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3.0.-5.0. EDSR 04-26-1993 \r ay°f lk TO: ECONOMIC DEVELOPMENT AUTHORITY R• iver FROM: WILLIAM RUBIN, ED COORDINATOV DATE: APRIL 26, 1993 SUBJECT: AGENDA MEMO FOR APRIL 26, 1993, EDA MEETING ITEM 3 . TESCOM DEVELOPMENT AGREEMENT The EDA is now in a position to approve the Development Agreement between the Elk River EDA and Tescom Corporation, Inc. This Agreement is not unlike previous TIF agreements (that is, Timron Precision Gear, etc. ) with one noted exception: The EDA was unable to obtain a reverter in the Quit Claim Deed which conveys title to Tescom. This element of the Quit Claim Deed enables the property to revert back to the EDA if a Certificate of Occupancy is not issued, and therefore, the project is not finished. As a substitute to the reverter, I refer you to Section 3 . 3 of the Development Agreement. This Section allows the EDA to accept $100,000 from the developer (Tescom) as a deposit • for performance of the obligations under the Agreement. After a permanent Certificate of Occupancy is issued, the $100,000 is returned to Tescom, and, Tescom is eligible to achieve its other reimbursements under the Agreement. Tescom is required to construct a new facility which contains approximately 28,080 square feet. Construction of the project is to be completed no later than January 1, 1994 . This enables the City/EDA to collect the first full increment beginning in 1995 . The project's finished market value for tax purposes will be $1,200,000 (land and building value) . This value will be subject to a "assessment agreement" that is executed by the EDA, Tescom, and the County Assessor. Because this project entails the creation of a new Tax Increment District, it is subject to certain restrictions that were placed on the TIF law in 1990 . The basic restriction deals with the City' s potential loss in State Aid or HACA. Tescom is responsible for reimbursing the City for its loss during the life of this TIF District. Action Requested The EDA is asked to approve the Contract for Private Development by and between the Elk River EDA and Tescom Corporation. • ITEM 4 . TIF PLEDGE AGREEMENT 720 Dodge Avenue N.W., Elk River, Minnesota 55330 (612) 441-7420 • From the Tescom TIF District, the EDA will collect tax increment payments from Sherburne County over an estimated three to four year period. One hundred thousand dollars of these TIF increments should be earmarked directly to the City of Elk River. These funds will be used by the City to repay its funding sources relative to the acquisition of the vacant parcels in the Industrial Park. Action Requested The EDA is asked to pass a motion pledging $100,000 in Tax Increment Funds from District No. 11 to the City of Elk River. ITEM 5 . CONVEY TITLE TO TESCOM CORPORATION The final item for EDA action on this project is to convey title of Lots 2 and 3, Block 2, Elk River Industrial Park 2nd Addition by Quit Claim Deed to Tescom Corporation. The Quit Claim Deed is being prepared by Larkin, Hoffman, Daly, and Lindgren, and requires the signature of the EDA President and Executive Director. Action Requested • The EDA is asked to authorize the conveyance of Lots 2 and 3, Block 2, Elk River Industrial Park 2nd Addition to Tescom Corporation, Inc. This action is subject to the execution of a Development Agreement with Tescom. • 410 CONTRACT FOR PRIVATE DEVELOPMENT By and Between THE ECONOMIC DEVELOPMENT AUTHORITY FOR THE CITY OF ELK RIVER and TESCOM CORPORATION, INC. i CONTRACT FOR PRIVATE DEVELOPMENT THIS AGREEMENT, made on or as of the day of 1993, by and between the ECONOMIC DEVELOPMENT AUTHORITY FOR THE CITY OF ELK RIVER (hereinafter referred to as the "Authority" or the "EDA") , and TESCOM CORPORATION, INC. , a Minnesota corporation (hereinafter referred to as the "Developer") , having its principal office at 12616 Industrial Boulevard, Elk River, Minnesota 55330 . WITNESSETH: WHEREAS, in furtherance of the objectives of municipal economic development the City of Elk River (hereinafter referred to as the "City") has undertaken a program for the economic development of certain areas of the City (hereinafter referred to as the "Project") ; and WHEREAS, as of the date of this Agreement there has been • prepared and approved by the City Council of the City (hereinafter referred to as the "Council") pursuant to the Act a Development Program for the Project, adopted April 1, 1985 (which Program, as amended, is hereinafter referred to as the "Development Program") ; and WHEREAS, major objectives of the Development Program include: providing maximum opportunity for redevelopment by private enterprise, consistent with the needs of the City as a whole; providing increased employment opportunities and supplementing the financial base of the community; providing land for needed expansion of existing businesses in the Project Area; providing adequate street, utility and other public improvements and facilities to enhance the Project Area for new and existing development; and WHEREAS, in order to achieve the objectives of the Development Program the City and Authority have determined to provide aid and assistance to finance public costs of development in the Project Area; and WHEREAS, the Property is located within Tax Increment Financing District No. 9, delineated in and established pursuant to a tax increment financing plan approved by the EDA and the Council and dated March 8, 1993 (hereinafter referred to as the "Tax Increment Plan") ; and S WHEREAS, the City and EDA believe that development of the • Property pursuant to this Agreement, and fulfillment generally of this Agreement, are in the vital and best interests of the City and the health, safety, morals, and welfare of its residents, and in accord with the public purposes and provisions of the applicable State and local laws and requirements under which the Project has been undertaken and is being assisted. NOW, THEREFORE, in consideration of the premises and the mutual obligations of the parties hereto, each of them does hereby covenant and agree with the other as follows: ARTICLE I pefinitions 1.1) Definitions . In this Agreement, unless a different meaning clearly appears from the context: "Act" means Minnesota Statutes, Section 469 .001 et seq. "Agreement" means this Agreement, as the same may be from time to time modified, amended, or supplemented. "Assessment Agreement" means the agreement, in the form of the agreement contained in Schedule B attached to and made a part of this Agreement, among the Developer, the EDA and the county assessor of Sherburne County, entered into pursuant to Section 6 .2 of this Agreement. "Authority" shall mean the Economic Development Authority for the City of Elk River. "City" means the City of Elk River, Minnesota. "County" means the County of Sherburne, Minnesota. "Developer" means Tescom Corporation, Inc. "EDA" means the Economic Development Authority for the City of Elk River. "Event of Default" means an action by the Developer listed in Article IX of this Agreement. "Minimum Improvements" means an approximately 30, 000 square foot industrial building to be constructed on the Property. "Mortgage" means any mortgage made by the Developer which is secured, in whole or in part, with the Property. "Net Proceeds" means any proceeds paid by an insurer to the • Developer or the Authority under a policy of insurance required to be provided and maintained by the Developer pursuant to 2 . Article V of this Agreement and remaining after deducting all expenses (including fees and disbursements of counsel) incurred el° in the collection of such proceeds. "Project" means the Elk River Development Program, as modified. "Project Area" means the real property located within the boundaries of the Project. "Site Preparation" means those improvements made to and on the Property by Authority, including the completion of a survey and soil borings and analysis in preparation for construction on the Property. "Property" means the real property described in Schedule A of this Agreement. "Development Program" means the Development Program for the Project dated April 1, 1985, as amended. "State" means the State of Minnesota. "Tax Increment" means the portion of the real property taxes which is paid with respect to the Property and which is remitted to the EDA as tax increment pursuant to the Tax Increment Law. "Tax Increment District" means Tax Increment Financing District No. 9 as delineated in and established pursuant to the tax increment financing plan approved by the Authority and the Council and dated March 8, 1993. "Tax Increment Law" means Minnesota Statutes, Section 469.174 to 469 .179, as amended. "Tax Increment Plan" or "Plan" means the tax increment financing plan approved by the Authority and the Council and dated March 8, 1993. "Tax Official" means any City or County Assessor; County Auditor; City, County or State Board of Equalization, the commissioner of revenue of the State, or any State or Federal District Court, the Tax Court of the State, or the State Supreme Court. "Termination Date" means that date on which the Authority has received from the County sufficient tax increment to reimburse the Authority in full for its undertakings as set forth in Article III of this Agreement. "Unavoidable Delays" means delays which are the direct result of strikes, acts of God, other labor troubles, fire or any other casualty to the Minimum Improvements, litigation commenced by third parties which, by injunction or other similar judicial 3. action, directly results in delays, or acts of any federal, state or local governmental unit (other than the EDA or the City) which • directly result in delays. ARTICLE II Representations and Warranties 2 .1) Representations by City and EDA. The City and EDA make the following representations as the basis for the undertaking on their part herein contained: (01) The Project is a "development program" within the meaning of the Act and was created, adopted and approved in accordance with the terms of the Act. (02) The Property is located within a "tax increment district" created, adopted, certified and approved pursuant to Minnesota Statutes, Section 469 .177. (03) The activities of the City and EDA are undertaken for the purposes and objectives stated in the Development Program. (04) The Authority is the owner of the Property and intends to convey the Property to Developer for uses in accordance with this Agreement. • 2 .2) Representations and Warranties by the Developer. The Developer represents and warrants that: (01) The Developer is a Minnesota corporation duly organized and in good standing under the laws of the State, is not knowingly in violation of any provisions of the laws of the State, has 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. (02) The Developer will construct, operate and maintain the Minimum Improvements 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) . (03) To the best of Developer' s knowledge, the Minimum Improvements constitute a permitted use under federal laws and regulations (including, but not limited to, environmental, zoning, building code and public health laws and regulations) . (04) The Minimum Improvements will be constructed at a cost of at least $ (including land and building) in the event the Property is conveyed to the Developer. 4. (05) The Developer has received no notice or communication from any local, state or federal official that the activities • of the Developer or the EDA in the Project Area may be or will be in violation of any environmental law or regulation (other than those notices or communications of which the Authority is aware) . The Developer is aware of no facts the existence of which would cause it to be in violation of any local, state or federal environmental law, regulation or review procedure or which would give any person a valid claim under the Minnesota Environmental Rights Act. (06) The Developer will use its best efforts to construct the Minimum Improvements in accordance with all local, state or federal energy-conservation laws or regulations. (07) The Developer will use its best efforts to obtain, in a timely manner, all required permits, licenses and approvals, and will meet, in a timely manner, all requirements of all applicable local, state and federal laws and regulations which must be obtained or met before the Minimum Improvements may be lawfully constructed. (08) 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 or 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. (09) The Developer will cooperate with the City and EDA with respect to any litigation commenced with respect to the Plan, Project, or Minimum Improvements. ARTICLE III Undertakings of the Authority 3 . 1) Conveyance of Property. (01) Authority will convey any and all title to the Property held by Authority, by quitclaim deed, subject to any easements, reservations, restrictions, covenants, and conditions affecting the Property. All special assessments levied or pending as of the date of the conveyance shall be paid by Authority. The conveyance of the Property and the Developer' s use of the Property shall be subject to all of the conditions, covenants, restrictions, and limitations imposed by this Agreement and the quitclaim deed. The conveyance of title to the Property and the Developer' s use of the Property shall also be subject to building and zoning 5. laws and ordinances and all other local, state, and federal • laws and regulations. (02) Authority will, within five (5) days of the execution of this Agreement, loan to Developer Authority' s Abstract of Title for the Property. The Abstract of Title shall be returned to Authority within thirty (30) days. Subject to satisfaction of the terms and conditions contained in this Agreement, Authority shall execute and deliver a quitclaim deed to the Property to Developer no later than fifteen (15) days following return to Authority of the Abstract. Developer shall take possession of the Property the day following execution of the deed by the Authority. Unless otherwise mutually agreed by the Authority and Developer, the execution and delivery of all deeds shall be made at City Hall, at 13065 Orono Parkway, Elk River, Minnesota. The deed for the Property shall be in recordable form and shall be promptly recorded with the Assessment Agreement, as provided in this Agreement. Developer shall pay all costs for such recording. 3 .2) Site Preparation. Authority will prepare the Property for construction by reimbursing Developer for the actual cost of conducting a survey and preliminary soil borings and analysis of the Property. Authority and Developer anticipate that the costs for these site preparation activities will not exceed $29, 000. 00, and Authority shall be obligated to reimburse no more than . $29, 000 for said site preparation costs. If the site preparation costs exceed $29 , 000 .00, Developer shall have the right to request that Authority amend the Tax Increment Plan and this Agreement to fund the additional site preparation costs, but neither Authority nor City shall have an obligation to do so. Developer shall provide Authority with invoices and/or other evidence of actual costs incurred for said site preparation activities, and Authority shall reimburse Developer for these costs within thirty (30) days of Developer' s receipt of a permanent certificate of occupancy for the Minimum Improvements . Authority shall have no obligation to reimburse Developer for Site Preparation costs if Developer does not obtain a permanent certificate of occupancy for the Minimum Improvements on or before January 1, 1994 or Developer is in breach of any other term of this Agreement and the Agreement is terminated. 3 .3) Security for Developer' s Performance. In lieu of taking a security interest in the property, Authority will accept as security for Developer' s performance of its obligation under Article IV of this Agreement to construct the Minimum Improvements, a cash deposit by the Developer in the amount of $100, 000 . 00 . This deposit shall be made by Developer at the time Authority conveys title to the Property to Developer. Authority shall place the $100, 000.00 cash deposit in an escrow account and shall return the principal amount of $100, 000. 00 to Developer within thirty (30) days of Developer's receipt of a permanent certificate of occupancy for the Minimum Improvements. Authority 6. shall have no obligation to return the $100, 000.00 deposit to • Developer if Developer fails to receive a permanent certificate of occupancy for the Minimum Improvements on or before January 1, 1994 or there is any other breach by Developer of the terms of this Agreement and the Agreement is terminated. 3 .4) Reimbursement to Authority for Property and Site Preparation Costs. The Authority shall be reimbursed for the Property conveyed to Developer, the site preparation costs, and related administrative expenses in the amount of $135, 000 . Reimbursement of this amount shall come from the Tax Increment generated by the Tax Increment District as provided in the Tax Increment Plan. 3 .5) Reimbursement to City for City Services. As partial compensation for services provided by the City and Authority to Developer to facilitate development of the Minimum Improvements, and for additional municipal services required by Developer during the term of this Agreement, Developer shall pay to the City, on or before June 1 of each year, commencing June 1, 1993, and continuing to the termination of this Agreement, the sum of $ . ARTICLE IV Construction of Minimum Improvements • 4 . 1) Construction of Minimum Improvements. The Developer agrees that it will construct the Minimum Improvements in accordance with the Plans approved by the City and will at all times prior to the Termination Date operate and maintain, preserve and keep the Minimum Improvements or cause the Minimum Improvements to be maintained, preserved and kept with the appurtenances and every part and parcel thereof, in good repair and condition. 4 .2) Commencement and Completion of Construction. Subject to Unavoidable Delays, the Developer shall commence construction of the Minimum Improvements within ninety (90) days after the execution of this Agreement, or on such other date as the parties shall mutually agree . Subject to Unavoidable Delays, construction of the Minimum Improvements shall be completed and a permanent certificate of occupancy obtained not later than January 1, 1994 . All work with respect to the Minimum Improvements shall be constructed in conformity with the Plans approved by the City. 4 . 3) Completion of Minimum Improvements. The construction of the Minimum Improvements shall be deemed to be completed when such Minimum Improvements are substantially completed. Such Minimum Improvements will be deemed to be substantially completed when the Minimum Improvements are occupied for business and • Developer has received a permanent certificate of occupancy by the City. 7. 5 .1) InsuranceARTICLE V • I.nsurance and Condemnation (01) Upon completion of construction of the Minimum Improvements and prior to the Termination Date, the Developer shall maintain, or cause to be maintained, at its cost and expense, and from time to time at the request of the EDA shall furnish proof of the payment of premiums on, insurance as follows: (a) Insurance against loss and/or damage to the Minimum Improvements under a policy or policies covering such risks as are ordinarily insured against by similar businesses, including (without limiting the generality of the foregoing) fire, extended coverage, vandalism and malicious mischief, boiler explosion, water damage, demolition cost, debris removal, collapse and flood in an amount not less than the full insurable replacement value of the Minimum Improvements, but any such policy may have a deductible amount of not more than $25, 000.00. No policy of insurance shall be so written that the proceeds thereof will produce less than the • minimum coverage required by the preceding sentence, by reason of co-insurance provisions or otherwise, without the prior consent thereto in writing by the EDA. The term "full insurable replacement value" shall mean the actual replacement cost of the Minimum Improvements (excluding foundation and excavation costs and costs of underground flues, pipes, drains and other uninsurable items) and equipment, and shall be determined from time to time at the request of the EDA, but not more frequently than once every three years, by an insurance consultant or insurer. All policies evidencing insurance required by this subparagraph (a) with respect to the Minimum Improvements shall be carried in the names of the Developer and the EDA as their respective interests may appear and shall contain standard clauses which provide for Net Proceeds of insurance resulting from claims per casualty thereunder to the Minimum Improvements which are equal to or less than $25, 000.00 for loss or damage covered thereby to be made payable directly to the Developer, and Net Proceeds from such claims in excess of $25, 000 .00 to be made payable directly to the EDA. The EDA and the Developer shall jointly agree on the amount of settlement. 8 . (b) Comprehensive general public liability insurance, • including personal injury liability (with employee exclusion deleted) and automobile insurance, including owned, non-owned and hired automobiles, against liability for injuries to persons and/or property, in the minimum amount for each occurrence and for each year of $1, 000, 000. 00, for public liability not arising from ownership or operation of automobiles (or other motor vehicles) , and in the minimum amount of $1, 000, 000 . 00 for each occurrence and for each year for liability arising out of ownership or operation of automobiles (or other motor vehicles) and shall be endorsed to show the City as additional insured. (c) Such other insurance, including workers ' compensation insurance respecting all employees of the Developer, in such amount as is customarily carried by like organizations engaged in like activities of comparable size and liability exposure; provided that the Developer may be self- insured with respect to all or any part of its liability for workers ' compensation. (02) All insurance required in Article V of this Agreement shall be taken out and maintained in responsible insurance companies selected by the Developer which are authorized under the laws of the State to assume the risks covered thereby. The Developer will deposit annually with the EDA policies evidencing all such insurance, or a certificate or certificates or binders of the respective insurers stating that such insurance is in force and effect . Unless otherwise provided in this Article V of this Agreement each policy shall contain a provision that the insurer shall not cancel nor modify it without giving written notice to the Developer and the EDA at least thirty (30) days before the cancellation or modification becomes effective. Not less than fifteen (15) days prior to the expiration of any policy the Developer shall furnish the EDA evidence satisfactory to the EDA that the policy has been renewed or replaced by another policy conforming to the provisions of this Article V of this Agreement, or that there is no necessity therefor under the terms hereof. In lieu of separate policies, the Developer may maintain a single policy, blanket or umbrella policies, or a combination thereof, having the coverage required herein, in which event the Developer shall deposit with the EDA a certificate or certificates of the respective insurers as to the amount of coverage in force upon the Minimum Improvements. The EDA shall be named as an additional insured under all policies of insurance carried with respect to the Minimum Improvements. S 9 . (03) Developer agrees to notify the EDA immediately in the case of damage exceeding $25, 000.00 in amount to, or destruction of, the Minimum Improvements or any portion thereof resulting from fire or other casualty. In the event that any such damage does not exceed $25, 000 . 00, Developer will forthwith repair, reconstruct and restore the Minimum Improvements to substantially the same or an improved condition or value as it existed prior to the event causing such damage and, to the extent necessary to accomplish such repair, reconstruction and restoration, the Developer will apply the Net Proceeds of any insurance relating to such damage received by the Developer to the payment or reimbursement of the costs thereof. Net Proceeds of any insurance relating to such damage up to $25, 000 .00 shall be paid directly to the Developer. In the event the Minimum Improvements or any portion thereof is destroyed by fire or other casualty and the damage or destruction is estimated to equal or exceed $25, 000.00, then the Developer shall within one hundred and twenty (120) days after such damage or destruction, proceed forthwith to repair, reconstruct and restore the damaged Minimum Improvements to substantially the same condition or utility value as it existed prior to the event causing such damage or destruction and, to the extent necessary to accomplish such repair, reconstruction and restoration, Developer will apply the Net Proceeds of any insurance relating to such damage or • destruction received by the Developer from the EDA to the payment or reimbursement of the costs thereof . Any Net Proceeds remaining after completion of construction shall be disbursed to the Developer. (04) If the Developer is in compliance with the terms and conditions of this Agreement, then any Net Proceeds of insurance relating to such damage or destruction received by the Authority shall be released from time to time by the Authority to the Developer upon the receipt of: (a) A certificate of an authorized representative of the Developer specifying the expenditures made or to be made or the indebtedness incurred in connection with such repair, reconstruction and restoration and stating that such Net Proceeds, together with any other moneys legally available for such purposes, will be sufficient to complete such repair, construction and restoration; and (b) If Net Proceeds equal or exceed $100, 000 in amount, the written approval of such certificate by an independent engineer. (05) The rights of the EDA with respect to the receipt and • distribution of Net Proceeds of insurance shall be subordinate to the rights of the Holder of any Mortgage and 10. Mortgage documents as approved under Article VII of this • Agreement, provided any Net Proceeds of insurance are used to III the extent available to the repair and/or replacement of the Minimum Improvements. 5.2) Condemnation. In the event that title to and possession of the Minimum Improvements or any material part thereof shall be taken in condemnation or by the exercise of the power of eminent domain by any governmental body or other person (except the City or EDA) prior to the Termination Date, the Developer shall, with reasonable promptness after such taking, notify the EDA as to the nature and extent of such taking. Upon receipt of any Condemnation Award the Developer shall elect to either: (a) use the entire Condemnation Award to reconstruct the Minimum Improvements (or, in the event only a part of the Minimum Improvements have been taken, then to reconstruct such part) within the Project Area; or (b) pay to the EDA out of the Condemnation Award the amount necessary to reimburse the Authority for the unreimbursed cost of its undertakings pursuant to Article III of this Agreement. ARTICLE VI Tax Increment 6 . 1) Real Property Taxes: Assessments. (01) The Authority shall pay all special assessments levied or pending and all real property taxes payable with respect to the Property as of the date of its conveyance of the Property to Developer. Developer shall pay all real property taxes payable with respect to the Property subsequent to the year of its acquisition from Authority. (02) The Developer agrees that prior to the Termination Date (1) it will not seek administrative review or judicial review of the applicability of any tax statute determined by any Tax official to be applicable to the Project or the Developer or raise the applicability of any such tax statute as a defense in any proceedings, including delinquent tax proceedings; (2) it will not seek administrative review or judicial review of the constitutionality of any tax statute 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; (3) it will not cause a reduction in the real property taxes paid in respect of the Property below the amount agreed to in the Assessment Agreement attached as Schedule B to this Agreement through: (A) willful destruction of the Property or any part thereof; (B) willful refusal to reconstruct damaged or destroyed property pursuant to Section 5 . 1 of this Agreement; (C) a request to the city • assessor of the City or the county assessor of the County to reduce the Assessed Market Value or tax capacity of all or 11. any portion of the Property; (D) a petition to the board of • equalization of the City or the board of equalization of the County to reduce the Assessed Market Value or tax capacity of all or any portion of the Property; (E) a petition to the board of equalization of the State or the commissioner of revenue of the State to reduce the Assessed Market Value or tax capacity of all or any portion of the Property; (F) an action in a District Court of the State or the Tax Court of the State pursuant to Minnesota Statutes, Chapter 278, seeking a reduction in the Assessed Market Value or tax capacity of the Property; (G) an application to the commissioner of revenue of the State requesting an abatement of real property taxes pursuant to Minnesota Statutes, Chapter 270; and (H) any other proceedings, whether administrative, legal or equitable, with any administrative body within the City, the County, or the State or with any court of the State or the federal government. The Developer shall not, prior to the Termination Date, apply for a deferral of property tax on the Property pursuant to Minnesota Statutes, Section 273. 86. 6 .2) Assessment Agreement. Upon execution of this Agreement, the Developer and the EDA shall enter into an Assessment Agreement substantially in the form of the Assessment Agreement contained in Schedule 8 of this Agreement. The Assessment Agreement shall provide that the minimum market value of the Minimum Improvements, including land value of the . Property, upon full completion of the Minimum Improvements, shall be equal to until the Termination Date. The Developer shall not take any actions specified in Section 6. 1 to cause a reduction in such market values. 6 .3) Right to Collect Delinquent Taxes. The Developer acknowledges that the City is providing substantial aid and assistance in furtherance of the Property. The Developer understands it is crucial that the tax increment pledged to reimburse the Authority be promptly and timely paid. To that end, the Developer agrees for itself, its successors and assigns, in addition to the obligation pursuant to state law to pay real estate taxes, that it is also obligated by reason of this Agreement to pay before delinquency all real estate taxes assessed against the Property based upon Section 6.2 and upon the Minimum Market Value as stated in the Assessment Agreement. The Developer acknowledges that this obligation creates a contractual right on behalf of the City and EDA to sue the Developer or its successors and assigns to collect delinquent real estate taxes and any penalty or interest thereon and to pay over the same as a tax payment to the County. In any such suit, the City shall also be entitled to recover its costs, expenses and reasonable attorneys fees . • 12 . ARTICLE VII • Mortgage Financing 7. 1) Mortgage Financing. Any Mortgage recorded against the property shall specifically provide that the mortgagee or any successor to its interest shall, in the event of a foreclosure of the Mortgage, be bound by the terms of this Agreement and specifically the terms of Article VI and Schedule B hereof. ARTICLE VIII Prohibitions Against Assignment and Transfers; Indemnification 8. 1) Representation as to Development. The Developer represents and agrees that its purchase of the Property, and its other undertakings pursuant to the Agreement are, and will be used, for the purpose of development of the Property and not for speculation in land holding. The Developer further recognizes that, in view of (a) the importance of the development of the Property to the general welfare of the community; (b) the substantial financing and other public aids that have been made available by the EDA for the purpose of making such development possible; and (c) the fact that any act or transaction involving or resulting in a significant change in the identity of the parties in control of the Property or the degree of their control • is for practical purposes a transfer or disposition of the property then owned by the Developer, the qualifications and identity of the Developer are of particular concern to the community and the EDA. The Developer further recognizes that it is because of such qualifications and identity that the EDA is entering into the Agreement with the Developer and, in so doing, is further willing to accept and rely on the obligations of the Developer for the faithful performance of all undertakings and covenants hereby by it to be performed. 8 .2) Prohibition Against Transfer of Property and Assignment of Agreement. For the foregoing reasons the Developer represents and agrees that prior to the Termination Date: (01) Except only by way of security for, and only for, the purpose of obtaining financing necessary to enable the Developer or any successor in interest to the Property, or any part thereof, to perform its obligations with respect to making the Minimum Improvements under the Agreement, and any other purpose authorized by the Agreement, the Developer (except as so authorized) has not made or created, and that it will not, make or create, or suffer to be made or created, any total or partial sale, assignment, conveyance, or lease, or any trust or power, or transfer in any other mode or form of or with respect to the Agreement or the Property or any part therefor any interest therein, or any contract or • 13 . agreement to do any of the same, without the prior approval • of the EDA, such approval not to be unreasonably withheld. (02) The EDA shall be entitled to require, except as otherwise provided in the Agreement, as conditions to any such approval that: (i) Any proposed transferee shall have the qualifications and financial responsibility, as determined by the EDA, necessary and adequate to fulfill the obligations undertaken in the Agreement by the Developer (or, in the event the transfer is of or relates to part of the Property such obligations to the extent they they relate to such part) ; (ii) Any proposed transferee, by instrument in writing satisfactory to the EDA and in form recordable among the land records, shall, for itself and its successors and assigns, and expressly for the benefit of the EDA, have expressly assumed all of the obligations of the Developer under the Agreement and agreed to be subject to all the conditions and restrictions to which the Developer is subject (or, in the event the transfer is of or relates to part of the Property, such obligations, conditions and restrictions to the extent that they relate to such part) unless the Developer agrees to continue to fulfill those obligations, in which case the preceding provisions of this Section 8 .3 (02) (b) shall not apply: provided, that the fact that any transferee of, or any other successor in interest whatsoever to, the Property, or any part thereof, shall, whatever the reason, not have assumed such obligations or so • agreed, shall not (unless and only to the extent otherwise specifically provided in the Agreement or agreed to in writing by the EDA) deprive or limit the EDA of or with respect to any rights or remedies or controls with respect to the Property or the construction of the Minimum Improvements; it being the intent of this, together with other provisions of the Agreement, that (to the fullest extent permitted by law and equity and excepting only in the manner and to the extent specifically provided otherwise in the Agreement) no transfer of, or change with respect to, ownership in the Property or any part thereof, or any interest therein, however consummated or occurring, and whether voluntary or involuntary, shall operate, legally or practically, to deprive or limit the City of or with respect to any rights or remedies or controls provided in or resulting from the Agreement with respect to the Property and the construction of the Minimum Improvements that the City would have had, had there been no such transfer or change; and (iii) There shall be submitted to the City for review all instruments and other legal documents involved in effecting transfer; and if approved by the city, its approval shall be indicated to the Developer in writing. In the absence of specific written agreement by the EDA to the contrary, no such transfer or approval by the EDA thereof • shall be deemed to relieve the Developer, or any other party bound in any way by the Agreement or otherwise with respect 14. to the construction of the Minimum Improvements, from any of its obligations with respect thereto. 8.3) rovals. Any approval required to be given by the EDA under this Article VIII of this Agreement may be denied only in the event that the EDA reasonably determines that the ability of the Developer to perform its obligations under this Agreement will be materially impaired by the action for which approval is sought. ARTICLE IX Events of Default 9 .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: (01) Failure by the Developer to pay when due the payments required to be paid under Sections 3 .5, 5.1, 6 . 1, and 6.3 of this Agreement. (02) Failure by the Developer to reconstruct the Minimum Improvements when required pursuant to Section 5 . 1 of this Agreement . • (03) Failure by the Developer to commence and complete construction of the Minimum Improvements pursuant to the terms, conditions and limitations of Articles III and IV of this Agreement . (04) Failure by the Developer to substantially observe or perform any material covenant, condition, obligation or agreement on its part to be observed or performed hereunder. (05) The Holder of a Mortgage exercises any remedy provided by the Mortgage documents or exercises any remedy provided by law or equity in the event of a default in any of the terms or conditions of the Mortgage. 9 .2) Remedies on Default. Whenever any Event of Default referred to in Section 9 . 1 of this Agreement occurs, the EDA may take any one or more of the following actions after providing thirty days written notice to the Developer of the Event of Default, but only if the Event of Default has not been cured within said thirty days or, if the Event of Default cannot be cured within thirty days, the Developer does not provide assurances to the Authority reasonably satisfactory to the Authority that the Event of Default will be cured and will be cured as soon as reasonably possible: 15. (01) 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. (02) Cancel and rescind or terminate the Agreement. (03) Withhold the return to Developer of the security deposited by Developer pursuant to Section 3 .3 of this Agreement. (04) Withhold reimbursement to Developer of Developer's Site Preparation costs pursuant to Section 3 .2 of this Agreement. (05) Withhold the Net Proceeds from the insurance policies provided to the City pursuant to Section 5. 1 of this Agreement in accordance with the terms of the policies. (06) Take whatever action, including legal or administrative action, which may appear necessary or desirable to the EDA to collect any payments due under this Agreement, or to enforce performance and observance of any obligation, agreement, or covenant of the Developer under this Agreement. 9 .3) No Remedy Exclusive. No remedy herein conferred upon or reserved to the EDA 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. In order to entitle the Authority or the Developer to exercise any remedy reserved to it, it shall not be necessary to give notice, other than such notice as may be required in this Article IX. 9 .4) No Additional Waiver Implied by One Waiver. In the event 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. ARTICLE X Additional Provisions 10. 1) Conflict of Interest: City Representatives Not Individually Liable. No member, official or employee of the City or EDA shall have any personal interest, direct or indirect, in • the Agreement, nor shall any such member, official , or employee participate in any decision relating to the Agreement which 16. affects his personal interests or the interests of any corporation, partnership, or association in which he is, directly or indirectly, interested. No member, official, or employee of the City shall be personally liable to the Developer, or any successor in interest, in the event of any default or breach by the City or for any amount which may become due to the Developer or successor or on any obligations under the terms of the Agreement. 10 .2) Equal Employment Opportunity. The Developer, for itself and its successors and assigns, agrees that during the construction of the Minimum Improvements provided for in the Agreement it will comply with all applicable federal, state and local equal employment and non-discrimination laws and regulations. 10. 3) Restrictions on Use. The Developer agrees for itself, and its successors and assigns, and every successor in interest to the Property, or any part thereof, that the Developer, and such successors and assigns, shall devote the Property to, and only to and in accordance with, the uses specified in this Agreement, and shall not discriminate upon the basis of race, color, creed, sex or national origin in the sale, lease, or rental or in the use or occupancy of the Property or any improvements erected or to be erected thereon, or any part thereof. 10 .4) Provisions Not Merged With Deed. None of the provisions of this Agreement are intended to or shall be merged by reason of any deed transferring any interest in the Property and any such deed shall not be deemed to affect or impair the provisions and covenants of this Agreement. 10 . 5) Titles of Articles and Sections. Any titles of the several parts, Articles, and Sections of the Agreement are inserted for convenience of reference only and shall be disregarded in construing or interpreting any of its provisions. 10. 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 (01) in the case of the Developer, is addressed to or delivered personally to the Developer at 12616 Industrial Boulevard, Elk River, Minnesota. (02) in the case of the EDA, is addressed to or delivered personally to the City at 13065 Orono Parkway, Elk River, Minnesota 55330 . 17. 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 10 . 6 . 10. 7) Termination of Agreement. This Agreement shall be terminated and of no further force and effect on the Termination Date, provided that Developer is current in its obligation under Section 3 .5 hereof. 10. 8) Counterparts. This Agreement is executed in any number of counterparts, each of which shall constitute one and the same instrument. 10 .9) Modification. If the Developer is requested by the Holder of a Mortgage or by a prospective Holder of a prospective Mortgage to.amend or supplement this Agreement in any manner whatsoever, the EDA will, in good faith, consider the request with a view to granting the same unless the City and EDA, in their reasonable discretion, conclude that they cannot do so. IN WITNESS WHEREOF, the EDA has caused this Agreement to be duly executed in its name and behalf and its seal to be hereunto duly affixed and the Developer has caused this Agreement to be duly executed on or as of the date first above written. THE ECONOMIC DEVELOPMENT AUTHORITY FOR THE CITY OF ELK RIVER, MINNESOTA • By: Jeffrey Gongoll Its: President By: Patrick Klaers Its: Executive Director TESCOM CORPORATION, INC. By: Its: By: Its: i 18 . STATE OF MINNESOTA • ss. COUNTY OF SHERBURNE The foregoing instrument was acknowledged before me this day of , 1993, by Jeffrey Gongoll and Patrick Klaers, the President and Executive Director, respectively, for the Economic Development Authority for the City of Elk River, Minnesota. Notary Public STATE OF MINNESOTA as. COUNTY OF SHERBURNE The foregoing instrument was acknowledged before me this day of , 1992, by and the and , respectively, of Tescom Corporation, Inc. , a Minnesota corporation. Notary Public • 411 PKB:BB6 19 . SCHEDULE A • Description of Development Property Lot 2, Block 2 , Elk River Industrial Park (PID No. 75-520-0210) Lot 3, Block 2, Elk River Industrial Park (PID No. 75-520-0210) • 411 PKB:BB6 A-1 SCHEDULE B ASSESSMENT AGREEMENT and ASSESSOR'S CERTIFICATION By and among THE ECONOMIC DEVELOPMENT AUTHORITY FOR THE CITY OF ELK RIVER and TESCOM CORPORATION, INC. and COUNTY ASSESSOR OF THE COUNTY OF SHERBURNE, MINNESOTA THIS AGREEMENT, dated as of the day of 1993, by and between the ECONOMIC DEVELOPMENT AUTHORITY FOR THE CITY OF ELK RIVER, MINNESOTA (the "EDA") and TESCOM CORPORATION, INC. (the "Developer") . WITNESSETH, that WHEREAS, on or before the date hereof the EDA and Developer have entered into a Contract for Private Development (the "Development Contract") regarding certain real property located in the City of Elk River, Minnesota, legally described in Exhibit A hereto (the "Property") ; and WHEREAS, it is contemplated that pursuant to said Development Contract, the Developer will construct an approximately 30, 000 square foot industrial building upon the Property; and WHEREAS, the EDA and Developer desire to establish a minimum market value for said land and the improvements to be constructed thereon pursuant to Minnesota Statutes, Section 469 .177, Subdivision 8; and WHEREAS, the EDA and the County Assessor for Sherburne County, Minnesota have reviewed the preliminary plans and specifications for the improvements which it is contemplated will be erected; . NOW, THEREFORE, the parties to this Agreement, in consideration of the promises, covenants and agreements made by B-1 each to the other, do hereby agree as follows: 1. ) Upon substantial completion of construction of the above referenced improvements by the Developer, the minimum market value which shall be assessed for the land described in Exhibit A, with the industrial building constructed thereon shall be Construction of the above-referenced improvements will be completed on or before January 1, 1994. 2 . ) The minimum market value herein established shall be of no further force and effect and this Agreement shall terminate on the Termination Date set forth in the Development Contract. 3 . ) This Agreement shall be promptly recorded by the Developer with a copy of Minnesota Statutes, Section 469 . 177, Subdivision 8, set forth in Exhibit B hereto. The Developer shall pay all costs of recording. 4. ) Neither the preambles nor provisions of this Agreement are intended to, nor shall they be construed as, modifying the terms of the Development Contract between the EDA and the Developer. 5 . ) This Agreement shall inure to the benefit of and be binding upon the successors and assigns of the parties. THE ECONOMIC DEVELOPMENT AUTHORITY FOR THE CITY OF ELK RIVER By: Jeffrey Gongoll Its: President By: Patrick Klaers Its: Executive Director TESCOM CORPORATION, INC. By: Its: By: Its: • B-2 STATE OF MINNESOTA • ss . COUNTY OF SHERBURNE The foregoing instrument was acknowledged before me this day of , 1993, by Jeffrey Gongoll and Patrick Klaers, the President and Executive Director, respectively, for the Economic Development Authority for the City of Elk River, Minnesota. Notary Public STATE OF MINNESOTA 88. COUNTY OF SHERBURNE The foregoing instrument was acknowledged before me this day of , 1993, by and , the and respectively, of Tescom Corporation, Inc. , a Minnesota corporation. • Notary Public CERTIFICATION BY COUNTY ASSESSOR The undersigned, having reviewed the plans and specifications for the improvements to be constructed and the market value assigned to the land upon which the improvements are to be constructed, and being of the opinion that the minimum market values contained in the foregoing Agreement appear reasonable, hereby certifies as follows: The undersigned Assessor, being legally responsible for the assessment of the above described property, hereby certifies that the market value assigned to such land and improvements upon completion of the improvements to be constructed thereon shall not be less than until termination of this Agreement. County Assessor for Sherburne County, Minnesota i B-3 STATE OF MINNESOTA ) • COUNTY OF SHERBURNE)) SS . The foregoing instrument was acknowledged before me this day of , 1993, by the County Assessor of Sherburne County, Minnesota. Notary Public i III PKB:BB6 B-4 EXHIBIT A • Legal Description of Land Lot 2, Block 2, Elk River Industrial Park (PID No. 75-520-0210) Lot 3, Block 2, Elk River Industrial Park (PID No. 75-520-0210) • 411 A-1 EXHIBIT B • Section 469 . 177 Subd. 8. Assessment Agreements . A City may, upon entering into a development or redevelopment agreement pursuant to Section 469 . 176, Subdivision 5, enter into a written assessment agreement in recordable form with the developer or redeveloper of property within the tax increment financing district which establishes a minimum market value of the land and completed improvements to be constructed thereon until a specified termination date, which date shall be not later than the date upon which tax increment will no longer be remitted to the City pursuant to Section 469 .176, Subdivision 1 . The assessment agreement shall be presented to the county assessor, or city assessor having the powers of the county assessor, of the jurisdiction in which the tax increment financing district is located. The assessor shall review the plans and specifications for the improvements to be constructed, review the market value previously assigned to the land upon which the improvements are to be constructed and, so long as the minimum market value contained in the assessment agreement appears, in the judgment of the assessor, to be a reasonable estimate, shall execute the following certification upon such agreement: The undersigned assessor, being legally responsible for the assessment of the above-described property upon completion of the improvements to be constructed thereon, hereby certifies that the market value assigned to such land and improvements upon completion shall not be less than Upon transfer of title of the land to be developed or redeveloped from the City to the developer or redeveloper, such assessment agreement, together with a copy of this subdivision, shall be filed for record and recorded in the office of the county recorder or filed in the office of the registrar of titles of the county where the real estate or any part thereof is situated. Upon completion of the improvements by the developer or redeveloper, the assessor shall value the property pursuant to Section 273 . 11, except that the market value assigned thereto shall not be less than the minimum market value contained in the assessment agreement. Nothing herein shall limit the discretion of the assessor to assign a market value to the property in excess of the minimum market value contained in the assessment agreement nor prohibit the developer or redeveloper from seeking, through the exercise of administrative and legal remedies, a reduction in market value for property tax purposes; provided, however, that the developer or redeveloper shall not seek, nor shall the city assessor, the county assessor, the county auditor, any board of review, any board of equalization, the commissioner of revenue or any court of this state grant a reduction of the market value below the minimum market value contained in the assessment agreement during the term of the agreement filed of . record regardless of actual market values which may result from incomplete construction of improvements, destruction or B-1 diminutive by any cause, insured or uninsured, except in the case • of acquisition or reacquisition of the property by a public entity. Recording or filing of an assessment agreement complying with the terms of this subdivision shall constitute notice of the agreement to any subsequent purchaser or encumbrancer of the land or any part thereof, whether voluntary or involuntary, and shall be binding upon them. • 411 B-2