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Home My WebLink About2017 12-11 EDAPEDA Agd EDA MEETING City of Brooklyn Center December 11, 2017 AGENDA 1.Call to Order —The EDA requests that attendees turn off cell phones and pagers during the meeting. A copy of the full City Council packet, including EDA (Economic Development Authority), is available to the public. The packet ring binder is located at the podium. 2.Roll Call 3. Approval of Agenda and Consent Agenda —The following items are considered to be routine by the Economic Development Authority (EDA) and will be enacted by one motion. There will be no separate discussion of these items unless a Commissioner so requests, in which event the item will be removed from the consent agenda and considered at the end of Commission Consideration Items. a. Approval of Minutes 1.November 27, 2017 - Regular Session 2.December 4, 2017 - Special Session 4. Public Hearings a. Resolution Approving Assignment of Purchase Agreement to Ridgecrest Investors LLC (D/B/A Told Development Company) —On June 26, 2011, the EDA adopted Resolution No. 2011-16 Approving Purchase Agreement and Conveyance of Certain Property to Shingle Creek, LLC. Notice of this hearing was published in the official newspaper on November 30, 2017. Requested Commission Action —Motion to open Public Hearing —Take public input —Motion to close Public Hearing. —Motion to adopt resolution. 5.Commission Consideration Items a. Resolution Approving a TIF Development Agreement (HOM Furniture Redevelopment of Kohls Lot) Requested Commission Action: —Motion to adopt resolution. 6.Adjournment IEDA Agdi I[thm N©0 39- MINUTES OF THE PROCEEDINGS OF THE ECONOMIC DEVELOPMENT AUTHORITY OF THE CITY OF BROOKLYN CENTER IN THE COUNTY OF HENNEPIN AND THE STATE OF MINNESOTA REGULAR SESSION NOVEMBMER 27, 2017 CITY HALL - COUNCIL CHAMBERS 1. CALL TO ORDER The Brooklyn Center Economic Development Authority (EDA) met in Regular Session called to order by President Tim Willson at 7:56 p.m. President Tim Willson and Commissioners Marquita Butler, April Graves, Kris Lawrence- Anderson, and Dan Ryan. Also present were Executive Director Curt Boganey, Deputy City Manager Reggie Edwards, Finance Director Nate Reinhardt, Director of Business and Development Gary Eitel, City Attorney Troy Gilchrist, and Carla Wirth, TimeSaver Off Site Secretarial, Inc. 3. APPROVAL OF AGENDA AND CONSENT AGENDA Commissioner Graves moved and Commissioner Ryan seconded to approve the Agenda and Consent Agenda, as amended, and the following item was approved: 3a. APPROVAL OF MINUTES November 13, 2017 —Regular Session Motion passed unanimously. - None. k. EI)'A 10I MCI us) ES)Ii II] a V [I)I I I I1 Sa. RESOLUTION NO. 2017-20 APPROVING A FIFTH AMENDMENT TO DEVELOPMENT AGREEMENT (SHINGLE CREEK CROSSING PROJECT) Director of Business and Development Gary Eitel introduced the item, discussed the history, and stated the purpose of the proposed resolution to approve a fifth amendment to the Development Agreement for the Shingle Creek Crossing project. He noted the City Council/EDA considered 11/27/17 -1- DRAFT the drafting and processing of a Fifth Amendment to the Shingle Creek Crossing Tax Increment Development Agreement at its November 13, 2017, Study/Work Session. He displayed slides depicting site plans showing Outlot A, the FDA-owned lot, and described its location. Mr. Eitel reviewed the components included in the proposed Fifth Amendment: 1) Address the developer's assignment of its rights to purchase the EDA parcel to Ridgecrest Investors LLC (dba Told Development); 2) Process the Shingle Creek Crossing 6th Addition, the replat of Lot 1, Block 2, Shingle Creek Crossing, and Outlot A; 3) Extension of the Additional Improvement Note Maturity Date to complete the 239,000 square foot additional commercial development within Shingle Creek Crossing from December 31, 2018 to December 31, 2021; 4) Redevelopment of the Kohl's lot (Lot 2, Block 2, Shingle Creek Crossing) to the Phase II parcels identified for the 230,000 square foot of additional improvements that will be constructed and obtain certificates of occupancy permits; and, 5) Clarifications regarding the placement of a transitional screening fence on Food Court Pad Sites 9 and 10 pending the future development of these two pad sites to complete the Food Court improvements. Mr. Bitel stated the additional commercial development was added in 2011. At that time, Mr. Gatlin thought he could complete the project in five years but, unfortunately, that has not yet happened. Mr. Eitel described the site work that is underway and stated he is optimistic that 2018 will be a good year for this project since there is a commitment by the developer to work with the City of Brooklyn Center. Mr. Bitel explained that in addition to the components identified in the draft agreement presented at the November 13, 2017, Work Session, there is a component relating to the EDA's obligation/payment of $300,000 to Shingle Creek Crossing LLC for the land necessary to construct the required bio-infiltration basin. He reviewed the recommended revision to Paragraph 11 and budget issues related to this consideration. Mr. Bitel stated the City Attorney's office has prepared the resolution before the FDA. Commissioner Graves moved and Commissioner Ryan seconded to adopt RESOLUTION NO. 2017-20 Approving a Fifth Amendment to Development Agreement (Shingle Creek Crossing Project). Motion passed unanimously. 6. ADJOURNMENT Commissioner Ryan moved and Commissioner Butler seconded adjournment of the Economic Development Authority meeting at 8:09 p.m. Motion passed unanimously. 11/27/17 -2- DRAFT MINUTES OF THE PROCEEDINGS OF THE ECONOMIC DEVELOPMENT AUTHORITY OF THE CITY OF BROOKLYN CENTER IN THE COUNTY OF HENNEPIN AND THE STATE OF MINNESOTA SPECIAL SESSION DECEMBER 4, 2017 CITY HALL - COUNCIL CHAMBERS Wm*t,X,M1 I) DIII The Brooklyn Center Economic Development Authority (EDA) met in Special Session called to order by President Tim Willson at 7:47 p.m. President Tim Willson and Commissioners Marquita Butler, April Graves, Kris Lawrence- Anderson, and Dan Ryan. Also present were Executive Director Curt Boganey, Finance Director Nate Reinhardt, and Deputy City Clerk Rozlyn Tousignant. 3.APPROVAL OF AGENDA AND CONSENT AGENDA Commissioner Graves moved and Commissioner Lawrence-Anderson seconded approval of the Agenda and Consent Agenda. Motion passed unanimously. 4.COMMISSION CONSIDERATION ITEMS 4a. RESOLUTION APPROVING THE FINAL BUDGET FOR TH3 ECONOMIC DEVELOPMENT AUTHORITY OF BROOKLYN CENTEI MINNESOTA, FOR FISCAL YEAR 2018 Commissioner Lawrence-Anderson moved and Commissioner Graves seconded to adopt RESOLUTION NO. 2017-21 Approving the Final Budget for the Economic Development Authority of Brooklyn Center, Minnesota, for Fiscal Year 2018. Motion passed unanimously. IMIflHIhY4IDlI Commissioner Ryan moved and Commissioner Butler seconded to adjourn the Economic Development Authority meeting at 7:48 p.m. Motion passed unanimously. 12/04/17 -1- DRAFT IDA Airdi Hem N©0 EDA IfTEM MEMORANDUM DATE: December 11, 2017 TO: Curt Boganey, City Mang'4 FROM: Gary Eitel, Director of Business & Development SUBJECT: Resolution Approving the Assignment of Purchase Agreement to Ridgecrest Investors LLC (D/B/A Told Development Company. Recommendation: It is recommended that the Economic Development Authority open the Public Hearing, take public input, close the Public Hearing and consider adoption of Resolution Approving the Assignment of Purchase Agreement to Ridgecrest Investors LLC (D/B/A Told Development Company. Background: On May 23, 2011, the City Council approved the Shingle Creek Crossing Planned Unit Development Plans and the Final Plat of Shingle Creek Crossing, which provided for the reimaging of the Brookdale Mall site and the redevelopment of a significant portion of the Mall properties, including the current Midas Site and the EDA's parcel (the former Boulevard Bar & Grill/Ground Round restaurant). Additionally, on May 23, the City Council and EDA approved the Shingle Creek Crossing Tax Increment Development Agreement which included provisions for the conveyance of the EDA's parcel as part of the overall redevelopment plans of the approved PUD. On June 27, 2011, the EDA conducted a public hearing on the sales of the EDA parcel and upon making the required findings, the EDA adopted Resolution No. 201 U16, A Resolution Approving Purchase Agreement with and Conveyance of Certain Property to Shingle Creek, LLC. The Purchase Agreement included the following provisions for the future conveyance of the EDA parcel: - The purchase price was set at the current appraised value of $355,000. The term of the purchase agreement is 5 years from the date of the execution of the Tax Increment Agreement. The EDA's approval of site and development plans for this lot is required before the conveyance of the parcel, - The developer has agreed to the following minimum development parameters for this lot: o at least an 8,000 sf. commercial or retail facility or at least a 4,000 sf. dine -in restaurant consistent with the PUD. Mission: Ensuring an attract/re, clean, safe, inclusive Conmuflhluty that enhances the qualiv of life for till people ant/preserves the public (rust - The agreement has the required Right of Re-entry provisions, which state that barring any unavoidable delays, the developer shall commence construction of the improvements on this lot within 12 months of the conveyance of the property or the process of reverting the property back to the EDA will commence. - The agreement included the provision that the $355,000 promissory note/sales price will be forgiven in the event the developer acquires and incorporates the Midas Site into the overall PUD plans. (The developer satisfied this provision with the acquisition of the Midas Site and incorporated this parcel into the overall redevelopment plans for Shingle Creek Crossing.) On November 13, 2012, the City Council adopted Resolution No. 2012-146, which approved the Site and Building Plans for the LA Fitness Facility on portions of land formerly a part of the Midas site. On October 23, 2017, the EDA's Work Session included a discussion on amending the minimum development parameters for the Shingle Creek Crossing Purchase Agreement for the EDA parcel (former Boulevard Bar and Grill/Ground Round restaurant site) to include a 4,000 sf. bank. The consensus of the EDA was that the future development of a bank at the eastern entrance to the Shingle Creek Crossing PUD was in keeping with the vision for the redevelopment of this parcel and supported the addition of at least a 4,000 sf bank to the minimum development parameters provisions of the Purchase Agreement for the conveyance of the EDA Parcel. On November 13, 2017, the City Council adopted Resolution No. 2017-174, A Resolution Regarding the Disposition of Planning Commission Application No. 2017-007, which included a revised General Development Plan illustrating the future development of the EDA Parcel with a 4,000 sf. bank. Additionally, at this meeting the City Council adopted Resolution No. 2017-175, approving the Preliminary Plat of Shingle Creek 6 th Addition which separated the EDA owner parcel into its original configuration to be recognized as Lot 1, Block 1, Shingle Creek Crossing Addition. On November 27, 2017 the EDA adopted Resolution No. 2017- Approving the Fifth Amendment to the Development Agreement (Shingle Creek Crossing Project) which recognized the Developer's assignment of its rights to purchase the EDA Parcel to Ridgecrest Investors LLC (d/b/a Told Development) and extended the time frame for to complete the terms of the purchase agreement (approval of redevelopment plans) to 12-31-2021. On November 30, 2017, the Planning Commission adopted Resolution No. 2017-0 recommending approval of site and building plans for the development of a Bank of America on the EDA parcel. The City Council's acceptance of the Planning Commission's recommendation to approve the Bank of America's site and building plans will satisfy the terms of the 2011 Purchase Agreement for the Conveyance of the EDA parcel. Mission: Ensuring an attractive, clean, safe, inclusive community that enhances the quality of life for all people and preserves the public trust I IJJA I 1131kYA U I I&YA [I) 1iYiI I1J I Resolution Approving the Assignment of Purchase Agreement to Ridgecrest Investors LLC (D/BIA Told Development Company): The City Attorney's Office has prepared the attached resolution which formally assigns the 2011 Purchase Agreement with Shingle Creek Crossing LLC to TOLD Development and authorizes the President and Executive Director to execute Development Documents on behalf of the EDA, including the conveyance of the EDA Parcel to TOLD Development. Attached for reference is a portion of the 2011 recorded Tax Increment Agreement relating to the Purchase Agreement between the EDA and Shingle Creek Crossing LLC. There are no General Fund expenditures associated with this conveyance. The EDA will be responsible for the seller's recording fees of the conveyance documents, which is an eligible TIF 3 redevelopment expenditure. This lot is included within Tax Increment District No. 7 (Opportunity Site) with future tax increment generated by this development available to the EDA for eligible redevelopment expenditures and activities. Strategic Priorities: Targeted Redevelopment Mission: Ensuring an attractive, clean, safe, inclusive coininun i/V (11(11 enhances the (J1i(iIltj of life for al/people and preserves (lie public trust Commissioner introduced the following resolution and moved its adoption: EDA RESOLUTION NO. IKESOLUTION APPROVING ASSIGNMENT OF PURCHASE AGREEMENT TO RIDGECREST INVESTORS LLC (D/BIA TOLJ DEVELOPMENT COMPANY) WHEREAS, pursuant to Minnesota Statutes, Sections 469.090 to 469.1081 (the "EDA Act"), the EDA is authorized to acquire and convey real property and to undertake certain activities to facilitate the development of real property by private enterprise; and WHEREAS, to facilitate development of certain property in the City of Brooklyn Center, Minnesota (the "City"), the EDA has heretofore entered into an Agreement of Purchase and Sale (the "Contract") between the EDA and Shingle Creek, LLC (the "Developer"), under which, among other things, the EDA conveyed certain property legally described as Lot 1, Block 2, SHINGLE CREEK CROSSING, Hennepin County, Minnesota, according to the recorded plat thereof, formerly described as Tract A Registered Land Survey Number 1430, Hennepin County, Minnesota, (the "EDA Parcel") to Developer for construction of an at least 8,000 square foot commercial or retail facility or an at least 4,000 square foot dine-in restaurant project consistent with the Planned Unit Development for the EDA Parcel; and WHEREAS, the Developer proposes to assign all of its right, title and interest in and to EDA Parcel pursuant to an Agreement for Assignment and Assumption of Agreement of Purchase and Sale (the "Assignment") between the Developer and Ridgecrest Investors LLC, a Minnesota limited liability company (dlb/a TOLD Development Company) ("TOLD Development") subject to the consent of the EDA; and WHEREAS, the EDA has on this date conducted a duly noticed public hearing regarding the sale of the EDA Parcel to TOLD Development, at which all interested persons were give an opportunity to be heard; and WHEREAS, the EDA finds and determines that conveyance of the EDA Parcel to the TOLD Development, for the purpose of constructing a commercial facility consistent with the Planned Unit Development for the EDA Parcel is in the public interest and will further the objectives of its general plan of economic development, because it will provide an opportunity for increased employment opportunities in the City and serve as an impetus for further development. NOW, THEREFORE, BE IT RESOLVED by the Board of Commissioners ("Board") of the Economic Development Authority of Brooklyn Center, Minnesota (the "EDA") as follows: EDA RESOLUTION NO. Section 1. EDA Approval Further Proceedings. 1.01. The Board hereby approves the Assignment in substantially the form presented to the Board, together with any related documents necessary in connection therewith, including without limitation any necessary amendments to the Contract in connection with the Assignment and a deed and all documents, exhibits, certifications or consents referenced in or attached to the Contract or the Assignment (collectively, the "Development Documents") and hereby authorizes the President and Executive Director to negotiate the final terms thereof and, in their discretion and at such time as they may deem appropriate, to execute the Development Documents on behalf of the EDA, and to carry out, on behalf of the EDA, the EDA' s obligations thereunder, including conveyance of the EDA Parcel to TOLD Development. 1.02. The approval hereby given to the Development Documents includes approval of such additional details therein as may be necessary and appropriate and such modifications thereof, deletions therefrom and additions thereto as may be necessary and appropriate and approved by legal counsel to the EDA and by the officers authorized herein to execute said documents prior to their execution; and said officers are hereby authorized to approve said changes on behalf of the EDA. The execution of any instrument by the appropriate officers of the EDA herein authorized shall be conclusive evidence of the approval of such document in accordance with the terms hereof. In the event of absence or disability of the officers, any of the documents authorized by this Resolution to be executed may be executed without further act or authorization of the Board by any duly designated acting official, or by such other officer or officers of the Board as, in the opinion of the City Attorney, may act in their behalf. 1.03. Upon execution and delivery of the Development Documents, the officers and employees of the EDA are hereby authorized and directed to take or cause to be taken such actions as may be necessary on behalf of the EDA to implement the Development Documents. 1.04. The Board hereby determines that the execution and performance of the Development Documents will help realize the public purposes of the EDA Act. December 11, 2017 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 thereof: and the following voted against the same: whereupon said resolution was declared duly passed and adopted. I O O do I i33HS V1OS& Jld3H !191HX3 NV1d aLIS NV 1ND NA1NOOSNV1d1VflIdNO3 NiSSOHONJ3 1ONIHS!NVJON21MVGfld -II! L [TT -:\_-pt \_- LJiLYL i!!f IMiá I oil oil IIIIIIIIIIIIIIuhIIIIIIIIIII NlIIIiIiIIiIIIIHIiIIIIIiIN o 10 il Ij ç2 -' - • I T7VL ILI HIE - \ \ \\\ 7 f i i iixw j \\ II ii ci0n i-kt 1ffr tn- - \ il Ji\\ lidN p p - — --- -- - - Esger -. Iq ii LLC 0' N 0 1000 1 as - W\0 \vca0 o avlaotco nb0 o \ I 6 I EI1[I]U Eli I)I Pi 11)11 p'11) ii BROOKLYNIlI ahW MINNESOTA June 17, 2011 Return to: First American Title Insurance Company 1900 Midwest Plaza, 801 Nicofjet Mall Minneapolis, MN 55402 (P))" 383012v12 BR291-304 f Y i, / ARTICLE I DEFINITIONS .3 Section1.1 Definitions ............................................................................................ 3 ARTICLE II REPRESENTATIONS AND WARRANTIES................................................8 Section 2.1 Representations and Warranties of the Authority................................8 Section 2.2 Representations and Warranties by the Developer..............................9 ARTICLE III CONVEYANCE OF EDA PARCEL .................. ..........................................11 Section 3.1 Conveyance of EDA Parcel...............................................................11 Section 3.2 Purchase Price....................................................................................11 Section 3.3 Conveyance Subject to Right of Re-entry .........................................11 ARTICLE IV CONSTRUCTION OF MINIMUM IMPROVEMENTS..............................12 Section 4.1 Planned Unit Development . ...............................................................12 Section 4.2 Construction Plans . ............................................................................12 Section 4.3 Construction of Minimum Improvements .........................................13 Section 4.4 Commencement and Completion of Construction.............................13 Section 4.5 Effect of Delay ........................................ .... ......... . .... . ........................13 Section 4.6 Compliance with Environmental Requirements................................14 Section 4.7 Additional Responsibilities of the Developer....................................14 Section 4.8 Prevailing Wages; Underemployed Local Labor...............................14 Section 4.9 Certificate of Completion..................................................................15 ARTICLE V TAX INCREMENT ASSISTANCE..............................................................17 Section 5.1 Creation of Tax Increment District and Approval of Tax Increment Financing Plan...........................................................17 Section 5.2 Minimum Improvements Forgivable Loan........................................17 Section 5.3 Issuance of TIF Note..........................................................................18 Section 5.4 Additional Improvements Forgivable Loan.......................................19 Section 5.5 Midas Property Assistance.................................................................20 Section5.6 Review of Taxes ................................................................................20 Section 5.7 Use of Tax Increments.......................................................................21 Section 5.8 Business Subsidy Act .........................................................................21 ARTICLE VI ENCUMBRANCE OF THE DEVELOPER PROPERTY............................22 Section 6.1 Encumbrance of the Developer Property...........................................22 Section 6.2 Copy of Notice of Default to Mortgagee...........................................22 Section 6.3 Mortgagee's Option to Cure Events of Default.................................22 Section 6.4 Defaults Under Mortgage..................................................................22 Section 6.5 Subordination of Agreement..............................................................22 ARTICLE VII INSURANCE AND MAINTENANCE.........................................................23 Section 7.1 Insurance............................................................................................23 Section7.2 Subordination.....................................................................................24 Section 7.3 Maintenance and Operation of the Development and Any Additional Improvements ..........................................................25 ARTICLE VIII TRANSFER LIMITATIONS AND INDEMNIFICATION..........................26 Section 8.1 Representation as to Development.....................................................26 Section 8.2 Limitations on Transfer......................................................................26 383012v10 BR291-304 Section 8.3 Indemnificatjon ... . 27Section8.4 Limitation.......................................................................................28 ARTICLE IX EVENTS OF DEFAULT AND DAMAGES ................................................29Section 9.1 Events of Default Defined .................................................................29 Section 9.2 Developer Events of Default..............................................................29 Section 9.3 Authority Events of Default...............................................................30 Section 9.4 Authority Remedies on Default.........................................................30 Section 9.5 Developer Remedies on Default........................................................30 Section 9.6 No Remedy Exclusive........................................................................30 Section 9.7 No Additional Waiver Implied by One Waiver.................................31 ARTICLE X ADDITIONAL PROVISIONS ....................................................................... 32Section 10,1 Conflicts of Interest............................................................................32 Section 10.2 Titles of Articles and Sections...........................................................32 Section 10.3 Notices and Demands ........................................................................32 Section 10.4 Counterparts ........................................................................................ 32 Section 10.5 Law Governing ........................... ....... ... . .... .. ........... ............... ............ 32Section 10.6 Consents and Approvals ....................................................................33 Section 10.7 Representatives .................................................................. ....... ......... 33Section 10.8 Superseding Effect ............................................................................. 33Section 10.9 Relationship of Part'le s .......................................................................33 Section10.10 Term............................................................................................. ..... 33 Section10.11 Venue...........................................................................................33 Section 10.12 Provisions Surviving Rescission or Expiration..................................33 EXHIBIT A DESCRIPTION OF DEVELOPER PROPERTY ........................................ A-i EXHIBIT B CERTIFICATE OF COMPLETION ........................................................... B-i EXHIBIT C CERTIFICATE OF RELEASE .................................................................... C-i EXHIBIT D ELIGIBLE COSTS......................................................................................, D-1 EXHIBIT PROMISSORY NOTE (ADDITIONAL IMPROVEMENTS) ............... ..... E.-i EXHIBITF FORM OF NOTE .........................................................................................F-i EXHIBIT G PREVAILING WAGE RATES ................................................................... 0-i EXHIBIT H PROMISSORY NOTE (MINIMUM IMPROVEMENTS) ......................... H-i EXHIBIT I LEGAL DESCRIPTION OF PHASE II PARCELS .....................................I-i EXHIBIT J WORKFORCE PLAN .................................................................................. J-i EXHIBIT K FORM OF PURCHASE AGREEMENT ....................................................K-i EXHIBIT L FORM OF COLLATERAL ASSIGNMENT OF DEVELOPMENT AGREEMENT..............................................................................................L-1 383012v10 BR291-304 .uiI K-i 383012v10 BR291-304 AGREEMENT OF:NRCHASE:A4IE This.A9T4ment pfgrc.l . artd le (the 4A gte efttonty Ls-:tnade totd.entetud into this day ofEffe2011 (the ctive Date?) by and between the Economic Development Authority of Brooklyn Center Minnesota, a body politic and corporate organized and existing under the Constitution and laws of the State ofMnmesofa (the Seller ) and Shmle Creek; LLC Dlvre 1imiteduiabiity:compaiy(Th'Ptirchrtset')I This Agreetuerd sttietithe.s refers i Seller and Pirdiaser individually as a 'Party" and coliectivdlyas -thePattiesY' L EDA P-steel, The real property-that-ia the -ttibjdct bfThisAreethllnt It. located in the City oIBrooklyh Canton Heiinepin County, Minnesota (the city ) consisting of (a) the land legally described in Exhibit A attached hereto (the Land ) (b) any water or mineral nghts owned by or leased to,,Seller (c) any property that accrues to -the Land as a result of the vacation Qf adjacent rights of way and (d) all improvements and personal property if any, locatd oh1andttll4ctIvdIy,th "arcel 2.}hir.c1thnd Sale. SdIl tosdconyyih DA Parcel tcPut&tatht pursuant to the terms nf This Agreement, arid Prchaser agrees to purchase the ED2t. Parcel from 911kt pursuant to-ti-ic :trms.pf-ths Agreement. 3.Pthchas.Ps1e. 'dpnne1rasptice.(th qriasc .ri-ce) tab pai&-to'thaEeller by the Purchaser for the Et)A Parce1 ta THREE IIIJNDRED FIFTY FIVE AND 00/100 DOlI,LARS ($355 000 00) The Purchase Price shall be paid onihe Date of Closing (as defined below) by the delivery of a promissory note (thc Purchase Vnce Note ) which is in the form attached hereto as EKhibit B in the amount of the Purchase Pnce and which is secured by that certain Mortgage Security Agreeniant, Assignment of Leases nd Rents and Pixture Financing Statement dated as of the Date -of Closing by the Purchaser in favor of the Seller (the 4. E Ar neA Moriey Therc -hal1 b ire earnest money or other deposit tuq.iired pursuasitto - thit Apaihdht; 5 Cnyey-anee .?terms , -Upon Purdhatef'S fdil perfotmanc of Purchasr's obligations- under this Agreeme.nt Seller must exerpt -and. deliver to Purchaser -a Limited Warranty Deed co ieyingfe'e -title to the EDAP-arceljo Puchar zdbject-only to: (a)Building zoning and subdivisrn statutes Jaws ordinances and regulatiorts; (b)Rcsdrati,nits of minerals or of mineral rights in. favor of the State tf Mi.ñtitao, if any.;' () The lien of real estate 'taxes and special steesmnnts, riQI yef thie and payable; 3831OOvi 358 Biu93t 121283448v2 0879479 64444 3803669v26 (6) Qoenants conditions, rests timis;sejnents 5 ncumbrances or other defects in title which are disclosed 'by 'the Evidxhce of Title a defined in Section 8,.-and whrch are not the subject of an Objection; as defined in Section 10 or which are the subject of an Objection That Purchaser has waived pursuant to the provisions of Section i0b). (e) The itemsdOentified on 'the Certiflcatc of Title attached hereto as Ehibit D; (I) Rl'ghj of Reentry as described in the. Linritd Wartanty Deed attached as 'Exhibit C; (heteinaEer, ccllectively,'the "Permitted Bncuinbranees?'). 6. TPosess'fon, Upon PuycI3 er's f llpe5f6rtnarice o'fPuschaser obligations under ths Agreement, 6U6itrttsstd0ifar'ito9essj9n ofThe.EAar.eel,to .Pjtrfftaser, 7, Cluing. The Patti6tititi5( tott tbe offices p lier at '6101 shingle Creek Parkway Btooldyn Center, Minnesota on the date 60 days following the1urohaser sdehveiy of written notice to the Seller that the Purchaser intenda to close On-The purchase of the Land or such other date as the Parties may establish by wrlgen agreement but in tio eyent later than Jline 30, 2016, (the 'Illate of Closing"), at which tim'e': (a) Seller nilist: Q) execute and 4elivr to ,Purher the deed 'described, in, Section 5 above Seller will .'nOIude 'Oti'thO deed th'sttertrent "The iddrfifi6s.:tha"the Seller, doesnotknowMf anyt'wellsoii The described teal property;" (ii) etciatite and cieli,vc.x t,o Purchaser taid Pur(hasvet litle nsntt; 1i any, an appropriate Minnesota Uniform Oojiveyancing Blank Form Affidavit evidencing the absenoe of bankruptcies judgments tax liens involving partses 'with the same or similar names as *iKd Seller and evidencing the absence of mechanic s lien -rights affecting the EDA Parcel 'unrecorded interests affecting the FDA Parcel, persons in possession , of the FDA 'Parcel and known encroachments itt boundary li'ne'qnes,tions affecting the EDA Ftritel; '(iiy execute: and llelivee to Ptix'chaser , non-foreign affidavit in iecordable form containing such information as is required under IIRC Section 1445(,i) (2) and 'aiiycegu]a'ti'ons relating Thereto; (iv)provide P'orchaset or Title, cc a pfined. iri 'ect'ion 8,. with, the information necessary to complete a Mitinesota Certifieatsto;f Real Estate Yalue (v)Deliver to Purchaser The Date. Down Certificate describea 'in &c'tibn 12; and 353 SOvi isa Bpagi-304 121283448v2 0879479 64444 38O3669y26 (vi) pay provide 'evidence nfpayrnertt o'f"tnhC real thtate taxes and lf applicable levied or pending special assessments pursuant to the provisions of Sec ion II. (b) Purchaser must: (i)Bithen (1) Execute and delivet to :Sdllet the Purchase P.rice 4otein'The artiount of 'S'32.SVOO.OQ and in the form atteohed as, Exhibit B and execute and deliver:theMorvgage to Sglle,r.çpr :2) Deliver tO the '&lIet- evidence that (a) the Purchaser has closed on the acquisition of the real property legally described in Exhibit A to the Purchase Price MQItS (TW"Was Property"); b) the .atitotnobil'e repair facility located on the Midas Properly has been demolished in accordance with the PUD (as deflnèd in The Development Agreement, dated as of Ji.irie' 17, 2011, as the, same may be amended from time to time between the Seller and the Purchaser (the Development Agreement ).), - and (c) no Event of Default under the teIoprrtont Agreement exists d remains uncured ftr- The period Olowed thefeinand. (ii)Pay or provide evidence of payment of the following the premium for Purçhaer s owners policy of title insurance if arty the charges for any endorsements to Purchaser s We insurance policy that Purchaser elects So purchase the recording fee due upon the recording of the deed from. Seller to ?.ureiiaser; The State Deed Thit: due a)son"Use .exctitien of the deed dsCrib'ed in Section 5 real estate taxes and if applicable levied or pending special assessments pursuant to the provisions of Section 11 mortgage registration tax due and payable ipoo recording of the Mortgage all costs associated with Purehater'tasic'ir'g,, if any, iitdfng mortgagee's title insufahCe pbliOy"cnsts and premiums if.any and Title a' fee to conduct aid insure the closing of this iranactIon; and (iii)Deliver'tollie Seller the Platis, specifications, divalngs and related documents ror 'the constrttction' of una'Lieast 8;0t) square foot cbmthercial Or retail facility.or an at least 4000 square .fo,ot'din-in restaurant project consistent with the PUP' (,ks defined in the Development Agreement) to be located, on the EDA Parcdl ftheProect'-') wMdh shall be as detailed as the plans, sse,eificatioas, drawings and related dOeuinent'wblch, ?resubmitted to 'the building irisjstctor of the City (the "Construction Plans ) and The Authenty shall have approved such Construction 'Plaht dfi•the matinee zs.et fOrth in SecOçi 4,2 of the Development mAgreeent; provided, howCtet, the Purdhaset is not. 'requlred, to identify' the purchaser, te,iattr user of the facility to be 000ttrUctCd or! the Land; and (iv)Deliver to the Seller ,eyi6ence 'that the Purchaser has, Closed On Cons.ti-uctiort financing for the Project with 'the lender thereof in an amount 'which 383100vi'J55 'dR29 -354 121283448v2 0879479 64444 3803669v26 -f[16 loper. sltal -cc^iflf is -aqfficien.t, together with c4uity ocitiiniittnOntS, tb complete constraction of the Project 'in accordance with the Construction Plans approved by the SIlet :8. Title Commitment. The -purchaser may order, in Put cltatat's solo disc-tietiotioncl at the Purchaser s expense a comn)ittnent (the iTi tl O Conirmtinent') issued by any title insurance company acceptable to Purlhaser( Title), for an owner s title insutance policy in the M! amount of the Purchase PridO, hOWiitg.fe triple iitle to the EDA Parcel in Sellet. 9. Suiwey. Purchaser may order, in Purchaser's sole ditcfdtihn and. at the Purchaser s expense, a currently -datedsijrvey of the EDA arcel (the Survey and together with the Title Commitment, Evidence of Title ) Which Soevey may be prepared in accordance with the most current- nuiiiimumdstIil ttani:OlOtsificatiotr ALTA/ASCM land title sjanlia4s., aod may inlode any Table A items that kurdhaser -may .rttiOtt 10.. Defoets anmd Ctue. Within teti (ltl ness days:.pcPrçl)ascr.s receipt of the last item of the Evidence of Title or 'within ten (10) 5ays of Purchaser discovery of a defect in the marketability of Seller's title 'to the E'DA Parcel which defect was not reasoriably ascertaindble from the Evidence of Title Purchaser may, give Seller written notice of alleged defect(s) in the marketability of Seller's actual and record title to the EDA Parcel and request That Seller make Seller s -title mar'ketable ( Objections ) The Permitted Eriovmbrances may not serve as a basis for an. Objection Witbth ten (10) days of Seller s ieceipf of P urc h aseri s Objection(s) Seller must notii Putchaser, in writing , l'f'Seller vil1 attempt to make Seller s title to the EDA Parcel marketable on or beforetheDate of Closing. If Seller notifiesPutchaser that Seller will attempt to nake Se1lr s title to the EDA Parcel marketable -Seller must use commercially reasonable efforts to do so but Seller has no obligation to cpmmençe alawsint or pay money to make Seller s title marketable If Seller notifies YUX chaser that Sellet does to mtencl to make Sçller s tste marketable or if Seller notifies Purchaser that Seller intends to make SeSts:Ijtle marketable but i unable 10 do co-on or before the Iate of tlbalng, PurOhksetrodiat, On ot.bOfOre the Date of Closing, ipiTher i (a)terminate , thi, Agreemont putstraiit to the prortitturøc set: forth in Sctiop 20 below; or (b notify Sollot thatE haser waiyes. Purchaser's Objections. tf.'Purchaser waives Purohtaet't Objections-the-taattereghdiig rice to uôh Objectips- will be deemed a 'Brrnitted -Encumbrance and the.Patfies must .fay p.eifotnt ibtir obligations under this- Agreement. If Purchaser rti6kes an Objectioii and does not rtotif-j Seller of Purchaser's election to terminate this Agreement pursuant to subsection (a) above before Seller and Purchaser meet to close this transactipn pursuant. to SOotiOii 7 Ptithaer will be -dtamed to have waived Purchaser's Olecticn. 11, Real Esfate Tams and Special Assessments -. Th Parties must pay the real estate taxes (which tutin, as used -hi this Agreement, includes set-vine charges assessed against 783100v8i0 aase)-iat 121283448v2 0879479 64444 3803669v26 real property on an annual bas is :pUtsuaTt Minites.otn Sta ts.f2.9.lQl3 ap.4 pecal assessments as follows: (a)Oh bft ihJYatof.Q tjg^^p.lJer mut.pay the teat ettatetaxes aid any installments of special assessments certified fox payment therewith and any penalties and interest thereon that ore due and payable in 2010 or pnor years with respect to the EIA Patceh (b On. Or b.efo.rc tbs Date lp.!og,. Seller shall pay any and all .installitihnts of .special assesirfleitts 1eied or pending . nginst the EDA iel as of the Date of Closing and (c) Putshaser an.dller.:must pp r.ateth real. estate taxOs, If any, which ard payable with respect to the EDA Parcel in Theear oyf closing on a per diem basis using 0 calendar year, to the Date Of Closing. 12. Slled's Representation s Seller makes The following r6present5tions to (a)Seller Tepresthti pnd. W5rtant that iliet has _4.Q00 no. labor p.r ticris to the "'DA.f'ap l:fpr. which paentfi4stiOtb.eeti paid (b)Scllartp.pts4ntaThato s Iseaf 1 Sdi1er's no!gal knowledge,'there ate no unrecorded. mortgageg., contra.ts, ptrchas4 ggr0its Pp 5 onsj leaes, easements or :othp.ragemeo.ormterestreiatingtQ the EDA,P.atoal. ()Seller tepresoritsthat.,to heest.pfçller's.aotual knowledge, there areno persons in possession of any portion of The EDA Parcel other tap pursuant to a recorded document .oras may be disclosed on .tho Sui-vy. (d). Seller rppzesenis. that, to tbebçat of Selleis atrtuai knowledge, that there are noencroachments Or boundary line questiopa affecting the EDA Parcel except as may be disdised on the 8urvty .. (c) Sell.et ipprp.se.its dot, to the best o f ell er i s artual knowledge, the EDA P:arcei and the i mprove rneots thereon, if any, are opt to violatIon of atly statute, law; didinahce t±eOlati6n, Seller represents that, to the beit.ofSellOi°s àeitai knwlcdge., there is no action, litigation governmental investigation condemnation, or adrn.imstrative proceeding of any kind pending against Seller, involving any portion of EDA Parcel and no third party has threatened Sdller with. com.enee.nc.nt of poy such action, litigation, investigation, (g) Seller represents that, to the best of 8elWs actual knowledge, there ara.no wells, as that term is defined in Minnespt Statp.te, section 1.0.1.005,, subd. 21, located onthe EDA Parcel, 38t1 00A iss.aR24I-584 121283448v2 0879479 64444 3803669v26 (h)Seller represeitsthaçtO 1hebe s t o Oiler's tualkriowledge, here.a.re no wells located on the EDA Parcel which are contaminated are constructed or maintained in such a manner that their continued use or existence endangers ground water quality or is a safety or health hazard are inoperable or not in use, or must be sealed under the Ip of Minnesota Statutes Chapter 1031 except for wells which have been sealed in accordance -with the reqoiremdnts tf.Mininesota StatWt Chapter 1031 and as whito 'ch; Scaled. Well Qertflcate has been delivered to the MinnescttaDeØrttnent of Halih. (i)Seller feVie5ents that, to tho best.ofSeilec's actualknowle .dge, there are no underground or above ground atorage tanks of any size Or type located on The EDA Parcel. (j)Seller represents that, totbe best of SIlr' a teal knqwledge, there ate no Hazardous Substances located on the EDA Parcel; the EDA Parcel is not subject to any hens, or claims by govemmOilt of regulatory agencies utthiid. parties arising..from the release or threatened release of Hazardous Substances in, on ot about EDA Parcel and EDA Parcel has not been used in connection with the generation thsposal storage tre'abn,nt or. ra O'statian..ofHazardousSubstanees eiceplgs dlIow.s: none (k)lot pprpces of thin Agreement, the :teriri iHeaar dou ^. Substance" incitides but is nt limited to substances defined aa 'hazardous substances "toxic substances or hazardous wastes in the Comprehensive Environmental Response Compensation Liability Act of 1980 as amended 4213 S C §9601 et seq ad aobtances defined as 'har6ou was'tes," ithazardoussubstatOes, ' ciltotttt,at cotiiaminants" as...dined :j The Minnesota Environmental P.esponse.and Liability Act, Minnesota Statutes §1 15-13,02 . The term hazardous, sobstance also includes asbestos polychnionated biphenyls petroleum including crude oil Or any fraction thereof petroleum products heating oil natufal gas, nãtutOl gatlitjtudt litpyefied hatutal gat, .r synthetic gut nsanbie fur fuel (or 'mixtures of.naturai gas and synthettegat). (1) ,Seflcr represeots, that; ic, the best ol.elfer's atua1l knowledge, there are no individual sewage tt'e'atiinenf systemS on, or serving the EllA Parcel and any sewage generated on the EDA PStcel goes to, a faiity permitted by die ,Minnesc,ta Po llution Cotr&l Agency. (rn) Seller, represents That, to th' best of Seller's ac @1 knowledge, the EDA Parcel has no boOn used. for teethainjihetatuTha production, at any time prior to the bate oflosing, Seller acquires actual kiioSvledge of events .or circumstances which render the representations set forth in this Section 12 inaccurate in any respect Seller must immediately notify Purchaser, in writing Seller will indemnify Purchaser , its succes's'ors and assigns, :s.gain8tan4 will hold, Pierchuser, its ancpessors and assigns harmless from, any expenses or datuaget, including reasonable uttorneys fees that Purchaser incurs because of the Seller'sbreach of anyof'The above Wadatitie's; the inSceuracy of any of the above representations when made; or Seller's failure to nofily. Purdhaser,. Wore the Date of Closing, 'if the representations set fOçth above become inaccurate. The representations,, warranties atid 383100vaj'sa 85291-304 1212834481,2 0179479 64444 3803669y26 .ittdemttifioationset forth gbove will surilve--the cloSing of This transaefion and Sellers delivery of a deed to Purchaser Purchaser acceptance of the deed describedsn Section 5 from Seller, but payment of the Purchase Price to Seller with knowledge-that one or more of the matters set forth above are not as represented and warranted will constitute Purchaser a -waiver or release of any claims doe to such misrepresentation or breach of warranty, At closing an authorized representative of Seller must execute and deliver to Purchaser a certificate of Seller certifying that the representations contained in this Section 12 are true as of the Date of Closing or if such representationtäre rl :iota--ti- :doscribiqg hi detail, the reason vIly the:representations are no longer true (the-"Date-tlowñ -edfiata'. 13. P-ttrchaser's Representations. Purchaser hereby iqriespnts to Seller as fol.Iwa:. (a)ThO -i'ndividUàlt exectititig this Agreernanttirt behalf of-Purohasefroprosent gnd wai t- tlat they have-the ethority to; execute this sen-ptibchd1fofPutehaser and to bind Purchaser. Purchaser represents that Putchasr has the .full and complete atitlittrirtp enter ito, th!sAgreasneut and topurohese;tha EPA. Parcel. (b)?urdhas-citetsents that - aserhas not engaged aTOa] Ostate sgOtA in conitecilon th*ifs-transactiOn.. - -14. -PurCIWs Or's Itistree-tion- nnd.!AS I-S.-SIe. At nil titires priOr. -to the Pate o1 Closihg, PurOhaser alid ittagen Ita.veth rtgh.t, 11PQti reasqisb1esiotice -to ei1e?,--to go -uponthe EDA Pa-reel to inspect the FDA Parcel and to deternrine The condition- of the FDA Parcel including speciflcally. -the presence or absence of Hazardous Substances in on or about the EDJh Parcel Purchaser agrees to mdtimnr' and dedeiid Seller froni arid, to hold el1er harmless agaiht anyand oil claims, catisestif actt-pn oraxpenses, incfudfng attorxies fees, relating to or arising from Purchaser a or Purchaser a agents or contractors presence on the FDA Pafcel prior to the Date of Closing Purchaser agrees to repair atiy damage to the DA Parcel caused by such inspections rind to ret.im-the EbA Parcel tO kaantially the same tioitdil'iop eatsted prior-to Purchaser s inspection PURCIIASER ACKNOWLEDGES THAT PURCHASER IS PURCHAS14( THE P.HOPERTYIN RELIANCE- ON TAE REPRESENTATIONS- OF SELLER SET VOMI IN SECTION 12, ON PURCHASER'S I"'SPECTXON OF THE PROPERTY PURSUANT TO THIS SECTION 14 AND ON PURCHASER'S JUDGMENT REGARDING THE SUFFICIENCY OF SUCH INSPECTIONS PURCHASER 15 N01'J -LYII -ON ANY WRITTEN OR ORAL It-PRESENTATIONS, WARRANTIES OR STATEMENTS THAT SELLER OR $ELLR'ES AGENTS FHAVE MADE EXCEPT FOR THE REPRESENTATIONS SET FORTH IN SECTION 12 OF TIllS AGREEMENT.- SUBJECT TO ptIRCH.ASER's RIGHT TO -T-EFJ'vHNATE TitS AGREEMENT PURSUANT TO SECTION l;-, PURCHASER IS PURCHASING -THE CONDITION RELYING ONLY ON THE REMESENrATIOMS. SET FORTH IN SECTION 12 15, Purchaser's t.onkhrcOcies. Phtphase-rh, phltgationa under this Agreement are contingent on: 383IOov2 isa tiR291-304 121283448v2 0879479 64444 3803669v26 (a). Piitchtspr' dat n2atiott, lsed jJ0 th e-Inspections: described in Section14 above and any other edleyant -inlannadn, that the bndrtitat of th DA Parcel' isacceptable to Purchaser; (b) Pvzchtser's abiJity i Ob tain 3 . liti osoraaco policy and:endorsements insuring Nif6lids -er's titld to tilO EA Pdtc.ti all lO o form ac.ptab1e. to Pxrchaser in Purchaser'.s sole; and absohitedjsoratjou. 16. Seller's Conflnftencj lr's obligftons nder Agreement are coniiogdnt. lforth in Sections 7(b)(iii) and 7(b)(i.v). 17, Condemnation. If a pubii..or15riyatO entity with the poWer of eniihctit:dpnialn commences, condemnation proceedings against all or any pait -ofthe EDA POrcOl, Seller ttierst immediately notify Purchaser and Purchaser may at Purchaser a sole option terminate this Agreennen'r pursuant teSectiougObeleiw, Pth haseehasweiity (20) eiays.&om the effective date f Sellers notice to Thirofiacet to taetoite P baton's lOrittinalioni right. if PQrehaser:tloes not terminate this Agreçment withiaaid twenty(20) day period, the Parties must fully perform their obligations undet this Agreement, with no reduction, in the. Purchase Price , and Seller must assign to Puichaser, on the Date of Closing all of Seller's right, jitle and interest in any award made or to be made in the condemnatnin proceedings Seller Mist not designate counsel appear or otherwise act with respect to lahy such condemnation proceedings without Purchaser s priorwritten roosent unless Purchaser fails to respond withI n ièvri (7) de5ta to a 'r.dqnet for suchwritten consent. is.. .]hffff. Purchaser May not . s'sign Pnteher' tigts pr 011ga6ons .tpiderthis Agreement to a third p arty without the -wrlttOh- .britertt of Seller.. Sell er May. gnat_It or'thhoid seller's consent (pan .signn'ioiit.jn Ilèr 5 8 sole and absohstô. disCretion. 1Y.. Defd.rdf. If eiThcr P.any default it .th ierfpm_Iance of. any of he 'arty's.'Obligations utidet' thirt Agrceniert_t, the nbtadefaulf0tg ParLyMay j after vrit(qano:tice to thp .defaulting Party, suspend performance:ofjtt t)bliatiOns ta'det_'this.Agreeuient ortd.'thc rights of the oon -de.foltingParty 4T^,ap thjj:ows: (a) Purchaser's Default. IfPOrhasttrelefau1ts in the' performance of any 'of'Purchaser's obligations under this Agreement, Seller .hat the right to terminate this Agreement pursuant to Minnesota Statutes, Section 559.21. if ortO or more of the representations setforth iit_$çct{on are ioaccprate, when rnad;.or if.Purehaser defaults in the performance-of 000 tnnr.e p€Pwchgser's obligadom pjd,er-gections7(b)(ii), Sel 7b)(i) orrle shall have all tights andj'e.edie vai1ableto it, at law or in equity. ni may commenOe an action fot dathaet aTnrst Ptir,Chaser in Hemiepin 'County District Court, and if Seller -prevails in such an aetion,.SeflOf is Ontitled 'tO t000Os.f froto PurChaser el1rs reasonable attorrieyfèes and Costa 'The remedies set forth in .this,Sectjôn 19(a) -are Seller's sole arid exChxsiererriedjes Ip - (b). iie't Default .11 'Seller dfatdts it_i th. erforenonee of any. of Seller'sobligations under this Agreement 3811 004 155.5.291-50 3803669v26 121283443v2 0879479 64444 (i)Purch8er may terminate thls Agreement pursuant fo Section 20 beisni'; (ii)Putoimset may initiate a civil aOtibrt to icorngcl Seller's specific performance of Seliets Obligeti s.snderfhisAgreementprovitled that Purchaser commences such attidn within ti (6) months of the nate of:-8616r's default IT Purchaser prevails -in any such action for specific peronnance Purchaser may also rec€rvei Purchaser's reasonable atottleys, fea udcostr; or .(iii) If any oite or more of the. representations set forth in Section 12 are inaccurate, when made, Purcfiasar trty canoe an action:fordaxfiages:a.Oinst Seller in H e nneprn County District Court, and if Purohaser prevails in such action Putdhaser may iso recover from Seller Pitchaaagonable attorneys fees and costs. The yenedjes set forth in thit' SrtiOn 19(b) are; Purqh.qller.s sole and. tacciugive feztidiet intbeeysntatf:SeTliefe default; 20. T'erminot{On ttf 1-h1 eement; eotons ill, I.7 and 19(b of Agreement allow Purchaser to terminate this Agreement under certain conditions Section 16 allows Seller to terminate this Agreement under certaineonditions Section 19(a) allows Seller to terminate this Agreement under certain conditions provided liowever 1 such termination is governed by Minnesota Statutes Section 559 21 and not 'b) this Section N. The following ptaeadiires govern a exercise of thoat tatnimnatiori rights: (a)The party that desires toerm••ate this Agreanien.t (the :eT e jnstj-g Party') must notify the otherparty (the mNon-Terinating Patty"), in writing, of theTenninadng:Partyairotto.termiaatq thiiAgreement (b)The Terminating . Pattys notice must tecIt the Section of this Agieament that authoriaes the Terminating Party s termination of this Agreement and must describe the facts and circumstances which the Terminating Party asserts justify termination under theseferenced Section. (c) The Terminating Party's nbxiva of tOrtilinatiort -wilt be effective as of the ddte thO ThrMIrtatirtg .Ply depccsits the no(ice itT tentiiOtio with the "United States Postal Service with all necessary postage paid for delivery to the Non Terminating Party Via certified mail retum recCipt requested at the address set forth in Section 23 If the Terminating Partydelivers a nOtice of terfriination :j adifferentmnanner than described in rho pneutding llentenqethenotice of terrñiOaticin will i.e eTfctivp as of the date the Non- Terminating Party actually receives the notice of termination The Terminating Party must also mail a copy. of the :ntiqe of termination to the Pttiet' respective attorneys as proyided -for In Section 23 below. <d) If the Non-TermInatin Party disputes the Terminating Party's sight to terminate this Agreement, the Non Terminating Party must so notify the Terminating Party, in Wdtiog wiihinthye (5) business days of the NonFem -dnating Party's receipt-of the Terminating Party's notice o f terrtrtoation. 38ti004.35Ba1r291-304 121283448v2 0879479 64444 3803669v26 e) If The Nort-Peutirtatiiig Pty de,es iot dispute fhe Tertnintaihd Perty't right to terminate the Agi'eement, Purçhaset must execute and deliver to Seller a recordable quit claim leed.orrither recordable in mentvidetuing'the lerTpiiiafion of this Aementsncl'Pureiiase,r's rights, in :thdftD& Parcel. (f) If the Patties dispute the, yaJithty of an, ttemptçd .termjnttioii of This Agreement either Party may initiate a civil action in a court of competent jurisdiction to deternitne the status ofthis Agreement, and the .Party that prevails in any such action. is entttlefl'to recover its reasonable attorneys fees and costs in the action from the non prevailing Party, l. Time, Pime of'the etseoco for all provisions of this Agtcm.epi. If 5011cr. and Purchaser have not previnusly closed pnrsuant.iöthi's Agteemeht this Ai'0eni,ent shall terminate and have jio further force.orffèctafterjune P, 2016 22.'Sthital of F Ortns, The Pi'tfie's' bijg(iriri:s si1er thJ. Agreement survive eUers deiiVea:deed tollurcl'iatet aitd:thetilosing cif this ttaisaetiim. 23.Notices. All waces. provided or in, this Agreement nnuft`b6 ht wtirmnif. The notice must be effective as of the date two days after the Party tpndmg such notice depositu the notice 'mth the TJmted States Postal Service with all necessary postege paid, for de,livery to the other Party via certtfled mail return receipt requested at the address set forth below, If Party delivers a notice provided for in this Agreement in a different mann0r than described in the ptaeeding sentence notice will be effective as of the date the other party ,receivesactually r the notibO. Th Party sendiccgtho.noii'ce mtistelso man a copy o hene,tijie tp:the15 ardes retpdllve attorneys via first class United States mallet tho addrestes set forth:helow 3,tii0,Ovi 353 B3291-304 121283448v2 0879479 64444 3803669v26 Purchaser:Shlirg1.Cttek, LLC 1018 htah Stretn Dickson, '1N37055 With a copy to:Brggs ndleiprg4n, PA. 2200 IDS Center 80 'SoiitliEighth Street :Mianeapolis, MN 55402-2157 Seller:Econpmie:Deveiopment Authority of Brooklytn CDn1et,Mjnnesota 301 Shuile-Ceek Parkway rooklynCenter,MN .55430-2199 Attn: Executive Dfrector With a copy to;2.harterpJ 470 TIS: aiikPi 200&uth.6th Sireft libinpgPQlis)MN 554027 24.P'tiil Agrem:ent; Th Prties, ackhowlddp that this Agremant rpeents the full and tornp[eto agrernent of the Parties relating In the purchase and sale of the EDA Parcel and all matters related to the purchase =0 sale of Ihe BDA Parcel This Agreement supersedes and replaces any prior agreements -either oral nr Written and any amendments or modifications fothis Agreme.nt-rnusl e in, wthing.and xéôUted bY bb&Pai.i4s tqbective. 25.GovèrxiInk Law; This Agreetnent has been--made tindëi' the I4ws of The State of Minnesota-and such laws control its. irit:relafion, 383100v8 isa 011291-304 121283448v2 0879479 64444 3803669v26 Resolution Approving the Assignment of Purchase Agreement to Ridgecrest Investors LLC (D/B/A Told Development Company. EDA Agenda Item #4a December 11, 2017 Brookdale Mall Midas and Sears site were not part of the Brookdale Mall ownership and initial acquisitions by Gatlin Development. In 2011, the City was in negotiation with the owner of the Midas site to acquire easements for the Twin Lakes Regional Trailway along Bass Lake Road. On June 27, 2011, the EDA conducted a public hearing on the sales of the EDA parcel and upon making the required findings, the EDA adopted Resolution No. 2011-16, A Resolution Approving Purchase Agreement with and Conveyance of Certain Property to Shingle Creek, LLC. EDA - Gatlin Development Purchase Agreement •The purchase price was set at the current appraised value of $355,000. •The term of the purchase agreement is 5 years from the date of the execution of the Tax Increment Agreement. •The EDA’s approval of site and development plans for this lot is required before the conveyance of the parcel, •The developer has agreed to the following minimum development parameters for this lot: - at least an 8,000 sf. commercial or retail facility or at least a 4,000 sf. dine –in restaurant consistent with the PUD. •The agreement included Right of Re-entry provisions, which requires that barring any unavoidable delays, the developer shall commence construction of the improvements on this lot within 12 months of the conveyance of the property or the process of reverting the property back to the EDA will commence. •The agreement included the provision that the $355,000 promissory note/sales price would be forgiven in the event the developer acquires and incorporates the Midas Site into the overall PUD plans. •On November 13, 2012, the City Council adopted Resolution No. 2012-146, which approved the Site and Building Plans for the LA Fitness Facility on portions of land formerly a part of the Midas site. •The acquisition of the Midas Site and incorporating of this parcel into the overall redevelopment plans for Shingle Creek Crossing forgave the $355,000 promissory note/sales price for the EDA parcel. •On November 13, 2017, the City Council adopted Resolution No. 2017-174, A Resolution Regarding the Disposition of Planning Commission Application No. 2017-007, which included a revised General Development Plan illustrating the future development of the EDA Parcel with a 4,000 sf. bank. •On November 27, 2017 the EDA adopted Resolution No. 2017 Approving the Fifth Amendment to the Development Agreement (Shingle Creek Crossing Project) which recognized the Developer’s assignment of its rights to purchase the EDA Parcel to Ridgecrest Investors LLC (d/b/a Told Development) and extended the time frame for to complete the terms of the purchase agreement (approval of redevelopment plans) to 12-31 -2021. •On November 30, 2017, the Planning Commission adopted Resolution No. 2017 -016 recommending approval of site and building plans for the development of a Bank of America on the EDA parcel. The City Council’s acceptance of the Planning Commission’s recommendation to approve the Bank of America’s site and building plans will satisfy the terms of the 2011 Purchase Agreement for the Conveyance of the EDA parcel. Recommendations •Open the Public Hearing; •Take public input; •Close the Public Hearing; •Adopt Resolution Approving the Assignment of Purchase Agreement to Ridgecrest Investors LLC (D/B/A Told Development Company). Questions? EDA Affftdi Hem) N©0 5i EDA JITEM MEMORANDUM DATE: December 11, 2017 TO: Curt Boganey, City Manaj FROM: Gary Eitel, Director of Business & Development SUBJECT: Resolution Approving a TIF Development Agreement (HOM Furniture Redevelopment of Kohl's Lot) Recommendation: It is recommended that the Economic Development Authority consider approval/adoption of Resolution Approving a TIF Development Agreement (HOM Furniture Redevelopment of Kohl's Lot). Background: On March 28, 2016, the City Council adopted Resolution No. 2016-40, a Resolution Approving Modification to Redevelopment Plan for Housing Development and Redevelopment Project No. 1, Establishing Tax Increment Financing District No. 7 (Redevelopment District) Therein and Approving a Tax Increment Financing Plan Therefor (Opportunity Site). The boundaries of Tax Increment District No. 7 include 9 parcels within the southern portion of the Opportunity Site (lying south of John Martin Drive): 5930 Shingle Creek Parkway Jani King (office building) 5939 John Martin Drive former Golden Value Market (acquired by EDA) 5927 John Martin Drive 5915 John Martin Drive 5901 John Martin Drive 5910 Shingle Creek Parkway 5900 Shingle Creek Parkway 2500 Co. Rd. 10 PID 02-118-21-13-0007 New King Buffet & Tires Plus former Perkins Restaurant site (for sale by owner) Health Partners Dental Clinic Mn. School of Business (office building) former Brookdale Square Center (acquired by EDA) former Brookdale Ford (acquired by EDA) remnant parcel adjacent to Hwy 100 ramp and 3 adjacent parcels within the eastern portion of the Shingle Creek Crossing Development: PID 02-118-21-24-0021 remnant parcel adjacent to 2545 Co. Rd. 10 2545 Co. Rd. 10 former Boulevard Restaurant (acquired by EDA) 2501 Co. Rd. 10 former Kohl's building This tax increment district deferred the first year of tax increment collection until 2019 and deferred its certification pending redevelopment proposals. (The Tax Increment Laws allow the deferral of certification for 3 years from the EDA actions of declaring blight conditions and first demolition activity, May-June 2015). Mission: Ensuring an attractive, clean, safe, inclusive comnninhtj' that enhances the quality of life Jcn' al/people and preserves the public trust 131 YV VI 3IkIk%I 3Ik (1)M5.501 IWJhAI On November 27, the EDA Work Session included a review of the Draft Tax Increment Agreement and EDA direction to staff regarding proceeding with the HOM Furniture Tax Increment Development Agreement for the redevelopment of the Kohl's lot. The consensus of the EDA was to proceed with the preparation of the final TIF Development Agreement. TIF Development Agreement By and Between Economic Development Authority of Brooklyn Center, Minnesota and KKIVIBA Brooklyn Center LLC (AKA HOM Furniture The development agreement has been prepared by Jenny Boulton, Kennedy & Graven, with the assistance of Tom Denaway, Springsted Financial and includes the following components: 1.The minimum improvements are identified as the building renovations and expansions as approved by the February 13, 2017 City Council approvals to the Shingle Crossing PUD Amendment No. 8 (Resolution No, 2017-007) 2.The schedule for the minimum improvements has been identified as beginning no later than August 1, 2018 and ending no later than March 31, 2019. 3.The Future improvements are identified as the future Pad Site X improvements and the Storm Water Improvements as approved by November 13, 2017 City Council approval to the Revisions to the Shingle Creek Crossing PUD Amendment No.8 (Resolution No. 2017-174). 4.The agreement does not include an obligation by the developer to commence the future improvements on Pad Site X. The schedule for this redevelopment is driven by market conditions; however, the completion of the Storm Water Improvements (bi-infiltration basin) is an obligation to be completed as part of the future development of Pad Site X. 5. The economic assistance to enable the redevelopment of the Kohl's Site includes 3 components: a.The payment of $300,000 from TIF 2 Fund for the portion of the Kohl's lot identified for the drainage & utility easements Storm Water Improvements. These TIF 2 funds are intended to be replaced by future TIF 5 revenue for Out—of —District eligible expenditures. b.A Pay-As-You-Go Note (not to exceed $300,000) for the construction of the Storm Water Improvements (bio-infiltration basin) from 15% of the annual tax increment generated from TIF 5 (this amount in 2017 is projected at $84,000) commencing in 2019 and subsequent years until there is sufficient funds ($300,000 cap) for these storm water improvements. c. A Pay-As-Go-You Note in the amount equal to the lesser of $3,272,400 or the Eligible Costs actually incurred and paid by the Developer which includes the following: - Land acquisition costs; - Utility improvements and relocations - Landscaping; - Demolition; Structural or other renovation of substandard building to address conditions in the Report of Inspection Procedures and Results for Mission: Ensuring on attractive, clean, safe, inclusive coinnnilzity that enhances the quality of ilfe for all people and preserves the public trust I 31 I MkiUhU MkTI[S] WWI )1IAAI Determining Qualifications of a Tax Increment Financing District, dated November 10, 2015, prepared by LHB, Inc.; and - Any other expense incurred by the Developer in connection with the acquisition of the Development Property and the construction of the Minimum Improvements and eligible of payment form Tax Increment in accordance with the TIP Act. 6. The Developer has decided to proceed with this development under the provisions of the Business Subsidy Act vs. the option of submitting paid settlement statements and invoices for acquisition and site preparation costs in the amount of $4,767,800 (the amount of the TIF assistance + 70% of the current assessed valuation) not later than March 31, 2019. The compliance with the provisions of the Business Subsidy Act (Section 4.7) is proposed to be met through the creation of 12 full time jobs at a minimum wage of at least $12.00 per hour, excluding benefits, within two years of the Benefit Date (the date a certificate of occupancy for the Minimum Improvements is issued by the City. Springsted Financial has structured the PAYG Note based on 97.5% of the potential Tax Increment Revenue Stream projected from HOM's Renovation, Expansion and Future Development of the Kohl's lot, identified the projected TIP Assistance Terms, and has prepared a But-For-Test/analysis for the need of assistance. Budget Issues: There are no General Fund obligations associated with this TIP Development Agreement, including the future issuance and repayment of the projects Pay-As-You-Go Note. Tax Increment generated from this redevelopment is net of the base value of the property, the fiscal disparity reductions, and the States General Education Levy. The developer will receive 97.5% of the increment generated by their redevelopment towards satisfying the TIF Note. Strategic Priorities: Targeted Redevelopment lIissioii: Eiisiiiiizg an attractive, clean, safe, inclusive community that enhances the quality of life for till people and preserves the public trust Commissioner introduced the following resolution and moved its adoption: EDA RESOLUTION NO. I Bull,X1,91 111MINKA WHEREAS, the EDA has received a proposal from KKMBA Brooklyn Center LLC (the "Developer") that the EDA assist the Developer in the renovation of an existing approximately 75,000 square foot substandard retail building and construction of an approximately 23,600 square foot addition thereto (the "Project"); and WHEREAS, the EDA has caused to be prepared a TIF Development Agreement by and between the EDA and the Developer (the "Development Agreement") setting forth the terms and conditions under which the EDA will provide assistance for the Project. NOW, THEREFORE, BE IT RESOLVED by the Board of Commissioners (the "Board") of the Economic Development Authority of Brooklyn Center, Minnesota (the "EDA"), as follows: Section 1. EDA Approval; Further Proceedings. 1.01. The EDA hereby approves the Development Agreement substantially in accordance with the terms set forth in the form presented to the Board, together with any related documents necessary in connection therewith, including without limitation all documents, exhibits, certifications or consents referenced in or attached to the Development Agreement (collectively, the "Development Documents") and hereby authorizes the President and Executive Director to negotiate the final terms thereof and, in their discretion and at such time as they may deem appropriate, to execute the Development Documents on behalf of the EDA, and to carry out, on behalf of the EDA, the EDA' s obligations thereunder. 1.02. The approval hereby given to the Development Documents includes approval of such additional details therein as may be necessary and appropriate and such modifications thereof, deletions therefrom and additions thereto as may be necessary and appropriate and approved by legal counsel to the EDA and by the officers authorized herein to execute said documents prior to their execution; and said officers are hereby authorized to approve said changes on behalf of the EDA. The execution of any instrument by the appropriate officers of the EDA herein authorized shall be conclusive evidence of the approval of such document in accordance with the terms hereof. In the event of absence or disability of the officers, any of the documents authorized by this Resolution to be executed may be executed without further act or authorization of the Board by any duly designated acting official, or by such other officer or officers of the Board as, in the opinion of the City Attorney, may act in their behalf. EDA RESOLUTION NO. 1.03. Upon execution and delivery of the Development Documents, the officers and employees of the EDA are hereby authorized and directed to take or cause to be taken such actions as may be necessary on behalf of the EDA to implement the Development Documents, including without limitation the issuance of the pay-as-you-go tax increment revenue notes thereunder when all conditions precedent thereto have been satisfied and reserving funds for the payment thereof in the applicable tax increment accounts. 1.04. The Board hereby determines that the execution and performance of the Development Documents will help realize the public purposes of the Act. December 11,201 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 thereof: and the following voted against the same: whereupon said resolution was declared duly passed and adopted. Springsted Incorporated 380 Jackson Street, Suite 300 Saint Paul, MN 55101-2887 a') H ri ç Tel: 651-223-3000 Fax: 651-223-3002 w.springsted.com MEMORANDUM TO: Gary Eitel, City of Brooklyn Center FROM: Tom Denaway, Assistant Vice President/Consultant DATE: November 10, 2017 SUBJECT: TIF (Redevelopment) District No. 7 - Summary Memo Kohl's Site Redevelopment Project The Developer is proposing the purchase and redevelopment of the vacant former Kohis site into a new retail/office development. The proposed redevelopment is anticipated to occur in two phases, with the first phase including the redevelopment of the existing building into a home furniture store along with construction of approximately 11,805 square feet of inline retail space, while the second phase proposes the construction of an approximately 33,000 ( square foot medical office building. The total cost for both phases of the redevelopment are projected to total approximately $14,377,000. The Developer anticipates completing the construction of the first phase of the development in 2018, while the second phase is anticipated to begin construction in 2020. In addition to constructing the buildings, the Developer will also be undertaking the necessary site work and remediation costs necessary for the redevelopment of the site. The first phase of the development is anticipated to be completed by the end of 2018, assessed as of January 2019, for taxes payable 2020. For the purposes of estimating Tax Increment Financing (TIF) revenue we have assumed the first receipt for increment for the District will occur in taxes payable 2020 resulting in a term of the TIF District running from 2020 through 2045. The projected term of the TIF District is based on the assumption that the District will not generate inflationary increment for taxes payable 2019. If increment is generated in 2019, it would shorten the term of the TIF District to 2044 and would result in a lower amount of TIF revenue being generated by the District, The Developer provided cost estimates, based on information provided by their contractor and based on prior experience, for the redevelopment of the site totaling $14,377,000. Included in the total cost are individual line-items related to the acquisition of the site, the construction of new vertical improvements, the undertaking of site improvements, and soft costs related to the redevelopment of the site. For the phase 1 redevelopment the Developer provided a building construction cost of $3,000,000 for the redevelopment of the existing building of 86,117 square feet and the construction the new 11,805 square feet of new retail space. This cost estimate equates to a blended per square foot cost of $30.63. Additionally, in phase 1 the Developer has included a cost estimate of $500,000 for tenant buildout contingency, which we have assumed pertains to the 11,805 square feet of new inline retail space, and equates to a per square foot cost of $42.35. The cost of developing the approximately 32,870 square foot medical office building in phase 2 includes $4,500,000 for the building construction and $1,500,000 for tenant buildout contingency, for a total cost of $6,000,000 which equates to $182.54 per square foot for costs incurred in 2020. Using the RSMeans Online Cost Estimator to provide a comparison, the Developer's construction cost estimate for the medical office building appears reasonable. Our review of the Developer's construction cost estimate for the redevelopment of the site as a whole found the budget to be reasonable. The Developer is a real estate holding entity that will be leasing the space to tenants. The large former Kohls space will be leased to a separate but related home furniture tenant, while the inline retail and medical office spaces are anticipated to be leased to unrelated third-party entities. In order to review the reasonableness of the proposed leasing of the furniture store space we reviewed a copy of an existing lease the tenant previously entered into in the occupancy of a comparably sized space. The lease rate assumption for the occupancy of this space was right in-line with the cost they incurred in the comparable space, as documented by the provided lease contract. Based on this we found the estimate to be reasonable. Additionally, the Developer provided lease rate assumptions related to the occupancy of the inline retail and medical office spaces. We evaluated those lease rates based on available third-party data and found them to be reasonable. Projected TIF Assistance Terms Revenue projections were prepared for the redevelopment of the site, based on market value information provided by Hennepin County. The total estimated post-development market value for the completed project is $10,096,080. The total duration of the of the District is based on the first receipt of increment. In order to maximize the potential assistance level of the District we have assumed the first increment will be received in the taxes payable year 2020. In the event that increment is generated in 2019, it would shorten the term of the TIF District and reduce the amount of increment generated, and subsequently the amount of assistance realized by the Developer. The TIF assistance is proposed to be provide in the form of a pay-as-you-go note to the Developer in a principal amount of $3,272,400, with an interest rate of 4.0%. The Developer would be reimbursed for TIF eligible expenditures in this amount, following the completion and verification that they have incurred TIF eligible expenditures, and the other requirements identified in the Development Agreement, The Developer would be reimbursed annually on a pay-as-you-go basis from 97.5% of the total TIF revenue, which would be used to repay the principal and interest amounts incurred on the note, The total term of the TIF repayment period is 26-years. In the event that TIF revenue is insufficient to fully repay the note over its 26-year term the City will have no obligation to make additional payments, as the Developer is only eligible to be repaid from increment generated by the District. As a result, all risk associated with the ability of the TIF District to satisfy this note rests with the Developer. Need for Assistance In order to make the finding that the project would not be likely to proceed "but-for" the requested financial assistance we reviewed project cost and operating assumptions prepared by the Developer. Using this information, we prepared an Internal Rate of Return (IRR) analysis which allowed us to estimate the potential return on investment to the Developer both with and without the requested TIF assistance. For purposes of this analysis we calculated the return over a 11-year period, to capture 10-years of operation and one-year of construction for phase 1, and used this information to project the anticipated unleveraged IRR of the project both with and without assistance. When calculating the IRR for the project without TIE assistance we projected the development would return an unleveraged return of approximately 3.81%. This return is significantly below what would be sought by a real estate developer, and indicates the project is not financially feasible without assistance and unlikely to be undertaken due to insufficient economic benefit considering the level of risk inherent in a real estate investment. In comparison when estimating the potential return with the TIF assistance included we calculated a return of approximately 8.05% with assistance. To evaluate the reasonableness of the return with assistance we consulted the IRR Viewpoint— Third Quarter 2017 which identified an average return target of 8.00% as a return target for retail projects in Minnesota. As a result, we found the Developer's return of 8.05% with assistance to be reasonable. Additionally, we performed a sensitivity analysis to determine the rate at which assumptions for project costs and revenues would need to change for the project to be feasible without assistance; for purposes of identifying a feasible threshold we solved for the IRR Viewpoint benchmark return of 8.00%. In the case of project costs, the Developer would need to realize cost savings of approximately 26% to achieve a rate of return of 8.17% without assistance. In the case of project revenues, the Developer would need to realize an increase in net revenue of approximately 34% for the project to achieve a return of 8.04%. If assumptions for both project costs and revenues were to change, it would take a combined change of a 15% decrease in project costs and a 15% increase in net revenue, for the project to be feasible without assistance and have a return of 8.19%. Given the significance of the changes necessary for the project to be feasible without assistance we concluded that the project would be unlikely to proceed but-for the requested assistance. EDA Agenda Item No. 5.a December 11, 2017 On March 28, 2016, the City Council adopted Resolution No. 2016-40, a Resolution Approving Modification to Redevelopment Plan for Housing Development and Redevelopment Project No. 1, Establishing Tax Increment Financing District No. 7 (Redevelopment District) Therein and Approving a Tax Increment Financing Plan Therefor (Opportunity Site). This tax increment district deferred the first year of tax increment collection until 2019 and deferred its certification pending redevelopment proposals. (The Tax Increment Laws allow the deferral of certification for 3 years from the EDA actions of declaring blight conditions and first demolition activity, May-June 2015). The TIF Development Agreement By and Between Economic Development Authority of Brooklyn Center, Minnesota and KKMBA Brooklyn Center LLC (AKA HOM Furniture) includes the following components: 1. The minimum improvements are the building renovation and expansion included in the site plan approved by the City Council on 2/13/2017 2-story addition - 11,805 sq. ft. of new retail (multi-tenant) space; 12,817 sq. ft. will be opened up to the 2nd floor of the HOM store and used for additional floor/display area. Site Plan Analysis 2. The schedule for the minimum improvements has been identified as beginning no later than August 1, 2018 and ending no later than March 31, 2019. 3. The Future improvements are identified as the future Pad Site X improvements and the Storm Water Improvements as approved by November 13, 2017 City Council approval to the Revisions to the Shingle Creek Crossing PUD Amendment No.8 (Resolution No. 2017-174 ). 4. The agreement does not include an obligation by the developer to commence the future improvements on Pad Site X. The schedule for this redevelopment is driven by market conditions; however, the completion of the Storm Water Improvements (bi-infiltration basin) is an obligation to be completed as part of the future development of Pad Site X. 5. The economic assistance to enable the redevelopment of the Kohl’s Site includes 3 components: a. The payment of $300,000 from TIF 2 Fund for the portion of the Kohl’s lot identified for the drainage & utility easements Storm Water Improvements. These TIF 2 funds are intended to be replaced by future TIF 5 revenue for Out–of –District eligible expenditures. b. A Pay-As-You-Go Note (not to exceed $300,000) for the construction of the Storm Water Improvements (bio-infiltration basin) from 15% of the annual tax increment generated from TIF 5 (this amount in 2017 is projected at $84,000) commencing in 2019 and subsequent years until there is sufficient funds ($300,000 cap) for these storm water improvements. c. A Pay-As-Go-You Note in the amount equal to the lesser of $3,272,400 or the Eligible Costs actually incurred and paid by the Developer. 6. The Developer has decided to proceed with this development under the provisions of the Business Subsidy Act vs. the option of submitting paid settlement statements and invoices for acquisition and site preparation costs in the amount of $4,767,800 (the amount of the TIF assistance + 70% of the current assessed valuation) not later than March 31, 2019. The compliance with the provisions of the Business Subsidy Act (Section 4.7) is proposed to be met through the creation of 12 full time jobs at a minimum wage of at least $12.00 per hour, excluding benefits, within two years of the Benefit Date (the date a certificate of occupancy for the Minimum Improvements is issued by the City. Springsted Financial has structured the PAYG Note based on 97.5% of the potential Tax Increment Revenue Stream projected from HOM’s Renovation, Expansion and Future Development of the Kohl’s lot and identified the projected TIF Assistance Terms for the TIF 7 PAYG Note at 4% . Springsted Financial’s But-For-Test/analysis for the need of assistance identified the following: -3.81 % an unleveraged internal rate of return without TIF Assistance. -In comparison to an 8.05 % estimated rate of return with TIF Assistance. Motion to adopt Resolution Approving a TIF Development (HOM Furniture Redevelopment of Kohl’s Lot ECONOMIC DEVELOPMENT01 I] I Olil ! I'll] J BROOKLYNri ft'ditCENTER, MINNESOTA I Ct' ut jgtfl e(,I,TrlW LS1M NM 1 December . 2017 494129v11 BR291-371 ARTICLE I DEFINITIONS .3 Section1.1 Definitions....................................................................................................3 ARTICLE II REPRESENTATIONS AND WARRANTIES..........................................................8 Section 2.1 Representations and Warranties of the EDA...............................................8 Section 2.2 Representations and Warranties by the Developer......................................9 ARTICLE III CONSTRUCTION OF MINIMUM IMPROVEMENTS ....................................... 11 Section 3.1 Planned Unit Development ........................................................................ 11 Section 3.2 Construction Plans . .................................................................................... 11 Section 3.3 Construction of Minimum Improvements . ................................................ 12 Section 3.4 Commencement and Completion of Construction.....................................12 Section3.5 Effect of Delay . .......................................................................................... 13 Section 3.6 Compliance with Environmental Requirements........................................13 Section 3.7 Additional Responsibilities of the Developer . ........................................... 13 Section 3 R Certificate of Comnietion. .......................................................................... 14 ARTICLE IV TAX INCREMENT ASSISTANCE.......................................................................15 Section 4.1 Creation of TIF District and Approval of TIF Plan . .................................. 15 Section 4.2 Issuance of TIF Note..................................................................................15 Section 4.3 Issuance of TIF 5 Pooled TIF Note............................................................16 Section 4.4 Storm Water Property Acquisition.............................................................17 Section 4.5 Review of Taxes ........................................................................................18 Section 4.6 Use of Tax Increments . .............................................................................. 19 Section 4.7 Business Subsidy Act.................................................................................19 ARTICLE V ENCUMBRANCE OF THE DEVELOPMENT PROPERTY................................21 Section 5.1 Encumbrance of the Development Property..............................................21 Section 5.2 Copy of Notice of Default to Financing Pal ties ......................................... 21 Section 5.3 Mortgagee's Option to Cure Events of Default.........................................21 Section 5.4 Defaults Under Mortgage . ......................................................................... 21 ARTICLE VI INSURANCE AND MAINTENANCE..................................................................22 Section6.1 Insurance....................................................................................................22 Section6.2 Subordination.............................................................................................24 Section 6.3 Maintenance and Operation of the Development . ..................................... 24 ARTICLE VII TRANSFER LIMITATIONS AND INDEMNIFICATION.................................25 Section 7.1 Representation as to Development.............................................................25 Section 7.2 Limitations on Transfer..............................................................................25 Section 7.3 Indemnification . ......................................................................................... 27 Section7.4 Limitation...................................................................................................28 ARTICLE VIII EVENTS OF DEFAULT AND DAMAGES.......................................................29 Section 8.1 Events of Default Defined . ........................................................................ 29 Section 8.2 Developer Events of Default......................................................................29 Section 8.3 EDA Events of Default . ............................................................................. 30 Section 8.4 EDA Remedies on Default.........................................................................30 Section 8.5 Developer Remedies on Default................................................................30 Section 8.6 No Remedy Exclusive................................................................................31 Section 8.7 No Additional Waiver Implied by One Waiver.........................................31 ARTICLE IX ADDITIONAL PROVISIONS...............................................................................32 Section 9.1 Conflicts of Interest....................................................................................32 Section 9.2 Titles of Articles and Sections...................................................................32 Section 9.3 Notices and Demands ................................................................................32 Section9.4 Counterparts...............................................................................................32 Section9.5 Law Governing . .........................................................................................32 Section 9.6 Consents and Approvals ............................................................................33 Section 9.7 Representatives ..........................................................................................33 Section 9.8 Superseding Effect . .................... ............................................................ ....33 Section 9.9 Relationship of Patties ............... ................................................................33 Section9.10 Term...........................................................................................................33 Section9.11 Venue . ........................................................................................................33 Section 9.12 Provisions Surviving Rescission or Expiration..........................................33 EXHIBIT A DESCRIPTION OF DEVELOPMENT PROPERTY ..................................Al EXHIBIT B CERTIFICATE OF COMPLETION ............................................................. B-1 EXHIBITC ELIGIBLE COSTS .......................................................................................C1 EXHIBIT D FORM OF TIF NOTE ..................................................................................D-1 EXHIBIT E FORM OF TIF 5 POOLED TIF NOTE ......................................................... E-1 EXHIBIT F FORM OF COLLATERAL ASSIGNMENT OF TAX INCREMENT FINANCING DOCUMENTS ......................................................................... F-I EXHIBIT G FORM OF STORM WATER DECLARATION..........................................G-1 11 l I lI] *'A UI i] I Uki WATh 1 UI UIk'4 I UhI I THIS TIF DEVELOPMENT AGREEMENT is made and entered into this day of December, 2017, 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 "EDA"), and KKMBA BROOKLYN CENTER LLC, a Minnesota limited liability company, or permitted assigns (the "Developer"). WHEREAS, pursuant to Minnesota Statutes, Section 469.090 through 469.1081 and Sections 469.001 through 469.047, the EDA has formed Housing Development and Redevelopment Project No. 1 (the "Project Area") and has adopted a Redevelopment Plan (the "Redevelopment Plan") for the Project Area which sets forth development objectives for the Project Area. A major objective of the Redevelopment Plan is to foster the development and redevelopment of commercial facilities in the Project Area; WHEREAS, the Developer has submitted a proposal to the EDA in connection with the renovation of an existing approximately 75,000 square foot substandard retail building on the Development Property and construction of an approximately 23,600 square foot addition thereto. The Development Property is within the Project Area; WHEREAS, the Developer intends to acquire the Development Property and the Storm Water Property and construct thereon the Minimum Improvements (as defined herein); WHEREAS, the Developer may, in addition, construct certain Future Improvements (as defined herein) and certain Storm Water Improvements (as defined herein) in connection therewith; WHEREAS, under Minnesota Statutes, Sections 469.174 through 469.1794, as amended (the "TIF Act"), the EDA is authorized to finance certain public redevelopment costs of a redevelopment project area with tax increment revenues derived from a tax increment financing district established within such project area; WHEREAS, the EDA has heretofore adopted a tax increment financing plan and created and established Tax Increment Financing District No. 7 (Redevelopment District) as a redevelopment tax increment financing district pursuant to the TIF Act (the "TIF District"); WHEREAS, in order to set forth the conditions under which the EDA will provide certain tax increment assistance to the Developer, the EDA and Developer have agreed to enter into this Agreement; WHEREAS, the requirements of the Business Subsidy Law, Minnesota Statutes, Sections 116J.993 through 116J.995, do apply to this Agreement; WHEREAS, the City of Brooklyn Center, Minnesota (the "City") has adopted criteria for awarding business subsidies that comply with the Business Subsidy Law, after public hearings for which notice was published; 494129v11 BR291-371 WHEREAS, the City Council and EDA Board have approved this Agreement as a subsidy agreement under the Business Subsidy Law; and WHEREAS, the EDA believes that the development of the Development Property, as more fully set forth in this Agreement, is in the best interests of the residents of the City, and will facilitate the redevelopment of blighted areas in the City, and increase opportunities for commercial development, and will otherwise benefit the health, safety, morals and welfare of the residents of the City, in accordance with the public purpose and provisions of the applicable State and local laws and requirements under the Redevelopment Plan; and 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 as follows: 2 494129v11 BR291-371 UTI Ii1D l kIiI [I]Il Section 1.1 Definitions. All capitalized terms used and not otherwise defined herein shall have the following meanings unless a different meaning clearly appears from the context: "Affiliate" means any Person directly or indirectly controlling or controlled by or under direct or indirect common control with a Person and any purchaser of all or substantially all of the assets of such Person. For this purpose, "control" means the power to direct management and policies, directly or indirectly, whether through ownership of at least a majority of its voting securities, or the right to designate or elect at least a majority of the members of its governing body, or by contract, by trustees of a family trust, or by other arrangements, and the terms "controlling" and "controlled" have correlative meanings. "Agreement" means this TIF Development Agreement as the same may be from time to time modified, amended or supplemented. "Available Tax Increment" means 97.5% of the Tax Increment. "Benefit Date" means the date on which a certificate of occupancy for the Minimum Improvements is issued by the City; "Business Day" means any day except a Saturday, Sunday or a legal holiday or a day on which banking institutions in Minnesota are authorized by law or executive order to close. "certjficate of Completion" means the certificate in substantially the form attached hereto as Exhibit B signed by the EDA Representative certifying completion of the Minimum Improvements. "City " means the City of Brooklyn Center, Minnesota, a municipal corporation, "Completion Date" means the date the Certificate of Completion is executed by the EDA Representative. "Construction Lender" means a lender who makes a Construction Loan to the Developer. "Construction Loan" means any loan or loans to be made to provide financing for the construction of the Minimum Improvements. "Construction Plans" means the plans, specifications, drawings and related documents for the construction of the Minimum Improvements which shall be as detailed as the plans, specifications, drawings and related documents which are submitted to the building inspector of the City. "County" means Hennepin County, Minnesota. 494129v11 BR291-371 "Developer" means KK MBA Brooklyn Center LLC, its successors or assigns. "Developer Event of Default" means the occurrence of an Event of Default set forth in Section 8.2 hereof. "Developer's Representative" means either Rod Johansen or John Pierce, or designee evidenced in writing to the EDA. "Development" means the Development Property and the Minimum Improvements. "Development Property" means the real property legally described in Exhibit A hereto. "EDA" means the Economic Development Authority of Brooklyn Center, Minnesota, its successors and assigns. "EDA Representative" means the Executive Director of the EDA or his or her designee. "Eligible Costs" means the costs identified on Exhibit C attached hereto. "Event of Default" means any of the events described in Sections 8.2 or 8.3. "Financing Party" means any mortgagee of a Mortgage, any Construction Lender, any other lender or other Person providing construction or permanent financing for the Minimum Improvements, or any member or partner of the Developer. "Future Improvements" means the proposed construction of one of four alternate designs approved under the PUD which include (a) an approximately 20,000 square foot retail building (with at least 90 parking stalls), (b) an approximately 3-story, 32,800 square foot medical center/office building (with at least 148 parking stalls), (c) an approximately 5460 square foot restaurant and 9,795 square foot retail building (with at least 55 and 44 stalls, respectively), or (d) an 26,225 square foot retail building (with at least 119 parking stalls) on Building Pad Site X (as defined in the PUD), or any other improvements approved by the EDA and the City, all consistent with the PUD and any approved development plans. "Market Value" or "Market Valuation" means the market value of real property as determined by the assessor of the County in accordance with Minnesota Statutes, Section 273.11 (or as finally adjusted by any assessor, board of equalization, commissioner of revenue, or any court). "Minimum Improvements" means the renovation of an existing approximately 75,000 square foot substandard retail building on the Development Property and construction of an approximately 23,600 square foot addition thereto, all consistent with the PUD and any approved development plans. "Mortgage" means any mortgage of all or any part of the Development Property granted by Developer. "Parties" means the Developer and the EDA. ru 494129v11 BR291-371 "Party" means the Developer or the EDA, as the context may require. "Person" means any individual, corporation, partnership, joint venture, limited liability company or partnership, association, trust, unincorporated organization, or government, or any agency or political subdivision thereof. "PUD" has the meaning provided in Section 3.1. "PUB Agreement" has the meaning provided in Section 3.1. "Sale" means any sale, direct or indirect, conveyance, assignment, transfer, exchange or other disposition of all or a part of the Developer's interest in the Minimum Improvements, to any Person other than an Affiliate. "State" means the State of Minnesota. "Storm Water Declaration" means the Declaration of Covenants and Restrictions set forth in Exhibit G. "Storm Water Improvements" means the storm water improvements required by the Shingle Creek Watershed Management Commission in connection with the Future Improvements. "Storm Water Property" means a portion real property currently legally described as Lot 2, Block 2, SHINGLE CREEK CROSSING, Hennepin County, Minnesota, according to the recorded plat thereof, Hennepin County, Minnesota, legally described in, and subject to the restrictions, set forth in the Storm Water Declaration attached as Exhibit G. "Tax Increment" means that portion of the real property taxes generated by the Development Property and any improvements thereon which is actually remitted to and received and retained by the EDA as tax increment under the TIF Act after deducting the amount of Tax Increment, if any, which must be paid to the City, the school district(s), the County and the State pursuant to Minnesota Statutes, Section 469.177, subdivisions 3, 9 and 11, Section 469.176, subdivision 4h, and Section 469.175, subdivision la or are otherwise allocated to other taxing jurisdictions pursuant to the TIF Act; for purposes of this definition, "generated by the Development Property and any improvements thereon" means the portion of Tax Increment actually received by the EDA from the TIF District determined by the EDA, in its sole determination, to have been derived from the Development based on the ratio that the captured tax capacity of the Development Property bears to the total captured tax capacity of the TIF District, taking into account tax delinquencies and petitions. "Tax Official" means any City or County assessor; County auditor; City, County, or State board of equalization; the Commissioner of Revenue of the State; or any State or Federal district court, the Tax Court of the State, or the State Supreme Court. "TIF Act" means Minnesota Statutes, Sections 469.174 through 469.1794, as amended, or any successor statutes. 494129v11 BR291-371 "TIF District" means Tax Increment Financing District No. 7 (Redevelopment District) as the same is amended from time to time. "TIF District No. 2" means Tax Increment Financing (Redevelopment) District No. 2 created by the City and the FDA. "TIF District No. 5" means Tax Increment Financing District No. 5 (Renewal and Renovation District) as the same is amended from time to time. "TIF 5 Pooled TIF Note" means the Taxable Pooled Tax Increment Revenue Note (HOM Furniture Project) to be executed by the EDA and delivered to the Developer pursuant to Section 4,3 hereof, a copy of which is attached hereto as Exhibit E. "TIF S Pooled TIF Note Payment Date" means each February 1 and August 1, commencing on the first February 1 or August 1 following the dated date of the TIF 5 Pooled TIF Note and thereafter to and including the TIF 5 Pooled TIF Note Termination Date; provided, that if any such date should not be a Business Day, the TIF 5 Pooled TIF Note Payment Date shall be the next succeeding Business Day. "TIF 5 Pooled TIF Note Termination Date" means the earlier of (i) February 1, 2030, (ii) the date the TIF 5 Pooled TIF Note is paid in full, (iii) the date on which TIF District No. 5 expires or is otherwise terminated or the EDA is no longer receiving tax increment from TIF District No. 5, or (iv) the date the TIF 5 Pooled TIF Note or this Agreement is terminated or rescinded in accordance with its terms. "TIF Note" means the Taxable Tax Increment Revenue Note (HOM Furniture, Inc. Project) to be executed by the FDA and delivered to the Developer pursuant to Section 4.2 hereof, a copy of which is attached hereto as Exhibit D. "TIF Note Payment Date" means each February 1 and August 1, commencing on the first February 1 or August 1 following the receipt by the EDA of Available Tax Increment from the Development Property and thereafter to and including the TIF Note Termination Date; provided, that if any such date should not be a Business Day, the TIF Note Payment Date shall be the next succeeding Business Day. "TIF Note Termination Date" means the earliest of (i) the February 1 following the 25th anniversary of the first TIF Note Payment Date, (ii) the date the TIF Note is paid in full, (iii) the date on which the TIF District expires or is otherwise terminated or the FDA is no longer receiving Tax Increment from the TIF District, or (iv) the date the TIF Note or this Agreement is terminated or rescinded in accordance with its terms. "TIF Plan" means that certain Tax Increment Financing Plan for the TIF District approved by the EDA, as amended from time to time. "TIF 2 Available Tax Increment" means, tax increment received by the EDA from TIF District No. 2 on or before December 31, 2017 and not otherwise pledged to other obligations of TIF District No. 2. 494129v11 BR291-371 "TIF S Available Tax Increment" means 15% of the real property taxes generated by the improvements within TIF District No. 5 which is actually remitted and retained by the EDA as tax increment under the TIF Act less the amounts, if any, which the EDA must pay to the school district, the County and the State pursuant to Minnesota Statutes, Sections 469.177, subds. 9, 10, and 11; 469.176, subd. 4h; and 469.175, subd. la, as the same maybe amended from time to time, which is received by the EDA with respect to the taxes payable in calendar year 2019 through the earlier of the TIF 5 Pooled TIF Note Termination Date or calendar year 2029 and not otherwise pledged to other obligations of TIF District No. 5. "Unavoidable Delays" means delays, outside the control of the party claiming its occurrence, which delay the activities contemplated by this Agreement, and which are the direct result of (a) unusually severe or prolonged bad weather, (b) acts of God, fire or other casualty to the Minimum Improvements, (c) litigation commenced by third parties which, by injunction or other similar judicial action, directly results in delays, (d) acts of any federal, State or local governmental unit which directly result in delays, (e) strikes, or other labor trouble, (f) delays in delivery of materials for the Minimum Improvements, (g) soil conditions of the Development Property or (h) acts of war or terrorism, not existing on the date hereof. 7 494129v11 BR291-371 ftIN1II Section 2.1 Representations and Warranties of the EDA. The EDA makes the following representations and warranties: (a)The EDA is a body corporate and politic organized and existing under the laws of the State of Minnesota with the authority to enter into this Agreement and carry out its obligations hereunder. (b)The EDA has taken all action necessary to create the Project Area and the TIF District, to adopt and approve the Redevelopment Plan and TIF Plan, to approve this Agreement, and to authorize the execution and delivery of this Agreement, and any other documents or instruments required to be executed and delivered by the EDA pursuant to this Agreement. (c)The FDA has elected in the TIF Plan to retain 100% of the captured net tax capacity of the Tax Increment Financing District, subject to Section 469.177, subdivision 3 of the TIF Act to finance permissible expenditures under the TIF Act, and has elected that the duration of the TIF District will be the maximum duration permitted by the TIF Act. (d)The activities of the EDA are undertaken for the purpose of fostering the redevelopment and renovation of certain real property that is or was occupied primarily by substandard and obsolete buildings, which will revitalize this portion of the Project Area, increase tax base, increase employment opportunities and provide commercial and retail facilities. (e)The execution, delivery and performance of this Agreement, and any other documents or instruments required pursuant to this Agreement by the FDA does not, and consummation of the transactions contemplated therein and the fulfillment of the terms thereof will not, conflict with or constitute on the part of the EDA a breach of or default under any existing (i) indenture, mortgage, deed of trust or other agreement or instrument to which the EDA is a party or by which the FDA or any of its property is or may be bound, or (ii) legislative act, constitution or other proceeding establishing or relating to the establishment of the EDA or its officers or its resolutions. (f)There is not pending, nor to the best of the FDA's knowledge is there threatened, any suit, action or proceeding against the EDA before any court, arbitrator, administrative agency or other governmental authority that materially and adversely affects the validity of any of the transactions contemplated by the EDA hereby, the ability of the EDA to perform its obligations hereunder, or as contemplated hereby or thereby, or the validity or enforceability of this Agreement against the FDA. (g) No member of the Board of the EDA or officer of the FDA, has either a direct or indirect interest in this Agreement or the Development within the meaning of Minnesota Statutes, Sections 412.311 and 471.87, as amended, or any successor statute. 8 494129v11 BR291-371 Section 2.2 Representations and Warranties by the Developer. The Developer represents and warrants that: (a)The Developer is a Minnesota limited liability company organized and in good standing under the laws of Minnesota, is duly authorized to transact business within the State, is not in violation of any provisions of its organizational documents or to the best of the Developer's knowledge the laws of the State, has the power and authority to enter into this Agreement and has duly authorized the execution, delivery and performance of this Agreement by proper action of its governing body. (b)The Developer will construct, or cause to be constructed, the Minimum Improvements in accordance with the terms of this Agreement, the Redevelopment Plan, the PUD and all local, State and federal laws and regulations (including, but not limited to, environmental, zoning, energy conservation, building code and public health laws and regulations), except for variances necessary to construct the Minimum Improvements contemplated in the Construction Plans approved by the City. (c)The Developer will obtain, or cause to be obtained, in a timely manner, all required permits, licenses and approvals, and will meet, in a timely manner, all requirements of all applicable local, state, and federal laws and regulations which must be obtained or met before the Minimum Improvements may be lawfully constructed. (d)The execution and delivery of this Agreement, the consummation of the transactions contemplated hereby, and the fulfillment of the terms and conditions hereof do not and will not conflict with or result in a material breach of any of the terms or conditions of the Developer's organizational documents or any restriction or any agreement or instrument to which the Developer is now a party or by which it is bound or to which any property of the Developer is subject, and do not and will not constitute a material default under any of the foregoing. To the best of the Developer's knowledge, the execution and delivery of this Agreement, the consummation of the transactions contemplated hereby, and the fulfillment of the terms and conditions thereof do not and will not result in a material violation of any order, decree, statute, rule or regulation of any court or of any state or federal regulatory body having jurisdiction over Developer or its properties, including its interest in the Development, and do not and will not result in the creation or imposition of any lien, charge or encumbrance of any nature upon any of the property or assets of Developer contrary to the terms of any instrument or agreement to which Developer is a party or by which it is bound. (e)To the best of the Developer's knowledge, the execution and delivery of this Agreement will not create a conflict of interest prohibited by Minnesota Statutes, Section 412.311, as amended, or any successor statute. (f)The Developer would not construct the Minimum Improvements and the Storm Water Improvements but for the execution of this Agreement and the tax increment financing assistance made available hereunder. 494129v11 BR291-371 (g)The Developer will fully cooperate with the EDA and the City with respect to any litigation commenced by third parties with respect to the activities contemplated by this Agreement. (h)There are no pending or threatened legal proceedings, of which the Developer has notice, contemplating the liquidation or dissolution of the Developer or threatening its existence, or seeking to restrain or enjoin the transactions contemplated by the Agreement, or questioning the authority of the Developer to execute and deliver this Agreement or the validity of this Agreement. (i)The Developer has not received any notice from any local, State or federal official that the activities of the Developer with respect to the Development Property may or will be in violation of any environmental law or regulation. The Developer is not aware of any State or federal claim filed or planned to be filed by any party relating to any violation of any local, State or federal environmental law, regulation or review procedure, and the Developer is not aware of any violation of any local, State or federal law, regulation or review procedure which would give any Person a valid claim under any state or federal environmental statute. (j)The Developer will obtain financing commitments to finance construction of the Minimum Improvements in amounts sufficient and on terms which will enable the Developer to timely and successfully complete the Minimum Improvements in conformance with the Construction Plans. (k) The Developer will cooperate fully with the EDA and the City in the resolution of any traffic, parking, trash removal or public safety problems which may arise in connection with the construction and operation of the Minimum Improvements and any Future Improvements or Storm Water Improvements. (1) The Developer understands that the EDA or the City may subsidize or encourage the development of other developments in the City, including properties that compete with the Development Property and the Development, and that such subsidies may be more favorable than the terms of this Agreement, and that neither the City nor the EDA has represented that development of the Development Property will be favored over the development of other properties. (m) The Developer expects that the construction of the Minimum Improvements will begin on or before August 1, 2018 and, barring Unavoidable Delays, will be substantially completed not later than March 31, 2019. 10 494129v11 BR291-371 :SIg1l Section 3.1 Planned Unit Development. On February 13, 2017, the City Council of the City adopted Resolution No. 2017-25 approving Planned Unit Development Amendment No. 8 to the Shingle Creek Crossing Declaration of Covenants and Restrictions dated June 28, 2013 and recorded in the office of the Hennepin County Registrar of Titles on June 30, 2011 as Document No. T4868187, as amended by Resolution No. 2017- "Resolution Regarding the Disposition of Planning Commission Application No. 2017-007 Submitted by HOM Furniture, Inc. and Gatlin Development Company for Revision to the Planned Unit Development Amendment No. 8 to the 2011 Shingle Creek Crossing Planned Unit Development (Located at 2501 and 2545 County Road 10)" and as the same may be further amended from time to time ("PUD"). Prior to the commencing the construction of the Minimum Improvements, the Developer shall have entered into a separate development agreement with the City (the "PUD Agreement") that addresses planning and land use requirements. Section 3.2 Construction Plans. (a)Prior to the commencement of construction of any portion of the Minimum Improvements, other than interior demolition and other improvements which neither (i) affect the exterior of the existing building on the Development Property nor (ii) relate to the construction of any additional building square footage on the Development Property (collectively, the "Exempt Improvements"), the Developer will deliver to the EDA the Construction Plans and a sworn construction cost statement certified by the Developer and the general contractor (the "Sworn Construction Cost Statement") for such portion of the Minimum Improvements other than any Exempt Improvements. Within 20 days after receipt of the Construction Plans and the Sworn Construction Cost Statement the EDA shall review the Construction Plans and deliver to the Developer a written statement approving the Construction Plans or a written statement rejecting the Construction Plans and specifying the deficiencies in the Construction Plans. The City's building official on behalf of the EDA shall approve the Construction Plans if: (i) the Construction Plans substantially conform to the terms and conditions of this Agreement and the PUD; (ii) the Construction Plans are consistent with the goals and objectives of the Redevelopment Plan; and (iii) the Construction Plans do not violate any applicable federal, State or local laws, ordinances, rules or regulations except as set forth in approved variances (provided, however, that a finding of no such violations does not necessarily constitute a finding that the Construction Plans meet all requirements of such federal, State or local laws, ordinances, rules or regulations). If the Construction Plans are not approved by the EDA, then the Developer shall make such changes as the EDA may reasonably require and resubmit the Construction Plans to the EDA for approval. If the EDA has not rejected the revised Construction Plans in writing within 20 calendar days of submission, such Construction Plans shall automatically be deemed approved by the EDA. (b)The approval of Construction Plans, or any proposed amendment to the Construction Plans, by the EDA for purposes of this Agreement does not constitute a representation or warranty by the EDA that any of the Construction Plans or the Minimum 11 494129v11 BR291-371 Improvements comply with any applicable building code, health or safety regulation, zoning regulation, environmental law or other law or regulation, or that the Minimum Improvements will meet the qualifications for issuance of a certificate of occupancy, or that the Minimum Improvements will meet the requirements of the Developer or any other users of the Minimum Improvements. Approval of the Construction Plans, or any proposed amendment to any of the Construction Plans, by the EDA will not constitute a waiver of an Event of Default. Nothing in this Agreement shall be construed to relieve the Developer of its obligations to receive approval of the Construction Plans and necessary construction permits from the City. Section 3.3 Construction of Minimum Improvements. Subject to the terms and conditions of this Agreement, the Developer agrees to construct, or cause to be constructed, the Minimum Improvements on the Development Property in substantial conformance with the approved Construction Plans for the Minimum Improvements. No changes shall be made to the Construction Plans for the Minimum Improvements without the EDA's prior written approval, unless the aggregate of such changes do not decrease the cost of the Minimum Improvements as set forth in the Sworn Construction Cost Statement by more than 10%. No changes (each a "Material Change") which in the aggregate would result in a decrease in the cost of the Minimum Improvements by more than 10% or which would materially alter, (a) the site plan, (b) exterior appearance, (c) quality, (d) facility amenities, or (e) exterior materials included in the PUD and Construction Plans shall be made without the EDA' s prior written consent. For purposes of the elements set forth in clauses (c) or (e) of the preceding sentence, a Material Change shall mean a decrease in the line item(s) for such element as set forth in the Sworn Construction Costs Statement of more than 10%. The Developer shall submit a description of any Material Change to the EDA. The approval of the EDA will not be unreasonably withheld, unreasonably conditioned or unreasonably delayed. The EDA shall either approve the Material Change or provide to the Developer specific written comments on the basis for its failure to approve within 20 days following submission. If the EDA does not respond to the Developer within such 20 day period, the Material Change shall be deemed approved. Section 3.4 Commencement and Completion of Construction. (a)Subject to the terms and conditions of this Agreement, the Developer will commence construction of the Minimum Improvements by August 1, 2018 and, barring Unavoidable Delays, will cause the Minimum Improvements to be substantially completed not later than March 31, 2019. The term "commence" means the making of visible improvements, including without limitation asbestos abatement and subsurface excavation but excluding mere surface grading. (b)The Developer will construct, or cause to be constructed, the Minimum Improvements on the Development Property and the Storm Water Property, respectively, in substantial conformity with the Construction Plans approved by the EDA and the PUD. Prior to delivery of the Certificate of Completion referred to in Section 3.8 hereof, upon the request of the EDA, the Developer will provide the EDA reasonable access to the Development Property. "Reasonable access" means at least one site inspection per week during regular business hours. During construction of the Minimum Improvements and the Storm Water Improvements, the Developer will deliver quarterly progress reports to the EDA. 12 4941290 1 BR291-371 (c) In addition to the Minimum Improvements, the Developer expects to construct certain Future Improvements and the Storm Water Improvements on the Development Property. The parties agree and understand that, while Developer has no obligation under this Agreement to construct anything other than the Minimum Improvements; nevertheless, the Developer shall submit Construction Plans for any Future Improvements and the Storm Water Improvements on the Development Property in accordance with Section 3.2 and comply with Sections 3.1 through 3.8 except as otherwise provided herein. If the Developer constructs any Future Improvements, the Developer shall cause the Storm Water Improvements to be completed no later than the completion date of such Future Improvements. Section 3.5 Effect of Delay. The Developer acknowledges that if construction of the Minimum Improvements is delayed or not completed, the effect of such delay or failure to complete may be to reduce the amount of the Tax Increment available to pay the TIF Note. In addition, the Developer intends to construct the Future Improvements on the Development Property and if construction thereof is delayed or not completed, the effect of such delay or failure to complete may be to reduce the amount of the Tax Increment available to pay the TIF Note. If construction of the Storm Water Improvements is delayed or not completed, the TIF 5 Pooled TIF Note will not be issued or payable. Section 3.6 Compliance with Environmental Requirements. The Developer shall comply with all applicable local, State, and federal environmental laws and regulations, and will obtain, and maintain compliance under, any and all necessary environmental permits, licenses, approvals or reviews. As of the date of this Agreement, the Developer has received no notice or communication from any local, State, or federal official that the activities of the Developer or the EDA under this Agreement may be or will be in violation of any environmental law or regulation. Without limiting its obligations under Section 7.3 of this Agreement, the Developer further agrees that it will indemnify, defend, and hold harmless the EDA, the City, and their governing body members, officers, and employees, from any claims or actions arising out of the presence, if any, of Hazardous Substances (as that term is defined below in paragraph 7.3(c) of this Agreement) existing on or in the Development Property or the Storm Water Property. Nothing in this section will be construed to limit or affect any limitations on liability of the City or EDA under State or federal law, including without limitation Minnesota Statutes Sections 466.04 and 604.02. Section 3,7 Additional Responsibilities of the Developer. (a)The Developer will construct, operate and maintain, or cause to be constructed, operated and maintained, the Minimum Improvements and any Future Improvements or Storm Water Improvements substantially in accordance with the terms of this Agreement, the Redevelopment Plan, the PUD and all local, State, and Federal laws and regulations (including, but not limited to zoning, building code, public health laws and regulations, except for variances necessary to construct the Minimum Improvements and any Future Improvements or the Storm Water Improvements contemplated in the Construction Plans approved by the EDA). (b)The Developer will obtain, or cause to be obtained, in a timely manner, all required permits, licenses, and approvals, and will meet, in a timely manner, all requirements of all applicable local, State, and federal laws and regulations which must be obtained or met before 13 the Minimum Improvements and any Future Improvements or the Storm Water Improvements may be lawfully constructed. The EDA makes no representations or warranties that all permits or licenses that may be required by State and federal entities, other than the EDA, have been or will be approved. (c)The Developer will not construct any building or other structures on, over, or within the boundary lines of any public utility easement unless such construction is provided for in such easement or has been approved by the City. (d)Except as provided in the approved Construction Plans or any development plans attached to the PUD, the Developer, at its own expense, will replace any public facilities and public utilities damaged during the construction of the Minimum Improvements, in accordance with the technical specifications, standards and practices of the owner thereof. Section 3.8 Certificate of Completion. The Developer shall notify the EDA when the construction of the Minimum Improvements has been substantially completed. The EDA shall, within 14 days after such notification, inspect the Minimum Improvements in order to determine whether the Minimum Improvements have been constructed in substantial conformity with the approved Construction Plans. If the EDA determines that the Minimum Improvements have not been constructed in substantial conformity with the approved Construction Plans, the EDA shall, within 28 days after the Developer's notification of completion of construction, deliver a written statement to the Developer indicating in adequate detail the specific respects in which the Minimum Improvements have not been constructed in substantial conformity with the approved Construction Plans and the Developer shall promptly remedy such deficiencies, or cause such deficiencies to be remedied. If the EDA determines that the Minimum Improvements have been constructed in substantial conformity with the approved Construction Plans, the EDA shall furnish to the Developer a Certificate of Completion in the form attached hereto as Exhibit B certifying the completion of the Minimum Improvements. The Certificate of Completion issued for the Minimum Improvements shall conclusively satisfy and terminate the agreements and covenants of the Developer in this Agreement to construct the Minimum Improvements only. The issuance of a Certificate of Completion shall not be construed to relieve the Developer of any approval required by any City department in connection with the construction, completion or occupancy of the Minimum Improvements nor shall it relieve the Developer of any other obligations under this Agreement. 14 494129v11 BR291-371 I$I[1 IlWi E Section 4.1 Creation of TIF District and Approval of TIF Plan. The EDA has taken all necessary actions to create and establish the TIF District. The Developer represents that the estimated market values, construction costs, acquisition costs, projected rentals, development costs and other information provided to the EDA's fiscal consultant reflect the reasonable expectations of the Developer. The Developer has made its own projections of Tax Increment to be generated from the Development and the Developer has not relied on any assumptions, calculations, determinations or conclusions made by the City, the EDA, their governing body members, officers or agents, including the independent contractors, consultants and legal counsel, servants and employees thereof, with respect to the foregoing. Section 4.2 Issuance of TIF Note. The EDA shall reimburse the Developer for Eligible Costs in an amount equal to the lesser of $3,272,400 or the Eligible Costs actually incurred and paid by the Developer and not previously reimbursed (the "Reimbursement Amount") exclusively through the issuance of the EDA' s TIF Note in substantially the form attached to this Agreement as Exhibit D, subject to the following conditions: (a)The TIF Note shall be dated, issued in a principal amount equal to the Reimbursement Amount and delivered to the Developer when the Developer shall have demonstrated in writing to the reasonable satisfaction of the EDA that (A) the Developer has substantially completed the Minimum Improvements in accordance with the approved Construction Plans and the PUD; and (B) the Developer has submitted signed settlement statements showing the cost of the Development Property and submitted paid invoices for any other Eligible Costs not previously reimbursed in an amount not less than the Reimbursement Amount. (b)The unpaid principal amount of the TIF Note shall bear simple, non-compounding interest, except during any period that the payment on the TIF Note has been suspended, from the date of issuance of the TIF Note, at a rate per annum equal to the lesser of 4.00% per annum or the effective rate of the long-term Construction Loan as determined on the date of issuance of the TIF Note. Interest shall be computed on the basis of a 360 day year consisting of twelve (12) 30-day months. (c)The principal amount of the TIF Note and the interest thereon shall be payable solely and exclusively from the Available Tax Increment. (d)On each TIF Note Payment Date and subject to the provisions of the TIF Note, the EDA shall pay, solely from the Available Tax Increment received by the EDA during the preceding 6 months (or, with respect to the first TIF Note Payment Date, in the period commencing on the date of issuance of the TIF Note through the day prior to the first TIF Note Payment Date) to the extent of the outstanding principal and accrued interest on the TIF Note. All such payments shall be applied first to the payment of accrued interest and then to the payment of the principal of the TIF Note. 15 494129v11 BR291-371 (e)The TIF Note shall be a special and limited obligation of the EDA and not a general obligation of the EDA or the City, and only Available Tax Increment shall be used to pay the principal and interest on the TIF Note. If, on any TIF Note Payment Date, the Available Tax Increment for the payment of the accrued and unpaid interest on the TIF Note are insufficient for such purposes, the difference shall be carried forward, without accruing additional interest, and shall be paid if and to the extent that on a future TIF Note Payment Date there are Available Tax Increment to pay such accrued interest on the TIF Note. (f)The EDA's obligation to make payments on the TIF Note on any TIF Note Payment Date or any date thereafter shall be conditioned upon the requirement that there shall not at that time be a Developer Event of Default that has occurred and is continuing under this Agreement, the PUD Agreement or any issued permits for the Minimum Improvements. (g)The TIF Note shall be governed by and payable pursuant to the additional terms thereof, as set forth in Exhibit P. In the event of any conflict between the terms of the TIF Note and the terms of this Section 4.2, the terms of the TIF Note shall govern. The issuance of the TIP Note pursuant and subject to the terms of this Agreement, and the taking by the EDA of such additional actions as bond counsel for the TIF Note may require in connection therewith, are hereby authorized and approved by the EDA. (h)The Developer may assign its interest in this Agreement and the TIP Note to a Construction Lender as collateral for a Construction Loan in accordance with the form of Collateral Assignment of Tax Increment Financing Documents attached as Exhibit F. Section 4.3 Issuance of TIF 5 Pooled TIF Note. The EDA shall reimburse the Developer for the costs of constructing the Storm Water Improvements in an amount equal to the lesser of $300,000 or the costs actually incurred and paid by the Developer and not previously reimbursed (the "Storm Water Reimbursement Amount") exclusively through the issuance of the EDA' s TIP 5 Pooled TIF Note in substantially the form attached to this Agreement as Exhibit E, subject to the following conditions: (a)The TIF 5 Pooled TIP Note shall be dated, issued in a principal amount equal to the Storm Water Reimbursement Amount and delivered to the Developer when the Developer shall have demonstrated in writing to the reasonable satisfaction of the EDA that (A) the Developer has substantially completed the Minimum Improvements and the Storm Water Improvements in accordance with the approved Construction Plans and the PUD; and (B) the Developer has submitted paid invoices for any other costs of constructing the Storm Water Improvements not previously reimbursed in an amount not less than the Storm Water Reimbursement Amount. (b)The unpaid principal amount of the TIF 5 Pooled TIP Note shall bear simple, non- compounding interest, except during any period that the payment on the TIF 5 Pooled TIP Note has been suspended, from the date of issuance of the TIF 5 Pooled TIF Note, at a rate per annum equal to the lesser of 6.00% per annum or the effective rate of the long-term Construction Loan as determined on the date of issuance of the TIP 5 Pooled TIP Note. Interest shall be computed on the basis of a 360 day year consisting of twelve (12) 30-day months. 16 494129v11 BR291-371 (c)The principal amount of the TIP 5 Pooled TIF Note and the interest thereon shall be payable solely and exclusively from TIF 5 Available Tax Increment. (d)On each TIF 5 Pooled TIF Note Payment Date and subject to the provisions of the TIF Note, the EDA shall pay, solely from TIF 5 Available Tax Increment received by the EDA during the preceding 6 months (or, with respect to the first TIF 5 Pooled TIF Note Payment Date, in the period commencing with calendar year 2019 through the day prior to the first TIF 5 Pooled TIF Note Payment Date) to the extent of the outstanding principal and accrued interest on the TIF 5 Pooled TIF Note. All such payments shall be applied first to the payment of accrued interest and then to the payment of the principal of the TIF 5 Pooled TIF Note. (e)The TIF 5 Pooled TIF Note shall be a special and limited obligation of the EDA and not a general obligation of the EDA or the City, and only TIF 5 Available Tax Increment shall be used to pay the principal and interest on the TIF 5 Pooled TIF Note. If, on any TIF 5 Pooled TIF Note Payment Date, the TIF 5 Available Tax Increment for the payment of the accrued and unpaid interest on the TIF 5 Pooled TIF Note are insufficient for such purposes, the difference shall be carried forward, without accruing additional interest, and shall be paid if and to the extent that on a future TIF 5 Pooled TIP Note Payment Date there are TIF 5 Available Tax Increment to pay such accrued interest on the TIP 5 Pooled TIF Note. (f)The EDA's obligation to make payments on the TIP 5 Pooled TIF Note on any TIF 5 Pooled TIF Note Payment Date or any date thereafter shall be conditioned upon the requirement that there shall not at that time be a Developer Event of Default that has occurred and is continuing under this Agreement, the PUD Agreement or any issued permits for the Minimum Improvements and the Storm Water Improvements. (g)The TIP 5 Pooled TIF Note shall be governed by and payable pursuant to the additional terms thereof, as set forth in Exhibit E. In the event of any conflict between the terms of the TIF 5 Pooled TIF Note and the terms of this Section 4.3, the terms of the TIF Note shall govern. The. issuance of the TIF 5 Pooled TIF Note pursuant and subject to the terms of this Agreement, and the taking by the EDA of such additional actions as bond counsel for the TIF 5 Pooled TIF Note may require in connection therewith, are hereby authorized and approved by the EDA. (h)The Developer may assign its interest in this Agreement and the TIF 5 Pooled TIF Note to a Construction Lender as collateral for a Construction Loan in accordance with the form of Collateral Assignment of Tax Increment Financing Documents attached as Exhibit F. Section 4.4 Storm Water Property Acguisition. The EDA shall pay to Shingle Creek, LLC (the "Seller") on behalf of the Developer $300,000, solely from TIP 2 Available Tax Increment, to pay for the cost of the Storm Water Property upon the Developer's closing of the acquisition of the Development Property from the Seller when the following conditions have been satisfied: (a) the Developer shall have obtained site plan approval from the City for the Minimum Improvements; 17 494129v11 BR291-371 (b)the Seller shall have executed a deed to the Developer for the conveyance of the Development Property, including the portion thereof which constitutes the Storm Water Property; (c)the EDA shall have received an executed copy of a Fifth Amendment to Development Agreement between the EDA and the Seller pursuant to which the Seller agrees, upon receipt of $300,000 from the EDA, to convey the Storm Water Property to the Developer in connection with its purchase of the remainder of the Development Property from the Seller; and (d) the Developer shall have executed and recorded the Storm Water Declaration in substantially the form set forth in Exhibit G. Section 4.5 Review of Taxes. The Developer acknowledges that the primary source of money to pay debt service on the TIF Note is the Available Tax Increment derived from the Development Property and any improvements thereon, including the Minimum Improvements. The Developer further acknowledges that any of the following actions taken by the Developer could reduce such Tax Increment below the amount necessary to pay a portion or all of the payments due on the TIF Note: (a)Initiation of administrative or judicial review of the applicability of any tax statute determined by any Tax Official to be applicable to the Development Property, and any improvements thereon, including the Minimum Improvements. (b)Initiation of administrative or judicial review of the constitutionality of any tax statute determined by any Tax Official to be applicable to the Development Property and any improvements thereon, including the Minimum Improvements. (c)A reduction in the real property taxes paid with respect to the Development Property and any improvements thereon, including any reduction in the assessed Market Value of the Development Property and any improvements thereon, including the Minimum Improvements, that is made without a request or petition of the Developer, a reduction in the tax classification of the Development Property and any improvements thereon, including the Minimum Improvements, under Minnesota Statutes, Section 273.13, or any successor statute, a reduction in the local tax rates applicable to the Development Property and any improvements thereon, including the Minimum Improvements, or any change to the method of taxing real property that has the effect of reducing the revenues derived from such taxes. (d)Any application for an abatement or deferral of real property taxes under any applicable statute of the State. (e) Other actions or events outside the control of the Developer or outside the control of the City or the EDA, including a reduction in the Market Value of the Development Property and the Minimum Improvements that are made without a request or petition of the Developer, a reduction in the tax classification of the Development Property and the Minimum Improvements under Minnesota Statutes, Section 273.13, or any successor statute, a reduction in the local tax rates applicable to the Development Property and the Minimum Improvements, or any change to the method of taxing real property that has the effect of reducing the revenues derived from such taxes. 18 494129v11 BR291-371 (f) Failure of the Developer to commence and complete the Minimum Improvements by the times set forth in Section 3.4 hereof. The Developer shall notify the EDA within 10 days of filing any petition seek reduction in Market Value or property taxes on any portion of the Development Property under any State law (referred to as a "Tax Appeal"). If as of any TIF Note Payment Date any Tax Appeal is then pending, the EDA will withhold payments of Available Tax Increment attributable, as determined by the EDA, to the portion of the tax payment that is the subject of the Tax Appeal. The EDA will pay any withheld amount to the extent not reduced as a result of the Tax Appeal, without interest, promptly after the Tax Appeal is fully resolved and the amount of Available Tax Increment attributable to the disputed tax payments is finalized. Section 4.6 Use of Tax Increments. The EDA shall be free to use the Tax Increment, other than the Available Tax Increment herein pledged to the payment of the TIF Note, for any other purpose for which the Tax Increment may lawfully be used pursuant to applicable provisions of the Minnesota law. Section 4.7 Business Subsidy Act. (a)Goals. In order to satisfy the provisions of Minnesota Statutes, Sections 11 6J,993 to 116J.995 (the "Business Subsidies Act"), the Developer acknowledges and agrees that the amount of the "Business Subsidy" granted to the Developer under this Agreement is the Reimbursement Amount, and that the Business Subsidy is needed because the Minimum Improvements are not sufficiently feasible for the Developer to undertake without the Business Subsidy. The public purpose of the Business Subsidy is to increase the tax base in the City, provide employment opportunities, and encourage economic development. The Developer agrees that it will cause the anchor tenant (i.e. a tenant occupying at least 10,000 square feet of space) of the Minimum Improvements to meet the following goals (the "Goals") by entering into and enforcing a lease with such anchor tenant of the Minimum Improvements whereby the anchor tenant will agree to meet such Goals within two years from the Benefit Date: at least 12 full time (i.e. at least 35 hours per week) jobs will created at the Minimum Improvements at a wage of at least $12.00 per hour, excluding benefits, within two years from the Benefit Date. Alternatively, if no single tenant occupies at least 10,000 square feet of space in the Minimum Improvements, the Goals may be satisfied by multiple tenants who each agree in their respective leases to create a number of jobs which, in the aggregate, will satisfy the Goals. (b)Remedies. If none of the Goals are met, the Developer agrees to repay all of the Business Subsidy to the EDA, plus interest ("Interest") set at the implicit price deflator defined in Minnesota Statutes, Section 275.70, Subdivision 2, accruing from and after the Benefit Date, compounded semiannually. If the Goals are met in part, the Developer will repay a portion of the Business Subsidy (plus Interest) determined by multiplying the Business Subsidy by a fraction, the numerator of which is the number of jobs in the Goals which were not created at the wage level set forth above and the denominator of which is 12 (i.e. number of jobs set forth in the Goals). In addition to the remedy described in this Section and any other remedy available to the EDA for failure to meet the Goals stated in this Section, the Developer agrees and understands 19 494129v11 BR291-371 that it may not receive a business subsidy from the City, the EDA or any other grantor (as defined in the Business Subsidies Act) for a period of 5 years from the date of the failure unless the Developer satisfies its repayment obligation under this Section, whichever occurs first. (c)Reports. The Developer agrees to (i) report its progress on achieving the Goals to the EDA until the later of the date the Goals are met or two years from the Benefit Date, or, if the Goals are not met, until the date the Business Subsidy is repaid, (ii) include in the report the information required in Section 11 6J.994, Subdivision 7 of the Business Subsidies Act on forms developed by the Minnesota Department of Employment and Economic Development, and (iii) send completed reports to the EDA. The Developer agrees to file these reports no later than March 1 of each year commencing March 1, 2019, and within 30 days after the deadline for meeting the Goals. The Developer shall enter into and enforce an initial lease with the anchor tenant of the Minimum Improvements whereby the anchor tenant will agree to agree to provide the information to the Developer necessary for the Developer to complete the reports required by this Section 3.4(3); alternatively, if no single tenant occupies at least 10,000 square feet of space in the Minimum Improvements, the Developer shall enter into and enforce initial leases to agree to provide the information to the Developer necessary for the Developer to complete the reports required by this Section 3.4(3)with the tenants who, in the aggregate, will satisfy the Goals. The EDA agrees that if it does not receive the reports, it will mail the Developer a warning letter within one week of the required filing date. If within 14 days of the post marked date of the warning the reports are not made, the Developer agrees to pay to the EDA a penalty of $100 for each subsequent day until the report is filed up to a maximum of $1,000. (d)Continued Operation. The Developer agrees that the Minimum Improvements will operate as a commercial facility in accordance with City zoning and the PUD for at least 5 years after the Benefit Date. The Developer shall enter into an initial lease with the anchor tenant of the Minimum Improvements for a term of at least 5 years; alternatively, if no single tenant occupies at least 10,000 square feet of space in the Minimum Improvements, the Developer shall enter into an initial leases for terms of at least 5 years with the tenants who, in the aggregate, will satisfy the Goals. (e)Other assistance. Other than the assistance set forth in this Agreement, there are no other state or local government agencies providing financial assistance for the Minimum Improvements. (f)Parent Corporation. There is no parent corporation of the Developer. 20 494129v11 BR291-371 V1 I O •)JUiIh ItS] I'd Section 5.1 Encumbrance of the Development Property. Neither the Developer nor any successor in interest to the Developer will engage in any financing or any other transaction creating any mortgage or other encumbrance or lien upon the Development Property, or portion thereof, whether by express agreement or operation of law, or suffer any encumbrance or lien to be made on or attach to the Development Property except only for the purpose of obtaining funds to the extent necessary for financing the costs of the Minimum Improvements and any Future Improvements or the Storm Water Improvements and any additional capital improvements thereto (including, but not limited to, land and building acquisition, labor and materials, professional fees, real estate taxes, construction interest, organization and other indirect costs of development, costs of constructing the Minimum Improvements and any Future Improvements or the Storm Water Improvements, and an allowance for contingencies), plus reasonable transaction costs. Section 5.2 Copy of Notice of Default to Financing Parties. If the EDA delivers any notice or demand to the Developer with respect to any Event of Default under this Agreement, the EDA will also deliver a copy of such notice or demand to any Financing Party at the address of such Financing Party provided to the EDA in a written notice from the Developer or such Financing Party. Section 5,3 Mortgagee's Option to Cure Events of Default. Upon the occurrence of an Event of Default, the mortgagee under any Mortgage will have the right, at its option, to cure or remedy such Event of Default. Section 5,4 Defaults Under Mortgage. The Developer will use its best efforts to obtain an agreement from any mortgagee under a Mortgage that, in the event the Developer is in default under any Mortgage, the mortgagee, within 10 days after it becomes aware of any default and prior to exercising any remedy available to it due to such default, will notify the EDA in writing of (i) the fact of default; (ii) the elements of default; and (iii) the actions required to cure the default. If, within the time period required by the Mortgage, the EDA cures any default under the Mortgage, the mortgagee will pursue none of its remedies under the Mortgage based on such default. 21 494129v11 BR291-371 Section 6.1 Insurance. (a) The Developer will cause to be maintained at all times during the process of constructing the Minimum Improvements and any Future Improvements or Storm Water Improvements the Developer owns, and, from time to time during that period, at the request of the EDA, furnish the EDA with proof of payment of premiums, on policies covering the following: (i)Builder's risk insurance, written on the so-called "Builder's Risk Completed Value Basis," in an amount equal to the replacement value of the relevant Improvements, and with coverage available in non-reporting form on the so-called "all risk" form of policy. The interest of the EDA, to the extent insurable, shall be protected in accordance with a clause in form and content satisfactory to the EDA, or in the alternative, provide similar coverage in a form and content satisfactory to Developer's Construction Lender which provides substantially similar coverage to the EDA; (ii)Comprehensive general liability insurance (including operations, contingent liability, operations of subcontractors, completed operations, and contractual liability insurance) together with an Owner's Protective Liability Policy with limits against bodily injury and property damage of not less than $1,000,000 for each occurrence and $2,000,000 in the aggregate (to accomplish the above-required limits, an umbrella excess liability policy may be used). The EDA shall be listed as an additional insured on the policy; and (iii) Workers' compensation insurance, with statutory coverage, provided that the Developer may be self-insured with respect to all or any part of its liability for workers' compensation. (b) Upon completion of construction of the Minimum Improvements and any Future Improvements or Storm Water Improvements the Developer owns and prior to the Maturity Date, the Developer shall maintain, or cause to be maintained, at its cost and expense, and from time to time at the request of the FDA shall furnish proof of the payment of premiums on, insurance as follows: (i)Insurance against loss and/or damage to the Minimum Improvements and any Future Improvements or Storm Water Improvements the Developer owns under a policy or policies covering such risks as are ordinarily insured against by similar businesses. (ii)Comprehensive general public liability insurance, including personal injury liability (with employee exclusion deleted), against liability for injuries to Persons and/or property, in the minimum amount of $1,000,000 for each occurrence and 22 494129v11 BR291-371 $2,000,000 in the aggregate and shall be endorsed to show the City and EDA as additional insureds. (iii) Such other insurance, including workers' compensation insurance respecting all employees of the Developer, in such amount as is customarily carried by like organizations engaged in like activities of comparable size and liability exposure; provided that the Developer may be self-insured with respect to all or any part of its liability for workers' compensation. (c)All insurance required in Article VII of this Agreement shall be taken out and maintained in responsible insurance companies selected by the Developer that are authorized under the laws of the State to assume the risks covered thereby. Upon request, the Developer will deposit annually with the EDA a certificate or certificates or binders of the respective insurers stating that such insurance is in force and effect. Unless otherwise provided in this Article VII of this Agreement each policy shall contain a provision that the insurer shall not cancel nor modify it in such a way as to reduce the coverage provided below the amounts required herein without giving written notice to the Developer and the EDA at least 30 days before the cancellation or modification becomes effective. In lieu of separate policies, the Developer may maintain a single policy, blanket or umbrella policies, or a combination thereof, having the coverage required herein, in which event the Developer shall deposit with the EDA a certificate or certificates of the respective insurers as to the amount of coverage in force upon the Minimum Improvements the Developer owns. (d)The Developer agrees to notify the EDA immediately in the case of damage exceeding $100,000 in amount to, or destruction of, the Minimum Improvements or any portion thereof resulting from fire or other casualty. In such event the Developer will forthwith repair, reconstruct, and restore the Minimum Improvements to substantially the same or an improved condition or value as it existed prior to the event causing such damage or construct such other improvements as are approved by the EDA and City and, to the extent necessary to accomplish such repair, construction, reconstruction, and restoration, the Developer will apply the net proceeds of any insurance relating to such damage received by the Developer to the payment or reimbursement of the costs thereof. (e)The Developer shall complete the repair, reconstruction and restoration of the Minimum Improvements or the construction of such other improvements as are approved by the EDA and City, regardless of whether the net proceeds of insurance received by the Developer for such purposes are sufficient to pay for the same. Any net proceeds remaining after completion of such repairs, construction, reconstruction and restoration shall be the property of the Developer. (f)In lieu of its obligation to reconstruct Minimum Improvements or construct such other improvements as are approved by the EDA and City as set forth in this Section, the Developer shall have the option of cancelling the TIF Note and delivering the cancelled TIF Note to the EDA. (g) All insurance requirements set forth in this Article VII terminate upon the earlier of the final Payment Date of the TIF Note or termination of this Agreement. 23 494129v11 BR291-371 Section 6.2 Subordination. Notwithstanding anything to the contrary herein, the rights of the EDA with respect to the receipt and application of any insurance proceeds shall, in all respects, be subordinate and subject to the rights of any mortgagee under a Mortgage allowed pursuant to Article VI of this Agreement. Section 6.3 Maintenance and Operation of the Development. The Developer will at all times during the term of this Agreement operate and maintain the Development or cause the Development to be operated and maintained in a safe and secure way and in compliance with this Agreement and all federal, State and local laws, regulations, rulings and ordinances applicable thereto. Developer shall pay all of the reasonable and necessary expenses of the operation and maintenance of the Development, including all premiums for insurance insuring against loss or damage thereto and adequate insurance against liability for injury to Persons or property arising from the Development as required pursuant to this Agreement. Developer shall not knowingly cause any person working in or attending the Development to be exposed to any hazardous or unsafe condition; provided that Developer shall not be in default hereunder if it has required the contractors employed by Developer to perform work on the Development to take such precautions as may be available to protect the Persons in and around the Development from hazards arising from the work, and has further required each such contractor to obtain and maintain liability insurance protecting against liability to Persons for injury arising from the work. The expenses of operation and maintenance of the Development shall be borne solely by Developer. 24 494129v11 BR291-371 iitiiamimiiu N 1IJknJaIkk!I,a [UTIJhI Section 7.1 Representation as to Development. The Developer represents to the EDA that its purchase of the Development Property, and its other undertakings under this Agreement, are for the purpose of developing commercial and retail facilities, and not for the purpose of speculation in land holding. The Developer acknowledges that, in view of the importance of the development of the Development Property to the general welfare of the EDA and the City, and the substantial financing and other public aids that have been made available by the EDA for the purpose of making such development possible, the qualifications and identity of the Developer are of particular concern to the EDA. The Developer further acknowledges that the EDA is willing to enter into this Agreement with the Developer because of the qualifications and identity of the Developer. Section 7.2 Limitations on Transfer. (a)Except only by way of security for, and only for, a Construction Loan, and any refinancings of such Construction Loan or other financing as provided in Article VI and as further provided in this Section 7.2(a), or as provided in Section 7.2(e), the Developer will not sell, assign, convey, lease or transfer in any other mode or manner (collectively, "Transfer") this Agreement, the TIP Note, the TIF 5 Pooled TIP Note or the Development Property or the Minimum Improvements, or any interest therein, without the express written approval of the EDA, which consent will not be unreasonably withheld, conditioned or delayed. In case of a Transfer by way of security for a Construction Loan, or a refinancing of a Construction Loan, the Developer, the EDA and the Construction Lender will execute and deliver a collateral assignment in substantially the form of, or containing provisions substantially in accord with, the Collateral Assignment of Tax Increment Financing Documents attached as Exhibit F to this Agreement. (b)Notwithstanding the foregoing, the EDA shall be entitled to require, in connection with any Transfer of the TIP Note or the TIF 5 Pooled TIF Note that: (i)There shall be submitted to the EDA for review all instruments and other legal documents involved in effecting such transfer, and if approved by EDA, its approval shall be indicated to the Developer in writing; and (ii)Any proposed transferee of the TIF Note or the TIF 5 Pooled TIF Note shall (A) execute and deliver to the EDA, as applicable, the Acknowledgment and Receipt of Note in the form included in Exhibit A to the TIF Note or Exhibit A to the TIF 5 Pooled TIP Note and (B) surrender the TIF Note or the TIF 5 Pooled TIF Note to the EDA either in exchange for a new fully registered note or for transfer of the TIP Note or the TIP 5 Pooled TIP Note on the registration records for the TIP Note or the TIF 5 Pooled TIF Note maintained by the EDA. 25 494129v11 BR291-371 (c) Except as set forth in Section 7.2(a) and 7.2(b), and except in the case of a foreclosure or deed in lieu of foreclosure after completion of the Minimum Improvements in accordance with Article IV hereof in which case only clause (c)(iv) shall apply, the EDA shall be entitled to require, as conditions to any approval of any Transfer of this Agreement, the Development Property, the Minimum Improvements, or applicable portion thereof, the TIF 5 Pooled TIF Note or the TIF Note in connection therewith, that: (i)Any proposed transferee shall have the qualifications and financial responsibility, as reasonably determined by the EDA, necessary and adequate to fulfill the obligations undertaken in this Agreement by the Developer; (ii)Any proposed transferee, by instrument in writing satisfactory to the EDA shall, for itself and its successors and assigns, and expressly for the benefit of the EDA have expressly assumed all of the obligations of the Developer under this Agreement and agreed to be subject to all the conditions and restrictions to which the Developer is subject; (iii)There shall be submitted to the EDA for review all instruments and other legal documents involved in effecting transfer, and if approved by EDA, its approval shall be indicated to the Developer in writing; (iv)Any proposed transferee of the TIF Note or the TIF 5 Pooled TIF Note shall (i) execute and deliver to the EDA, as applicable, the Acknowledgment and Receipt of Note in the form included in Exhibit A to the TIF Note or Exhibit A to the TIF 5 Pooled TIF Note and (ii) surrender the TIF Note or the TIF 5 Pooled TIF Note to the EDA either in exchange for a new fully registered note or for transfer of the TIF Note or the TIF 5 Pooled TIF Note on the registration records for the TIF Note or the TIF S Pooled TIF Note maintained by the EDA; and (v) The Developer and its transferees shall comply with such other conditions as the EDA may reasonably require in order to achieve and safeguard the purposes of the Act, the TIF Act and this Agreement. (d) The Developer agrees to pay all reasonable legal fees and expenses of the EDA, including fees of legal counsel retained by the EDA to review the documents submitted to the EDA in connection with any Transfer. (e) Nothing contained in this Section shall prohibit the Developer, without the consent or approval of the EDA, from (i) entering into leases with tenants in the ordinary course of business, (ii) entering into easement or other agreements necessary for the operation of the Minimum Improvements, (iii) making a Transfer of this Agreement, the TIF Note (subject to the requirements of (c)(iv) above), the TIF S Pooled TIF Note (subject to the requirements of (c)(iv) above), the Development Property, or the Minimum Improvements to an Affiliate or to a partnership whose general partner(s), or to a limited liability company whose managing member, or family trusts controlled by the Developer includes Developer or the principals of Developer, or (iv) transferring ownership interests in the Developer or admitting or removing members in accordance with the applicable organizational documents. Z1 104412 1 IQ LV12BIFLI (f)Any and all instruments and other legal documents involved in effecting the transfer of any interest in this Agreement or the Development Property governed by this Article VIII, shall be in a form reasonably satisfactory to the EDA. (g)In the event the foregoing conditions are satisfied then the Developer shall be released from its obligation under this Agreement, as to the portion of the Development Property that is transferred, assigned or otherwise conveyed. Section 7.3 Indemnification. (a)The Developer releases the EDA, the City, their governing body members, officers, agents, including the independent contractors, consultants and legal counsel, servants and employees thereof (hereinafter, for purposes of this Section, collectively the "Indemnified Parties") from any loss or damage to property or any injury to or death of any person occurring at or about or resulting from any defect in the Development to the extent not attributable to the intentional misconduct of the Indemnified Parties. (b)Except for intentional misconduct of the Indemnified Parties, the Developer agrees to indemnify the Indemnified Parties, now and forever, and further agrees to hold the aforesaid harmless from any claims, demands, suits, costs, expenses (including reasonable attorneys' fees) actions or other proceedings whatsoever (a "Claim") by any Person or entity whatsoever arising or purportedly arising from the actions or inactions of the Developer (or if other Persons acting on its behalf or under its direction or control) under this Agreement, or the transactions contemplated hereby or the acquisition, construction, installation, ownership, and operation of, or any defect in, the Development; including, without limitation, any Claim by a land owner or tenant located on the Development Property to be entitled to relocation costs and expenses. (c) Neither the EDA nor the City makes any warranties or representations regarding, nor do they indemnify the Developer with respect to, the existence or nonexistence on or in the vicinity of the Development Property or anywhere within the TIF District of any toxic or hazardous substances or wastes, pollutants or contaminants (including, without limitation, asbestos, urea formaldehyde, the group of organic compounds known as polychlorinated biphenyls, petroleum products including gasoline, fuel oil, crude oil and various constituents of such products, or any hazardous substance as defined in the Comprehensive Environmental Response, Compensation and Liability Act of 1980 ("CERCLA"), 42 U.S.C. § 961-9657, as amended) (collectively, the "Hazardous Substances"). The foregoing disclaimer relates to any Hazardous Substance allegedly generated, treated, stored, released or disposed of, or otherwise placed, deposited in or located on or in the vicinity of the Development Property or within the TIF District, as well as any activity claimed to have been undertaken on or in the vicinity of the Development Property that would cause or contribute to causing (1) the Development Property to become a treatment, storage or disposal facility within the meaning of, or otherwise bring the Development Property within the ambit of, the Resource Conservation and Recovery Act of 1976 ("RCRA"), 42 U.S.C. § 691 et M., or any similar state law or local ordinance, (2) a release or threatened release of toxic or hazardous wastes or substances, pollutants or contaminants, from the Development Property within the meaning of, or otherwise bring the Development Property within the ambit of, CERCLA, or any similar state law or local ordinance, or (3) the 27 494129v11 BR291-371 discharge of pollutants or effluents into any water source or system, the dredging or filling of any waters or the discharge into the air of any emissions, that would require a permit under the Federal Water Pollution Control Act, 33 U.S.C. § 1251 et M., or any similar state law or local ordinance. Further, neither the EDA nor the City makes any warranties or representations regarding, nor does either the EDA or the City indemnify the Developer with respect to, the existence or nonexistence on or in the vicinity of the Development Property or anywhere within the TIF District of any substances or conditions in or on the Development Property that may support a claim or cause of action under RCRA, CERCLA or any other federal, state or local environmental statutes, regulations, ordinances or other environmental regulatory requirements, including without limitation, the Minnesota Environmental Response and Liability Act, Minnesota Statutes, Chapter 115B. (d) The Developer waives any claims against the Indemnified Parties, for indemnification, contribution, reimbursement or other payments arising under federal and state law and the common law or relating to the environmental condition of the land comprising the Development Property. Section 7.4 Limitation. All covenants, stipulations, promises, agreements and obligations of the EDA or the Developer contained in this Agreement shall be deemed to be the covenants, stipulations, promises, agreements and obligations of the EDA or the Developer, respectively, and not of any governing body member, officer, agent, servant or employee of the EDA, the City or the Developer in the individual capacity thereof. 28 494129v11 BR291-371 AINffi D!áI II ii 1,7 Section 8.1 Events of Default Defined. Subject to applicable cure periods, the following shall be "Events of Default" under this Agreement and the term "Event of Default" shall mean whenever it is used in this Agreement any one or more of the events set forth in Sections 8.2 and 8.3, as applicable. Section 8.2 Developer Events of Default. The following shall be Developer Events of Default: (a)the Developer shall fail to begin construction of the Minimum Improvements or, subject to Unavoidable Delays, to proceed with due diligence to complete the Minimum Improvements as provided in Section 3.4 and by the date set forth therein, or the Developer shall default in or violate its obligations with respect to the construction of the Minimum Improvements (including the nature thereof) and such failure, default, or violation, shall not be cured within 30 days after written notice to do so. Notwithstanding the foregoing, if the default reasonably requires more than thirty (30) days to cure, such default shall not constitute an Event of Default, provided that the curing of the default is promptly commenced upon receipt by the Developer of the notice of the default, and with due diligence is thereafter continuously prosecuted to completion and is completed within a reasonable period of time, and provided that Developer keeps the EDA well informed at all times of its progress in curing the default; provided in no event, other than as a result of Unavoidable Delays, shall such additional cure period extend beyond 180 days; (b)there is, in violation of Article VIII of this Agreement, any conveyance or other transfer of the Development Property or any part thereof, and such violation is not cured within 30 days after written demand by the EDA to the Developer; (c)failure by the Developer to timely pay any ad valorem real property taxes or special assessments assessed with respect to the Development Property; (d)subject to Unavoidable Delays, failure by Developer to observe or perform any other covenant, condition, obligation or agreement on its part to be observed or performed under this Agreement or the PUD Agreement (taking into account the cure periods in the PUD Agreement), and the continuation of such failure for a period of 30 days after written notice of such failure from the EDA. Notwithstanding the foregoing, if the default reasonably requires more than 30 days to cure, such default shall not constitute an Event of Default, provided that the curing of the default is promptly commenced upon receipt by the Developer of the notice of the default, and with due diligence is thereafter continuously prosecuted to completion and is completed within a reasonable period of time, and provided that Developer keeps the EDA well informed at all times of its progress in curing the default; provided in no event, other than as a result of Unavoidable Delays, shall such additional cure period extend beyond 180 days; or We 494129v11 BR291-371 (e) the Developer shall (i) file any petition in bankruptcy or for any reorganization, arrangement, composition, readjustment, liquidation, dissolution, or similar relief under the United States Bankruptcy Act of 1978, as amended or under any similar Federal or State law; or (ii) make an assignment for the benefit of its creditors; or (ii) become insolvent or adjudicated a bankrupt; or if a petition or answer proposing the adjudication of Developer, as a bankrupt or its reorganization under any present or future Federal bankruptcy act or any similar Federal or State law shall be filed in any court and such petition or answer shall not be discharged or denied within 90 days after the filing thereof; or a receiver, trustee or liquidator of Developer, or of the Development, or part thereof, shall be appointed in any proceeding brought against Developer, and shall not be discharged within 90 days after such appointed, or if Developer shall consent to or acquiesce in such appointment. Section 8.3 EDA Events of Default. Subject to Unavoidable Delays, the failure of the EDA to observe or perform any covenant, condition, obligation or agreement on its part to be observed or performed under this Agreement, and the continuation of such failure for a period of 30 days after written notice of such failure from any party hereto shall be an Event of Default for the EDA. Notwithstanding the foregoing, if the default reasonably requires more than 30 days to cure, such default shall not constitute an Event of Default, provided that the curing of the default is promptly commenced upon receipt by the EDA of the notice of the default, and with due diligence is thereafter continuously prosecuted to completion and is completed within a reasonable period of time, and provided that the EDA keeps the Developer well informed at all times of its progress in curing the default; provided in no event, other than as a result of Unavoidable Delays, shall such additional cure period extend beyond 180 days. Section 8.4 EDA Remedies on Default. Whenever any Developer Event of Default occurs, the EDA may take any one or more of the following actions: (a)Suspend performance under this Agreement and the TIF Note and the TIF 5 Pooled TIF Note until it receives assurances from the Developer, deemed adequate by the EDA, that the Developer will cure its default and continue its performance under this Agreement. Interest on the TIF Note and the TIF 5 Pooled TIF Note shall not accrue during the period of any suspension of payment. (b)Withhold the Certificate of Completion for the Minimum Improvements. (c)Cancel and terminate either or both this Agreement, the TIF S Pooled TIF Note and the TIF Note. (d)Take whatever action at law or in equity may appear necessary or desirable to the EDA to collect any payments due under this Agreement, or to enforce performance and observance of any obligation, agreement, or covenant of the Developer under this Agreement. Notwithstanding anything to the contrary set forth in this Agreement, any Financing Party or Financing Parties shall have the right, but not the obligation, to cure an Event of Default during the cure period provided for the Developer. Section 8.5 Developer Remedies on Default. Whenever any Event of Default occurs by the EDA, the Developer may suspend its performance under this Agreement and/or take 30 494129v11 BR291-371 whatever action at law or in equity may appear necessary or desirable to the Developer to enforce performance and observance of any obligation, agreement, or covenant of the EDA under this Agreement. Nothing in this Agreement shall entitle the Developer to make any claim against the EDA for any damages whatsoever and the Developer's remedies are strictly limited to the foregoing. Section 8.6 No Remedy Exclusive. No remedy herein conferred upon or reserved to the EDA or the Developer, except as set forth in Section 8.5, is intended to be exclusive of any other available remedy or remedies unless otherwise expressly stated, but each and every such remedy shall be cumulative and shall be in addition to every other remedy given under this Agreement or now or hereafter existing at law or in equity or by statute. No delay or omission to exercise any right or power accruing upon any default shall impair any such right or power or shall be construed to be a waiver thereof, but any such right and power may be exercised from time to time and as often as may be deemed expedient. In order to entitle the EDA or the Developer, to exercise any remedy reserved to it, it shall not be necessary to give notice, other than such notice as may be required in this Article IX. Section 8,7 No Additional Waiver Implied by One Waiver. If any agreement contained in this Agreement should be breached by either Party and thereafter waived by the other Party, such waiver shall be limited to the particular breach so waived and shall not be deemed to waive any other concurrent, previous or subsequent breach hereunder. 31 494129v11 BR291-371 rEU;[IJRIDtE1 Section 9.1 Conflicts of Interest. No member of the EDA or other official of the EDA shall have any financial interest, direct or indirect, in this Agreement, the Development Property, the Minimum Improvements or any contract, agreement or other transaction contemplated to occur or be undertaken thereunder or with respect thereto, nor shall any such member of the governing body or other official participate in any decision relating to the Agreement which affects his or her personal interests or the interests of any corporation, partnership or association in which he or she is directly or indirectly interested. No member, official or employee of the EDA or the City shall be personally liable in the event of any default or breach by Developer or successor or on any obligations under the terms of this Agreement. Section 9.2 Titles of Articles and Sections. Any titles of the several parts, articles and Sections of the Agreement are inserted for convenience of reference only and shall be disregarded in construing or interpreting any of its provisions. Section 9.3 Notices and Demands. Except as otherwise expressly provided in this Agreement, a notice, demand or other communication under this Agreement by any party to any other shall be sufficiently given or delivered if it is dispatched by registered or certified mail, postage prepaid, return receipt requested, or delivered personally, and (a)in the case of Developer, is addressed to or delivered personally to Developer at in the case of the Developer is addressed to or delivered personally to: KKMBA Brooklyn Center LLC 10301 Woodcrest Drive Coon Rapids, MN 55433 Attn: Real Estate Manager & Accounting Manager (b)in the case of the EDA is addressed to or delivered personally to the EDA at: 6301 Shingle Creek Parkway Brooklyn Center, MN 55430-2199 Attn: Executive Director or at such other address with respect to any such party as that party may, from time to time, designate in writing and forward to the other, as provided in this Section. Section 9,4 Counterparts. This Agreement may be executed in any number of counterparts, each of which shall constitute one and the same instrument. Section 9.5 Law Governing. This Agreement will be governed and construed in accordance with the laws of the State of Minnesota. 32 494129v11 BR291-371 Section 9.6 Consents and Approvals. In all cases where consents or approvals are required hereunder, such consents or approvals shall not be unreasonably conditioned, delayed or withheld. All consents or approvals shall be in writing in order to be effective. Section 9.7 Representatives. Except as otherwise provided herein, all approvals and other actions required of or taken by the EDA shall be effective upon action by the EDA Representative. All actions required of or taken by Developer shall be effective upon action by the Developer Representative. Section 9.8 Superseding Effect. This Agreement reflects the entire agreement of the Parties with respect to the matters covered herein, and supersedes in all respects all prior agreements of the Parties, whether written or otherwise, with respect to such matters. Section 9.9 Relationship of Parties. Nothing in this Agreement is intended, or shall be construed, to create a partnership or joint venture among or between the Parties, and the rights and remedies of the Parties shall be strictly as set forth in this Agreement. Section 9.10 Term. The term of this Agreement shall be effective from the day and year first above written and, except as provided in Section 9.12, shall continue in effect until the earlier of (i) the date this Agreement is terminated pursuant to Section 8.4(c); (ii) the date that the TIF District is terminated or expires or the EDA is no longer receiving Tax Increment from the TIF District; or (iii) the date the TIF Note is paid in frill, defeased, forgiven or terminated in accordance with its terms. Section 9.11 Venue. All matters, whether sounding in tort or in contract, relating to the validity, construction, performance, or enforcement of this Agreement shall be controlled by and determined in accordance with the laws of the State of Minnesota, and the Developer agrees that all legal actions initiated by the Developer or EDA with respect to or arising from any provision contained in this Agreement shall be initiated, filed and venued exclusively in the State of Minnesota, Hennepin County, District Court and shall not be removed therefrom to any other federal or state court. Section 9.12 Provisions Surviving Rescission or Expiration. Sections 3.6, 7.3 and 7.4 shall survive any rescission, termination or expiration of this Agreement with respect to or arising out of any event, occurrence or circumstance existing prior to the date thereof. 33 494129v11 BR291-371 IN WITNESS WHEREOF, the EDA and Developer have caused this Agreement to be duly executed in their names and on their behalf, all on or as of the date first above written. ECONOMIC DEVELOPMENT AUTHORITY OF BROOKLYN CENTER, MINNESOTA By President By Executive Director STATE OF MINNESOTA ) ) ss COUNTY OF HENNEPIN ) The foregoing instrument was acknowledged before me this _____ day of 2017 by , the President of the Economic Development Authority of Brooklyn Center, Minnesota, a body corporate and politic organized and existing under the Constitution and laws of the State of Minnesota, on behalf of said Authority. Notary Public STATE OF MINNESOTA ) ) ss COUNTY OF HENNEPIN ) The foregoing instrument was acknowledged before me this day of 2017 by _, the Executive Director of the Economic Development Authority of Brooklyn Center, Minnesota, a body corporate and politic organized and existing under the Constitution and laws of the State of Minnesota, on behalf of said Authority. Notary Public 5-1 494129v11 BR291-371 KKMBA BROOKLYN CENTER LLC a Minnesota limited liability company BY: Its STATE OF )ss COUNTY OF_______ ) The foregoing instrument was acknowledged before me this day of 2017, by , the of KKIVIBA Brooklyn Center LLC, a Minnesota limited liability company, on behalf of said company. Notary Public Signature Page to the Development Agreement S-2 494129v11 BR291-371 I MIl :11 i I I] QIiii i I I Utl1 l II WA DI El] I I I au DI The property located in the City of Brooklyn Center, Hennepin County, Minnesota identified as Parcel ID #0211821310062 and legally described as: Lot 2, Block 2, SHINGLE CREEK CROSSING, Hennepin County, Minnesota, according to the recorded plat thereof, formerly described as Tract B Registered Land Survey Number 1614, Hennepin County, Minnesota (collectively, the "Development Property") A-I 494129v11 BR291-371 1' aUii ii vi iJ D I I I LI] 1EI] I I (iJI WHEREAS, the Economic Development Authority of Brooklyn Center, Minnesota, Minnesota (the "EDA"), a body corporate and politic subdivision of the State of Minnesota and KKMBA Brooklyn Center LLC, a Minnesota limited liability company (the "Developer") have entered into a TIF Development Agreement dated December , 2017 (the "TIF Development Agreement"); and WHEREAS, the TIF Development Agreement requires the Developer to construct certain Minimum Improvements (as defined in the TIF Development Agreement); WHEREAS, the Developer has constructed the Minimum Improvements in a manner deemed sufficient by the EDA to permit the execution of this certification and the release of the Development Property from the terms and conditions of the TIF Development Agreement; NOW, THEREFORE, this is to certify that the Developer has constructed the Minimum Improvements. Any remaining obligations under the TIF Development Agreement shall be solely contractual obligations of the Developer and parties to whom the Developer expressly assigns, and who expressly assume, the Developer's obligations under the TIF Development Agreement. The remaining covenants of the Developer under the TIF Development Agreement are not intended to run with title to the Development Property or bind successors in title to the Development Property. B-i 494129v11 BR291371 IN WITNESS WHEREOF, the EDA has caused this Certificate of Completion to be executed with by its duly authorized officer as of the day of STATE OF MINNESOTA ) ss) COUNTY OF HENNEPIIN ) The foregoing instrument was acknowledged before me this day of 20, by , the President and , the Executive Director of the Economic Development Authority of Brooklyn Center, Minnesota, a municipal corporation and politic subdivision organized and existing under the Constitution and laws of the State of Minnesota, on behalf of said Authority. Notary Public ME 494129v1 1 BR291-371 rniiiiiiza itet. :i:Rti}Ui (a)land acquisition costs; (b)utility improvements and relocation; (c)site improvements, soil corrections, pilings and grading; (d)landscaping; (e)demolition; (f)structural or other renovations of substandard building to address conditions in the Report of Inspection Procedures and Results for Determining Qualifications of a Tax Increment Financing District, dated November 10, 2015, prepared by LHB, Inc.; and (g) any other expenses incurred by the Developer in connection with the acquisition of the Development Property and the construction of the Minimum Improvements and eligible for payment from Tax Increment in accordance with the TIF Act. c-Il 494129v11 BR291-371 IDEIII:I:4t11] I[S]t1Y1tIJJLIii No. R-1 $ UNITED STATES OF AMERICA STATE OF MINNESOTA COUNTY OF HENNEPIN ECONOMIC DEVELOPMENT AUTHORITY OF THE CITY OF BROOKLYN CENTER TAXABLE TAX INCREMENT REVENUE NOTE (HUM FURNITURE, INC. PROJECT) The Economic Development Authority of the City of Brooklyn Center, Minnesota (the "EDA"), hereby acknowledges itself to be indebted and, for value received, hereby promises to pay the amounts hereinafter described (the "Payment Amounts") to KKMBA Brooklyn Center LLC, a Minnesota limited liability company (the "Developer") or its registered assigns (the "Registered Owner"), but only in the manner, at the times, from the sources of revenue, and to the extent hereinafter provided. The original principal amount of this Note shall equal the lesser of the principal amount stated above or the amount of Eligible Costs actually incurred and paid by the Developer and not previously reimbursed as determined in accordance with Section 4.2 of the TIF Development Agreement described herein. Such principal amount shall be reduced from time to time to the extent that principal shall have been paid in whole or in part pursuant to the terms hereof; provided that the principal amount shall in no event exceed $3,272,400 as provided in that certain TIF Development Agreement, dated as of December -, 2017, as the same may be amended from time to time (the "TIF Development Agreement"), by and between the EDA and the Developer. The unpaid principal amount hereof shall bear simple, non-compounding interest from the date hereof at the rate of four and no hundredths percent (4.00%) per annum. Interest shall be computed on the basis of a 360 day year consisting of twelve (12) 30-day months. The amounts due under this Note shall be payable on each February 1 and August 1, commencing first February 1 or August 1 following the receipt by the EDA of Available Tax Increment from the Development Property and thereafter to and including the earliest of (i) the February 1 following the 25th anniversary of the first Payment Date, (ii) the date this Note is paid in full, (iii) the date on which the TIF District expires or is otherwise terminated or the EDA is no longer receiving Tax Increment from the TIF District, or (iv) the date this Note or the TIF Development Agreement is terminated or rescinded in accordance with its terms (the "TIF Note Termination Date") or, if the first should not be a Business Day (as defined in the TIF Development Agreement) the next succeeding Business Day (the "Payment Dates"). On each Payment Date the EDA shall pay by check or draft mailed to the Person that was the Registered Owner of this Note at the close of the last business day of the EDA preceding such Payment Date D-1 494129v11 BR291-371 an amount equal to 97.5% of the Tax Increment (as defined in the TIF Development Agreement) (the "Available Tax Increment") received by the EDA during the six month period preceding such Payment Date (or, with respect to the first Note Payment Date, in the period commencing on the date of issuance of the TIF Note through the day prior to the first Payment Date). All payments made by the EDA under this Note shall first be applied to accrued interest and then to principal. If, on any TIF Note Payment Date, the Available Tax Increment for the payment of the accrued and unpaid interest on the TIF Note are insufficient for such purposes, the difference shall be carried forward, without accruing additional interest, and shall be paid if and to the extent that on a future TIF Note Payment Date there are Available Tax Increment to pay such accrued interest on the TIF Note. This Note is pre-payable by the EDA, without penalty, in whole or in part, on any date. This Note shall terminate and be of no further force and effect upon the TIF Note Termination Date. The EDA makes no representation or covenant, express or implied, that the Available Tax Increment will be sufficient to pay, in whole or in part, the amounts which are or may become due and payable hereunder. In the event Available Tax Increment is not sufficient, the EDA is not responsible to further fund or reimburse the Developer (or its assigns or creditors) for any such shortfall. The EDA is not responsible to fund or reimburse any obligation of the Developer (or its assigns or creditors) unless expressly stated in the TIF Development Agreement. Subject to the terms of the TIF Development Agreement, the EDA's payment obligations hereunder shall be further conditioned on the fact that no Event of Default under the TIF Development Agreement shall have occurred and be continuing at the time payment is otherwise due hereunder; and further, if pursuant to the occurrence of an Event of Default under the TIF Development Agreement the EDA elects to cancel and rescind the TIF Development Agreement, the EDA shall have no further debt or obligation under this Note whatsoever. Reference is hereby made to all of the provisions of the TIF Development Agreement, including without limitation Section 4.2 thereof, for a fuller statement of the rights and obligations of the EDA to pay the principal of this Note, and said provisions are hereby incorporated into this Note as though set out in full herein. This Note is a special, limited revenue obligation of the EDA and is payable by the EDA only from the sources and subject to the qualifications stated or referenced herein. This Note is not a general obligation of the EDA or the City of Brooklyn Center, Minnesota (the "City"), and neither the full faith and credit nor the taxing powers of the EDA nor the City are pledged to the payment of the principal of this Note and no property or other asset of the EDA or the City, save and except the above-referenced Available Tax Increment, is or shall be a source of payment of the EDA' s obligations hereunder. This Note is issued by the EDA in aid of financing a project pursuant to and in full conformity with the Constitution and laws of the State of Minnesota, including the provisions of D-2 494129v11 BR291-371 Minnesota Statutes, Sections 469.174 through 469.1794, as the same may be amended or supplemented from time to time (the "TIF Act"). This Note may be assigned only as provided in Section 7.2 of the TIF Development Agreement. In order to assign the Note, the assignee shall surrender the same to the EDA either in exchange for a new fully registered note or for transfer of this Note on the registration records for the Note maintained by the EDA. Each permitted assignee shall take this Note subject to the foregoing conditions and subject to all provisions stated or referenced herein. IT IS HEREBY CERTIFIED AND RECITED that all acts, conditions, and things required by the Constitution and laws of the State of Minnesota to be done, to have happened, and to be performed precedent to and in the issuance of this Note have been done, have happened, and have been performed in regular and due form, time, and manner as required by law; and that this Note, together with all other indebtedness of the EDA outstanding on the date hereof and on the date of its actual issuance and delivery, does not cause the indebtedness of the EDA to exceed any constitutional or statutory limitation thereon. IN WITNESS WHEREOF, Economic Development Authority of the City of Brooklyn Center, Minnesota, by its Board of Commissioners, has caused this Note to be executed by the manual signatures of its Chair and Secretary and has caused this Note to be dated as of President Executive Director D-.3 494129v11 BR291-371 a U I I (VII I LJLS] i a(eI ii I eiV I (I]l It is hereby certified that the foregoing Note was registered in the name of the Registered Owner set forth below, and that, at the request of the Registered Owner of this Note, the undersigned has this day registered the Note in the name of such Registered Owner, as indicated in the registration blank below, on the books kept by the undersigned for such purposes. NAME AND ADDRESS OF REGISTERED OWNER KK MBA Brooklyn Center LLC 10301 Woodcrest Drive Coon Rapids, MN 55433 DATE OF SIGNATURE OF EDA REGISTRATION EXECUTIVE DIRECTOR D-4 494129v11 BR291-371 Exhibit A to TIF Note ACKNOWLEDGMENT REGARDING TIF NOTE The undersigned, a ("Note Holder"), hereby certifies and acknowledges that:. A.On the date hereof the Note Holder has [acquired from]/[made a loan (the "Loan") to/for the benefit of] The KKMBA Brooklyn Center LLC (the "Developer") [secured in part by the Developer's interest as payee in] the Taxable Tax Increment Revenue Note (HOM Furniture, Inc. Project), a pay-as-you-go tax increment revenue note in the original principal amount of $____________ dated __, 201 of the Economic Development Authority of Brooklyn Center, Minnesota (the "EDA"), a copy of which is attached hereto, (the "Note"). The Note Holder has had the opportunity to ask questions of and receive all information and documents concerning the Note as it requested, and has had access to any additional information the Note Holder thought necessary to verify the accuracy of the information received. In determining to [acquire the Note]/[make the Loan], the Note Holder has made its own determinations and has not relied on the EDA or information provided by the EDA. B.The Note Holder represents and warrants that: 1.The Note Holder is acquiring [the Note]/[an interest in the Note as collateral for the Loan] for its own account, and without any view to resale or other distribution. 2.The Note Holder is [a bank or financial institution]/[a partnership whose general partner(s), or a limited liability company whose managing member, includes Developer or the principals of Developer] and has such knowledge and experience in financial and business matters that it is capable of evaluating the merits and risks of acquiring [the Note]/[an interest in the Note as collateral for the Loan]. 3.The Note Holder understands that the Note is a security which has not been registered under the Securities Act of 1933, as amended, or any state securities law, and must be held until its sale is registered or an exemption from registration becomes available. 4.The Note Holder is aware of the limited payment source for the Note and interest thereon and risks associated with the sufficiency of that limited payment source. C. The Note Holder understands that the Note is payable solely from certain tax increments derived from certain properties located in a tax increment financing district, if and as received by the EDA. The Note Holder acknowledges that the EDA has made no representation or covenant, express or implied, that the revenues pledged to pay the Note will be sufficient to pay, in whole or in part, the principal and interest due on the Note. Any amounts which have not IBM 494129v11 BR291-371 been paid on the Note on or before the final maturity date of the Note shall no longer be payable, as if the Note had ceased to be an obligation of the EDA. The Note Holder understands that the Note will never represent or constitute a general obligation, debt or bonded indebtedness of the City of Brooklyn Center, Minnesota (the "City"), the EDA, the State of Minnesota, or any political subdivision thereof and that no right will exist to have taxes levied by the City, the EDA, the State of Minnesota or any political subdivision thereof for the payment of principal and interest on the Note. D. The Note Holder understands that the Note is payable solely from certain tax increments, which are taxes received on improvements made to certain property (the "Improvements") in a tax increment financing district from the increased taxable value of the property over its base value at the time that the tax increment financing district was created, which base value is called "original net tax capacity". There are risk factors in relying on tax increments to be received, which include, but are not limited to, the following: 1.Value of Improvements. If the contemplated Improvements constructed in the tax increment financing district are completed at a lesser level of value than originally contemplated, they will generate fewer taxes and fewer tax increments than originally contemplated. 2.Damage or Destruction. If the Improvements are damaged or destroyed after completion, their value will be reduced, and taxes and tax increments will be reduced. Repair, restoration or replacement of the Improvements may not occur, may occur after only a substantial time delay, or may involve property with a lower value than the Improvements, all of which would reduce taxes and tax increments. 3.Change in Use to Tax-Exempt. The Improvements could be acquired by a party that devotes them to a use which causes the property to be exempt from real property taxation. Taxes and tax increments would then cease. 4.Depreciation. The Improvements could decline in value due to changes in the market for such property or due to the decline in the physical condition of the property. Lower market valuation will lead to lower taxes and lower tax increments. 5.Non-payment of Taxes. If the property owner does not pay property taxes, either in whole or in part, the lack of taxes received will cause a lack of tax increments. The Minnesota system of collecting delinquent property taxes is a lengthy one that could result in substantial delays in the receipt of taxes and tax increments, and there is no assurance that the full amount of delinquent taxes would be collected. Amounts distributed to taxing jurisdictions upon a sale following a tax forfeiture of the property are not tax increments. 6.Reductions in Taxes Levied. If property taxes are reduced due to decreased municipal levies, taxes and tax increments will be reduced. Reasons for such reduction could include lower local expenditures or changes in state aids to municipalities. For instance, in 2001 the Minnesota Legislature enacted an education 49412901 BR291-371 funding reform that involved the state increasing school aid in lieu of the local general education levy (a component of school district tax levies). 7.Reductions in Tax Capacity Rates. The taxable value of real property is determined by multiplying the market value of the property by a tax capacity rate. Tax capacity rates vary by certain categories of property; for example, the tax capacity rates for residential homesteads are currently less than the tax capacity rates for commercial and industrial property. In 2001 the Minnesota Legislature enacted property tax reform that lowered various tax capacity rates to "compress" the difference between the tax capacity rates applicable to residential homestead properties and commercial and industrial properties. 8.Changes to Local Tax Rate. The local tax rate to be applied in the tax increment financing district is the lower of the current local tax rate or the original local tax rate for the tax increment financing district. In the event that the Current Local Tax Rate is higher than the Original Local Tax Rate, then the "excess" or difference that comes about after applying the lower Original Local Tax Rate instead of the Current Local Tax Rate is considered "excess" tax increment and is distributed by Hennepin County to the other taxing jurisdictions and such amount is not available to the EDA as tax increment. 9.Legislation. The Minnesota Legislature has frequently modified laws affecting real property taxes, particularly as they relate to tax capacity rates and the overall level of taxes as affected by state aid to municipalities. 10.Multi-parcel TIF District. The Note Holder understands and acknowledges that the TIF District includes properties other than the Development Property, and the County remits Tax Increment to the EDA on the basis of the captured tax capacity of the entire TIF District. Consequently, the EDA will determine the amount of Tax Increment actually received by the EDA from the entire TIF District that is properly allocable, in the EDA's sole determination, to the Development Property based on the ratio that the captured tax capacity of the Development Property bears to the total captured tax capacity of the TIF District, taking into account tax delinquencies and tax petitions. E.The Note Holder acknowledges that the Note was issued as part of a development agreement between the EDA and the Developer dated December , 2017 ("Development Agreement"), and that the EDA has the right to suspend payments under this Note and/or terminate the Note upon an Event of Default under the Development Agreement. F.The Note Holder acknowledges that the EDA makes no representation about the tax treatment of, or tax consequences from, the Note Holder's acquisition of [the Note]/[an interest in the Note as collateral for the Loan]. 494!29v11 BR291-371 WITNESS our hand this day of , 20 i:rnnr By:_ Name: Its: 494129v11 BR291-371 D-8 i a:i :11 I S] 1tI] h II iI SIS] I D lull E[II I No. R-1 UNITED STATES OF AMERICA STATE OF MINNESOTA COUNTY OF HENNEPIN ECONOMIC DEVELOPMENT AUTHORITY OF THE CITY OF BROOKLYN CENTER TAXABLE POOLED TAX INCREMENT REVENUE NOTE (HOM FURNITURE, INC. PROJECT) The Economic Development Authority of the City of Brooklyn Center, Minnesota (the "EDA"), hereby acknowledges itself to be indebted and, for value received, hereby promises to pay the amounts hereinafter described (the "Payment Amounts") to KKIVIBA Brooklyn Center LLC, a Minnesota limited liability company (the "Developer") or its registered assigns (the "Registered Owner"), but only in the manner, at the times, from the sources of revenue, and to the extent hereinafter provided. The original principal amount of this TIF 5 Pooled TIP Note shall equal the lesser of the principal amount stated above or the amount of costs of the Storm Water Improvements actually incurred and paid by the Developer and not previously reimbursed as determined in accordance with Section 4.2 of the TIP Development Agreement described herein. Such principal amount shall be reduced from time to time to the extent that principal shall have been paid in whole or in part pursuant to the terms hereof provided that the principal amount shall in no event exceed $300,000 as provided in that certain TIF Development Agreement, dated as of December 2017, as the same may be amended from time to time (the "TIP Development Agreement"), by and between the EDA and the Developer. The unpaid principal amount hereof shall bear simple, non-compounding interest from the date hereof at the rate of six percent (6.00%) per annum. Interest shall be computed on the basis of a 360 day year consisting of twelve (12) 30-day months. The amounts due under this Note shall be payable on each February 1 and August 1, commencing on the later of 1, 201 or the first February I or August 1 following the date hereof and thereafter to and including February 1, 2029, or, if the first should not be a Business Day (as defined in the TIF Development Agreement) the next succeeding Business Day (the "Payment Dates"). On each Payment Date the EDA shall pay by check or draft mailed to the Person that was the Registered Owner of this TIP 5 Pooled TIF Note at the close of the last business day of the EDA preceding such Payment Date an amount equal to the TIP 5 Available Tax Increment (as defined in the TIP Development Agreement) received by the EDA during the six month period preceding such Payment (or, with respect to the first TIP 5 Pooled TIP Note Payment Date, in the period commencing with calendar year 2019 through the day prior to the first TIF 5 Pooled TIP Note Payment Date). All payments made by the EDA under this Note shall first be applied to accrued interest and then to principal. If, on any Payment Date, the TIP 5 E-1 494129v11 BR291-371 Available Tax Increment for the payment of the accrued and unpaid interest on the TIF 5 Pooled TIF Note are insufficient for such purposes, the difference shall be carried forward, without accruing additional interest, and shall be paid if and to the extent that on a future Payment Date there are TIF 5 Available Tax Increment to pay such accrued interest on the TIF 5 Pooled TIF Note. This Note is pre-payable by the EDA, without penalty, in whole or in part, on any date. This Note shall terminate and be of no further force and effect following the last Payment Date defined above, on any date upon which the EDA shall have terminated the TIF Development Agreement under Section 8.4(c) thereof, the date TIF District No. 5 is terminated, or on the date that all principal and interest payable hereunder shall have been paid in full, whichever occurs earliest. The EDA makes no representation or covenant, express or implied, that the TIF 5 Available Tax Increment will be sufficient to pay, in whole or in part, the amounts which are or may become due and payable hereunder. In the event TIF 5 Available Tax Increment is not sufficient, the EDA is not responsible to further fund or reimburse the Developer (or its assigns or creditors) for any such shortfall. The EDA is not responsible to fund or reimburse any obligation of the Developer (or its assigns or creditors) unless expressly stated in the TIF Development Agreement. Subject to the terms of the TIF Development Agreement, the EDA' s payment obligations hereunder shall be further conditioned on the fact that no Event of Default under the TIF Development Agreement shall have occurred and be continuing at the time payment is otherwise due hereunder; and further, if pursuant to the occurrence of an Event of Default under the TIF Development Agreement the EDA elects to cancel and rescind the TIF Development Agreement, the EDA shall have no further debt or obligation under this TIF 5 Pooled TIF Note whatsoever. Reference is hereby made to all of the provisions of the TIF Development Agreement, including without limitation Section 4.3 thereof, for a fuller statement of the rights and obligations of the EDA to pay the principal of this TIF 5 Pooled TIF Note, and said provisions are hereby incorporated into this Note as though set out in full herein. This TIF 5 Pooled TIF Note is a special, limited revenue obligation of the EDA and is payable by the EDA only from the sources and subject to the qualifications stated or referenced herein. This Note is not a general obligation of the EDA or the City of Brooklyn Center, Minnesota (the "City"), and neither the full faith and credit nor the taxing powers of the EDA nor the City are pledged to the payment of the principal of this Note and no property or other asset of the EDA or the City, save and except the above-referenced TIF 5 Available Tax Increment, is or shall be a source of payment of the EDA's obligations hereunder. This Note is issued by the EDA in aid of financing a project pursuant to and in full conformity with the Constitution and laws of the State of Minnesota, including the provisions of Minnesota Statutes, Sections 469.174 through 469.1794, as the same may be amended or supplemented from time to time (the "TIF Act"). E-2 494129v11 BR291-371 This Note may be assigned only as provided in Section 7.2 of the TIF Development Agreement. In order to assign the Note, the assignee shall surrender the same to the EDA either in exchange for a new fully registered note or for transfer of this TIF 5 Pooled TIF Note on the registration records for the TIF 5 Pooled TIF Note maintained by the EDA. Each permitted assignee shall take this TIF 5 Pooled TIF Note subject to the foregoing conditions and subject to all provisions stated or referenced herein. IT IS HEREBY CERTIFIED AND RECITED that all acts, conditions, and things required by the Constitution and laws of the State of Minnesota to be done, to have happened, and to be performed precedent to and in the issuance of this Note have been done, have happened, and have been performed in regular and due form, time, and manner as required by law; and that this TIF 5 Pooled TIF Note, together with all other indebtedness of the EDA outstanding on the date hereof and on the date of its actual issuance and delivery, does not cause the indebtedness of the EDA to exceed any constitutional or statutory limitation thereon. IN WITNESS WHEREOF, Economic Development Authority of the City of Brooklyn Center, Minnesota, by its Board of Commissioners, has caused this Note to be executed by the manual signatures of its Chair and Secretary and has caused this Note to be dated as of President Executive Director E-3 494129v11 BR291-371 It is hereby certified that the foregoing TIF 5 Pooled TIF Note was registered in the name of the Registered Owner set forth below, and that, at the request of the Registered Owner of this TIF 5 Pooled TIF Note, the undersigned has this day registered the Note in the name of such Registered Owner, as indicated in the registration blank below, on the books kept by the undersigned for such purposes. NAME AND ADDRESS OF REGISTERED OWNER ICs'-MBA Brooklyn Center LLC 10301 Woodcrest Drive Coon Rapids, MN 55433 DATE OF SIGNATURE OF EDA REGISTRATION EXECUTIVE DIRECTOR E-4 494129v11 BR291-371 Exhibit A to TIF Note tt4Dce tlJlk[eIIU:cIii{ZI1,) mM II:lIJ(IiI The undersigned, a ("Note Holder"), hereby certifies and acknowledges that:. A.On the date hereof the Note Holder has [acquired from]/[made a loan (the "Loan") to/for the benefit of] KK MBA Brooklyn Center LLC (the "Developer") [secured in part by the Developer's interest as payee in] the Taxable Pooled Tax Increment Revenue Note (HOM Furniture, Inc. Project), a pay-as-you-go tax increment revenue note in the original principal amount of $___________ dated , 201_ of the Economic Development Authority of Brooklyn Center, Minnesota (the "FDA"), a copy of which is attached hereto, (the "TIF 5 Pooled TIF Note"). The Note Holder has had the opportunity to ask questions of and receive all information and documents concerning the TIF 5 Pooled TIF Note as it requested, and has had access to any additional information the Note Holder thought necessary to verify the accuracy of the information received. In determining to [acquire the TIF 5 Pooled TIF Note]/[make the Loan], the Note Holder has made its own determinations and has not relied on the EDA or information provided by the FDA. B.The Note Holder represents and warrants that: 1.The Note Holder is acquiring [the TIF 5 Pooled TIF Note]/[an interest in the TIF 5 Pooled TIF Note as collateral for the Loan] for its own account, and without any view to resale or other distribution. 2.The Note Holder is [a bank or financial institution]/[a partnership whose general partner(s), or a limited liability company whose managing member, includes Developer or the principals of Developer] and has such knowledge and experience in financial and business matters that it is capable of evaluating the merits and risks of acquiring [the TIF 5 Pooled TIF Note]/[an interest in the TIF 5 Pooled TIF Note as collateral for the Loan]. 3.The Note Holder understands that the TIF 5 Pooled TIF Note is a security which has not been registered under the Securities Act of 1933, as amended, or any state securities law, and must be held until its sale is registered or an exemption from registration becomes available. 4.The Note Holder is aware of the limited payment source for the TIF 5 Pooled TIF Note and interest thereon and risks associated with the sufficiency of that limited payment source. C. The Note Holder understands that the TIF 5 Pooled TIF Note is payable solely from certain tax increments derived from a tax increment financing district, if and as received by the EDA. The Note Holder acknowledges that the EDA has made no representation or covenant, E-5 49412901 BR291-371 express or implied, that the revenues pledged to pay the TIF 5 Pooled TIF Note will be sufficient to pay, in whole or in part, the principal and interest due on the TIF 5 Pooled TIF Note. Any amounts which have not been paid on the TIF 5 Pooled TIF Note on or before the final maturity date of the TIF 5 Pooled TIF Note shall no longer be payable, as if the TIF 5 Pooled TIF Note had ceased to be an obligation of the EDA. The Note Holder understands that the TIF 5 Pooled TIF Note will never represent or constitute a general obligation, debt or bonded indebtedness of the City of Brooklyn Center, Minnesota (the "City"), the FDA, the State of Minnesota, or any political subdivision thereof and that no right will exist to have taxes levied by the City, the EDA, the State of Minnesota or any political subdivision thereof for the payment of principal and interest on the TIF 5 Pooled TIF Note. D. The Note Holder understands that the TIF 5 Pooled TIF Note is payable solely from certain tax increments, which are taxes received on improvements made to certain property (the "Improvements") in a tax increment financing district from the increased taxable value of the property over its base value at the time that the tax increment financing district was created, which base value is called "original net tax capacity". There are risk factors in relying on tax increments to be received, which include, but are not limited to, the following: 1.Value of Improvements. If the contemplated Improvements constructed in the tax increment financing district are completed at a lesser level of value than originally contemplated, they will generate fewer taxes and fewer tax increments than originally contemplated. 2.Damage or Destruction. If the Improvements are damaged or destroyed after completion, their value will be reduced, and taxes and tax increments will be reduced. Repair, restoration or replacement of the Improvements may not occur, may occur after only a substantial time delay, or may involve property with a lower value than the Improvements, all of which would reduce taxes and tax increments. 3.Change in Use to Tax-Exempt. The Improvements could be acquired by a party that devotes them to a use which causes the property to be exempt from real property taxation. Taxes and tax increments would then cease. 4.Depreciation. The Improvements could decline in value due to changes in the market for such property or due to the decline in the physical condition of the property. Lower market valuation will lead to lower taxes and lower tax increments. 5.Non-payment of Taxes. If the property owner does not pay property taxes, either in whole or in part, the lack of taxes received will cause a lack of tax increments. The Minnesota system of collecting delinquent property taxes is a lengthy one that could result in substantial delays in the receipt of taxes and tax increments, and there is no assurance that the full amount of delinquent taxes would be collected. Amounts distributed to taxing jurisdictions upon a sale following a tax forfeiture of the property are not tax increments. 6.Reductions in Taxes Levied. If property taxes are reduced due to decreased municipal levies, taxes and tax increments will be reduced. Reasons for such E-6 494129v11 BR291-371 reduction could include lower local expenditures or changes in state aids to municipalities. For instance, in 2001 the Minnesota Legislature enacted an education funding reform that involved the state increasing school aid in lieu of the local general education levy (a component of school district tax levies). 7.Reductions in Tax Capacity Rates. The taxable value of real property is determined by multiplying the market value of the property by a tax capacity rate. Tax capacity rates vary by certain categories of property; for example, the tax capacity rates for residential homesteads are currently less than the tax capacity rates for commercial and industrial property. In 2001 the Minnesota Legislature enacted property tax reform that lowered various tax capacity rates to "compress" the difference between the tax capacity rates applicable to residential homestead properties and commercial and industrial properties. 8.Changes to Local Tax Rate. The local tax rate to be applied in the tax increment financing district is the lower of the current local tax rate or the original local tax rate for the tax increment financing district. In the event that the Current Local Tax Rate is higher than the Original Local Tax Rate, then the "excess" or difference that comes about after applying the lower Original Local Tax Rate instead of the Current Local Tax Rate is considered "excess" tax increment and is distributed by Hennepin County to the other taxing jurisdictions and such amount is not available to the EDA as tax increment. 9.Legislation. The Minnesota Legislature has frequently modified laws affecting real property taxes, particularly as they relate to tax capacity rates and the overall level of taxes as affected by state aid to municipalities. 10.TIF 5 Pooled TIF. The Note Holder understands and acknowledges that the TIF 5 Pooled TIF Note is payable only from the TIF 5 Available Tax Increment from TIP District No. 5 (as defined in the TIF Development Agreement) and other tax increment from TIF District No. 5 is not pledged to the payment of the TIF 5 Pooled TIF Note. E.The Note Holder acknowledges that the Note was issued as part of a development agreement between the EDA and the Developer dated December , 2017 ("Development Agreement"), and that the EDA has the right to suspend payments under this Note and/or terminate the Note upon an Event of Default under the Development Agreement. F.The Note Holder acknowledges that the EDA makes no representation about the tax treatment of, or tax consequences from, the Note Holder's acquisition of [the Note]/[an interest in the Note as collateral for the Loan]. E-7 494129v11 BR291-371 WITNESS our hand this day of , 20 Note Holder: By:_ Name: Its: 494129v11 BR291-371 E-8 i a:i :ii : ti Iw Iiii 1 DikAl WI U IN Dated as of , 20 1.Parties. The parties to this Collateral Assignment of Tax Increment Financing Documents (the "Agreement") are KKMBA Brooklyn Center LLC, a Minnesota limited liability company (the "Developer") and , a ("Lender"). The Economic Development Authority of Brooklyn Center, Minnesota (the "EDA") is executing this Collateral Assignment of Tax Increment Financing Documents to confirm that this Collateral Assignment is a permitted assignment under Section 7.2 of the TIF Development Agreement, as defined below. 2.Recitals. 2.1 Recital One. The Developer and the EDA are parties to that certain TIF Development Agreement dated , 201_ (the "TIF Development Agreement"). 2.2 Recital Two. The Developer and Lender are parties to that certain [DESCRIBE LOAN DOCUMENTS] pursuant to which Lender has loaned $ to the Developer (the "Loan"). The Developer intends to use a portion of the proceeds of the Loan to construct the "Minimum Improvements," as defined in the TIF Development Agreement. 2.3 Recital Three. Pursuant to the TIF Development Agreement, Developer has agreed to construct the Minimum Improvements and the EDA has: issued its $ {Taxable Tax Increment Revenue Note (HOM Furniture, Inc. Project)/Taxable Pooled Tax Increment Revenue Note (HOM Furniture, Inc. Project)] dated , 201, (the "TIF Note") to provide funds to reimburse the Borrower for certain costs of the Project. 2.4 Recital Four. As security for the Loan, the Developer has granted Lender a mortgage on the real property legally described on the attached Exhibit A (the "Mortgaged Property"). 2.5 Recital Five. As a condition of the Loan, Lender has required that the Developer collaterally assign the Developer's rights under the TIF Development Agreement and the TIF Note to Lender so that if Lender exercises Lender's remedies under the Loan Documents, forecloses the Mortgage and becomes the owner of the Development Property, as defined in the TIF Development Agreement, Lender may perform the Developer's obligations under the TIF Development Agreement and receive the benefits of the TIF Development Agreement from the EDA. F-i 494129v11 BR291-371 3.Assignment of Agreement. In consideration of the Loan, the Developer hereby irrevocably transfers and assigns all of the Developer's rights and obligations under the TIF Development Agreement to Lender, and Lender, for the benefit of the EDA, assumes and agrees to perform all of the obligations of the Developer under the TIF Development Agreement; provided, however, the assignment and assumption set forth in this Section 3 shall not become effective until Lender acquires title to the Mortgaged Property pursuant to either a conveyance in lieu of foreclosure from the Developer or the foreclosure of the mortgage and the expiration of all applicable redemption periods. Except as set forth in Sections 4 and 7 below, the Developer is entitled to exercise all of the Developer's rights and receive all of the benefits under the TIF Development Agreement until this assignment becomes effective as provided above. 4.Pledge of TIF Note. Developer hereby pledges and grants Lender a security interest in the TIF Note, and does hereby grant, assign, transfer and set over unto Lender all of its right, title and interest in and to the any and all revenue and/or proceeds of the TIF Note which the EDA is required to pay pursuant to the terms of the TIF Note after the date hereof and prior to Developer's repayment of the Loan (the "TIF Note Proceeds"). Borrower agrees that EDA shall pay TIF Note Proceeds from the TIF Note directly to Lender and in the name of Lender. 5.Right to Disclaim. Lender may, at any time prior to (a) the recording of a conveyance of the Mortgaged Property from Developer to Lender in lieu of a foreclosure or (b) the recording of a sheriffs certificate of sale pursuant to which Lender has purchased all or any portion of the Mortgaged Property at a Sheriffs Sale, notify the EDA, in writing, that Lender is terminating this Collateral Assignment and disclaiming any rights under the TIF Development Agreement in which case Lender will acquire title to the Mortgaged Property free and clear of any rights or obligations under the TIF Development Agreement. Notwithstanding the foregoing, in no event will this Agreement limit the exercise of the remedies by the EDA under the TIF Development Agreement or under the TIF Note (as defined in the TIE Development Agreement). 6.Further Assignment. Subject to Section 7.2(c)(iv) of the TIF Development Agreement, Lender may assign its rights and obligations under this Agreement to (a) any assignee of the Mortgage; (b) any purchaser of all or any portion of the Mortgaged Property at a Sheriffs Sale; or (c) any party acquiring title to the Mortgaged Property from Developer pursuant to a deed in lieu of foreclosure. 7.Developer Default. If Developer defaults in the performance of one or more of Developer's obligations under one or more of the Loan Documents, Lender will give the EDA written notice of the default; provided, however, the Lender's failure to give the EDA notice of a Developer default under one or more of the Loan Documents will not extend any cure periods provided for Developer under any of the Loan Documents and will not invalidate or render ineffective, in any way, any notice of default provided by Lender to Developer. 8.Authorization to EDA. The Developer hereby irrevocably authorizes and directs the EDA to recognize the claims of the Lender without investigating the reason for any action taken or the validity of or the amount of indebtedness owing to the Lender or the existence of any Event of Default; and the Developer hereby irrevocably directs and authorizes the EDA to pay exclusively to the Lender or its assigns [from and after the date of any notice as set forth in Section 7], all sums due under the TIF Development Agreement or the TIF Note, subject to the F-2 494129v11 BR291-371 terms thereof, without the necessity of any such investigation; and to the extent such sums are paid to the Lender, the Developer agrees that the EDA shall have no further liability to the Developer for the same. The sole signature of the Lender shall be sufficient for the exercise of any rights under this Assignment and the sole receipt by the Lender of any sum paid by the EDA shall be in discharge and release of that portion of any amount owed by the EDA. The Lender acknowledges that the EDA 's rights and remedies against the Developer under the TIF Development Agreement are unaffected by this Agreement. 9. Notices. All notices and communications given pursuant to this Agreement shall be deemed to have been given or made when personally delivered or three (3) days after being sent by United States Mail, postage prepaid, to the parties at the following addresses or at such other addresses as the parties may hereinafter designate in writing: To the Developer KKMBA Brooklyn Center LLC 10301 Woodcrest Drive Coon Rapids, MN 55433 Phone No.: (763) Fax No.: (763) Email: With a copy to: To Lender: With a copy to: To the EDA: Economic Development Authority of Brooklyn Center, Minnesota 6301 Shingle Creek Parkway Brooklyn Center, Minnesota 55430-2199 Attn: Executive Director With a copy to: Kennedy & Graven Chartered 200 S. Sixth St. 4470 Minneapolis, MN 55402-1458 Attention: Jenny Boulton F-3 494129v11 BR291-371 10. Titles of Articles and Sections. Any titles of the Sections of this Agreement are inserted for convenience of reference only and shall be disregarded in construing or interpreting any of its provisions. 11.Counterparts. This Agreement may be executed in any number of counterparts, each of which shall constitute one and the same instrument. 12.Law Governing. This Agreement will be governed and construed in accordance with the laws of the State of Minnesota. 13. Relationship of Parties. Nothing in this Agreement is intended, or shall be construed, to create a partnership or joint venture among or between the Parties, and the rights and remedies of the Parties shall be strictly as set forth in this Agreement. 11 fl :i'1i BY: Its STATE OF MINNESOTA ) ) ss COUNTY OF The foregoing instrument was acknowledged before me this day of 20, by , the of KKMBA Brooklyn Center LLC, a Minnesota limited liability company on behalf of said company. Notary Public F-4 494129v11 11R291-371 LENDER: By Its STATE OF ) ss: COUNTY OF__________ ) The foregoing instrument was acknowledged before me on this day of __________ 20 by , the of a on behalf of the Notary Public MI 494129v11 BR291-371 * IJiv'LsI C1[SA'i m 31 lIel 31U Dkl Wl IZI)1I Dl1 To induce Lender to make advances pursuant to the Loan Agreement described in the foregoing Assignment, the undersigned EDA hereby acknowledges and consents to the foregoing Assignment to Lender, and further agrees to deliver to Lender a copy of any Default Notice given to Borrower with respect to any breach or default by Borrower under the TIF Development Agreement or the TIF Note within five (5) days of delivering any such notice to Borrower. Dated: ECONOMIC DEVELOPMENT AUTHORITY OF BROOKLYN CENTER, MINNESOTA By______ Its: President and by Its Executive Director STATE OF MINNESOTA ) ) ss: COUNTY OF HENNEPfN ) The foregoing instrument was acknowledged before me on this day of __________ 20 by —and , the President and Executive Director of the Economic Development Authority of Brooklyn Center, Minnesota, a body corporate and politic, on behalf of such Economic Development Authority. Notary Public Drafted by: KENNEDY & GRAVEN, CHARTERED 470 U. S. Bank Plaza 200 South Sixth Street Minneapolis, Minnesota 55402 F-6 494129v11 BR291-371 Exhibit A I I] 1114 ki(I] 1 (II The property located in the City of Brooklyn Center, Hennepin County, Minnesota identified as Parcel ID # legally described as: Lot 2, Block 2, SHINGLE CREEK CROSSING, Hennepin County, Minnesota, according to the recorded plat thereof, formerly described as Tract B Registered Land Survey Number 1614, Hennepin County, Minnesota (the "Mortgaged Property") F7 494129v1! BR291-371 I *01 It :i i I IJ Ii] (I] &VL'd N I I] acli W'I L'd N (I)I G-1 494129v11 BR291-371