or the transferee in lieu of foreclosure, including Mortgagee if it is such purchaser or
transferee, being herein called "New Owner ") and Mortgagee agrees that the Lease shall
thereafter continue in full force and effect as a direct lease between Tenant and New
Owner subject to the limitations set forth in paragraph 3 below.
3. Attornment.
(a) Tenant covenants and agrees that in the event of foreclosure of the Mortgage,
whether by power of sale or by court action, or upon a transfer of the Property by
conveyance in lieu of foreclosure, Tenant shall attorn to the New Owner as Tenant's new
landlord, and Tenant agrees that the Lease shall thereafter continue in full force and effect
as a direct lease between Tenant and New Owner upon all of the terms, covenants,
conditions and agreements set forth in the Lease and this Agreement, except for any
provisions thereof which are impossible for New Owner to perform; provided, however,
that in no event shall the New Owner be:
(i) liable for any act, omission, default, misrepresentation, or breach of
warranty, of any previous landlord (including Landlord) or obligations accruing prior
to New Owner's actual ownership of the Property;
(ii) subject to any offset, defense, claim or counterclaim which Tenant might
be entitled to assert against any previous landlord (including Landlord); and
(iii) bound by any payment of rent, additional rent or other payments, made
by Tenant to any previous landlord (including Landlord) for more than one (1)
month in advance.
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LLC, and The National Bank of Texas at Fort Worth) — CITY VERSION NO.2 - 12312015
(b) The provisions of this Agreement regarding attornment by Tenant shall be self -
operative and effective without the necessity of execution of any new lease or other
document on the part of any party hereto or the respective heirs, legal representatives,
successors or assigns of any such party. Tenant agrees, however, to execute and deliver,
upon the request of New Owner, any instrument or certificate which in the reasonable
judgment of New Owner may be necessary or appropriate to evidence such attornment,
including a new lease of the Premises on the same terms and conditions as the Lease for the
unexpired term of the Lease.
4. Estoppel Certificate. Tenant agrees to execute and deliver from time to time, upon the
request of Landlord or of any holder(s) of any of the indebtedness or obligations secured by the
Mortgage, a certificate regarding the status of the Lease, consisting of statements specifying, if true
(or if not, specifying why not), (a) that the Lease is in full force and effect, (b) the date through
which rentals thereunder have been paid, (c) the date of the commencement of the term of the
Lease, (d) the nature of any amendments or modifications of the Lease, (e) that, to the best of
Tenant's knowledge, no default, or state of facts which with the passage of time or notice (or both)
would constitute a default, then exists under the Lease, (f) that, to the best of Tenant's knowledge,
no setoffs, recoupments, estoppels, claims or counterclaims exist against Landlord, and (g) such
other matters as may be reasonably requested.
S. Acknowledgment and Agreement by Tenant. Tenant acknowledges and agrees as
follows:
(a) Tenant acknowledges that Landlord will execute and deliver to Mortgagee, in
connection with the financing of the Property, an assignment of leases and rents with
respect to the Property. Tenant hereby expressly consents to such assignment and agrees
that such assignment shall, in all respects, be superior to any interest Tenant has in the
Lease or the Property, subject to the provisions of this Agreement. Tenant will not amend,
alter or waive any provision of, or consent to the amendment, alteration or waiver of, any
provision of the Lease without the prior written consent of Mortgagee. Tenant shall not
prepay any rents or other sums due under the Lease for more than one (1) month in
advance of the due date therefor. Tenant acknowledges that Mortgagee will rely upon this
instrument in connection with the aforesaid financing.
(b) In the event that Mortgagee notifies Tenant of a default under the Mortgage,
Note, or Security Documents and demands that Tenant pay Tenant's rent and all other sums
due under the Lease directly to Mortgagee, Tenant shall, without inquiry as to whether a
default actually exists under the Mortgage, Security Documents or otherwise in connection
with the Note, and notwithstanding any contrary instructions of or demands from Landlord:
(i) notwithstanding Section 64.055(d) of the Texas Property Code, honor such demand and
immediately turn over, without offset, all rents and all other sums due under the Lease that
Mortgagee is entitled to collect under Section 64.054 of the Texas Property Code; (ii) not
deduct any portion of such rents for any purpose, notwithstanding any provisions of the
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LLC, and The National Bank of Texas at Fort Worth) — CITY VERSION NO.2 - 12312015
Texas Property Code to the contrary; and (iii) pay all rents and other sums as they accrue to
the Lender.
(c) To the extent the Lease contains any notice or cure periods, the date that
Mortgagee begins enforcement, as contemplated by Chapter 64 of the Texas Property Code,
shall not be affected, extended, or otherwise modified by reason of such periods.
6. Acknowledgment and Agreement by Landlord. Landlord, as landlord under the Lease
and grantor under the Mortgage, acknowledges and agrees, for Landlord and Landlord's heirs,
representatives, successors and assigns, that:
(a) this Agreement does not constitute a waiver by Mortgagee of any of its rights
under the Mortgage, Note, or Security Documents, or in any way release Landlord from
Landlord's obligations to comply with the terms, provisions, conditions, covenants,
agreements and clauses of the Mortgage, Note, or Security Documents;
(b) the provisions of the Mortgage, Note, or Security Documents remain in full force
and effect and must be complied with by Landlord; and
(c) Tenant is hereby authorized to pay Tenant's rent and all other sums due under
the Lease directly to Mortgagee upon receipt of a notice as set forth in paragraph 5(d)
above from Mortgagee and that Tenant is not obligated to inquire as to whether a default
actually exists under the Mortgage, Security Documents or otherwise in connection with the
Note. Landlord hereby releases and discharges Tenant of and from any liability to Landlord
resulting from Tenant's payment to Mortgagee in accordance with this Agreement. Landlord
represents and warrants to Mortgagee that a true and complete copy of the Lease has been
delivered by Landlord to Mortgagee.
7. Lease Status. Landlord and Tenant each hereby certify to Mortgagee that neither
Landlord nor Tenant has knowledge of any default on the part of the other under the Lease, that
the Lease is bona fide and contains all of the agreements of the parties thereto with respect to the
letting of the Premises and that all of the agreements and provisions therein contained are in full
force and effect.
8. Notices. All notices, requests, consents, demands and other communications required or
which any party desires to give hereunder shall be in writing and shall be deemed sufficiently given
or furnished if delivered by personal delivery (by an unrelated third party courier service providing
proof of delivery), by telegram, telex, or facsimile, by expedited delivery service with proof of
delivery, or by registered or certified United States mail, postage prepaid, at the addresses specified
at the end of this Agreement (unless any such address is changed by similar notice in writing given
by the particular party whose address is to be changed). Any such notice or communication shall be
deemed to have been given either at the time of personal delivery or, in the case of delivery service
or mail, as of the date of first attempted delivery at the address and in the manner provided herein,
or, in the case of telegram, telex or facsimile, upon receipt. Notwithstanding the foregoing, no
notice of change of address shall be effective except upon receipt. This Paragraph 8 shall not be
construed in any way to affect or impair any waiver of notice or demand provided in this Agreement
Page 4 of 10 - Subordination, Attomment, and Nondisturbance Agreement (City of Denton, 4SR Mulberry,
LLC, and The National Bank of Texas at Fort Worth) — CITY VERSION NO. 2 - 12312015
or in the Lease or in any document (including without limitation the Mortgage or any other Security
Documents) evidencing, securing or pertaining to the loan evidenced by the Note or to require
giving of notice or demand to or upon any person in any situation or for any reason.
9. Miscellaneous.
(a) This Agreement supersedes any inconsistent provision of the Lease.
(b) Nothing contained in this Agreement shall be construed to derogate from or in
any way impair, or affect the lien(s), security interest(s) or provisions of the Mortgage, Note,
or Security Documents.
(c) This Agreement shall be binding upon and inure to the benefit of each of the
parties hereto, their respective heirs, personal representatives, successors and permitted
assigns, and any New Owner, and such New Owner's heirs, personal representatives,
successors and assigns; provided, however, that in the event of the assignment or transfer
of the interest of Mortgagee, all obligations and liabilities of the assigning Mortgagee under
this Agreement shall terminate, and thereupon all such obligations and liabilities shall be
the responsibility of the party to whom Mortgagee's interest is assigned or transferred; and
provided, further, that the interest of Tenant under this Agreement may not be assigned or
transferred without the prior written consent of Mortgagee.
(d) THIS AGREEMENT AND ITS VALIDITY, ENFORCEMENT AND INTERPRETATION
SHALL BE GOVERNED BY THE LAWS OF THE STATE OF TEXAS AND APPLICABLE UNITED
STATES FEDERAL LAW, EXCEPT ONLY TO THE EXTENT, IF ANY, THAT THE LAWS OF THE STATE
IN WHICH THE PROPERTY IS LOCATED NECESSARILY CONTROL.
(e) The words "herein," "hereof," "hereunder" and other similar compounds of the
word "here," as used in this Agreement, refer to this entire Agreement and not to any
particular section or provision hereof.
(f) This Agreement may not be modified orally or in any manner other than by an
agreement in writing signed by all the parties hereto or their respective successors in
interest.
(g) If any provision of this Agreement shall be held to be invalid, illegal, or
unenforceable in any respect, such invalidity, illegality or unenforceability shall not apply to
or affect any other provision hereof, but this Agreement shall be construed as if such
invalidity, illegality, or unenforceability did not exist.
(h) The headings, captions and arrangements used in this Agreement are for
convenience only and shall not affect the interpretation of this Agreement.
(i) THIS AGREEMENT EMBODIES THE ENTIRE AGREEMENT AMONG THE PARTIES
HERETO WITH RESPECT TO THE SPECIFIC SUBJECT MATTER HEREOF AND SUPERCEDES ANY
AND ALL PRIOR COMMITMENTS, AGREEMENTS, REPRESENTATIONS AND
UNDERSTANDINGS, WHETHER WRITTEN OR ORAL, RELATING TO SUCH SPECIFIC SUBJECT
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LLC, and The National Bank of Texas at Fort Worth) — CITY VERSION NO.2 - 12312015
MATTER, AND THIS AGREEMENT MAY NOT BE CONTRADICTED OR VARIED BY EVIDENCE OF
PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OR DISCUSSIONS OF
THE PARTIES HERETO (IT BEING HEREBY ACKNOWLEDGED AND AGREED THAT THERE ARE
NO ORAL AGREEMENTS AMONG THE PARTIES HERETO WITH RESPECT TO THE SUBJECT
MATTER HEREOF).
(j) To facilitate execution of this Agreement, this Agreement may be executed in one
or more counterparts as may be convenient or required. All counterparts of this Agreement
shall collectively constitute a single instrument; but, in making proof of this Agreement, it
shall not be necessary to produce or account for more than one such counterpart. It shall
not be necessary for the signature of, or on behalf of, each party to this Agreement, or that
the signature of all persons required to bind any such party, appear on each counterpart of
this Agreement. Each signature page to any counterpart of this Agreement may be detached
from such counterpart without impairing the legal effect of the signatures thereon and
thereafter attached to another counterpart of this Agreement identical thereto except
having attached to it additional signature pages.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed
and sealed as of the date first above written.
-- SIGNATURE PAGES AND ACKNOWLEDGMENTS FOLLOW --
Page 6 of 10 - Subordination, Attomment, and Nondisturbance Agreement (City of Denton, 4SR Mulberry,
LLC, and The National Bank of Texas at Fort Worth) — CITY VERSION NO.2 - 12312015
TENANT:
CITY OF DENTON, TEXAS, a Texas municipal home-
rule corporation . ... .. .
By:
G 01
org(('C. Campbefr,City Manager
Signed on the day of 2016.
ATTEST:
Jennifer Walters, City Secretary
B W.
1ja
A , ROVIE05'TO LEGAL FORK
Anita Burgess, City Attorney
By:
Acknowledgement
State of Texas §
Denton County §
This instrument is acknowledged before me, on this the day of 2016, by
George C. Campbell, City Manager of the City of Denton, a Texas rnur0cipal home rule rporation,
rule r
known to me to be the person whose name is subscribed to the foregoing instrument and
acknowledged to me that the same was the act of the said City of Denton, Texas, a municipal
corporation, that he was duly authorized to perform the same by the City Council of the City of
Denton and that he executed the same as the act of said City for the purposes and consideration
therein expressed, and in the capacity therein stated.
n ta
JENNIFERK 1. t i RS
�C,STATr�
NO TARY PUM OF TEXAS
COMM, EXP 12-19,2018
NUTARY 0 1117650
W 101°"
ary Pu c, State of Texas
Page 7 of 10 - Subordination, Attomment, and Nondisturbance Agreement (City of Denton, 4SR Mulberry,
LLC, and The National Bank of Texas at Fort Worth) — CITY VERSION NO. 2 - 12312015
LANDLORD:
4SR MULBERRY, LLC, a Texas limited liability
c" ay
By: _....._..
Bi y D. Stc: as, J ., Managing Member
By: LLTK Realty, LLC, anagig Member
',"
...... ....._
Lawrence .
Iod "zyn, Manager
Signed on the _" day of. ',I�,. , 2016.
State of Texas § This instrument was acknowledged before me on the � day of �4f � , 2016 by Billy
D. Stevens, as the managing member of 4SR MULBERRY, LLC, a Texas limited liability company, on
behalf of said limited liability company.
I�r„t�aer -e.
Croy cW;rrritsi t= .xpk+'ss Notary Public ' Stoat e of Texas
State of Texas §
This instrument was acknowledged before me on theL "ay of f&/O 1� , 2016 by
Lawrence S. Mozdzyn, Manager of LLTK Realty, LLC, the managing member of 4S MULBERRY, LLC,
a Texas limited liability company, on behalf of said limited liability company.
[notary stamp here] .._i w ., 'f�j
Notary Public, State's of Texas
"" Delia Lyn Bouton
My commission Expires
01/1412019
Page 8 of 10 - Subordination, Attomment, and Nondisturbance Agreement (City of Denton, 4SR Mulberry,
LLC, and The National Bank of Texas at Fort Worth) — CITY VERSION NO.2 - 12312015
MORTGAGEE:
Signed on the,dy of , 2016.
State of Texas
This instruermt was m by
ackn wiled ed before e on they � da y f�i of �
_,. � M ���� _ [,Printed' name ��� of signatoryl,�.as2016
m the
-� (title] of THE NATIONAL BANK OF TEXAS AT FORT WORTH, a
National Lank, on behalf of said Va ional bank.
. �? 6�' air "Pn
[notary stamp here] _ ._..........__._ __..... ...___ .,.
Notary Public, Statc of Texas
Debra Lyn Bouton
0 My Commission Expires
' 01/14/2019
Imo°,
After recording, return to:
Real Estate Division
City of Denton
City Service Center
901A Texas St.
Denton, Texas 76210
Page 9 of 10 - Subordination, Attomment, and Nondisturbance Agreement (City of Denton, 4SR Mulberry,
LLC, and The National Bank of Texas at Fort Worth) — CITY VERSION NO.2 - 12312025
EXHIBIT "A"
LEGAL DESCRIPTION OF THE LAND
BEING LOT 1, BLOCK A, OF HALL -LEWIS ADDITION, IN THE CITY OF DENTON, DENTON COUNTY, TEXAS,
ACCORDING TO THE PLAT THEREOF RECORDED IN CABINET R, PAGE 378, PLAT RECORDS OF DENTON
COUNTY, TEXAS.
Page 10 of 10 - Subordination, Attomment, and Nondisturbance Agreement (City of Denton, 4SR Mulberry,
LLC, and The National Bank of Texas at Fort Worth) — CITY VERSION NO.2 - 12312015