7.5. SR 07-15-2013 City of
Elk - Request for Action
River
TO ITEM NUMBER
Mayor and City Council 7.5
AGENDA SECTION MEETING DATE PREPARED BY
Public Hearings July 15, 2013 Clay Wilfahrt,Assistant Director of Economic
Development
ITEM DESCRIPTION REVIEWED By
Disposition of City-Owned Property (Lot 1,Block 3, Brain Beeman,Director of Economic
Natures Edge Business Park) Development and Jeremy Barnhart,Deputy
Director CODD
REVIEWED BY
Cal Portner, City Administrator
Action Requested
Hold a public hearing to consider comment on the disposition of city property.
Following the public hearing,adopt by motion the following resolutions:
1. Resolution Authorizing the Sale of Land
2. Resolution Authorizing Execution of Abatement Agreements
3. Resolution Authorizing the Reimbursement of Funds
Background/Discussion
Attached for your review is the purchase agreement prepared by the city attorney. The agreement allows
for the sale of a 10.36-acre lot to Preferred Powder Company,LLC for the purchase price of$1.00,
conditioned upon the City of Elk River and Sherburne County reimbursing the land at market value in
the amount of$680,895 through tax abatement revenues generated for up to 18 years as a result of the
project. The City Council held a public hearing and approved the abatement application at its July 1
meeting. Sherburne County plans to hold a public hearing and consider the abatement application at its
August 6 meeting.
In addition,the purchase agreement includes the statutory provisions for the sale of city property.
Minnesota Statutes require the city to provide notice and hold a public hearing prior to the sale of
property,review building plans and specifications, and a reversion clause if the project is not completed
as agreed.
Financial Impact
Initial development costs for the Nature's Edge Business Center have been paid off by a$250,000
Department of Employment and Economic Development Public Infrastructure Grant, the city and EDA
development funds, and the trunk water and sewer funds, to afford the EDA the ability to provide the
10.36 acre lot in the form of upfront assistance for this unique project. The land will be $680,895 of the
up-front assistance,and the remaining$472,983 will be provided in the form of an inter-fund loan which
will be distributed upon proof of site development expenditures.
NaA f RE]
In accordance with the city Tax Abatement Policy, Springsted,Inc. completed an independent but for
analysis and financial projection for the tax abatement to conclude that with an estimated market value of
$4,670,900, the project will generate sufficient tax abatement revenue to repay the city within an 18-year
term at a 3%interest rate. It should be noted there is no minimum assessment agreement that establishes
a minimum market value to guarantee repayment in the 18-year term. Also, the county will recommend
the agreement for up to 12 years,which will generate enough money to pay back half of the land and
development funds;however,the county will not pay interest on the project as initially requested. The
interest is charged to replenish the development fund with a dollar amount equivalent to that used for
abatement taking inflation into account. The county will already abate 12 years of taxes,which has been
their maximum in most cases, and a 3%interest rate would push them beyond 12 years.
Staff evaluated the company's application in accordance with the Tax Abatement and Business Subsidy
Policy. The project scored 37 out of 45 possible points,which equates to a"moderately desirable"project
based on the city's project priorities.
The construction project, estimated at a cost of$6,192,695,will involve finance participation from the
company's lender, equity participation, and the following public financing applications:
City of Elk River Tax Abatement $ 576,939
Sherburne County Tax Abatement $ 576,939
EDA Micro Loan $ 100,000
EDA Forgivable Loan 200,000
Total $1,453,878
The city's Business Subsidy Policy requires the minimum wage for new or retained jobs at$15.00 per
hour. Deviations are allowed to be considered for projects that result in a significant tax base increase.
Preferred Powder intends to meet the city wage requirement.
Attachments
1. Resolution Authorizing the Sale of Land
2. Resolution Authorizing Execution of Abatement Agreements
3. Resolution Authorizing the Reimbursement of Funds
4. DRAFT Tax Abatement Agreement
5. DRAFT Business Subsidy Agreement
6. DRAFT Purchase Agreement
7. Preliminary Building Plans
City of
Elk
Pdver Resolution 13-
A Resolution of the City of Elk River Approving the Terms of up to a $472,982
Internal Financing in Connection with a Tax Abatement for Preferred Powder
Coating, LLC
WHEREAS, The city has heretofore approved the establishment of a tax abatement to assist
Preferred Powder Coating with the construction of an approximate 100,000 square foot facility within
the city; and
WHEREAS, The city has determined to reimburse for certain costs consisting primarily of
extraordinary site development improvements associated with the development (the "Qualified Costs"),
for which will be initially financed from city funds available for such purposes.
WHEREAS, The city intends to reimburse itself for the payment of the Qualified Costs,plus interest
thereon, from the city and county's share of annual tax abatements that will be levied for and collected
annually by each entity in accordance with the terms of this resolution (which terms are referred to
collectively as the "Internal Financing").
NOW, THEREFORE, BE IT RESOLVED The City of Elk River hereby authorizes the advance
of up to $472,982 from available city development funds that may be paid as Qualified Costs. The city
shall reimburse itself for such advances together with interest at the rate stated below. Interest accrues
on the principal amount from the date of each advance. The interest rate shall be 3.00%.
Principal and interest on the Internal Financing shall be paid semi-annually on each February 1 and
August 1 (each "Payment Date") following commencement of annual levies by the city and county for
collection of annual tax abatements through the term of the tax abatement collections (up to 20 years).
The principal sum and all accrued interest payable under the Internal Financing are pre-payable in
whole or in part at any time by the city.
The city may amend the terms of the Internal Financing at any time by resolution of the City Council,
including a determination to forgive the outstanding principal amount and accrued interest to the extent
permissible under law.
Passed and adopted this 15"'day of July 2013.
John J. Dietz,Mayor
ATTEST:
Tina Allard, City Clerk
P 0 W II R I D R I
INAWREJ
City of
Elk
River
Resolution 13-
A Resolution of the City of Elk River Authorizing the Sale of Land
WHEREAS, the City of Elk River,Minnesota (the "City") is the owner of certain real
property located in the City of Elk River,Minnesota identified as Lot 1,Block 3,Nature's Edge
Center, Sherburne County,Minnesota (the "Land").
WHEREAS, it has been proposed that the City sell the Land to Preferred Powder Coating
LLC (the "Developer");
WHEREAS, the Developer proposes to acquire the Land for the purpose of constructing a
100,000 square foot industrial facility and relocating its powder coating business from its
current site in Rogers to the new industrial facility on the Land;
WHEREAS, the Developer proposes to acquire the Land for$1.00 using tax abatements
from the City and County as a business subsidy pursuant to the terms of the Purchase
Agreement attached hereto;
WHEREAS, the City has, on the date hereof,held a public hearing on such sale of the Land.
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Elk River
that the Purchase Agreement for the Land is hereby approved.
The motion for adoption of the foregoing resolution was introduced by Councilmember
and duly seconded by Councilmember and, after full discussion
thereof, and upon a vote being taken thereof,the following voted in favor thereof-
and the following voted against same:
Passed and adopted this 15`''day of July 2013.
John J. Dietz,Mayor
ATTEST:
Tina Allard, City Clerk
POWERED A9
IN'AWR
PURCHASE AGREEMENT
RELATING TO
A LOT IN NATURE'S EDGE BUSINESS CENTER,
SHERBURNE COUNTY,MINNESOTA
1. Parties. The parties to this Purchase Agreement are:
a. The City of Elk River, a Minnesota municipal corporation, 13065 Orono
Parkway, Elk River, MN 55330-5600, Attention: City Clerk, (the "Seller"); and
b. Preferred Real Estate Holdings, LLC, , Rogers, MN
55330, Attention: (the "Buyer").
This Agreement sometimes refers to Seller and Buyer individually as a "Party" and collectively
as the "Parties".
2. Property. The real property that is the subject of this Agreement is a 10.36 acre
parcel in Nature's Edge Business Center located in the City of Elk River, Sherburne County,
Minnesota and is the property legally described on the attached Exhibit A (the "Property"). The
property is vacant land. The term "Property", as used in this Agreement includes all
hereditaments and appurtenances to the Property. No personal property will be conveyed
pursuant to this Agreement.
3. Purchase and Sale. Subject to the contingencies set forth herein, Seller agrees to
sell the Property to Buyer pursuant to the terms of this Agreement, and Buyer agrees to purchase
the Property from Seller pursuant to the terms of this Agreement.
4. Public Hearing. Before Seller may convey the Property to Buyer, Seller's City
Council must hold a hearing on the proposed sale and must determine that the sale is in the best
interest of the City of Elk River and its people and furthers Seller's general plan of economic
development. Within a reasonable period after Buyer submits a signed copy of this Purchase
Agreement to Seller, Seller will publish the required notice of and hold the hearing required by
Minnesota Statute Chapter 469. If, at the hearing, Seller's Council does not adopt a resolution
approving a sale pursuant to the terms of this Agreement, Buyer may terminate this Agreement
pursuant to Section 18(b), or Seller may terminate this Agreement pursuant to Section 19(a). If
Seller's Council adopts a resolution approving a sale pursuant to the terms of this Agreement and
a taxpayer appeals Seller's decision in accordance to Minnesota Statutes Chapter 469, Seller
must give Buyer written notice of the appeal, and Buyer may terminate this Agreement pursuant
to Section 18(b) or Seller may terminate this Agreement pursuant to Section 19(b). If neither
Buyer nor Seller terminates this Agreement pursuant to Section 18(b) or Section 19(b), within
five (5) business days of Seller's delivery of written notice of an appeal to Buyer, all time periods
provided for in this Agreement will be tolled pending the outcome of such appeal. If neither
Buyer nor Seller terminates this Agreement pursuant to Section 18(b) or Section 19(b) and a
District Court finds in favor of the parry taking the appeal, this Agreement automatically
terminates and Seller must return the Earnest Money to Buyer.
5. Purchase Price. The purchase price for the Property is One Dollar ($1.00)
payable at Closing (as defined below). Buyer will also pay for: (a) any legal or other fees
associated with the sale of the property incurred by Seller (other than typical and customary
closing costs); (b) the non-refundable $5,000 application fee; and (c) any other costs and
expenses allocated to Buyer herein below.
6. Earnest Money. Intentionally Omitted
7. Plans and Specifications. If Seller has not approved Buyer's plans and
specifications for its proposed improvements upon the Property on or before the Date of Closing,
either Buyer or Seller may terminate this agreement pursuant to Section 18 or Section 19
respectively.
8. Other Agreements. Contemporaneously with the closing on the transaction
contemplated in this Agreement, Buyer is entering into the following agreements: (i) a "Micro
loan" loan facility and a "Forgivable Loan" loan facility with the Economic Development
Authority for the City of Elk River; (ii) a tax abatement agreement with Seller and Sherburne
County; (iii) a loan facility with for the remainder of the financing
Buyer desires to complete Buyer's improvements upon the Property. Seller's obligations under
this Agreement are contingent upon Buyer consummating all of the agreements listed as items (i)
—(iv) above on or before the Closing Date.
9. Conveyance Terms. Upon Buyer's full performance of Buyer's obligations under
this Agreement, Seller must execute and deliver to Buyer a Limited Warranty Deed conveying
fee title to the Property to Buyer subject only to:
a. Building, zoning and subdivision statutes, laws, ordinances and
regulations;
b. Reservations of minerals or of mineral rights in favor of the State of
Minnesota, if any;
C. The lien of real estate taxes and special assessments not yet due and
payable; and
d. Covenants, conditions, restrictions, easements, encumbrances or other
defects in title which are disclosed by the Evidence of Title, as defined in Section 12, and
which are not the subject of an Objection, as defined in Section 13, or which are the
subject of an Objection that Buyer has waived pursuant to the provisions of Section
13(b).
f. The Tax Abatement Agreement between the Buyer, Seller and Sherburne
County as identified under Section 8(ii) of this Agreement.
g. The Mortgage between the Seller and Buyer required under the Tax
Abatement Agreement.
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h. As required by Minnesota Statutes, the following covenants in favor of
Seller:
(i) Within one year of the Date of Closing, as defined in Section 11,
Buyer must complete the construction of the improvements described in the Plans
and Specifications Seller approves pursuant to Section 7, as evidenced by the City
of Elk River's issuance of a Certificate of Occupancy, and devote the property to
use as in Buyer's business operations; and
(ii) Buyer must not transfer title to the Property within one year of the
Date of Closing without the consent of Seller which consent Seller will not
unreasonably withhold or delay.
i. Right of Re-Entry. If Buyer violates either of the covenants set forth at
9(e)(i) or 9(e)(ii), Seller may commence an action in Sherburne County District Court
seeking a judicial decree from the District Court that the Limited Warranty Deed is
canceled, that title to the Property reverts to Seller and that the Purchase Price is forfeited
to the Seller. The forgoing is Seller's sole and exclusive remedy in the event of a breach
of the covenants described in Section 9(e)(i) or 9(e)(ii). Seller hereby agrees that if
Buyer grants a third party a mortgage which constitutes a first lien on the Property and
uses the proceeds of the loan the mortgage securers to finance the construction of the
improvements described in the plans and specifications for which Seller has approved
and issued a building permit, a transfer of title from Buyer to the mortgagee pursuant to a
foreclosure of the mortgage shall be deemed to have the consent of Seller for purposes of
the covenant described in Subsection e(ii) above.
(hereinafter, collectively, the"Permitted Encumbrances").
10. Possession. Upon Buyer's full performance of Buyer's obligations under this
Agreement, Seller must deliver possession of the Property to Buyer.
11. Closing. The Parties must meet at the offices of Seller at 13065 Orono Parkway,
Elk River, Minnesota at 9:30 a.m., on August 8, 2013, except as otherwise extended by the terms
of this Agreement but no later than , 2013, or at such other place or other date as the
Parties may establish by written agreement(the "Date of Closing"), at which time:
a. Seller must:
(i) execute and deliver to Buyer the deed described in Section 9
above. Seller will include on the deed the statement "The Seller certifies that the
Seller does not know of any wells on the described real property."
(ii) execute and deliver to Buyer and Buyer's title insurer, if any, an
Affidavit by Seller indicating that on the date of Closing there are no outstanding,
unsatisfied judgments, tax liens, or bankruptcies against or involving the Property;
that there has been no skill, labor, or material furnished to the Property for which
payment has not been made or for which mechanics' liens could be filed; and there
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are no other unrecorded interests in the Property, together with whatever standard
owner's affidavit as may be reasonably required by the Buyer's title insurer;
(iii) execute and deliver to Buyer a non-foreign affidavit in recordable
form containing such information as required under IRC Section 1445(b)(2) and
any regulations relating there to;
(iv) provide Buyer or Title, as defined in Section 12 with the
information necessary to complete a Minnesota Certificate of Real Estate Value;
and
(v) pay or provide evidence of payment of the following: the cost of
providing the Evidence of Title as defined in Section 12(a); the State Deed Tax
due upon the execution of the deed described in Section 9; real estate taxes and, if
applicable, levied or pending special assessments pursuant to the provisions of
Section 14; and one-half of Title's fee to conduct the closing of this transaction.
b. Buyer must:
(i) Tender the Purchase Price to Seller pursuant to the provisions of
Section 6 above; and
(ii) Pay or provide evidence of payment of the following: the premium
for Buyer's owner's policy of title insurance, if any; the charges for any
endorsements to Buyer's title insurance policy that Buyer elects to purchase; the
recording fee due upon the recording the deed from Seller to Buyer; all costs
associated with Buyer's financing, if any, including mortgagee's title insurance
policy costs and premiums, if any, and one-half of Title's fee to conduct and
insure the closing of this transaction.
(iii) Execute and deliver to Seller the Tax Abatement Agreement and
Business Subsidy Agreement attached hereto as Exhibit together with the
Promissory Note and Mortgage attached thereto;
(iv) Execute and deliver to Seller the following Agreements attached
hereto as Exhibit ; Others?
(v) Execute and deliver all documents necessary to enter into the loan
facilities set forth in Sections 8(i) and 8(iv) and"close" on such loan facilities.
12. Evidence of Title.
a. Within ten (10) business days after the Effective Date, Seller must, at
Seller's sole cost and expense, deliver to Buyer a commitment from Sherburne County
Abstract and Title ("Title") to issue an ALTA Form 2006 Owner's Policy of Title
Insurance, in the amount of the Purchase Price, identifying Buyer as the proposed insured
(the"Title Commitment") as well as any so called"Schedule B-II documents".
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b. If Buyer desires a survey (the "Survey"), Buyer shall obtain one, at
Buyer's sole cost, within twenty-one (21) days after the Effective Date. The Title
Commitment, the Scheduled B-II documents and the Survey, if any, shall constitute the
"Title Evidence." If Buyer does not notify Seller of its intent to obtain a Survey within
ten (10) business days after the Effective Date, the Title Evidence shall be deemed not to
include a survey, regardless of whether Buyer later obtains a survey.
13. Examination of Title. Within five (5) business days after the earlier of. (i) the
forty-fifth day after the Effective Date; or (ii) Buyer's receipt of the last item of Title Evidence,
Buyer may give Seller written notice of alleged defect(s) in the marketability of title to the
Property and request that Seller make Seller's title marketable (an "Objection"). The Permitted
Encumbrances described in Sections 9(a) or 9(b) may not serve as the basis for an Objection.
Any defect in the marketability of Seller's title to the Property which Buyer does not object to, in
writing, within the time period set forth above, is a Permitted Encumbrance. Seller will cure any
mortgages,judgments, liens or incurred or created by Seller at or before the Date of Closing. Seller
may, but will have no obligation to, cure any other Objection. If any other Objections remain
uncured on the Contingency Date (as defined in Section 18),then Buyer may:
a. terminate this Agreement pursuant to the procedures set forth in Section
23 below; or
b. notify Seller that Buyer waives Buyer's Objection. If Buyer waives
Buyer's Objection, the matter giving rise to such Objection will be deemed a Permitted
Encumbrance and the Parties must fully perform their obligations under this Agreement.
If Buyer does not timely notify Seller of Buyer's election to terminate this Agreement pursuant to
subsection (a) above, then Buyer will be deemed to have waived all Objections (that Seller is not
required to cure) and closing will occur as scheduled.
14. Real Estate Taxes and Special Assessments. The Parties must pay the real
estate taxes (which term, as used in this Agreement, must include service charges assessed
against real property on an annual basis pursuant to Minnesota Statutes 429.101) and special
assessments as follows:
a. On or before the Date of Closing, Seller must pay the real estate taxes,
installments of special assessments and any penalties and interest thereon that are due and
payable with respect to the Property, in years prior to the Date of Closing;
b. On or before the Date of Closing, Seller must pay or provide for the
payment of all installments of special assessments levied or pending against the Property
as of the Date of Closing, excluding installments of special assessments certified for
payment with the current year's real estate taxes; and
C. Buyer and Seller must pro rate the real estate taxes and installments of
special assessments payable in the year of Closing on a per diem basis using the calendar
year, to the Date of Closing. Any such pro-ration is final and no subsequent adjustments,
refunds or additional payments shall be made.
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d. Buyer will be responsible for all amounts of real estate taxes and special
assessments which are due and payable from and after the Date of Closing.
15. Seller's Representations. Seller makes the following representations to Buyer:
a. Seller represents that, to the best of Seller's actual knowledge, there is no
action, litigation, governmental investigation, condemnation or administrative proceeding
of any kind pending against Seller with respect to the Property or otherwise involving any
portion of Property, and no third party has threatened Seller with commencement of any
such action, litigation, investigation, condemnation or administrative proceeding.
b. Seller represents that, to the best of Seller's actual knowledge, there are no
wells located on the Property.
C. Seller represents that, to the best of Seller's actual knowledge, there are no
underground or above ground storage tanks of any size or type located on the Property.
d. Seller represents that, to the best of Seller's actual knowledge, there are no
Hazardous Substances located on the Property; the Property is not subject to any liens or
claims by government or regulatory agencies or third parties arising from the release or
threatened release of Hazardous Substances in, on or about Property; and Property has
not been used in connection with the generation, disposal, storage, treatment or
transportation of Hazardous Substances. For purposes of this Agreement, the term
"Hazardous Substance" includes but is not limited to substances defined as "hazardous
substances," "toxic substances" or "hazardous wastes" in the Comprehensive
Environmental Response Compensation Liability Act of 1980, as amended, 42 U.S.C.
§9601, et seq., and substances defined as "hazardous wastes," "hazardous substances,"
"pollutants, or contaminants" as defined in the Minnesota Environmental Response and
Liability Act, Minnesota Statutes, §115B.02. The term "hazardous substance" must also
include asbestos, polychlorinated biphenyls, petroleum, including crude oil or any
fraction thereof, petroleum products, heating oil, natural gas, natural gas liquids, liquified
natural gas, or synthetic gas useable for fuel (or mixtures of natural gas and synthetic
gas).
If, at any time prior to the Date of Closing, Seller acquires actual knowledge of events,
circumstances or facts which render the representations set forth in this Section 15 inaccurate in
any respect, Seller must immediately notify Buyer, in writing. Buyer's acceptance of the deed
described in Section 9 from Seller and payment of the Purchase Price to Seller with knowledge
that one or more of the matters set forth above are not as represented constitutes Buyer's waiver
or release of any claims due to such misrepresentation.
16. Buyer's Representations. Buyer hereby represents to Seller as follows:
a. The individuals executing this Agreement on behalf of Buyer represent
and warrant that they have the authority to execute this Agreement on behalf of Buyer
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and to bind Buyer. Buyer represents that Buyer has the full and complete authority to
enter into this Agreement and to purchase the Property.
b. Buyer represents that Buyer has not engaged anyone else to act as Buyer's
agent in this transaction.
17. Buyer's Inspection and "AS IS" Sale. At all times prior to the Date of Closing,
Buyer and its agents have the right, upon reasonable notice to Seller, to go upon the Property to
inspect the Property and to determine the condition of the Property including, specifically, the
presence or absence of Hazardous Substances, in, on, or about the Property. Buyer agrees to
indemnify and defend Seller from and to hold Seller harmless against any and all claims, causes
of action or expenses, including attorneys' fees, relating to or arising from Buyer's or Buyer's
agents or contractors presence on the Property prior to the Date of Closing. Buyer agrees to
repair any damage to the Property caused by such inspections and to return the Property to
substantially the same condition as existed prior to Buyer's inspection. BUYER
ACKNOWLEDGES THAT BUYER IS PURCHASING THE PROPERTY IN RELIANCE
ON THE REPRESENTATIONS OF SELLER SET FORTH IN SECTION 15; ON
BUYER'S INSPECTION OF THE PROPERTY PURSUANT TO THIS SECTION 17;
AND ON BUYER'S JUDGMENT REGARDING THE SUFFICIENCY OF SUCH
INSPECTIONS. BUYER IS NOT RELYING ON ANY WRITTEN OR ORAL
REPRESENTATIONS, WARRANTIES OR STATEMENTS THAT SELLER OR
SELLER'S AGENTS HAVE MADE EXCEPT FOR THE REPRESENTATIONS SET
FORTH IN SECTION 15 OF THIS AGREEMENT. SUBJECT TO BUYER'S RIGHT TO
TERMINATE THIS AGREEMENT PURSUANT TO SECTION 18, BUYER IS
PURCHASING THE PROPERTY IN "AS IS" CONDITION RELYING ONLY ON THE
REPRESENTATIONS SET FORTH IN SECTION 15.
18. Buver's Contingencies. Buyer's obligations under this Agreement are contingent
on:
a. Buyer's determination, based on the inspections described in Section 17
above and any other relevant information, that the condition of the Property is acceptable
to Buyer;
b. Seller having satisfied the notice and hearing requirements set forth in
Minnesota Statute Section ; having made findings and a decision that the sale is
advisable and having entered its findings on its records as required by Minnesota Statute
Section and either (i) no taxpayer having filed an appeal within the twenty
(20) day time period described in Minnesota Statute Section ; or (ii) the time
periods during which a taxpayer may appeal the District Court's decision having expired,
on or before the Date of Closing;
C. The City of Elk River and Sherburne County having adopted appropriate
tax abatement financing resolutions approving the tax abatement financing and City of
Elk River and Buyer having executed the following documents:
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(i) Tax Abatement and Business Subsidy Agreement attached as
Exhibit ;
Buyer must satisfy or waive the contingencies described in this Section 18 on or before 5:00 p.m.
on August 7th (the "Contingency Date"). If Buyer does not notify Seller, in accordance with the
requirements of Section 23, on or before the date of the Contingency Date that Buyer is
exercising the contingencies described in this Section 18, Buyer's right to exercise the
contingencies described in this Section 18 terminates, and the Parties must proceed pursuant to
the other provisions of this Agreement.
19. Seller's Contingencies. Seller's obligations under this Agreement are contingent
on:
a. Seller's Board (i) determining that the sale contemplated by this
Agreement is in the best interest of the City of Elk River and its people and furthers
Seller's general plan of economic development; and (ii) adopting a resolution approving a
sale pursuant to the terms of this Agreement at a hearing called and held in accordance
with the requirements of Minnesota Statutes Section ;
b. The City of Elk River and Sherburne County having adopted appropriate
tax abatement financing resolutions approving the tax abatement financing and City of
Elk River and Buyer having executed the following documents:
(i) Tax Abatement and Business Subsidy Agreement attached as
Exhibit ;
d. No taxpayer filing an appeal within the twenty (20) day time period
described in Minnesota Statutes
If one or more of the contingencies described in this Section 19 are not satisfied, Seller may
terminate this Agreement pursuant to Section 23.
20. Condemnation. If a public or private entity with the power of eminent domain
commences condemnation proceedings against all of any part of the Property, this Agreement
shall terminate.
21. Assignment. Buyer may not assign Buyer's rights or obligations under this
Agreement to a third party without the written consent of Seller. Seller may grant or withhold
Seller's consent to an assignment in Seller's sole and absolute discretion.
22. Default. If either Party defaults in the performance of any of the Party's
obligations under this Agreement, the non-defaulting Party may, after written notice to the
defaulting Party, suspend performance of its obligations under this Agreement, and the rights of
the non-defaulting Party are as follows:
a. Buyer's Default. If Buyer defaults in the performance of any of Buyer's
obligations under this Agreement, Seller has the right to terminate this Agreement
pursuant to Minnesota Statutes, Section 559.21. If one or more of the representations set
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forth in Section 16 are inaccurate, when made or if Buyer defaults in the performance of
one or more of Buyer's obligations under Section 17, Seller may commence an action for
damages against Buyer in Sherburne County District Court, and if Seller prevails in such
an action, Seller is entitled to recover from Buyer Seller's reasonable attorneys' fees and
costs. The remedies set forth in this Section 22(a) are Seller's sole and exclusive
remedies in the event of Buyer's default.
b. Seller's Default. If Seller defaults in the performance of any of Seller's
obligations under this Agreement, Buyer's sole remedy is to terminate this Agreement
pursuant to Section 23 below, in which case Seller must return the Earnest Money to
Buyer.
23. Termination of this Agreement. Sections 13, 18, 20 and 22(b) of this
Agreement allow Buyer to terminate this Agreement under certain conditions. Sections 19 and
22(a) allow Seller to terminate this Agreement under certain conditions. The following
procedures govern the exercise of those termination rights:
a. The party that desires to terminate this Agreement (the "Terminating
Party") must notify the other party (the "Non-Terminating Party"), in writing, of the
Terminating Party's intent to terminate this Agreement.
b. The Terminating Party's notice must recite the Section of this Agreement
that authorizes the Terminating Party's termination of this Agreement and must describe
the facts and circumstances which the Terminating Party asserts justify termination under
the referenced Section.
C. The Terminating Party's notice of termination is effective as of the date
the Terminating Party deposits the notice of termination with the United States Postal
Service, with all necessary postage paid, for delivery to the Non-Terminating Party via
certified mail, return receipt requested, at the address set forth in Section 1. If the
Terminating Party delivers a notice of termination in a different manner than described in
the preceding sentence, the notice of termination is effective as of the date the Non-
Terminating Party actually receives the notice of termination. The Terminating Party
must also mail a copy of the notice of termination to the Parties respective attorneys as
provided for in Section 26 below.
d. If the Non-Terminating Party disputes the Terminating Party's right to
terminate this Agreement, the Non-Terminating Party must so notify the Terminating
Party, in writing, within five (5) business days of the Non-Terminating Party's receipt of
the Terminating Party's notice of termination.
e. If the Non-Terminating Party does not dispute the Terminating Party's
right to terminate the Agreement, Buyer must execute and deliver to Seller a recordable
quit claim deed or other recordable instrument evidencing the termination of Buyer's
rights in the Property, and upon the receipt of such a quit claim deed or other instrument,
Seller must return the Earnest Money to Buyer.
9
f. If the Parties dispute the validity of an attempted termination of this
Agreement, either Party may initiate a civil action in a court of competent jurisdiction to
determine the status of this Agreement, and the Party that prevails in any such action is
entitled to recover its reasonable attorneys' fees and costs in the action from the non-
prevailing Party.
g. Buyer's $5,000 application fee is non-refundable if this Agreement is
terminated,regardless of the cause or reason for such termination.
24. Time. Time is of the essence for all provisions of this Agreement.
25. Notices. All notices provided for in this Agreement must be in writing. The
notice must be effective as of the date two days after the Party sending such notice deposits the
notice with the United States Postal Service with all necessary postage paid, for delivery to the
other Party via certified mail, return receipt requested, at the address set forth in Section 1 above.
If Party delivers a notice provided for in this Agreement in a different manner than described in
the preceding sentence, notice must be effective as of the date the other party actually receives
the notice. The Party sending the notice must also mail a copy of the notice to the Parties'
respective attorneys via first class United States mail at the addresses set forth below:
Attorney for Buyer:
Attorney for Seller: Peter Beck Law Office
800 Nicollet Mall, Suite 2600
Minneapolis,MN 55402
Attn: Mr. Peter Beck
26. Full Agreement. The Parties acknowledge that this Agreement represents the
full and complete agreement of the Parties relating to the purchase and sale of the Property and
all matters related to the purchase and sale of the Property. This Agreement supersedes and
replaces any prior agreements, either oral or written, and any amendments or modifications to
this Agreement must be in writing and executed by both Parties to be effective.
27. Governing Law. This Agreement has been made under the laws of the State of
Minnesota and such laws must control its interpretation
28. Effective Date. This Agreement is effective as of the day of July, 2013 (the
"Effective Date"); provided, however, if Seller and Buyer each execute this Agreement without
having completed the blanks in this Section 28, the Effective Date is the later of the dates
inserted on the signature pages of this Agreement.
29. Dates/Holidays. If the final day of a period or date of performance under this
Agreement falls on a Saturday, Sunday or legal holiday, then the final day of the period or the
date of performance will fall on the next day that is not a Saturday, Sunday or legal holiday.
10
30. Counterparts. This Agreement may be executed in any number of counterparts
and each such counterpart will be an original instrument, but all such counterparts together shall
constitute but one Agreement.
31. Severability. If any provision of this Agreement is determined by a Court of Law
to be invalid or unenforceable, the Court may modify that provision to be within the limits of
enforceability or validity, if feasible; however, if the offending provision cannot be so modified,
it may be stricken and all other provisions of this Agreement in all other respects shall remain
valid and enforceable.
32. Waiver. No waiver of the provisions of this Agreement will be effective unless
in writing, executed by the party to be charged with such waiver. No waiver will be a continuing
waiver or waiver in respect of any subsequent breach or default, either of similar or different
nature,unless expressly stated in writing.
[signature page(s) to follow]
11
Dated: July , 2013 SELLER:
THE CITY OF ELK RIVER, a Minnesota
municipal corporation
By
Its President
By
Its Vice President
By
Its Executive Director
Dated: July , 2013 BUYER:
PREFERRED REAL ESTATE
HOLDINGS,LLC, a Minnesota limited
liability company
By
Its
By
Its
12
EXHIBIT A
Legal Description
GP:3450894 v4
13
of E
Resolution 13-
River
TAX ABATEMENT AND BUSINESS SUBSIDY AGREEMENT
THIS AGREEMENT, made on or as of the day of July, 2013, by and between
the City of Elk River, a Minnesota municipal corporation (the "City"); Sherburne County,
Minnesota, (the "County"); and Preferred Powder Coating, LLC, a Minnesota limited
liability company, (the "Developer").
WITNESSETH:
WHEREAS, the City and County believe that the development and construction of a
certain Project as defined herein), and fulfillment of this Agreement are vital and are in the best
interests of the City and County and will result in preservation and enhancement of the tax base,
provide employment opportunities and are in accordance with the public purpose and provisions
of the applicable state and local laws and requirements under which the Project has been
undertaken and is being assisted; and
WHEREAS, the City and the Developer have entered into a Purchase Agreement dated
July , 2013 for the City's conveyance of the property legally described as Lot 1, Block 3,
Nature's Edge Business Center, Sherburne County, Minnesota, ("Property") to the Developer
("Purchase Agreement") for the purpose of constructing a 100,000 square foot industrial facility
(the "Minimum Improvements"); and
WHEREAS, Developer will acquire the Property, construct the Minimum
Improvements, relocate its powder coating business from its current site in Rogers to the new
industrial facility on the Property ("the Project") and will continue to operate its business in the
industrial facility for a minimum of 5 years following substantial completion of the Project;
WHEREAS, Developer has indicated that construction of the Minimum Improvements
would not occur on the Property due to the extraordinary site development and acquisitions costs
associated with building on the Property but for tax abatement assistance from the City and
County;
WHEREAS, pursuant to the Tax Abatement Act, the City and County may grant an
abatement of the taxes imposed by such governmental units on parcels of property, subject to
certain conditions set forth in such act;
WHEREAS, the Purchase Agreement provides that the City will provide Assistance (as
defined in the Purchase Agreement) to Developer for economic development and job growth
purposes; and
171419v1 1
WHEREAS, the Purchase Agreement provides that the Developer agrees to proceed with
the Project, as hereinafter defined, upon satisfaction of certain conditions, including the
commitment to receive Tax Abatement, as hereinafter defined, as provided in this Agreement;
WHEREAS, the Tax Abatement for the Project provided by the City and County
constitutes a business subsidy (the "Business Subsidy"), pursuant to Minnesota Statutes, Sections
116J.993-.995 (the "Business Subsidy Act");
WHEREAS, the City and County each held a public hearing on the Tax Abatement
following more than 10 days' but less than 30 days' published notice;
WHEREAS, the City and the County desire to pledge Tax Abatement to encourage
development of the Project;
WHEREAS, the Developer agrees to satisfy the provisions of the business subsidy
reporting requirements under the Business Subsidy statute at Minn. Stat. Section 116J.993-.995
and as required by Minn. Stat. 469.320, subd. 1, and as amended, identified in the Business
Subsidy Requirements of this Agreement;
WHEREAS, the City and County have adopted a set of criteria for awarding business
subsidies that comply with Minnesota Statutes §116J.994;
WHEREAS,the Project is not located within a tax increment financing district; and
WHEREAS, the City and County believe that the Project and fulfillment generally of
this Agreement is in the best interest of the City and County and the health, safety, morals and
welfare of the residents of the City and County and in accord with the public purposes and
provisions of the Business Subsidy Act, and applicable state and local laws and requirements;
NOW, THEREFORE, in consideration of the Purchase Agreement, and of the premises
and the mutual obligations of the parties hereto, each of them does hereby covenant and agree
with the others as follows:
ARTICLE I.
DEFINITIONS
In this Agreement, unless a different meaning clearly appears from the context:
"Agreement" means this Tax Abatement and Business Subsidy Agreement between the
City, County and the Developer, as the same may be from time to time modified, amended or
supplemented.
"Articles and Sections" mentioned by number only are the respective Articles and
Sections of this Agreement so numbered.
171419v1 2
"Benefit Date" means the date of closing on the Purchase Agreement for conveyance of
the Property to Developer.
"Business Day"means any day except a Saturday, Sunday or a legal holiday or a day on
which banking institutions in the City are authorized by law or executive order to close;
"City" means the City of Elk River, Minnesota.
"City Tax Abatement" means the City's Tax Abatement as described in Article 111
hereof and as authorized by the City Tax Abatement Resolution, pursuant to the Tax Abatement
Act.
"County" means the County of Sherburne, Minnesota.
"County Tax Abatement"means the County's Tax Abatement as described in Article
111 hereof and as authorized by the County Tax Abatement Resolution, pursuant to the Tax
Abatement Act.
"Developer" means Preferred Powder Coating, LLC, a Minnesota limited liability
company.
"Event of Default" means an action by the Developer listed in Article V of this
Agreement.
"Minimum Improvements" means the approximately 100,000 square foot light
industrial facility to be constructed by the Company upon the Property pursuant to the terms of
this Agreement and the Purchase Agreement.
"Parties" means the Developer and City
"Party" means one of the following: Developer or City
"Project" means the acquisition by Developer of the Tax Abatement Property and
construction of a 100,000 square foot industrial facility, necessary parking, parking lot lighting,
landscaping, City water and sewer connections, and all other construction activities related to the
construction and operation of Developer's powder coating business on the Tax Abatement
Property, in accordance with the Plans and Specifications for the Project approved by the City
and all applicable local, state and federal regulations and relocation of Developer's powder
coating business from Rogers to the Property;
"Property" means Lot 1, Block 3, Nature's Edge Business Center, Sherburne County,
Minnesota, according to the recorded plat thereof.
"State" means the State of Minnesota.
"Substantial Completion" means the stage in the progress of construction of Project
where the work is sufficiently complete in accordance with the plans approved under this
Agreement that a certificate of occupancy or temporary certificate is issued.
"Tax Abatement" means collectively the County Tax Abatement and the City Tax
Abatement of ad valorem real estate taxes levied on the Project by the County as provided in the
County's Tax Abatement Resolution and by the City as provided in the City Tax Abatement
Resolution and this Agreement, and as authorized by the Tax Abatement Act.
"Tax Abatement Act" means Minnesota Statutes, Sections 469.1812 through 469.1815,
as amended or supplemented from time to time.
"Unavoidable Delays" means delays outside the control of the Party claiming its
occurrence which are the direct result of strikes, other labor troubles, unusually severe or
prolonged bad weather, Acts of God, fire or other casualty to the Project, litigation commenced
by third parties which, by injunction or other similar judicial action, directly results in delays, or
acts of any federal, state or local governmental unit (other than the City) which directly result in
delays. Unavoidable delays shall not include delays in the Developer's obtaining permits or
governmental approvals necessary directly to enable construction of the Project.
ARTICLE II.
REPRESENTATIONS AND WARRANTIES
Section 2.1. Representations and Warranties by the City. The City represents and
warrants that:
(a) The City is a Minnesota municipal corporation duly organized and existing under
the laws of the State of Minnesota. Under the laws of the State, the City has the
power to enter into this Agreement and carry out its obligations hereunder.
(b) The Business Subsidy Program was created, adopted and approved in accordance
with the terms of the Business Subsidy Act and the City's Business Subsidy
Policy and Criteria.
(c) The City Tax Abatement is consistent with the criteria established for awarding
subsidies by the City.
Section 2.2. Representations and Warranties by the County. The County represents
and warrants that:
(a) The County is a body corporate and politic duly organized and existing under the
laws of the State of Minnesota. Under the laws of the State, the County has the
power to enter into this Agreement and carry out its obligations hereunder.
(b) The Business Subsidy Program was created, adopted and approved in accordance
with the terms of the Business Subsidy Act and the County's Business Subsidy
Policy and Criteria.
(c) The County Tax Abatement is consistent with the criteria established for
awarding subsidies by the County.
Section 2.3. Representations and Warranties by the Developer. The Developer
represents and warrants that:
(a) The Developer is a limited liability company duly organized and operating under
the laws of the State of Minnesota, has the power to enter into this Agreement,
and has duly authorized the execution, delivery, and performance of this
Agreement by proper action of its Board of Directors.
(b) The Developer will acquire the Property in accordance with the terms of the
Purchase Agreement and cause the Project to be constructed, operated and
maintained in accordance with the terms of this Agreement, and all local, state
and federal laws and regulations (including, but not limited to, environmental,
zoning, building code and public health laws and regulations including the
America with Disabilities Act).
(c) The acquisition of the Property and construction of the Project would not be
undertaken by the Developer, and in the opinion of the Developer would not be
economically feasible within the reasonably foreseeable future, without the
assistance and benefit to the Developer provided for in this Agreement.
(d) The Developer will obtain, in a timely manner, all required permits, licenses and
approvals and to 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
Project may be lawfully constructed.
(e) The Developer will cooperate with the City with respect to any litigation
commenced with respect to the Property or the Project.
(fl Neither the execution and delivery of this Agreement, the consummation of the
transactions contemplated hereby, nor the fulfillment of or compliance with the
terms and conditions of this Agreement is prevented, limited by or conflicts with,
or results in a breach of, the terms, conditions or provisions of any corporate
restriction or any evidences of indebtedness, agreement or instrument of whatever
nature to which the Developer is now a party or by which it is bound or
constitutes a default under any of the foregoing.
(g) Whenever any Event of Default occurs and if the City shall employ attorneys and
engineers or incur other expenses for the collection of payments due or to become
due or for the enforcement of performance or observance of any obligation or
171419v1 5
agreement on the part of the Developer under this Agreement, the Developer
agrees that it shall, within ten (10) days of written demand by the City, pay to the
City the reasonable fees of such attorneys and such other expenses so incurred by
the City.
ARTICLE III.
UNDERTAKINGS OF DEVELOPER AND TAX ABATEMENT
Section 3.1. Construction of the Project. The Developer agrees that it will acquire the
Property in accordance with the terms of the Purchase Agreement and will construct the Project
on the Property in accordance with construction plans and specifications approved by the City,
(the "Construction Plans") and will operate and maintain, preserve and keep the Project or cause
the Project to be maintained, preserved and kept with the appurtenances and every part and
parcel thereof in good repair and condition.
Section. 3.2. Construction Plans. If the Developer desires to make any material change
in any Construction Plans after their approval by the City, the Developer shall submit the
proposed change to the City for approval by the City Engineer and City Building Official. For
purposes of this Section, a material change means any change in the building that involves the
building code, any change in the location of the building on the site plan, any change of location
of any sidewalk, parking space, drive lane, driveway, water or sewer service alignment, and any
change in finished drainage patterns. If the Construction Plans, as modified by the proposed
change, conform to the requirements of this Section 3.2 of this Agreement with respect to such
previously approved Construction Plans, the City shall approve the proposed change and notify
the Developer in writing of its approval.
Section 3.3. Construction of Improvements. The Developer shall commence
construction of the Project no later than August 31, 2013 and shall substantially complete
construction of the Project, except for landscaping; exterior matters such as final lift of asphalt,
striping, etc.; and minor "punch list items", on or before a November 31, 2013, subject to
extensions approved by the City and Unavoidable Delays.
Section 3.4 Damage and Destruction. In the event of damage or destruction of the
Project the Developer shall repair or rebuild the Project.
Section 3.5. Tax Abatement. The City shall provide to Developer a reduction in the
purchase price of the Property in the amount of $680,895.00 and up-front financing for site
development costs in the amount of$472,983.00 ("Tax Abatement") pursuant to the terms of the
Purchase Agreement through the City's Development Fund which amount consists of the City
Tax Abatement amount of$576,939.00 plus interest at the rate of 3% per annum and the County
Tax Abatement amount of$576,939.00 plus interest at the rate of 3% per annum.
(a) The City Tax Abatement is hereby granted in respect of property taxes levied by the
City on the Property for twenty years, commencing with taxes payable in 2015 and concluding
171419v1 6
with taxes payable in 2034. The City Tax Abatement will reduce all of the City taxes for the
Property, and the total amount of the Abatement will not exceed $1,615,908. The City shall
retain the City Tax Abatement and apply it to the payment of all or portion of the costs of
acquiring or constructing the Project.
(b) The County Tax Abatement is hereby granted in respect of property taxes levied by
the Count on the Property for twenty years, commencing with taxes payable in 2015 and
concluding with taxes payable in 2034. The County Tax Abatement will reduce all of the
County taxes for the Property, and the total amount of the Abatement will not exceed 1,615,908
(principal of$576,939.00 plus interest at the rate of three percent (3%) on the unpaid principal
balance from the Benefit Date). The County Tax Abatement amount shall be paid to the City
annually to reimburse the City for the County's share of the payment for all or portion of the
costs of acquiring or constructing the Project.
Section 3.6 Real Property Taxes. The Developer shall, so long as this Agreement
remains in effect, pay all real property taxes with respect to all parts of the Property owned by it
which are payable pursuant to any statutory or contractual duty that shall accrue until title to the
Property is vested in another person. The Developer agrees that for tax assessments so long as
this Agreement remains in effect:
(a) It will not seek administrative review or judicial review of the applicability of any
tax statute relating to the ad valorem property taxation of real property contained on the
Property determined by any tax official to be applicable to the Project or the Developer or
raise the inapplicability of any such tax statute as a defense in any proceedings with
respect to the Property, including delinquent tax proceedings; provided, however, " tax
statute" does not include any local ordinance or resolution levying a tax;
(b) It will not seek administrative review or judicial review of the constitutionality of
any tax statute relating to the taxation of real property contained on the Property
determined by any tax official to be applicable to the Project or the Developer or raise the
unconstitutionality of any such tax statute as a defense in any proceedings, including
delinquent tax proceedings with respect to the Property; provided, however, " tax statute"
does not include any local ordinance or resolution levying a tax;
(c) It will not seek any tax deferral or abatement, either presently or prospectively
authorized under Minnesota Statutes, Section 469.181, or any other State or federal law,
of the ad valorem property taxation of the Tax Abatement Property so long as this
Agreement remains in effect.
ARTICLE IV
BUSINESS SUBSIDY
Section 4.1. Assistance. The Business Subsidy consists of the City Tax Abatement and
the County Tax Abatement pursuant to this Agreement and the Tax Abatement Act.
Section 4.2. Wage Level and Job Creation Goals. In order to satisfy the provisions of
Minnesota Statutes, Sections 116J.993 to 116J.995 (the "Business Subsidies Act"), the
Developer Acknowledges and agrees that the amount of the "Business Subsidy" granted to the
171419v1 7
Developer under this Agreement is $1,153,878.00 and that this Business Subsidy is needed
because the Project is not sufficiently feasible for the Developer to undertake without the
Business Subsidy. The public purpose of the Business Subsidy is to create new jobs in the City
and to enhance the tax base. The Developer agrees that it will meet the following goals (the
"Goals"): (i) construct the Minimum Improvements in accordance with the terms of this
Agreement and (ii) create a net increase of eight (8)jobs and retain its existing twenty-four (24)
jobs in Minnesota within twenty four (24) months from the date of issuance of a certificate of
occupancy for the Minimum Improvements at an hourly wage of at least $12.19 per hour. As of
the date of this Agreement, Developer certifies that the current number of full time employees of
Developer in Minnesota is twenty-four (24).
Section 4.3. Default. If the Goals established in the Agreement are not met, Developer
shall, upon thirty (30) days written notice, pay the City the sums required pursuant to the terms
of the Promissory Note ("Financial Obligation"), accruing from and after the Benefit Date,
attached hereto as Exhibit A, and secured by the mortgage attached hereto as Exhibit B
("Mortgage"). If the Goals are met in part, the Developer will repay a portion of the Business
Subsidy plus interest in accordance with the terms of the Promissory Note.
Section 4.4. Reports. The Developer agrees to (i) report its progress on achieving the
Goals to the City until the Goals are met, or the Business Subsidy is repaid, whichever occurs
earlier; (ii) include in the report the information required on forms developed by the Minnesota
Department of Employment and Economic Development; and (iii) send the completed reports to
the City. The Developer agrees to file these reports no later than March I of each year and
within thirty days after the deadline for meeting the Goals. The City agrees that if it does not
receive the reports, it will mail the Developer a warning within one week of the required filing
date. If within fourteen(14) days of the post marked date of the warning letter the reports are not
made, the Developer agrees to pay to the City a penalty of$100.00 for each subsequent day until
the report is filed up to a maximum of$1,000.
Section 4.5. Continued Operations Commitment. Developer agrees to continue the
Project at the Facility for at least five (5)years after the Tax Abatement Benefit Date.
Section 4.6. Term of Agreement. The term of this Agreement will commence upon the
closing of the Purchase Agreement and terminate on the earlier of December 31, 2034 or full
reimbursement of the Business Subsidy to the City through the Tax Abatements ("Termination
Date").
ARTICLE V.
Events of Default
Section 5.1. Events of Default Defined. 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 (unless the context otherwise provides), any one or more of the following events:
(a) Failure by the Developer to pay when due any payments required to be paid under
this Agreement or to pay when due ad valorem taxes on the Property.
171419v1 8
(b) Failure by the Developer to commence, diligently pursue and complete
construction of the Project, or portions thereof, pursuant to the terms, conditions and limitations
of this Agreement.
(c) Failure by Developer to observe or perform any other covenant, condition,
obligation or agreement on its part to be observed or performed hereunder.
(d) If any warranty or representation by the Developer in this Agreement is untrue in
any material respect.
Section 5.2. City's Remedies on Default. Whenever any Event of Default by
Developer referred to in Section 5.1 of this Agreement occurs, the City may take any one or
more of the following actions and unless otherwise provided such actions may be taken only
after providing thirty (30) days written notice to the Developer of the Event of Default and the
Event of Default has not been cured within said thirty (30) days or, if the Event of Default is by
its nature incurable within thirty (30) days, the Developer does not provide assurances to the City
reasonably satisfactory to the City that the Event of Default will be cured and will be cured as
soon as reasonably possible:
(a) Suspend its performance under the Agreement until it receives assurances from
the Developer, deemed adequate by the City, that the Developer will cure its default and
continue its performance under the Agreement.
(b) Terminate this Agreement;
(c) Take whatever action, including legal, equitable or administrative action, which
may appear necessary or desirable to the City to collect any payments due or damages arising
under this Agreement or to enforce performance and observance of any obligation, agreement, or
covenant of the Developer under this Agreement.
Section 5.3. No Remedy Exclusive. No remedy herein conferred upon or reserved to
the City is intended to be exclusive of any other available remedy or remedies, 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.
Section 5.4. Attorneys' Fees. Whenever any Event of Default occurs and either the City
shall employ attorneys or incur expenses for the collection of payments due or to become due or
for the enforcement of performance or observance of any obligation or agreement on the part of
the Developer under this Agreement, the Developer agrees that it shall, within ten (10) days of
written demand by the City pay to the City the reasonable fees of such attorneys and such other
expenses so incurred by the City, provided, that the Developer shall only be obligated to make
such reimbursement if the other party prevails in such collection or enforcement action.
171419v1 9
ARTICLE VI.
ADDITIONAL PROVISIONS
Section 6.1. Equal Employment Opportunity. The Developer, for itself and its
successors and assigns, agrees that during the construction of the Project provided for in this
Agreement it will comply with all applicable federal, state and local equal employment and
nondiscrimination laws and regulations.
Section 6.2. Waiver and Release by Developer. The Developer hereby waives,
releases and forever discharges the City and County from any claim for costs incurred in
preliminary plans, specifications, site testing improvements, professional fees or legal fees in
connection with the Project.
Section 6.3. Release and Indemnifications Covenants.
(a) The Developer releases from and covenants and agrees that the City and County
and their governing body members, officers, agents, servants and employees shall not be liable
for and agrees to indemnify and hold harmless the City and County and their governing body
members, officers, agents, servants, and employees against 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 Project
or Property.
(b) Except for any willful misrepresentation or wanton misconduct of the following
named parties, the Developer agrees to protect and defend the City and County and their
governing body members, officers, agents, servants and employees, now or forever and further
agrees to hold the aforesaid harmless from any claim, demand, such , action or other proceeding
whatsoever by any person or entity whatsoever arising or purportedly arising from a breach of
the obligations of the Developer under this Agreement, or the transactions contemplated hereby
or the acquisition, construction, installation, ownership, maintenance and operation of the Project
and Property.
(c) The City and County and their governing body members, officers, agents,
servants and employees shall not be liable for any damages or injury to the persons or property
of the Developer or its officers, agents, servants, employees, invitees, guests or any other person
who may be on the Property or may use the Project or Property due to any act of negligence of
any person.
(d) All covenants, stipulations, promises, agreements and obligations of the City and
County contained herein shall be deemed to be the covenants, stipulations, promises, agreements
and obligations of the City or County and not of any governing body member, officer, agent,
servant or employee of the City or County in the individual capacity thereof.
Section 6.5. Titles of Articles and Sections. Any titles of the several parts, Articles and
Sections of this Agreement are inserted for convenience of reference only and shall be
disregarded in construing or interpreting any of its provisions.
171419v1 10
Section 6.6. Notices and Demands. Except as otherwise expressly provided in this
Agreement, a notice, demand or other communication under the Agreement by either party to the
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 the Developer, is addressed or delivered personally to:
Preferred Powder Coating, LLC
13251 George Weber Drive
Rogers, MN 55374
(b) In the case of the City, is addressed or delivered personally to:
City of Elk River
13065 Orono Parkway,
Elk River, Minnesota 55309
With a copy to:
Andrea McDowell Poehler
CAMPBELL KNUTSON,Professional Association
1380 Corporate Center Curve, Suite 4317
Eagan, Minnesota 55121
Telephone: (651) 452-5000
(c) In the case of the County, is addressed or delivered personally to:
Sherburne County Government Center
13880 Business Center Drive
Elk River, Minnesota 55330
(d) Either Party may, upon written notice to the other Party, change the address to which
such notices and demands are made.
Section 6.7. Disclaimer of Relationship. The Developer acknowledges that nothing
contained in this Agreement nor any act by the City, County or the Developer shall be deemed or
construed by the Developer or any third person to create any relationship of third-party
beneficiary, principal and agent, limited or general partner or joint venture between the City,
County and the Developer.
Section 6.8. Covenants Running with the Land. The terms and provisions of this
Agreement shall be deemed to be covenants running with the Property and shall be binding upon
any successors or assigns of the Developer and any future owners or encumbrances of the
Property.
171419v1 1 1
Section 6.9. Counterparts. This Agreement is executed in any number of counterparts,
each of which shall constitute one and the same instrument.
Section 6.10. Law Governing. This Agreement will be governed and construed in
accordance with the laws of Minnesota.
Section 6.11. Facsimile Signature. The parties hereto acknowledge and agree that in
order to expedite the signing of this Agreement and the processing, and review and compliance
with the terms hereof, the parties may utilize facsimile equipment to transmit and convey
signatures hereto and such other information as may be necessary. With respect to any such
transmission bearing a signature for any party hereto and on which the receiver is or may be
reasonably expected to rely, than if such a facsimile transmission is corroborated by regular
facsimile printout showing the telephone number from which transmitted together with a date
and time of transmission, it shall be binding on the sending party and may be relied upon by the
party receiving the same. The sending party hereby acknowledges such reliance and weighs any
defenses to the use of such documents or signatures.
IN WITNESS WHEREOF, the City and County have caused this Agreement to be duly
executed in their names and behalf, the Developer has caused this Agreement to be duly
executed in its name and behalf, on or as of the date first above written.
[Remainder of Page Intentionally Left Blank.]
171419v1 12
CITY OF ELK RIVER
By:
John J. Dietz,Mayor
By:
Calvin Portner, City Administrator
STATE OF MINNESOTA )
)ss.
COUNTY OF SHERBURNE)
The foregoing instrument was acknowledged before me this day of
, 2013, by John J. Dietz and Calvin Portner, respectively the Mayor and City
Administrator of the City of Elk River, a Minnesota municipal corporation, on behalf of the
corporation and pursuant to the authority granted by its City Council.
Notary Public
171419vi 13
COUNTY OF SHERBURNE
By:
Chairperson, Sherburne County Board
STATE OF MINNESOTA )
)ss.
COUNTY OF SHERBURNE)
The foregoing instrument was acknowledged before me this day of
, 2013, by , the Chairperson of the Sherburne
County Board of the County of Sherburne, a body corporate and politic duly organized and
existing under the laws of the State of Minnesota, on its behalf.
Notary Public
171419vi 14
PREFERRED POWDER COATINGS, LLC
By:
Its:
STATE OF MINNESOTA )
)ss.
COUNTY OF SHERBURNE)
The foregoing instrument was acknowledged before me this day of July , 2013, by
, the of Preferred Powder
Coating, LLC, a Minnesota limited liability company, on its behalf.
Notary Public
DRAFTED BY:
CAMPBELL KNUTSON, P.A.
1380 Corporate Center Curve, Suite 4317
Eagan,Minnesota 55121
Telephone: (651)452-5000
171419v1 15
EXHIBIT A
PROMISSORY NOTE
$1,153,878.00 Elk River, Minnesota
12013
FOR VALUE RECEIVED, the undersigned, PREFERRED POWDER COATING,
LLC, a Minnesota limited liability company, whose address is 13251 George Weber Drive,
Rogers, Minnesota 55374 ("Borrower"), promises to pay to the order of the CITY OF ELK
RIVER, a Minnesota municipal corporation, or its successors and assigns ("CITY"), at its principal
office at 13065 Orono Parkway, Elk River, Minnesota 55309, or at such other place as the holder of
this Note ("Note") may require, the principal sum of One Million One Hundred Fifty-three
Thousand Eight Hundred Seventy-eight and No/100 Dollars ($1,153,878.00), or such greater or
lesser sum as may be actually owing, together with interest on the unpaid principal balance from the
date of advance at the Note Rate (as hereinafter described), in effect from time to time, during the
term of this Note, as required under the terms of the Tax Abatement and Business Subsidy
Agreement between the Borrower, City and Sherburne County, dated 2013
("Agreement"). Principal and interest payable under this Note shall be paid as follows:
(a) The outstanding principal sum together with interest on the unpaid principal balance
from the date of advance of the Note due in cash or certified funds twenty-four months following
the Approval Date of the Agreement ("First Payment"). Notwithstanding the foregoing, the First
Payment shall be adjusted and reduced to zero and 00/100 Dollars ($0.00) if Borrower substantially
completes the Minimum Improvements in accordance with the terms of the Agreement;
(b) The outstanding principle sum together with interest on the unpaid principle balance
less the amount paid under subsection (a) from the date of the advance of the Note due in cash or
certified funds twenty four months following issuance of a certificate of occupancy for the
Minimum Improvements in accordance with the Agreement ("Second Payment"). Notwithstanding
the foregoing, the Second Payment shall be adjusted and reduced to zero and 00/100 Dollars($0.00)
if Borrower has satisfied the requirements contained in Article IV of the Agreement. If Borrower
fails to create 8 full-time jobs and maintain existing full-time jobs with a wage of a minimum of
$12.19 per hour, the Second Payment will be reduced by 12.5% for each full-time position at a
wage of at least $12.19 per hour that was not created by Borrower over the current twenty four full-
time positions.
The principal balance and interest thereon shall be payable in coin or currency which at the time of
payment is legal tender for the payment of public or private debts in the United States of America.
This Promissory Note may be prepaid in full or in part at any time.
The interest rate (termed "Note Rate") shall be set at the minimum rate authorized under
Minn. Stat. §116J.994, subd. 6, which shall be applied to any and all amounts of principal advanced
pursuant to the terms of this Note remaining unpaid from time to time. Per diem interest during the
Loan Term shall be computed on the basis of a three hundred sixty (360) day year but shall be
payable on the actual days elapsed during the term of this Note.
171419v1 16
All payments made under this Note shall be applied first to costs, second to any late charges
due hereunder, the interest, and finally to principal, except that if any advances made by the City
due to the occurrence of an Event of Default are not repaid on demand, any moneys received, at the
option of the City, may first be applied to repay such advances, plus interest thereon at the Note
Rate, and the balance, if any, shall be applied on account of any principal and/or interest then due.
This Note is secured by a Mortgage of even date herewith (the "Mortgage") by which
Borrower has granted to the City a mortgage lien on certain real property, as therein defined, located
in Sherburne County, Minnesota (the "Property"). The terms of the Mortgage are incorporated
herein by reference and made a part hereof.
Borrower shall be in default upon the occurrence of any of the following events, circumstances or
conditions("Events of Default"):
A. Failure by any party obligated on this Note or any other obligations Borrower under this
Agreement to make payment when due; or
B. Failure to comply with all provisions of the Agreement related to construction of the Project
or Article IV thereof, or
C. The dissolution or insolvency of, the appointment of a receiver by or on behalf of, the
assignment for the benefit of creditors by or on behalf of, the voluntary or involuntary termination
of existence by, or the commencement of any proceeding under any present or future federal or state
insolvency, bankruptcy, reorganization, composition or debtor relief law by or against Borrower, or
any co-signer, endorser or surety of this Note.
It is agreed that time is of the essence in performance of this Note. Notwithstanding any provision
contained in the Note, the City agrees to provide written notice to the Borrower of any default by
Borrower under the Note. The Borrower shall have an opportunity to cure such default for a period
of thirty (30) days following receipt of such notice. The City agrees not to take any action until the
expiration of the thirty (30) day period. In the event Borrower fails to cure any defaults under the
Note within thirty (30) days of the notice of a default, then, at the City's option, all or any part of
this Note shall be immediately due and payable without notice or demand. The City may exercise
all rights and remedies provided by law, equity, this Note, any mortgage, deed of trust or similar
instrument and any other security, loan or surety agreements pertaining to this Note. The City is
entitled to all rights and remedies provided at law or equity whether or not expressly stated in this
Note. By choosing any remedy, the City does not waive its right to an immediate use of any other
remedy if the Event of Default continues or occurs again.
The remedies of the City, as provided herein and in the Mortgage shall be cumulative and
concurrent and may be pursued singularly, successively, or together at the sole discretion of the City
and may be exercised as often as the occasion therefore shall arise.
Upon the occurrence of an Event of Default, the City may recover from Borrower all
reasonable expenses of collection in realizing on any security interest, and if the same is referred to
an attorney for collection or any action at law or in equity is brought with respect hereto, Borrower
171419v1 17
shall pay the City all reasonable expenses and costs of collection, including but not limited to
reasonable attorneys' fees and court costs. Any such fees and costs shall be added to the principal,
and interest shall accrue thereon at the Note Rate and shall be secured by the Collateral (as
hereinafter defined).
Regarding this Note,to the extent not prohibited by law, Borrower and any other signers:
A. Waive protest, presentment for payment, notice of intent to accelerate and notice of
dishonor.
B. Consent to any renewals and extensions for payment on this Note, regardless of the number
of such renewals or extensions.
C. Consent to the release, substitution or impairment of any Collateral(as hereinafter defined).
D. Consent that Borrower is authorized to modify the terms of this Note or any instrument
securing or relating to this Note.
E. Consent to any and all sales,repurchases and participations of this Note to any person in any
amounts and waive notice of such sales,repurchases or participations of this Note.
All agreements between the City and Borrower are hereby expressly limited so that in no
contingency or event whatsoever, by reason of acceleration of maturity of the indebtedness
evidenced hereby or otherwise, shall the amount paid or agreed to be paid to the City for the use,
forbearance, loaning or detention of the indebtedness evidenced hereby exceed the maximum
permissible under applicable law. If from any circumstances whatsoever, fulfillment of any
provisions hereof or of the Mortgage shall involve transcending the limit of validity prescribed by
law, then the obligation to be fulfilled shall automatically be reduced to the limit of such validity
and if from any circumstances the City should ever receive as interest an amount which would
exceed the highest lawful rate, such amount which would be in excess of such highest lawful rate
shall be applied to the reduction of the principal balance evidenced hereby and not to the payment of
interest or returned to Borrower, at the option of the City. This provision shall control every other
provision of all agreements between Borrower and the City and shall also be binding upon and
available to any subsequent holder or endorsee of this Note.
The City is under no duty to preserve or protect any Collateral, as hereinafter defined, until
the City is in actual or constructive possession of the Collateral. For purposes of this paragraph, the
City shall only be considered to be in "actual" possession of the Collateral when the City has
physical, immediate and exclusive control over the Collateral and has affirmatively accepted such
control. The City shall only be considered to be in"constructive"possession of the Collateral when
the City has both the power and the intent to exercise control over the Collateral.
This Note is secured by the following type(s) (or items) of real property and/or personal
property("Collateral"): the real property described in the Mortgage.
Borrower represents and warrants to the City that the Loan is for business purposes.
171419v1 18
Borrower shall maintain property insurance covering the Collateral that secures this Loan
until such time as the Loan is paid in full. Borrower may obtain the property insurance from any
reputable insurance company of Borrower's choice that is reasonably acceptable to the City.
Borrower and all other makers, co-signers and sureties shall be jointly and severally liable
under this Note.
GENERAL PROVISIONS.
A. TIME IS OF THE ESSENCE. Time is of the essence in Borrower's performance of
all duties and obligations imposed by this Note.
B. NO WAIVER BY CITY. No delay or omission on the part of the City in exercising
any right hereunder shall operate as a waiver of such right or of any other remedy under this Note.
A waiver on any one occasion shall not be construed as a bar to or waiver of any such right or
remedy on a future occasion, unless any such waiver is in writing and is signed by the City.
C. AMENDMENT. The provisions contained in this Note may not be amended, except
through a written amendment that is signed by Borrower and the City.
D. INTEGRATION CLAUSE. This written Note, the Mortgage and the Agreement
and all documents executed concurrently herewith, represent the entire understanding between the
parties as to the obligations and may not be contradicted by evidence of prior, contemporaneous, or
subsequent oral agreements of the parties.
E. FURTHER ASSURANCES. Borrower agrees,upon the City's request and within a
reasonable time period, to provide any information, and to execute, acknowledge, deliver and record
or file such further instruments or documents as the City may reasonably require to secure this Note
or confirm any lien.
F. GOVERNING LAW. This Note shall be governed by the laws of the State of
Minnesota,provided that such laws are not otherwise preempted by federal laws and regulations.
G. FORUM AND VENUE. In the event of litigation pertaining to this Note, the
exclusive forum, venue and place of jurisdiction shall be in the State of Minnesota, unless otherwise
designated in writing by the City or otherwise required by law.
H. SUCCESSORS. This Note shall inure to the benefit of and bind the heirs, personal
representatives, successors and assigns of the parties; provided however, that Borrower may not
assign,transfer or delegate any of the rights or obligations under this Note.
L NUMBER AND GENDER. Whenever used, the singular shall include the plural,
the plural the singular, and the use of any gender shall be applicable to all genders.
171419v1 19
J. DEFINITIONS. The terms used in this Note, if not defined herein, shall have their
meanings as defined in the other documents executed contemporaneously or in conjunction with
this Note.
K. PARAGRAPH HEADINGS. The headings at the beginning of any paragraph, or
any subparagraph, in this Note are for convenience only and shall not be dispositive in interpreting
or construing this Note.
L. IF HELD UNENFORCEABLE. If any provision of this Note shall be held
unenforceable or void, then such provision to the extent not otherwise limited by law shall be
severable from the remaining provisions and shall in no way affect the enforceability of the
remaining provisions nor the validity of this Note.
M. CHANGE IN APPLICATION. Borrower will notify the City in writing before any
changes in its name or address.
N. NOTICE. All notices under this Note must be in writing. Any notice given by the
City to Borrower will be effective upon personal delivery or 24 hours after mailing by first class
United States mail, postage prepaid, addressed to Borrower at the address indicated on page one of
this Note. Such address may be changed by written notice to the other party.
RECEIPT OF COPY. Borrower acknowledges that Borrower has read and received a copy
of this Note by its signature below.
BORROWER AND CITY ACKNOWLEDGE THAT THE RIGHT TO TRIAL BY JURY
IS A CONSTITUTIONAL ONE, BUT THAT IT MAY BE WAIVED. EACH PARTY, AFTER
CONSULTING (OR HAVING HAD THE OPPORTUNITY TO CONSULT) WITH COUNSEL
OF THEIR CHOICE, KNOWINGLY AND VOLUNTARILY, AND FOR THEIR MUTUAL
BENEFIT, WAIVES ANY RIGHT TO TRIAL BY JURY IN THE EVENT OF LITIGATION
REGARDING THE PERFORMANCE OR ENFORCEMENT OF, OR IN ANY WAY RELATED
TO,THIS NOTE OR THE INDEBTEDNESS SECURED HEREBY.
IN WITNESS WHEREOF, the undersigned has executed this Note as of the day and year
first above written.
BORROWER:
PREFERRED POWDER COATING,LLC
By:
Chief Manager
171419v1 20
EXHIBIT `B"
MORTGAGE
THIS INDENTURE (hereinafter referred to as the "Mortgage"), dated as of the day
of , 2013, between PREFFERED POWDER COATING, LLC, a Minnesota
limited liability company, whose address is: 13251 George Weber Drive, Rogers, Minnesota 55374
("Mortgagor"), and CITY OF ELK RIVER, a Minnesota municipal corporation, whose address
is 13065 Orono Parkway, Elk River,Minnesota 55309 ("Mortgagee").
WITNESSETH,that the said Mortgagor, in consideration of the debt hereinafter described,
the receipt and sufficiency of which is hereby acknowledged, does hereby CONVEY unto the said
Mortgagee, its successors and assigns, forever, the following real property [all of the following
being hereafter collectively referred to as the("Property")]:
A. Real Property. All the tracts or parcels of real property lying and being in the County of
Sherburne, State of Minnesota, all as more fully described in Exhibit "A" attached hereto and made
a part hereof, together with all the estates and rights in and to the real property and in and to lands
lying in streets, alleys and roads adjoining the real property and all buildings, structures,
improvements, fixtures and annexations, access rights, easements, rights of way or use, servitudes,
licenses, tenements, hereditaments and appurtenances now or hereafter belonging or pertaining to
the real property ("Real Property") subject to encumbrances of record as of the date hereof or
hereafter consented to in writing by Mortgagee(the"Permitted Encumbrances").
AND THE SAID MORTGAGOR, for itself, its administrators, successors and assigns, does
covenant with the Mortgagee, its successors and assigns, that Mortgagor is lawfully seized of the
Property and has good right to sell and convey the same; that the Property is free from all
encumbrances except the Permitted Encumbrances; that the Mortgagee, its successors and assigns,
shall quietly enjoy and possess the Property; and that the Mortgagor will WARRANT AND
DEFEND the title to the same against all lawful claims not specifically excepted in this Mortgage.
TO HAVE AND TO HOLD THE SAME, together with the possession and right of possession of
the Property,unto the Mortgagee, its successors and assigns, forever.
PROVIDED, NEVERTHELESS, that if the Mortgagor, its administrators, personal representatives,
successors and assigns (A) shall pay to the Mortgagee, its successors or assigns, the sum of One
Million One Hundred Fifty-three Thousand Eight Hundred Seventy-eight and No/100 Dollars
($1,153,878.00) or such lesser amount as may be adjusted according to the terms of that certain
Promissory Note ("Note") of even date herewith, the terms and conditions of which are
incorporated herein by reference and made a part hereof, together with any extensions or renewals
thereof, due and payable with interest thereon at the interest rate set forth therein,the balance of said
principal sum, together with interest thereon, being due and payable in full one-hundred forty-four
months following the Approval Date of the Tax Abatement and Business Subsidy Agreement,
between Mortgagor, Mortgagee and Sherburne County, Minnesota dated , 2013, to
which this Mortgage is attached as an Exhibit ("Agreement"), unless due earlier according to the
171419v1 21
terms of the Note, and (B) shall repay to the Mortgagee, its successors or assigns, at the times
demanded and with interest thereon at the same rate specified in the Note, all sums advanced in
protecting the lien of this Mortgage, in payment of taxes and special assessments on the Property, in
payment of insurance premiums covering improvements thereon, in payment of principal and
interest on prior liens, in payment of expenses and attorneys' fees herein provided for and all sums
advanced for any other purpose authorized herein(the Note and all such sums, together with interest
thereon, being collectively referred to as the "Indebtedness Secured Hereby"), and shall keep and
perform all of the covenants and agreements in the Note, the Agreement, as amended, and herein
contained, then this Mortgage shall become null and void and shall be released at Mortgagor's
expense.
AND IT IS FURTHER COVENANTED AND AGREED AS FOLLOWS:
ARTICLE ONE
GENERAL COVENANTS,AGREEMENTS,WARRANTIES
SECTION 1.1: Payment of Indebtedness / Observance of Covenants. Mortgagor will duly and
punctually pay or cause to be paid each and every installment of principal and interest on the Note
and all other Indebtedness Secured Hereby, as and when the same shall become due, and shall duly
and punctually perform and observe all of the covenants, agreements and provisions contained
herein, in the Note, and any other instrument given as security for the payment of the Note.
SECTION 1.2: Maintenance; Repairs. Mortgagor agrees that it will keep and maintain the
Property in good repair and operating condition, free from any waste or misuse, and will comply
with all requirements of law, municipal ordinances and regulations, restrictions and covenants
affecting the Property and its use. Except for the improvements contemplated in the Agreement,
Mortgagor agrees that without the prior consent of the Mortgagee it will not expand any
improvements on the Property erect any new improvements or make any material alterations in any
improvements which will affect the market value of the Property, and will complete within a
reasonable time any buildings now or at any time in the process of erection on the Property.
Mortgagor agrees not to acquiesce in any rezoning classification, modification or restriction
affecting the Property. Mortgagor will not use or occupy the Property in any manner that violates
any applicable laws, rules, regulations or orders with respect to the Property including but not
limited to the Americans with Disabilities Act.
SECTION 1.3: Payment of Operating Costs, Liens and Levies. Mortgagor agrees that it will
pay all operating costs and expenses of the Property, keep the Property free from mechanic's,
materialmen's and other liens, keep the Property free from levy, execution or attachment, and upon
request will exhibit to Mortgagee satisfactory evidence of such payment and discharge.
SECTION 1.4: Payment of Impositions. Mortgagor will pay when due and before any penalty all
taxes, assessments, water charges, sewer charges and other fees, taxes, charges and assessments of
every kind and nature whatsoever assessed or charged against or constituting a lien on the Property
or any interest therein, or the Indebtedness Secured Hereby ("Impositions"), and will upon demand
furnish to the Mortgagee proof of the payment of any such Impositions. In the event of a court
decree or an enactment after the date hereof by any legislative authority of any law imposing upon a
171419v1 22
mortgagee the payment of the whole or any part of the Impositions herein required to be paid by the
Mortgagor, or changing in any way the laws relating to the taxation of mortgages or debts secured
by mortgages or a mortgagee's interest in mortgaged property, so as to impose such Imposition on
the Mortgagee or on the interest of the Mortgagee in the Property, then, in any such event,
Mortgagor shall bear and pay the full amount of such Imposition, provided that if for any reason
payment by Mortgagor of any such Imposition would be unlawful, or if the payment thereof would
constitute usury or render the Indebtedness Secured Hereby wholly or partially usurious,
Mortgagee, at its option, may declare the whole sum secured by this Mortgage with interest thereon
to be immediately due and payable, without prepayment premium, or Mortgagee, at its option, may
pay that amount or portion of such Imposition as renders the Indebtedness Secured Hereby unlawful
or usurious, in which event Mortgagor shall concurrently therewith pay the remaining lawful and
non-usurious portion or balance of said Imposition.
SECTION 1.5: Contest of Impositions, Liens and Levies. Mortgagor shall not be required to
pay, discharge or remove any Imposition, or any lien or levy ("Lien or Levy") so long as the
Mortgagor shall in good faith contest the same or the validity thereof by appropriate legal
proceedings which shall operate to prevent the collection of the Levy, Lien or Imposition so
contested and the sale of the Property, or any part thereof to satisfy the same, provided that the
Mortgagor shall, prior to the date such Levy, Lien or Imposition is due and payable, have given
such reasonable security as may be demanded by the Mortgagee to insure such payments and
prevent any sale or forfeiture of the Property by reason of such non-payment. Any such contest
shall be prosecuted with due diligence and the Mortgagor shall promptly after final determination
thereof pay the amount of any such Levy, Lien or Imposition so determined, together with all
interest and penalties, which may be payable in connection therewith. Notwithstanding the
provisions of this Section, Mortgagor shall (and if Mortgagor shall fail so to do, Mortgagee may but
shall not be required to) pay any such Levy, Lien or Imposition notwithstanding such contest if in
the reasonable opinion of the Mortgagee the Property shall be in jeopardy or in danger of being
forfeited or foreclosed.
SECTION 1.6: Protection of Security. Mortgagor agrees to promptly notify Mortgagee of and
appear in and defend any suit, action or proceeding that materially affects the value of the Property,
the Indebtedness Secured Hereby or the rights or interest of Mortgagee hereunder, unless such
action was commenced by Mortgagee in which case no notice to Mortgagee is necessary. The
Mortgagee may elect to appear in or defend any such action or proceeding and, except in the case of
an action commenced by Mortgagee, Mortgagor agrees to indemnify and reimburse Mortgagee
from any and all loss, damage, expense or cost arising out of or incurred in connection with any
such suit, action or proceeding, including costs of evidence of title and reasonable attorneys' fees.
SECTION 1.7: Additional Assurances. Mortgagor agrees upon reasonable request by the
Mortgagee to execute and deliver such further instruments and will do such further acts as may be
necessary or proper to carry out more effectively the purposes of this Mortgage and, without
limiting the foregoing, to make subject to the lien hereof any property agreed to be subjected hereto
or covered by the granting clause hereof, or intended so to be. Mortgagor agrees to pay any
recording fees, filing fees, stamp taxes or other charges arising out of or incident to the filing or
recording of the Mortgage, such further assurances and instruments and the issuance and delivery of
the Note.
171419vi 23
SECTION 1.8: Maximum Amount. The maximum amount this Mortgage shall secure shall not
be more than One Million One Hundred Fifty-three Thousand Eight Hundred Seventy-eight and
No/100 Dollars ($1,153,878.00) at any time, together with interest and all amounts expended by the
Mortgagee to protect the Mortgagee's interest in the Property secured by this Mortgage and to
enforce the terms hereof.
SECTION 1.9: Subordination Of This Mortme. Notwithstanding anything contained herein to
the contrary, upon written request by Developer, the City shall subordinate its rights and interest in
the Property, the Project and this Mortgage to the lien of all mortgages for the construction of the
Project on a form approved by the lender and the City Attorney.
ARTICLE TWO
INSURANCE AND ESCROWS
SECTION 2.1: Insurance. Mortgagor shall obtain and keep in full force and effect during the
term of this Mortgage at its sole cost and expense, standard "Builder's Risk" insurance with respect
to all construction in progress on the Property and "All-Risk" or "Fire-extended coverage -
difference in conditions" property insurance against loss by fire, lightning and risk customarily
covered by standard extended coverage endorsement, including the cost of debris removal, all in the
amounts of not less than the full insurable value, with agreed amount and full replacement cost
endorsements, whichever is greater. Such insurance policies shall be written on forms and with
insurance companies satisfactory to Mortgagee, shall name as the insured parties the Mortgagor and
the Mortgagee as their interests may appear, shall be in amounts sufficient to prevent the Mortgagor
from becoming a co-insurer of any loss thereunder, shall contain endorsements that no act or
negligence of Mortgagor or any occupant of the Property and no occupancy or use of the Property
for purposes more hazardous than permitted by the terms of the policy shall affect the validity and
enforceability of such insurance as against Mortgagee, and shall bear a satisfactory mortgagee
clause in favor of the Mortgagee with loss proceeds under any such policies to be made payable to
the Mortgagee, subject, however, to any claims by any mortgagee lender for construction of the
Project on the Property. Mortgagee agrees to make any such loss proceeds available to Mortgagor
in the event the parties agree to restore and/or repair the Property. Mortgagor shall also obtain and
keep in full force and effect during the term of this Mortgage comprehensive general public liability
insurance covering the legal liability of the Mortgagor against claims for bodily injury, death or
property damage occurring on, in or about the Property in the amount of at least One Million and
No/100 Dollars ($1,000,000.00), which policies shall name the Mortgagee as additional insured.
All required policies of insurance or acceptable certificates thereof, together with evidence of the
payment of current premiums therefor, shall be delivered to the Mortgagee. The Mortgagor shall,
within thirty (30) days prior to the expiration of any such policy, deliver other original policies or
certificates of the insurer evidencing the renewal of such insurance together with evidence of the
payment of current premiums therefor. All policies shall specifically provide that the Mortgagee
shall receive thirty (30) days prior written notice before cancellation of any such policies. In the
event of a foreclosure of this Mortgage or any acquisition of the Property by the Mortgagee, all
proceeds payable under this policy, whether payable before or after a foreclosure sale, or during the
period of redemption, if any, shall become the absolute property of the Mortgagee to be utilized at
its discretion. In the event of foreclosure or the failure to obtain and keep any required insurance,
171419vi 24
the Mortgagor empowers the Mortgagee to effect insurance upon the Property at Mortgagor's
expense and for the benefit of the Mortgagee in the amounts and types aforesaid for a period of time
covering the time of redemption from foreclosure sale, and if necessary, to cancel any or all existing
insurance policies. Mortgagor agrees to furnish Mortgagee copies of all inspection reports and
insurance recommendations received by Mortgagor from any insurer.
SECTION 2.2: Escrows. Intentionally deleted.
ARTICLE THREE
UNIFORM COMMERCIAL CODE
INTENTIONALLY DELETED
ARTICLE FOUR
APPLICATION OF INSURANCE AND AWARDS
SECTION 4.1: Damage or Destruction of the Property. Mortgagor will give the Mortgagee
prompt notice of any damage to or destruction of the Property. If the insurance proceeds are
sufficient to pay all costs of repair and/or restoration, then the parties will in good faith consider that
option.
SECTION 4.2: Condemnation. Subject to the rights of any mortgagee lender of the Property for
construction of the Project to which this Mortgage may be subordinated, Mortgagor will give the
Mortgagee prompt notice of any action, actual or threatened, in condemnation or eminent domain
and hereby assigns, transfers and sets over to the Mortgagee the entire proceeds of any award or
claim for damages for all or any part of the Property taken or damaged under the power of eminent
domain or condemnation, the Mortgagee being hereby authorized to intervene in any such action in
the name of the Mortgagor and to collect and receive from the condemning authorities and give
proper receipts and acquittances for such proceeds to the extent such proceeds and claims for
damage are not assigned to any mortgagee lender for the Property for construction of the Project.
Any expenses incurred by the Mortgagee in intervening in such action or collecting such proceeds
shall be reimbursed to the Mortgagee first out of the proceeds. The proceeds or any part thereof
shall be applied upon or in reduction of the Indebtedness Secured Hereby then most remotely to be
paid, whether due or not, without the application of any prepayment premium, or to the restoration
or repair of the Property, the choice of application to be solely at the discretion of Mortgagee.
SECTION 4.3: Disbursement of Insurance and Condemnation Proceeds. Should any insurance
or condemnation proceeds be applied to the restoration or repair of the Property, the restoration or
repair shall be done under the supervision of an architect acceptable to Mortgagee and pursuant to
plans and specifications approved by the Mortgagee. In such case the insurance or condemnation
proceeds shall be held by Mortgagee, subject to the rights of any mortgagee lender for the Property
for construction of the Project, for such purposes and will from time to time be disbursed by
Mortgagee to defray the costs of such restoration or repair under such safeguards and controls as the
Mortgagee may reasonably require to assure completion in accordance with the approved plans and
specifications and free of liens or claims. Any surplus which may remain after payment of all costs
of restoration or repair may at the option of the Mortgagee be applied on account of the
171419v1 25
Indebtedness Secured Hereby then most remotely to be paid, whether due or not, without
application of any prepayment premium or shall be returned to Mortgagor as its interest may appear,
the choice of application to be solely at the discretion of Mortgagee.
ARTICLE FIVE
RIGHTS OF MORTGAGEE
SECTION 5.1: Right to Cure Default. If the Mortgagor shall fail to comply with any of the
covenants or obligations of this Mortgage,the Mortgagee may,but shall not be obligated to,without
further demand upon Mortgagor, and without waiving or releasing Mortgagor from any obligation
in this Mortgage contained, remedy such failure, and the Mortgagor agrees to repay upon demand
all sums incurred by the Mortgagee in remedying any such failure, together with interest on all such
sums advanced at a rate equal to that then in effect under the terms of the Note. Mortgagee shall
give Mortgagor at least thirty (30) days notice of the failure to comply prior to the Mortgagee
taking remedial action, but Mortgagee's failure to give any such notice shall have no effect on
Mortgagor's obligation to repay Mortgagee for any sums advanced together with interest thereon.
All such sums, together with interest as aforesaid, shall become so much additional Indebtedness
Secured Hereby, but no such advance shall be deemed to relieve the Mortgagor from any failure
hereunder.
SECTION 5.2: No Claim Against the Mortgagee. Nothing contained in this Mortgage shall
constitute any consent or request by the Mortgagee, express or implied, for the performance of any
labor or services or for the furnishing of any materials or other property in respect of the Property or
any part thereof, nor as giving the Mortgagor or any party in interest with Mortgagor any right,
power or authority to contract for or permit the performance of any labor or services or the
furnishing of any materials or other property in such fashion as would create any personal liability
against the Mortgagee in respect thereof or would permit the making of any claim that any lien
based on the performance of such labor or services or the furnishing of any such materials or other
property is prior to the lien of this Mortgage.
SECTION 5.3: Inspection. Upon reasonable prior notice to Mortgagor,Mortgagor will permit the
Mortgagee's authorized representatives to enter the Property for the purpose of inspecting the same;
provided the Mortgagee shall have no duty to make such inspections and shall not incur any liability
or obligation for making or not making any such inspections.
SECTION 5.4: Waivers; Releases; Resort to Other Security; etc. Without affecting the liability
of any party liable for payment of any Indebtedness Secured Hereby or performance of any
obligation contained herein and without affecting the rights of the Mortgagee with respect to any
security not expressly released in writing, the Mortgagee may, at any time, and without notice to or
the consent of the Mortgagor or any party in interest with the Property or the Note (a) release any
person liable for payment of all or any part of the Indebtedness Secured Hereby or for performance
of any obligation herein, (b) make any agreement extending the time or otherwise altering the terms
of payment of all or any part of the Indebtedness Secured Hereby or modifying or waiving any
obligation, or subordinating, modifying or otherwise dealing with the lien or charge hereof, (c)
accept any additional security, (d) release or otherwise deal with any property, real or personal,
including any or all of the Property, including making partial releases of the Property; or (e) resort
171419v1 26
to any security agreements, pledges, contracts of guarantee, assignments of rents and leases or other
securities, and exhaust any one or more of said securities and the security hereunder, either
concurrently or independently and in such order as it may determine.
SECTION 5.5: Rights Cumulative. Each right, power or remedy herein conferred upon the
Mortgagee is cumulative and in addition to every other right, power or remedy, express or implied,
now or hereafter arising, available to Mortgagee, at law or in equity, or under any other agreement,
and each and every right, power and remedy herein set forth or otherwise so existing may be
exercised from time to time as often and in such order as may be deemed expedient by the
Mortgagee and shall not be a waiver of the right to exercise at any time thereafter any other right,
power or remedy. No delay or omission by the Mortgagee in the exercise of any right, power or
remedy arising hereunder or arising otherwise shall impair any such right, power or remedy or the
right of the Mortgagee to resort thereto at a later date or be construed to be a waiver of any default
or event of default under this Mortgage or the Note.
SECTION 5.6: Subsequent Agreements. Any agreement hereafter made by the Mortgagor and
Mortgagee pursuant to this Mortgage shall be superior to the rights of the holder of any intervening
lien or encumbrance.
SECTION 5.7: Waiver of Marshaling. Mortgagor hereby waives any rights available with
respect to marshaling of assets so as to require the separate sales of any portion of the Property, or
as to require the Mortgagee to exhaust its remedies against a specific portion of the Property before
proceeding against the other and does hereby expressly consent to and authorize the sale of the
Property or any part thereof as a single unit or parcel.
ARTICLE SIX
EVENTS OF DEFAULT AND REMEDIES
SECTION 6.1: Events Of Default. It shall be an "Event of Default" under this Mortgage if(a)
the Mortgagor shall fail to pay any principal or interest due on the Note when and as the same
become due (whether at the stated maturity or at a date fixed for any installment payment or any
accelerated payment date or otherwise); or (b) the Mortgagor shall fail to pay when due any other
Indebtedness Secured Hereby; or(c) the Mortgagor shall, except as to defaults under(a), (b) above,
after 30 days prior notice from Mortgagee, fail to comply with or perform any other term, condition
or covenant of the Note, this Mortgage,the Agreement or any other instrument securing the Note; or
(d) the Mortgagor shall sell, convey, transfer, further mortgage or encumber or dispose of the
Property, or any part thereof, or any interest therein, or agrees so to do, except in accordance with
the terms of this Mortgage; or (e) the Mortgagor shall make an assignment for the benefit of its
creditors, or shall admit in writing its inability to pay its debts as they become due, or shall file a
petition in bankruptcy, or shall be adjudicated a bankrupt or insolvent, or shall file a petition seeking
any reorganization, dissolution, liquidation, arrangement, composition,readjustment or similar relief
under any present or future bankruptcy or insolvency statute, law or regulation or shall file an
answer admitting to or not contesting the material allegations of a petition filed against it in such
proceedings, or shall not within sixty (60) days after the filing of such a petition have the same
dismissed or vacated, or shall seek or consent to or acquiesce in the appointment of any trustee,
receiver or liquidator of a material part of its properties, or shall not within sixty (60) days after the
171419v1 27
appointment without its consent or acquiescence of a trustee, receiver or liquidator of any material
part of its properties have such appointment vacated; or (f) any representation or warranty made by
Mortgagor herein, in the Note, or in any other instrument given as security for the Note shall be
materially false, breached or dishonored.
SECTION 6.2: Mortmee's Remedies/Ri2ht to Foreclose. Upon the occurrence of an Event of
Default, Mortgagee shall provide written notice to Mortgagor of any default. Mortgagor shall have
an opportunity to cure such default for a period of thirty (30) days following receipt of such notice.
Mortgagee agrees not to take any action until the expiration of the thirty (30) day period. In the
event Mortgagor fails to cure any defaults within thirty (30) days of the notice of a default, then
Mortgagee may, at its option, exercise any or all of the following rights and remedies (and any other
rights and remedies available to it):
(a) Declare the entire principal of and the accrued interest on the Note, together with all sums
advanced hereunder and interest thereon, to be immediately due and payable, and thereupon the
Note, including both principal and interest accrued thereon, and all sums advanced hereunder and
interest thereon, shall be immediately due and payable without presentment, demand or notice of
any kind; or
(b) Proceed to protect and enforce its rights by a suit or suits in equity or at law (1) for the
specific performance of any covenant or agreement contained herein or in the Agreement, or (2) in
aid of the execution of any power herein or therein granted, or (3) for the foreclosure of this
Mortgage, or(4) for the enforcement of any other appropriate legal equitable remedy; or
(c) Foreclose this Mortgage by action or advertisement, and Mortgagor hereby authorizes
Mortgagee to do so, power being herein expressly granted to sell the Property at public auction
without any prior hearing or notice thereof and to convey the same to the purchaser, in fee simple,
pursuant to the statutes of Minnesota in such case made and provided, and out of the proceeds
arising from such sale, to pay all Indebtedness Secured Hereby with interest, and all legal costs and
charges of such foreclosure and reasonable attorney's fees permitted by law, which costs, charges
and fees Mortgagor agrees to pay. In the event of a sale under this Mortgage, whether by virtue of
judicial proceedings or advertisement or otherwise, the Property may, at the option of Mortgagee, be
sold as an entirety or in such other manner and order as Mortgagee in its sole discretion may elect;
or
(d) Without releasing Mortgagor from any obligation hereunder or under the Note and this
Mortgage, cure any Event of Default. In connection therewith, Mortgagee may enter upon the
Property and do such acts and things as Mortgagee reasonably deems necessary or desirable to
protect the Property, including without limitation: (1) paying, purchasing, contesting or
compromising any encumbrance, charge, lien or claim, property taxes and charges; (2) paying any
insurance premiums; and (3) employing counsel, accountants, contractors and other appropriate
persons to assist Mortgagee in the foregoing. Should Mortgagee make any such payments, the
amount thereof shall be secured hereby, and Mortgagor shall reimburse Mortgagee immediately
upon demand, and said amount shall bear interest at the rate specified in the Note until repaid; or
171419v1 28
(e) It is expressly understood and agreed by Mortgagor that in the event of any foreclosure or
other sale under this Mortgage by virtue of judicial proceeding, advertisement or otherwise, the
Property may be sold as one parcel without exhausting Mortgagee's right, except as the same may
be limited by applicable law, to such remedy for any unsatisfied part of the Borrower's indebtedness
under the Note and this Mortgage or the Agreement, and without exhausting the power to exercise
such remedy for any other part of said indebtedness, whether matured at the time or subsequently
maturing. If a part of the Property is sold pursuant to this Section 6.2 and the proceeds thereof do
not fully pay and satisfy the Borrower's indebtedness under the Note, and the Agreement, such sale,
if so made, shall not in any manner affect the unpaid and unsatisfied part of said indebtedness; or
(f) Exercise any and all remedies available to Mortgagee under the Agreement and any and all
rights under the laws of the State of Minnesota,whether or not herein specified.
The exercise of any right or remedy with respect to any part of the Property shall not affect the
availability of any other of Mortgagee's rights and remedies under other applicable law or this
Mortgage. All expenses (including any receivers' fees, attorneys' fees, costs and agents'
compensation) incurred by Mortgagee pursuant to the powers herein contained shall be secured
hereby and shall bear interest from the date incurred at the rate provided in the Note until paid by
Mortgagor.
SECTION 6.3: Receiver. Upon the occurrence and continuance of an Event of Default hereunder
and after the expiration of any applicable cure periods, the Mortgagee shall be entitled as a matter of
right without notice and without giving bond and without regard to the solvency or insolvency of
the Mortgagor, or waste of the Property or adequacy of the security of the Property, to apply for the
appointment of a receiver in accordance with the statutes and law made and provided for who shall
collect the rents, and all other income of any kind; manage the Property so to prevent waste;
complete construction of the Project (as defined in the Agreement) already under construction and
pay for the same;pay all expenses for normal maintenance of the Property and perform the terms of
this Mortgage and apply the rents, issues and profits in the following order: (a)to the payment of the
reasonable fees of said receiver; (b) to the payment when due of prior or current real estate taxes or
special assessments with respect to the Property or, if required by this Mortgage, payment of the
periodic escrow for payment of the taxes or special assessments; (c) to the payment when due of
premiums for insurance of the type required by this Mortgage or, if required by this Mortgage,
payment of the periodic escrow for the payment of the premiums; and (d) to the repayment of the
Indebtedness Secured Hereby and to or for the construction of the Improvements, operation,
maintenance, upkeep and repair of the Property, including payment of taxes on the Property and
payments of premiums of insurance on the Property. The Mortgagor does hereby irrevocably
consent to such appointment.
SECTION 6.4: Rights Under Uniform Commercial Code. Intentionally deleted.
SECTION 6.5: Remedies are Cumulative. All remedies herein expressly provided for are
cumulative of any and all other remedies existing at law or in equity and are cumulative of any and
all other remedies provided for in any other instrument securing the payment of the Note or relating
to same, or any part thereof, or otherwise benefiting Mortgagee and Mortgagee shall, in addition to
the remedies herein provided, be entitled to avail itself of all such other remedies as may now or
171419v1 29
hereafter exist at law or in equity for the collection of the Note, and the enforcement of the
covenants herein and the foreclosure of the liens and security interest evidenced hereby, and the
resort to any remedy provided for hereunder or under any such other instrument or provided for by
law shall not prevent the concurrent or subsequent employment of any other appropriate remedy or
remedies.
SECTION 6.6: Right to Discontinue Proceedings. In the event Mortgagee shall have proceeded
to invoke any right, remedy or recourse permitted under this Mortgage and shall thereafter elect to
discontinue or abandon the same for any reason, Mortgagee shall have the unqualified right to do so
and in such event Mortgagor and Mortgagee shall be restored to their former positions with respect
to the Indebtedness Secured Hereby. This Mortgage, the Property and all rights, remedies and
recourse of the Mortgagee shall continue as if the same had not been invoked.
SECTION 6.7: Acknowledgement of Waiver of Hearing Before Sale. Mortgagor understands
and agrees that if any default is made under the terms of this Mortgage, Mortgagee has the right
inter alia, to foreclose this Mortgage by advertisement pursuant to Minnesota Statutes Chapter 580,
as hereafter amended, or pursuant to any similar or replacement statute hereafter enacted; that if the
Mortgagee elects to foreclose by advertisement, it may cause the Property, or any part thereof, to be
sold at public auction; that notice of such sale must be published for six (6) successive weeks at
least once a week in a newspaper of general circulation and that no personal notice is required to be
served upon Mortgagor. Mortgagor further understands that under the Constitution of the United
States and the Constitution of the State of Minnesota, it may have the right to notice and hearing
before the Property may be sold and that the procedure for foreclosure by advertisement described
above does not insure that notice will be given to the Mortgagor and said procedure for foreclosure
by advertisement does not require any hearing or other judicial proceeding. MORTGAGOR
HEREBY RELINQUISHES, WAIVES AND GIVES UP ANY CONSTITUTIONAL RIGHTS IT
MAY HAVE TO NOTICE AND HEARING BEFORE SALE OF THE PROPERTY AND
EXPRESSLY CONSENTS AND AGREES THAT THE PROPERTY MAY BE FORECLOSED
BY ADVERTISEMENT AS DESCRIBED ABOVE. MORTGAGOR ACKNOWLEDGES THAT
IT IS REPRESENTED BY LEGAL COUNSEL OR THAT IT HAD THE OPPORTUNITY TO
CONSULT WITH LEGAL COUNSEL; THAT BEFORE SIGNING THIS DOCUMENT THIS
PARAGRAPH AND MORTGAGOR'S CONSTITUTIONAL RIGHTS WERE FULLY
EXPLAINED BY SUCH COUNSEL AND THAT MORTGAGOR UNDERSTANDS THE
NATURE AND EXTENT OF THE RIGHTS WAIVED HEREBY AND THE EFFECT OF SUCH
WAIVER.
ARTICLE SEVEN
MISCELLANEOUS
SECTION 7.1: Release of Mortiase. When all Indebtedness Secured Hereby has been paid, this
Mortgage and all assignments herein contained shall be void and this Mortgage shall be released by
the Mortgagee at the cost and expense of the Mortgagor, otherwise to remain in full force and effect.
SECTION 7.2: Choice of Law. This Mortgage is made and executed under the laws of the State
of Minnesota and is intended to be governed by the laws of said State.
171419vi 30
SECTION 7.3: Changes of Ownership. In the event that the ownership of the Property becomes
vested in a person or persons other than the Mortgagor, the Mortgagee may continue to deal with
the Mortgagor without any obligation to deal with such successor or successors in interest with
reference to this Mortgage and the Indebtedness Secured Hereby until notified of such vesting and
approval of such successor or successors in accordance with the terms of this Mortgage. Upon such
notification, the Mortgagee may thereafter deal with such successor in place of Mortgagor without
any obligation to thereafter deal with Mortgagor and without waiving any liability of Mortgagor
hereunder or under the Note.
SECTION 7.4: Successors and Assigns. This Mortgage and each and every covenant, agreement
and other provision hereof shall be binding upon the Mortgagor and its successors and assigns,
including without limitation each and every from time to time record owner of the Property or any
other person having an interest therein, shall run with the land and shall inure to the benefit of the
Mortgagee and its successors and assigns.
SECTION 7.5: Unenforceability of Certain Clauses. The unenforceability or invalidity of any
provision hereof shall not render any other provision or provisions herein contained unenforceable
or invalid.
SECTION 7.6: Corrections of Errors. Mortgagor will, upon reasonable request of Mortgagee (a)
promptly correct any defect, error or omission which may be discovered in the contents of this
Mortgage or in any other instrument executed in connection herewith or in the execution of
acknowledgment thereof, (b) execute, acknowledge, deliver, procure, and file or record any
documents or instruments (including specifically any financing statement) reasonably necessary by
Mortgagee to protect the lien or the security interest hereunder against the rights or interest of third
persons, and Mortgagor will pay all costs of recording the same.
SECTION 7.7: Captions and Headings. The captions and headings of the various sections of this
Mortgage are for convenience only and are not to be construed as confining or limiting in any way
the scope or intent of the provisions hereof. Whenever the context requires or permits, the singular
shall include the plural, the plural shall include the singular and the masculine, feminine and neuter
shall be freely interchanged.
SECTION 7.8: Notices. Any notice which any party hereto may desire or may be required to give
to any other party shall be in writing and the mailing thereof by certified mail to their respective
addresses as set forth herein, or to such other places any party hereto may hereafter by notice in
writing designate, shall constitute service of notice hereunder.
MORTGAGOR AND MORTGAGEE ACKNOWLEDGE THAT THE RIGHT TO TRIAL BY
JURY IS A CONSTITUTIONAL ONE, BUT THAT IT MAY BE WAIVED. EACH PARTY,
AFTER CONSULTING (OR HAVING HAD THE OPPORTUNITY TO CONSULT) WITH
COUNSEL OF THEIR CHOICE, KNOWINGLY AND VOLUNTARILY, AND FOR THEIR
MUTUAL BENEFIT, WAIVES ANY RIGHT TO TRIAL BY JURY IN THE EVENT OF
LITIGATION REGARDING THE PERFORMANCE OR ENFORCEMENT OF, OR IN ANY
WAY RELATED TO,THIS MORTGAGE OR THE INDEBTEDNESS SECURED HEREBY.
171419vi 31
IN WITNESS WHEREOF, the Mortgagor has caused these presents to be executed this
day of 72013.
MORTGAGOR:
PREFERRED POWDER COATING, LLC
By:
Chief Manager
STATE OF MINNESOTA )
)ss.
COUNTY OF )
The foregoing instrument was acknowledged before me this day of
2013, by , the of Preferred Powder Coating, LLC, a
Minnesota limited liability company, on behalf of said company.
Notary Public
Drafted by and return to:
CAMPBELL KNUTSON,P.A.
1380 Corporate Center Curve, Suite 317
Eagan,Minnesota 55121
Phone: (651)452-5000
171419vi 32
EXHIBIT"A"
Legal Description to Mortgage
Lot 1, Block 3, NATURE'S EDGE BUSINESS CENTER, Sherburne County, Minnesota,
according to the recorded plat thereof.
171419vi 33