4.6. SR 08-28-2000ITEI~
/-I..6.
City of
River
MEMORANDUM
TO:
Mayor and Council
FROM:
DAli::
Marc Nevinski, Assistant Director of
Economic Development
August 28, 2000
SUBJECT: Development Agreement for TIF District No. 21
/ssue
Attached you will find the development agreement for TIF District No. 21, which
outlines the terms and conditions for the collection and disbursement of tax
increment dollars for the SoftPac/Opus project. Incorporated into the development
agreement is the business subsidy agreement, which outlines the goals for the
project and the public purposes it serves. The goals and public purposes were
reviewed at the public hearing on August 21, 2000 and are also addressed in the
previous memo.
Action Requested
Staff requests that council consider the development agreement for TIF District No.
21 and then consider adopting the attached resolution approving and authorizing
the execution of the development agreement.
Attachments
· Development Agreement For TIF District No. 21
· Resolution Approving and Authorizing Execution of the Development
Agreement
13065 Orono Parkway · P.O. Box 490 · Elk River, MN 55330 · TDD & Phone (763) 441-7420 · Fax (763) 441-7425
8/23/00 Draft
DEVELOPMENT
ASSISTANCE AGREEMENT
By and Among
THE CITY OF ELK RIVER, MINNESOTA,
OPUS NORTHWEST, L.L.C.
And
SOFTPAC, INC.
This document drafted by:
BRIGGS AND MORGAN (JOM)
Professional Association
2200 First National Bank
Building
332 Minnesota Street
St. Paul, Minnesota 55101
Tel: (651) 223-6600
Fax: (651) 223-6450
1198072.2
TABLE OF CONTENTS
ARTICLE I - Definitions .................... 1
Section 1.1. Definitions ................ 1
ARTICLE II - Representations, Warranties and Covenants .... 4
Section 2.1. Representations, Warranties and Covenants
by the City ................ 4
Section 2.2. Representations, Warranties and Covenants
by the Company ............... 4
ARTICLE III - Completion of Improvements; Reimbursement
of Certain Costs ................ 6
Section 3.1.
Section 3.2.
Section 3.3.
Section 3.4.
Section 3.5.
Completion of Improvements by the Company 6
Reimbursement by City of Certain Costs 6
Release and Indemnification Covenants 8
Certificate of Completion ......... 9
Business Subsidy Agreement; Possible
Repayment of Assistance .......... 9
ARTICLE IV - Events of Default 12
Section 4.1. Events of Default Defined ........ 12
Section 4.2. Remedies on Default ........... 12
Section 4.3. No Remedy Exclusive .... . . . . . . . 13
Section 4.4. No Additional Waiver Implied by One
Waiver .................. 13
ARTICLE V - Additional Provisions .............. 14
Section 5.1. Titles of Articles and Sections ..... 14
Section 5.2. Notices and Demands ........... 14
Section 5.3. Counterparts ............... 14
Section 5.4. Law Governing .............. 14
ARTICLE VI - Termination of Agreement; Expiration; Limitation
on Assignments ................. 15
Section 6.1. The City's Option to Terminate ...... 15
Section 6.2. Expiration ................ 15
Section 6.3. Effect of Termination or Expiration 15
Section 6.4. No Third Party Beneficiaries; Execution
Hereof by SoftPac ............ 15
Section 6.5 Limitations on Transfer of Property and
Assignment of Agreement ......... 16
EXHIBIT A - LEGAL DESCRIPTION OF DEVELOPMENT PROPERTY .... A-1
EXHIBIT B - FORM OF TIF BOND ................ B-1
EXHIBIT C - CERTIFICATE OF COMPLETION ............ C-1
EXHIBIT D - BUSINESS SUBSIDY REPORT ............. D-1
1198072.2
DEVELOPMENT ASSISTANCE AGREEMENT
THIS AGREEMENT is dated as of August 28, 2000; is by and
between the City of Elk River, Minnesota and Opus Northwest,
L.L.C., a Delaware limited liability company, and is subscribed in
part, as described in Section 6.4(b) hereof, by SoftPac, Inc., a
Minnesota corporation; and provides as follows:
ARTICLE I
Definitions
Section 1.1. Definitions As used in this Agreement, the
following terms have the following respective meanings:
"Administrative Expenses" means "administrative expenses," as
defined in Section 469.174, Subdivision 14, of the TIF Act, at any
time actually incurred by the City with respect to the TIF
District, subject to the 10% statutory maximum provided in
Section 469.176, Subdivision 3, of the TIF Act.
"Agreement" means this Development Assistance Agreement, as
the same may be amended.
"City" means the City of Elk River, Minnesota.
"Company" means Opus Northwest, L.L.C., a Delaware limited
liability company, or permitted successors or assigns.
"Development Costs" means the Company's allocable costs of
acquiring the Development Property (and no other property), as
further specified in and limited by Section 3.2(b) . All
Development Costs must be costs of such property acquisition of the
Development Property.
"Development Property" means the real property described in
Exhibit A of this Agreement, being the property comprising the TIF
District, as originally established.
"Event of Default" means an event of default defined in
Section 4.1 of this Agreement.
"Improvements" means the approximately 73,000 square foot
manufacturing/packaging/warehousing/distribution facility to be
constructed by the Company on the Development Property, including
all utility, site improvement, parking and related improvements on
the Development Property.
"Party" means either the Company or the City.
"Parties" means the Company and the City.
~8072.2 1
"Project" means the Development Property and the Improvements.
"SoftPac" means SoftPac, Inc., a Minnesota corporation.
"SoftPac Lease" means that certain lease and/or similar
agreement(s) (together with any amendments, supplements or
successors thereto) pursuant to which the Company, as lessor
thereunder, inter alia, leases the Project to SoftPac, as lessee
thereunder, for SoftPac's occupancy and use in its manufacturing
and related operations.
"Tax Increments" means those tax increments generated by the
Project which the City shall be entitled to receive and retain, and
which the City shall have actually received, from Sherburne County
from time to time from the TIF District pursuant to the TIF Act;
provided that the term "Tax Increments" shall specifically not
include any amounts of tax increment generated by the TIF District
which pursuant to the applicable terms of the TIF Act (as it may
exist or be amended from time to time) may be required to be paid
to or reserved for the State of Minnesota, Sherburne County, or any
other entity or official; and "Available Tax Increments" means, as
further defined in Section 3.2, the portion of the Tax Increments
which shall be available to pay the City's obligations under the
TIF Bond.
"Term" means the period beginning on the date of this
Agreement and ending (1) on the date, if any, on which the City
shall have paid all amounts payable on the TIF Bond, (2) the last
of the scheduled "Payment Dates" defined in the TIF Bond, or (3) on
such date (if any) as the City shall have terminated this Agreement
pursuant to its terms, whichever shall occur earliest.
"TIF Act" means the Minnesota Tax Increment Financing Act,
that is, Minnesota Statutes, Sections 469.174 through 469.179, as
the same may be amended or supplemented.
"TIF Bond" means the tax increment revenue bond of the City in
the form of the attached Exhibit B, as further described in Section
3.2.
"TIF District" means the City's Tax Increment Financing
District No. 21 within its Development District No. 1, as the same
may be amended.
"TIF Plan" means the tax increment financing plan for the TIF
District, as provided in that certain City document entitled in
part "Modifications to the Development Program for Development
District No. 1," dated as adopted August 28, 2000, as the same may
be amended.
"Unavoidable Delays" means any delay outside the control of
the Party claiming its occurrence which is the direct result of
1198072.2 2
strikes, other labor troubles, unusually severe or prolonged bad
weather, unavailability of materials, Acts of God, fire or other
casualty to the Improvements, litigation (including without
limitation bankruptcy proceedings) and which directly results in
delays; or acts of any federal, state or local governmental unit
which directly result in delays.
1198072.2 3
ARTICLE II
Representations, Warranties and Covenants
Section 2.1. Representations, Warranties and Covenants by the
City. The City represents and warrants that it is authorized to
enter into and perform its obligations under this Agreement.
Section 2.2. Representations, Warranties and Covenants by the
Company. The Company represents and warrants that:
(a) The Company is a limited liability company duly
organized and in good standing under the laws of the State of
Delaware, is authorized to conduct its business activities in
the State of Minnesota, is not in violation of any provisions
of its organizational documents or the laws of the State of
Minnesota or the State of Delaware and is authorized to enter
into and perform its obligations under this Agreement.
(b) The execution and delivery of this Agreement, the
consummation of the transactions contemplated hereby and the
fulfillment of or compliance with the terms and conditions of
this Agreement are not prevented or limited by and will not
conflict with or result in a breach of any provision or
requirement applicable to the Company or of any provision of
any evidence of indebtedness, agreement or instrument of
whatever nature to which the Company is now a party or by
which it is bound.
(c) The Company, with respect to its construction,
operation and maintenance of the Improvements upon the
Development Property, will cause the same to occur in
accordance with this Agreement and all local, state and
federal laws and regulations (including without limitation
environmental, zoning, building code and public health laws
and regulations).
(d) The Company has received no notice or communication
from any local, state or federal official or body that any
activities of the Company respecting the Development Property
contemplated by this Agreement, including the construction of
the Improvements on the Development Property, may be or will
be in violation of any law or regulation.
(e) The Company 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 Improvements may be lawfully constructed and
completed.
1198072.2 4
(f) To the best knowledge and belief of the Company, the
construction of the Improvements on the Development Property
within the reasonably foreseeable future is conditioned on the
assistance and benefit provided for in this Agreement. It is
also the belief of the Company that the level and expected
duration of the cash flow assistance to be provided pursuant
to the TIF Bond are essential in order to make feasible the
financing and initial operation of the Improvements due to the
fact that SoftPac has indicated to the Company that it would
not enter into the SoftPac Lease without such assistance, and
absent the SoftPac Lease, the Company would definitely not
proceed with the Project.
(g) The Company represents that it expects to enter into
an option or similar agreement pursuant to which the Company
will have the right to purchase the Development Property and
that said agreement (if executed prior to the City Council's
public hearing on and approval of the TIF District and the TIF
Plan) will be contingent upon the receipt of tax increment
assistance for the Project.
(h) The City represents, and the Company acknowledges,
that the City intends to finance its assistance provided under
this Agreement through tax increments derived from the Project
and that the City has established the Development Property as
the TIF District, and more particularly as an "economic
development district" within the meaning of Minnesota
Statutes, Section 469.174, Subdivision 12. For purposes of
establishing compliance with the limitations provided in
Minnesota Statutes, Section 469.176, Subdivision 4c, the
Company hereby represents to and covenants with the City that
not less than 85% of the buildings and facilities comprising
the Improvements (determined on the basis of square footage)
are to be used and will be used during the Term for one or
more of the following purposes: (1) the manufacturing of
tangible personal property, including processing resulting in
the change in condition of the property; (2) warehousing,
storage and distribution of tangible personal property,
excluding retail sales; and (3) space necessary for and
related to the activities described in (1) and (2) of this
subsection.
(i) In particular, the Company covenants that the
Project will throughout the Term be leased to (or occupied by)
SoftPac and used by SoftPac in its manufacturing and related
operations.
1198072 .2 5
ARTICLE III
Completion of Improvements; Reimbursement
of Certain Costs
Section 3.1. Completion of Improvements by the Company.
Subject to Unavoidable Delays, the Company shall have substantially
completed the Improvements by December 31, 2001. It is the non-
binding expectation of the Company that substantial progress will
be made in the year 2000 on constructing the Improvements such as
will add assessor's market value to the Development Property as of
January 2, 2001, and will generate Tax Increments payable in 2002.
Section 3.2. Reimbursement by City of Certain Costs. The
Company hereby represents to the City that the Company will incur
and pay significant Development Costs. The City hereby agrees to
defray up to $700,000 of the Development Costs by issuing the TIF
Bond to the Company (or to its designee, and the Company hereby
authorizes and directs the City to issue the TIF Bond directly to
SoftPac), as registered owner thereof, substantially in the form of
Exhibit B to this Agreement, the issuance of which TIF Bond is
hereby authorized and approved. The TIF Bond and all potential
payments thereon shall be subject to the following conditions and
limitations:
(a) The TIF Bond shall be dated, issued and delivered on
or as soon as practicable following the date of execution and
delivery of this Agreement, provided no Event of Default
shall have occurred and be at the time continuing.
(b) As conditions to such reimbursement of Development
Costs pursuant to the TIF Bond, the Company shall have
completed the Improvements and shall have submitted (from time
to time) such written proofs and other documentation as may be
reasonably satisfactory to the City of the exact nature and
amount of the particular Development Costs for which the
Company is seeking reimbursement, together with such other
information and documentation necessary to enable the City to
substantiate its tax increment expenditures and/or to comply
with its tax increment reporting obligations to the State
Commissioner of Revenue, the Office of the State Auditor or
other applicable official. The documentation shall include
documentary proofs of the allocable cost of acquiring the
Development Property and shall include paid invoices, copies
of remittances and/or other suitable documentary proofs of the
Company's payment thereof.
The maximum aggregate principal amount of Development
Costs which may be added to the TIF Bond is $700,000.
(c) Subject to the provisions thereof, the TIF Bond
shall be payable on each July 15 and December 15 during the
1198072.2 6
Term (or at least 15 days after receipt from Sherburne County
of the respective settlements of Tax Increments), commencing
July 15, 2002 (the "Payment Dates"), in the respective amount
or amounts described in this subsection. The sole source of
funds available for payment of the City's obligations under
this Section and correspondingly under the TIF Bond shall be
the Available Tax Increments, hereby defined to be, for each
calendar year, the Tax Increments respecting taxes payable in
that year, provided that the City may deduct from the Tax
Increments its then-unpaid Administrative Expenses, including
without limitation the City's costs of establishing,
implementing and administering the TIF District.
The principal amount of the TIF Bond shall be the lesser
of $700,000 and the sum of the amounts certified by the
Company and accepted by the City pursuant to Section 3.2(b).
All payments made on the TIF Bond shall be applied first to
accrued and unpaid interest thereon and second toward payment
of the principal thereof. All amounts of Tax Increments which
are not Available Tax Increments are not subject to this
Agreement, and the City retains full discretion as to any
authorized application thereof, regardless of whether the
Available Tax Increments are sufficient to reimburse the
Company in full for the above-described costs. To the extent
that the Available Tax Increments are insufficient, through
the final Payment Date, to pay all amounts otherwise due on
the TIF Bond, said unpaid amounts shall then cease to be any
debt or obligation of the City whatsoever.
(d) The unpaid principal of the TIF Bond shall bear
simple, non-compounded interest at 8.00% per annum from the
date of execution of the Certificate of Completion. Interest
shall be computed on the basis of a 360-day year consisting of
12 months of 30 days each.
(e) The City shall not endeavor to issue the TIF Bond so
that the interest thereon shall be exempt from federal or
State income taxation, and the Parties accordingly anticipate
that the TIF Bond will be a "taxable" obligation.
(f) The TIF Bond shall be a special and limited revenue
obligation of the City and not a general or moral obligation
of the City, and only Available Tax Increments shall be used
to pay the amounts due on the TIF Bond.
(g) The City's obligation to make payments on the TIF
Bond shall be conditioned upon the requirement that there
shall not at the time have occurred and be continuing an Event
of Default; provided, however, that (unless the City shall
have terminated this Agreement) if such Event of Default shall
subsequently have been cured to the reasonable satisfaction of
~98072.2 7
the City, such unpaid obligations shall thereupon
reinstated and thereby become due and payable.
be
(h) The TIF Bond shall be governed by and payable
pursuant to the additional terms thereof, as set forth in
Exhibit B.
(i) Following any termination of this Agreement by the
City pursuant to Section 4.2 hereof, no further or unpaid
amounts of the TIF Bond shall then or thereafter be due and
payable by the City under this Section or the TIF Bond but
shall thereupon be extinguished.
(j) As of each Payment Date, the SoftPac Lease shall
have been executed, delivered and in effect, and SoftPac shall
then be continuing to occupy the Project and to use it in its
manufacturing and related operations.
Section 3.3. Release and Indemnification Covenants.
(a) The Company releases from and covenants and agrees
that the City and the governing body members, officers,
agents, including its independent contractors, consultants and
legal counsel, servants and employees thereof (hereinafter,
for purposes of this Section, collectively the "Indemnified
Parties") shall not be liable for and agrees to indemnify and
hold harmless the Indemnified Parties against any loss or
damage to property or any injury to or death of any person
occurring at, about or in connection with the Improvements, or
the Company's undertaking and completion thereof, or resulting
from any defect therein, except to the extent such loss,
damage or death is caused by the negligence or other wrongful
acts of the Indemnified Parties.
(b) Except for any willful misrepresentation or any
willful or wanton misconduct or negligence of the Indemnified
Parties, the Company agrees to protect and defend the
Indemnified Parties, now and forever, and further agrees to
hold the aforesaid harmless from any claim, demand, suit,
action or other proceeding whatsoever by any person or entity
whatsoever arising or purportedly arising from this Agreement,
or the transactions contemplated hereby or the acquisition,
construction, installation, ownership, and operation of the
Improvements, provided, that this indemnification shall not
apply to the warranties made or obligations undertaken by the
City in this Agreement.
(c) Ail covenants, stipulations, promises, agreements
and obligations of the City contained herein shall be deemed
to be the covenants, stipulations, promises, agreements and
obligations of the City and not of any governing body member,
officer, agent or employee of the City.
1198072.2 8
(d) This Agreement shall not create nor be construed to
create any partnership, joint venture, agency, or employment
relationship between the Parties.
Section 3.4. Certificate of Completion.
(a) Promptly after completion of the Improvements in
accordance with the provisions of this Agreement, and upon
written request made to the City by the Company, the City will
execute the Certificate of Completion in the form attached
hereto as Exhibit C, which shall then be a conclusive
determination of satisfaction and termination of the
agreements and covenants in this Agreement with respect to the
completion of the Improvements. The following shall be
conditions precedent to the City's obligation to execute the
Certificate of Completion:
(i) There shall exist no Event of Default
hereunder, and the Improvements shall have been
completed in substantial conformity to the terms of
this Agreement; and
(ii) The City shall have issued a Certificate
of Occupancy for all of the Improvements.
(b) If the City determines that it cannot execute the
Certificate of Completion, it shall, within 20 days after
written request therefor, provide a written statement
indicating in adequate detail why it cannot do so and also
indicating what measures or acts it will be necessary to be
taken or performed in order to permit execution of the
Certificate of Completion.
Section 3.5. Business Subsidy Agreement; Possible Repayment
of Assistance. The City, the Company and SoftPac recognize and
agree that the assistance under this Agreement is a "business
subsidy,, under Minnesota Statutes, Sections 116J.993 through
116J.995, as amended (the "Subsidy Law"), and is subject to the
provisions thereof, including without limitation reporting
requirements and five year commitment by SoftPac.
Accordingly, it is agreed:
(a) The estimated fair market value of the subsidy is
$700,000. The type of the subsidy is tax increment financing
from an "economic development,, tax increment district in the
form of deferred reimbursement, with interest, via the TIF
Bond, of land acquisition expenses.
(b) The public purposes of the subsidy are to further
development of the City's industrial and tax base and to
create jobs.
1198072 .2 9
(c) For purposes of Section 116J.994, Subdivision 3, of
the Subsidy Law, the goals of the subsidy are completion of
the Improvements and leasing thereof to SoftPac for at least
five years after the "Benefit Date" of the subsidy, as defined
in the Subsidy Law, which is hereby determined to be the date
of execution of the Certificate of Completion.
(d) For purposes of the Subsidy Law, the subsidy shall
be considered to be a forgivable loan to SoftPac from the
City. It is agreed, as required by Section 116J.994,
Subdivision 6, if SoftPac is in default under this Section
3.5, subject to any remedial provisions of the Subsidy Law as
may be applicable, SoftPac shall be obligated to repay all
amounts paid under the TIF Bond (whether for principal thereof
or interest thereon) plus interest on all such amounts at the
implicit price deflator, as defined under Minnesota Statutes,
Section 275.70, Subdivision 2. If SoftPac meets some but not
all of its Job Goals hereinafter defined, SoftPac may request
in writing, and City may agree in the absolute discretion of
the City Council, that the subsidy be repaid by SoftPac pro
rata, e.g., if SoftPac created only 50 of the 60 jobs at the
Project, SoftPac would repay one-sixth of the assistance paid
to SoftPac, plus accrued interest thereon. The subsidy is
needed in order to induce SoftPac to lease and occupy the
Project in the City. SoftPac covenants that it will continue
to lease the Project from the Company for at least five years
after the Benefit Date.
(e) SoftPac represents that it has no parent
corporations.
(f) SoftPac represents that the following are all of the
State of Minnesota and "local government agency" grants (other
than the subsidy hereunder) to the Project:
Grantor Value ($)
Grantor Value ($)
(g) SoftPac represents that it is not in default on the
date hereof on any subsidy agreement entered into by SoftPac
under the Subsidy Law.
(h) For its "Job Goals" under this Section 3.5, SoftPac
covenants that it will provide at the Project 60 full-time
equivalent permanent employee positions within two years of
the Benefit Date, with these jobs having wage levels of at
least $10.00 per hour, exclusive of benefits.
~9s072.2 10
(i) SoftPac shall complete and file with the City from
time to time the report in the form of the attached Exhibit D.
The Subsidy Law provides that if SoftPac does not make such
reports, when due, the City must mail SoftPac a warning within
one week of the required filing date, and if, after 14 days
after the postmark date of that warning, SoftPac continues to
fail to report, then SoftPac is required to and shall pay the
City a penalty of $100 for each subsequent day until the
report is filed, up to a maximum of $1,000. SoftPac shall
file these reports with the City, in care of its Director of
Economic Development, (1) on March 1 of each year, beginning
with the March 1 immediately following the Benefit Date, and
(2) within 30 days after the "Compliance Date," hereby defined
to be the date which is two years after the Benefit Date.
Each March 1 report shall report on the prior calendar year,
and each other report shall report on the period since the
last reporting period.
(j) This Section 3.5 is intended to be the "subsidy
agreement" required by Section 116J.994, Subdivision 3, of the
Subsidy Law. In the event that any provision of this Section
3.5 in inconsistent or in conflict with any provision of the
Subsidy Law, and in the event that any provision of the
Subsidy Law provides additional requirements, the provisions
of the Subsidy Law shall apply and govern. In addition to all
reporting obligations of the Company under this Section 3.5
and Exhibit D, SoftPac agrees to provide the City with any
additional information which may be required in order for the
City to comply with its reporting requirements, as they may
exist or be amended from time to time, under the Subsidy Law.
(k) Nothing in this Section 3.5 is intended to limit or
otherwise amend the other terms of this Agreement. To the
extent that provisions in this Section 3.5 are more extensive
or restrictive than any related term elsewhere in this
Agreement, the provisions hereof shall govern. The above
commitment of SoftPac to lease the Project for at least five
years from the Benefit Date is a requirement of the Subsidy
Law (subject to procedures therein allowing relaxation or
waiver of said requirement) and shall apply and govern. By
the same token, however, said five year commitment shall not
limit a longer commitment made elsewhere in this Agreement,
e.g., see Section 2.2(i) hereof.
1198072.2 11
ARTICLE IV
Events of Default
Section 4.1. Events of Default Defined.
Events of Default under this Agreement:
The following are
(a) There shall have occurred a failure in the
observance, performance or continued existence, as the case
may be, of any covenant, condition, obligation or agreement to
be observed or performed or to exist under this Agreement or
any other agreement respecting the Improvements, including
without limitation the failure to exist of any condition or
requirement herein relating to SoftPac's occupancy, use and
creation of specified employment levels of or respecting the
Project.
(b) There shall have occurred a failure in payment, when
due, of any property tax, special assessment, or other
governmental imposition respecting the Development Property,
subject to statutory or other legal rights to contest or defer
payment of the same.
(c) There shall have been filed a petition in bankruptcy
by or against the Company or SoftPac under the United States
Bankruptcy Code; or there shall occur a failure by the Company
or SoftPac within 90 days to have discharged any execution,
garnishment or attachment of such consequence as would impair
the ability of the Company or SoftPac to carry on its
operations respecting the Improvements; or there shall occur
an assignment by the Company or SoftPac for the benefit of
creditors or the entry by the Company or SoftPac into an
agreement of composition with creditors.
(d) The SoftPac Lease shall have expired or been
terminated and SoftPac shall have ceased its occupancy or
operation of the Project.
(e) A default under Section 3.5 shall have occurred.
An Event of Default shall also include any occurrence which would
with the passage of time or giving of notice become an Event of
Default as defined hereinabove.
Section 4.2. Remedies on Default. Whenever any Event of
Default occurs, in addition to all other remedies specified herein
(e.g., repayment of the assistance pursuant to Section 3.5) or
available to the City at law or in equity, the City (1) may without
notice suspend its performance under this Agreement until it
receives assurances from the Company, deemed adequate by the City,
that the Company has cured its default and will continue its
performance under this Agreement, and (2) may, after provision of
~9so72.2 12
60 days written notice to the Company and SoftPac of the Event of
Default, but only if the Event of Default has not been cured within
said 60 days, or if the Event of Default cannot be cured within 60
days, the Company does not provide assurances to the City
reasonably satisfactory to the City that the Event of Default will
be cured as soon as reasonably possible, terminate this Agreement,
without further obligation whatsoever hereunder to the Company.
Upon the occurrence of any Event of Default, the Company shall
reimburse the City for all expenses and liabilities resulting
therefrom, including without limitation all reasonable attorney or
consultant fees.
Section 4.3. No Remedy Exclusive. No remedy herein conferred
upon or reserved to the either Party 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. 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 4.4. No Additional Waiver Implied by One Waiver. If
any agreement contained in this Agreement should be breached by
either Party and thereafter waived by the other Party, such waiver
shall be limited to the particular breach so waived and shall not
be deemed to waive any other concurrent, previous or subsequent
breach hereunder.
~98072.2 13
ARTICLE V
Additional Provisions
Section 5.1. 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 the provisions hereof.
Section 5.2. 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 sent by first class
mail, postage prepaid, or delivered personally or telecopied; and,
(a) in the case of the Company, to Opus Northwest,
L.L.C., 10350 Bren Road West, Minnetonka, Minnesota 55343,
with a copy to SoftPac, Inc.,
Attention:
(and any notices directed to SoftPac shall also be copied to
the Company); and
(b) in.the case of the City, to the City of Elk River,
Minnesota, at the Elk River City Hall, 13065 Orono Parkway,
P.O. Box 490, Elk River, Minnesota 55330-0490, Attention:
Director of Economic Development.
or at such other address with respect to either such Party as that
Party may, from time to time, designate in writing and forward to
the other as provided in this Section.
Section 5.3. Counterparts. This Agreement may be executed in
any number of counterparts, each of which shall constitute an
original hereof.
Section 5.4. Law Governing. The Parties agree that this
Agreement shall be governed and construed in accordance with the
laws of the State of Minnesota.
1198072.2 14
ARTICLE VI
Termination of Agreement; Expiration; Limitation
on Assignments.
Section 6.1. The City's Option to Terminate. As provided and
under the conditions specified in Section 4.2, the City may
terminate this Agreement if an Event of Default shall have occurred
hereunder and be continuing. Nothing in that or in this Section
shall affect the City's right, should the City not so elect to
terminate this Agreement and as recourse against the Company, to
insist on performance hereunder by the Company (or SoftPac, as the
case may be).
Section 6.2.
end of the Term.
Expiration. This Agreement shall expire at the
Section 6.3. Effect of Termination or Expiration. No
termination or expiration of this Agreement pursuant to the terms
hereof shall terminate (i) any rights or remedies of the City
arising hereunder due to an Event of Default occurring prior to
such termination or expiration or (ii) the provisions of Section
3.3 hereof.
Section 6.4.
by SoftPac.
No Third Party Beneficiaries; Execution Hereof
(a) There shall, as against the City, be no third party
beneficiaries to this Agreement. More specifically, the City
enters into this Agreement, and intends that the consummation
of the City obligations contemplated hereby shall be, for the
sole and exclusive benefit of the Company, and notwithstanding
the fact that any other "persons" may ultimately participate
in or have an interest in the Improvements, the City does not
intend that any party other than the Company shall have, as
alleged third party beneficiary or otherwise, any rights or
interests hereunder as against the City, and no such other
party shall have standing to complain of the City's exercise
of, or alleged failure to exercise, its rights and
obligations, or of the City's performance or alleged lack
thereof, under this Agreement. The provisions of this Section
6.4(a) do not apply to SoftPac.
(b) The Company, SoftPac and the City acknowledge and
agree that SoftPac is a beneficiary of the assistance under
this Agreement and that there may arise hereunder monetary
obligations payable to the City ("Monetary Obligations"),
including without limitation such obligations as may arise
pursuant to the indemnification provisions of Section 3.3, the
repayment provisions of Section 3.5 or the occurrence of an
Event of Default and/or the City's exercise of any remedies
specified hereunder or otherwise available to the City at law
or in equity.
SoftPac hereby agrees to pay any and all such Monetary
Obligations to the City, upon written demand, and the City
agrees that it will look only to SoftPac (and not to the
Company, even if SoftPac fails to pay the same) for payment
and satisfaction of all such Monetary Obligations.
SoftPac represents to the City that is has reviewed,
understands and consents to the terms of this Agreement
(including without limitation the issuance of the TIF Bond to
SoftPac) and that it is duly authorized to undertake and
discharge its obligations under this section 6.4(b). Without
limitation, SoftPac specifically confirms the representations
and endorses the covenants of Sections 2.2(h) and (i).
The Company, SoftPac and the City agree that SoftPac's
execution and delivery of this Agreement is solely for the
purpose of binding itself to the provisions of this Section
6.4 (b) .
Section 6.5. Limitations on Transfer of Property and
Assignment of Agreement. The Company covenants and agrees that
prior to the expiration or earlier termination of this Agreement,
except only by way of security for the purpose of obtaining
financing necessary to enable the Company to acquire the
Development Property and complete the Improvements (and any future
expansion of the Company's operations on the Development Property),
the Company (except as so authorized) has not made or created and
will not make or create or suffer to be made or created any total
or partial sale, assignment, conveyance, or lease (excepting the
SoftPac Lease), or any trust or power, or any transfer in any other
mode or form, of or with respect to this Agreement or the Project
or any part thereof or any interest therein, or any contract or
agreement to do any of the same, without the prior written approval
of the City (which approval the City may withhold in its sole
discretion).
The City shall be entitled to require, except as otherwise
provided in the Agreement, as conditions to any such approval that:
(a) Any proposed transferee shall have the
qualifications and financial responsibility, in the reasonable
judgment of the City, necessary and adequate to fulfill the
obligations undertaken in this Agreement by the Company.
(b) Any proposed transferee, by instrument in writing
reasonably satisfactory to the City, shall, for itself and its
successors and assigns, and expressly for the benefit of the
City, have expressly assumed all of the obligations of the
Company under this Agreement and agreed to be subject to all
~8072.2 16
the conditions and restrictions to which the Company and the
Project are subject (including the SoftPac Lease) unless the
Company agrees to continue to fulfill those obligations, in
which case the preceding provisions of this Section 6.5(b)
shall not apply. The City may also require the transferor
Company to execute such agreements to the extent deemed
reasonably necessary by the City in order to clarify the
respective rights and obligations, or absence thereof, of the
transferor, the transferee and/or the City, as the case may
be.
(c) There shall be submitted to the City for prior
review all instruments and other legal documents proposed to
be executed in effectin~ the transfer of any such interest in
this A~reement or the Project.
A sale of the Project and/or assignment of this A~reement to
SoftPac shall not be prohibited by this Section 6.5 and shall not
be subject to discretionary approval by the City, provided the
conditions in (b) and (c) above are observed and satisfied.
A sale of the Project and/or assignment of this A~reement to
a party other than SoftPac shall also not be prohibited by this
Section 6.5 and shall not be subject to discretionary approval by
the City, provided the conditions in (b) and (c) above are observed
and satisfied, and provided further that the Certificate of
Completion shall have been issued hereunder.
IN WITNESS WHEREOF, the City and the Company have caused this
A~reement to be executed by their duly authorized representatives.
CITY OF ELK RIVER, MINNESOTA
By
Its Mayor
By
Its City Administrator
(SEAL)
[Execution of this Development Assistance
Northwest, L.L.C., and SoftPac Industries,
following pa~e.]
Agreement by Opus
Inc. appears on the
1198072.2 17
OPUS NORTHWEST, L.L.C., a Delaware
Limited Liability Company
By
Its
By
Its
SOFTPAC, INC., a Minnesota
Corporat ion
By
Its
By
Its
[Execution Page to Development Assistance Agreement between the
City of Elk River, Minnesota, and the above-named parties.]
1198072.2 18
EXHIBIT A
LEGAL DESCRIPTION OF DEVELOPMENT PROPERTY
The Development Property consists of the following property
located in the City of Elk River, Sherburne County, Minnesota:
1198072.2 A-1
CITY OF ELK RIVER,
COUNTRY CROSSING BUSINESS CENTER THIRD ADD/T/ON
PLAT:AREA
/- -~ -- T- -- -'~
___~.£ ! \ . \
' ~1~,'x, "
__ ~~,,.~ ~ _ .... _L _ --
,.,. j If
..... ~"'~":'""~':" c'.%~.. ,,,, ,:. '"':'~"~',';
·
""~/3,'..,
__ __ '5 BLOCK 1
PU^~ ^RE,A: 608,599 $.F,, ,Dr 1197 ,Ac'/-
fl ~. -::(X ..... 1': '- .,? \ ~ '~''~ --'~ -'~ -- --" ~"~':-'" ~"-"' - - -
.:: :;'" ' ' -~, /, ,, ",, I ~,i' I .....
SHERBURNE COUNTY, MN.
LEGAL DESCRIPTION
Country Crossing Business Center Third Addition, Lot 1, Block 1
No. R-1
EXHIBIT B
FORM OF TIF BOND
UNITED STATES OF AMERICA
STATE OF MINNESOTA
COUNTY OF SHERBURNE
CITY OF ELK RIVER, MINNESOTA
TAXABLE TAX INCREMENT REVENUE
BOND OF 2000
(SOFTPAC PROJECT)
[1] The City of Elk River, Minnesota (the "City"), hereby
acknowledges itself to be indebted and, for value received, hereby
promises to pay to SoftPac, Inc., a Minnesota corporation, or its
registered assigns (the "Registered Owner"), but only in the
manner, at the times, from the sources of revenue, and to the
extent hereinafter provided, the Principal Amount of this Bond (as
defined in paragraph [2] hereof) and to pay interest on the unpaid
portions of the Principal Amount of this Bond at the rate of
interest of eight and no hundredths percent (8.00%) per annum.
Interest shall accrue from the date of the Certificate of
Completion (as defined in the Development Agreement hereinafter
described) and shall be computed on the basis of a 360-day year
consisting of 12 30-day months. This Bond is the "TIF Bond"
described and defined in that certain Development Assistance
Agreement, dated as of August 28, 2000 (as the same may be amended
from time to time, the "Development Agreement"), between the City
and Opus Northwest, L.L.C., a Delaware limited liability company,
as the initial Company under the Development Agreement, and also
subscribed in part by SoftPac Industries, Inc., a Delaware limited
liability company. Each capitalized term which is used but not
otherwise defined in this Bond shall have the meaning given to that
term in the Development Agreement.
[2] The Principal Amount of this Bond shall be the lesser of
$700,000 and the sum of the amounts certified to the City by the
Company and acceptable to the City pursuant to Section 3.2(b) of
the Development Agreement.
[3] Subject to the terms hereof, amounts due on this Bond
shall be payable on each July 15 and December 15 (or at least 15
days after receipt from Sherburne County of the respective
settlements of Tax Increments), commencing July 15, 2002, and
continuing through December 15 of the year which is eight years
~8072.2 B-1
after the year in which the TIF District first generates Tax
Increments (the "Payment Dates") .
[4] On each Payment Date (or, if not a business day of the
city, the first business day thereafter) the City shall pay by
check or draft mailed to the person that was the Regist@red Owner
of this Bond at the close of the last business day of the City
preceding such Payment Date an amount equal to the lesser of
(1) the Available Tax Increments received by the City since the
preceding said Payment Date (or, in the case of the first Payment
Date, since the date of this Bond) and (2) the sum of (i) the
accrued and unpaid interest hereon and (ii) the aggregate amount of
the unpaid principal of this Bond. All payments made by the City
under this Bond shall be applied first to pay accrued and unpaid
interest on this Bond and second toward payment of principal
hereof.
[5] This Bond shall terminate and be of no further force and
effect on any date upon which the City shall have terminated the
Development Agreement, on the last Payment Date following payment
thereon of the Available Tax Increments then due, or on the date
that all amounts payable hereunder shall have been paid in full,
whichever occurs earliest.
[6] The City makes no representation or covenant, express or
implied, that the revenues described herein will be sufficient to
pay, in whole or in part, the amounts which are or may otherwise
become due and payable hereunder. Any amounts which have not
become due and payable on this Bond on or before the final Payment
Date shall no longer be a debt or obligation of the City
whatsoever.
[7] The City's payment obligations hereunder shall be further
conditioned on the Company's compliance with the terms and
conditions of the Development Agreement and on the fact that there
shall not at the time have occurred and be continuing an Event of
Default under the Development Agreement, and, further, if pursuant
to the occurrence of an Event of Default under the Development
Agreement the City elects to terminate the Development Agreement,
the City shall have no further debt or obligation under this Bond
whatsoever. Reference is hereby made to the provisions of the
Development Agreement for a complete statement of the obligations
of the Company and of the rights of the City thereunder, and said
provisions are hereby incorporated by reference into this Bond to
the same extent as though set out in full herein. The execution
and delivery of this Bond by the City, and the acceptance thereof
by the Company, as the initial Registered Owner hereof, shall
conclusively establish this Bond as the "TIF Bond" (and shall
conclusively constitute discharge of the City's obligation to issue
and deliver the same) under the Development Agreement.
~98072.2 B-2
[8] This Bond is not any obligation of any kind whatsoever of
any public body, except that this Bond is a special and limited
revenue obligation but not a general or moral obligation of the
City and is payable by the City only from the sources and subject
to the qualifications and limitations stated or referenced herein.
Neither the full faith and credit nor the taxing powers of the City
are pledged to or available for the payment of this Bond, and no
property or other asset of the City, save and except the above
referenced Available Tax Increments, is or shall constitute a
source of payment of the City's obligations hereunder.
[9] This Bond is issued by the City in aid of financing a
project pursuant to and in full conformity with the Constitution
and laws of the State of Minnesota, including Minnesota Statutes,
Sections 469.174 through 469.179, and including specifically but
without limitation Section 469.178, Subdivision 4, thereof.
[10] This Bond may be assigned by the Registered Owner but
upon such assignment the assignor shall promptly notify the City
thereof in writing, and the assignee shall surrender this Bond to
the City either in exchange for a new fully registered Bond or for
transfer of this Bond on the registration records for the Bond
maintained by the City. The Registered Owner, by accepting
registration of this Bond, acknowledges that the City has not
qualified or registered this Bond under any state or federal
registration, securities or similar laws and the Registered Owner
covenants to comply with all securities, anti-fraud, registration,
and other state and federal laws and limitations applicable in
connection with any such proposed transfer or sale of this Bond.
Each such assignee shall take this Bond subject to the foregoing
conditions and subject to all provisions stated or referenced
herein. As a precondition to any such assignment or transfer of
this Bond, the City shall have been provided with an opinion of
counsel (from a firm reasonably acceptable to the City) or a
certificate from the transferor, in a form and of a content
satisfactory to the City (including, in the City's discretion, an
SEC Regulation Deed certification), that such transfer is exempt
from registration and prospectus delivery requirements of federal
and state securities and similar laws and regulations.
[11] This Bond has been issued as a taxable and not as a tax-
exempt obligation, and the City makes no representation, express or
implied, that the interest on this Bond is or may be excludable
from gross or taxable net income of the Registered Owner for income
tax purposes.
~98072.2 B-3
[12] IN WITNESS WHEREOF, the City of Elk River, Minnesota, has
caused this Bond to be executed by the manual signatures of its
Mayor and City Administrator, has caused the official seal of the
City to be omitted herefrom, as permitted by law, and has caused
this Bond to be issued and dated as of , 2000.
Mayor
City Administrator
~8072.2 B-4
CERTIFICATION OF REGISTRATION
It is hereby certified that the foregoing Bond was as of the
latest date listed below registered in the name of the last
Registered Owner noted below, and that, at the request of said
Registered Owner of this Bond, the undersigned has as of said
applicable date registered this Bond as to principal and interest
on the Bond in the name of such Registered Owner, as indicated in
the registration blank below, on the books kept by the undersigned
for such purposes.
NAME OF REGISTERED
OWNER
DATE OF
REGISTRATION
SIGNATURE OF CITY
FINANCE DIRECTOR
SoftPac, Inc.
, 2000
x~8072.2 B-5
EXHIBIT C
CERTIFICATE OF COMPLETION
WHEREAS, the City of Elk River, Minnesota (the "City"), and
Opus Northwest, L.L.C., a Delaware limited liability company (the
"Company"), have executed a Development Assistance Agreement, dated
as of August 28, 2000 (the "Development Agreement"), with respect
to the completion by the Company of certain improvements (the
"Improvements,,), more specifically, an approximately 73,000 square
foot manufacturing facility on certain land (the "Development
Property") described in the Development Agreement; and
WHEREAS, the Company has performed its obligation under the
Development Agreement to substantially complete the Improvements in
a manner deemed sufficient by the City to permit the execution of
this certificate pursuant to Section 3.4 of the Development
Agreement:
NOW, THEREFORE, this is to certify that the Improvements have
been completed on the Development Property in substantial
conformance with the applicable terms of the Development Agreement.
CITY OF ELK RIVER, MINNESOTA
By
Its
Dated: , 200__.
1198072.2 C-1
EXHIBIT D
BUSINESS SUBSIDY REPORT
Report by SoftPac, as Recipient of Business Subsidy
This report is required by Section 3.5 of that certain
Development Assistance Agreement, dated as of August 28, 2000 (the
"Agreement"), among the City of Elk River, Minnesota (the "City"),
Opus Northwest, L.L.C., and SoftPac, Inc. ("SoftPac"), and as
required by Minnesota Statutes, Section 116J.994, Subdivision 7, as
amended. Capitalized terms which are used but not otherwise
defined in this report have the meanings given to those terms under
the Agreement.
The City has under the Agreement granted a certain business
subsidy to SoftPac.
Under the Agreement, SoftPac is required to file reports with
the City's Director of Economic Development (1) on March 1 of each
year, beginning with the March 1 immediately following the date of
the Certificate of Completion, being referred to herein as the
Benefit Date, and (2) within 30 days after the Compliance Date,
namely, the date which is two years after the Benefit Date. Each
March 1 report is required to report on the prior calendar year,
and each other report shall report on the period since the last
reporting period.
SoftPac's Jobs Goals under Section 3.5 of the Agreement are to
create at the Project 60 permanent full-time equivalent jobs within
two years from the Benefit Date. These jobs are required to have
a wage of at least $10.00 per hour, exclusive of benefits.
SoftPac hereby certifies to the City the following:
(1) As provided in the Agreement, the fair market value
of the subsidy is estimated to be $700,000, the type of
subsidy is tax increment financing from an "economic
development" tax increment district in the form of deferred
reimbursement, with interest, of certain land acquisition
costs, and the public purposes of the subsidy are to further
development of the City's industrial and tax base and to
create jobs.
(2) The hourly wage of each permanent full-time
equivalent job which has been created by SoftPac at the
Project since the Benefit Date, with separate bands of wages,
are as follows:
~98072.2 D-1
Number of Jobs Wage Levels per Hour
(3) The cost of health insurance provided by SoftPac for
the above-referenced jobs, separated by bands of wages, is as
follows:
Wa§e Level per Hour
Cost of Health Insurance
(4) If SoftPac has not already met the Job Goals, it
reasonably expects that it will meet those goals on or before
, 200 , and is taking the following steps
to meet the Job Goals:
(5) SoftPac's lease of the Project involved the
relocation by SoftPac of its facilities located at 9480
Hemlock Lane North, Maple Grove, Minnesota 55369, due to lack
of available and affordable production space at that previous
site.
(6) SoftPac has no parent corporations.
(7) Other than the subsidy provided by the City under
the Agreement, there are no other State of Minnesota or "local
government agency" grants of subsidy to SoftPac for the
Project, except for:
Grantor Value ($)
Grantor Value ($)
(8) SoftPac hereby agrees to provide upon request such
other information as the Commissioner of the Department of
Trade and Economic Development of the State of Minnesota may
~98072.2 D-2
request the City or SoftPac to provide or as may be required
by the Subsidy Law.
(9) SoftPac represents that it has continuously leased
the Project since its completion, that SoftPac has
continuously used and occupied the Project, and SoftPac
expects said lease and occupancy to continue for the
foreseeable future.
(10) SoftPac is not in default on the date hereof of its
obligations under any subsidy agreement under the Subsidy Law.
SOFTPAC, INC.
By
Its
This report is to be filed with:
City Elk River
Elk River City Hall
13065 Orono Parkway
P.O. Box 490
Elk River, Minnesota 55330-0490
Attn: Director of Economic Development
~8072.2 D-3
CITY OF ELK RIVER'
COUNTY OF SHERBURNE
STATE OF MINNESOTA
RESOLUTION NO.
A RESOLUTION APPROVING AND AUTHORIZING THE
EXECUTION OF A DEVELOPMENT ASSISTANCE AGREEMENT
RESPECTING SOFTPAC PROJECT
BE IT RESOLVED by the City Council (the "Council") of the City
of Elk River, Minnesota (the "City"), as follows:
1. Recitals.
(a) The City has the powers provided in Minnesota
Statutes, Sections 469.124 through 469.134 (the "Act").
(b) Pursuant to and in furtherance of the objectives of
the Act, the City has undertaken a program to promote
redevelopment of certain land within the City, and in this
connection is engaged in carrying out its development project
known as its Development District No. 1 (the "Development
District") in an area (the "Project Area") located in the
City.
(c) There has been approved by the Council, pursuant to
the Act, a Development Program for the Development District,
as amended (the "Development Program").
(d) In order to achieve the objectives of the
Development Program and particularly to make the land in the
Project Area available for redevelopment by private enterprise
in conformance with the Development Program, the City has
determined to provide substantial aid and assistance in
connection with the Development Program through the financing
of certain of the public costs of development in the Project
Area.
(e) Opus Northwest, L.L.C. (the "Company"), has
presented the City with a proposal for the construction within
the Project Area of certain improvements, and a certain
Development Assistance Agreement (the "Agreement") between the
City and the Company, stating the terms and conditions of such
development and the City's and the Company's responsibilities
respecting the assistance thereof, has been presented to the
Council for its consideration.
2. The Council hereby approves the Agreement substantially in
the form presented to the Council and hereby authorizes the Mayor
and City Clerk, in their discretion and at such time, if any, as
1198072. I
they may deem appropriate, to execute the'same on behalf of the
City, with such additions and modifications as those officers may
deem desirable or necessary, as evidenced by their execution
thereof.
3. Upon execution and delivery of the Agreement, the officers
and employees of the City are hereby authorized and directed to
take or cause to be taken such actions as may be necessary on
behalf of the City to implement the Agreement, including without
limitation the issuance of the TIF Bond thereunder.
4. The Council hereby determines that the execution and
performance of the Agreement will help realize the public purposes
of the Act and are in furtherance of the Development Program.
Adopted on , 2000, by the Elk River City Council.
1198072.1 2
STATE OF MINNESOTA )
)
COUNTY OF SHERBURNE )
SS.
CiTY CLERK'S CERTIFICATE
I, the undersigned, being the duly qualified and acting City
Clerk of the City of Elk River, Minnesota, (the "City"), hereby
certify that I have carefully compared the attached and foregoing
resolution with the original on file in my office and further
certify that the same is a full, true and complete copy thereof,
relating to the authorization by the City Council of the City of
the execution of a certain Development Assistance Agreement between
the City, and Opus Northwest, L.L.C., and SoftPac, Inc.
I further certify that said resolution was duly adopted by
said Council at a duly called and regularly held regular or special
meeting thereof.
Witness my hand officially as such City Clerk and the official
seal of the City this day of , 2000.
City Clerk
Elk River, Minnesota
(SEAL)
1198072.1 3