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8.1 SR 08-19-2024The Elk River Vision A welcoming community with revolutionary and spirited resourcefulness, exceptional service, and community engagement that encourages and inspires prosperity Request for Action To City Council Item Number 8.1 Meeting Date August 19, 2024 Prepared By Brent O'Neil, Economic Development Director Item Description Resolution 24-49 Amending Development Assistance Agreement and Approving Subordination Agreements - Heritage Millwork Project Reviewed by Cal Portner Action Requested Approve, by motion, Resolution 24-49 amending the Development Assistance Agreement (DAA) for the Heritage Millwork project and authorizing execution of subordination agreements with First Bank Elk River and Twin Cities-Metro Community Development Corporation (TCM). Background/Discussion Following the City Council's approval of the Heritage Millwork project, including the sale of land and approval of a tax increment financing (TIF) district and the execution and delivery of a Development Assistance Agreement (DAA), the city has been asked to subordinate its position to the primary lenders for the project. The city approved the sale of the property, valued at $1,378,019, under an arrangement in which the city would be compensated for the full property value, plus five percent annual interest, through the tax increment generated from the TIF district once the project is constructed and supplemental shortfall payments from the project owners, if needed, over a nine-year schedule of TIF payments. In addition, the DAA provides that the shortfall payments are secured by a minimum assessment agreement, a mortgage, corporate guaranty, and the personal guaranties of certain owners of Heritage Millwork. First Bank Elk River (“First Bank”) is the lead lender on the project and TCM is participating through a federal small business loan program. They are collectively financing approximately $18,000,000 of the project with a total budget in excess of $20,000,000. It is relatively common in situations in which TIF is utilized for the TIF portion of the project to be subordinate to senior lenders. Both lenders have requested that the city subordinate its interests to the senior lenders. Staff and counsel have reviewed the requests and have worked with both lenders on terms of the subordination agreements to strengthen the city's position in considering and accepting these agreements. The TCM request is regarding the property mortgage and is in line with past practice. It does not take effect until construction is complete. First Bank's request is a comprehensive subordination including the mortgage, security guarantees, minimum assessment agreement, reverter provision, shortfall payments, and DDA including the payment and construction requirements set forth therein. The city has included in the proposed Amended and Restated Development Assistance Agreement provisions that require pay-off of the city portion in the event of a sale of the company or refinancing of the senior loans that puts the city behind a larger loan, Page 212 of 327 and a 2nd position mortgage of $500,000 on another Heritage property during construction. The additional mortgage was provided as an attempt to bridge some of the construction risks that the city will face as a result of subordinating its position. The city has also included language in the proposed Subordination Agreement with First Bank that certain agreements remain in effect following any foreclosure of the project rather than terminate, and language that the minimum assessment agreement will only be subordinated during the construction phase of the project. While these added provisions do not completely eliminate the city’s risk on the project, they strengthen the city's position in the unlikely event a significant hardship befalls the project. The city's financial advisor has also been consulted on this request. Financial Impact N/A Mission/Policy/Goal Support the growth and development of the community. Attachments 1. Res 24-49 Authorizing Amendment to DDA for Heritage Millwork and Subordination Agreements 2. Subordination Agreement - TCM 3. Subordination Agreement - First Bank 4. Amended and Restated Development Agreement - Heritage Millwork Page 213 of 327 City of Elk River City Council Resolution 24-49 A Resolution of the City Council of the City of Elk River Approving an Amended and Restated Development Assistance Agreement and Subordination Agreements related to the Heritage Millwork Project NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Elk River, Minnesota, as follows: Section 1. Recitals. 1.01. The City intends to convey certain property in the City (the “Development Property”) to Developer, a Minnesota limited liability company (the “Developer”), pursuant to a certain Purchase Agreement (the “Purchase Agreement”) for the purposes of constructing an approximately 110,000 square foot industrial warehouse facility (the “Project”) to be operated by Heritage Millwork, Inc., a Minnesota corporation (the “Company”). PLM Properties, LLC (“PLM”) has assigned its interest in the Purchase Agreement to Developer, pursuant to a certain Assignment of Purchase Agreement, by and between the Developer and Developer and consented to by the City. The City has previously approved a certain Development Assistance Agreement (the “Development Assistance Agreement”), by and among the City, PLM (the predecessor to the Developer) and the Company, pursuant to which the City has agreed to accept a purchase price note in the amount of $1,378,020.60 as payment (the “Purchase Price Note”) for a portion of the purchase price for the Development Property. The Purchase Price Note will be paid pursuant to its terms and the terms of the Development Assistance Agreement by tax increments derived from the Development Property and the improvements thereon. 1.02. To finance the Project, Developer has received (i) construction loans from First Bank Elk River, a Minnesota state banking corporation (the “Bank”), in the estimated principal amount of $17,554,000 (collectively, the “Bank Loan”), and (ii) a loan (the “SBA Loan” and, together with the Bank Loan, the “Bank Loans”) from Twin Cities-Metro Certified Development Company, a Minnesota nonprofit corporation (the “SBA Lender” and, together with the Bank, the “Lenders”), assigned to the U.S. Small Business Administration, in an amount not to exceed $4,824,000, and the Lenders, and as a condition of giving Developer the Bank Loans, require that the City subordinate its rights under the Development Assistance Agreement and related documents pursuant to (i) a certain Debt Subordination Agreement by and between the City and the Bank (the “Bank Subordination Agreement”), a form of which is presented to the City Council, and (ii) a certain Subordination Agreement, made by the City for the benefit of the SBA Lender (the “SBA Subordination Agreement” and, together with the Bank Subordination Agreement, the Page 214 of 327 “Subordination Agreements”), a form of which is presented to the City Council. 1.03. The City, Developer and the Company wish to amend and restate the Development Assistance Agreement to update certain terms of the Agreement to provide additional security to the City and have presented a form of the Amended and Restated Development Assistance Agreement is presented to the City Council (the “Amended and Restated Agreement”). Section 2. Development Documents Approved. 2.01. The City hereby approves the assignment of the Purchase Agreement to the Developer, the Subordination Agreements and the Amended and Restated Agreement substantially in accordance with the terms set forth in the forms presented to the City Council, together with any related documents necessary in connection therewith, including without limitation all documents, exhibits, certifications or consents referenced in or attached to the Subordination Agreements and the Amended and Restated Agreement, including, but not limited to, the Purchase Price Note, the Assessment Agreement, the Personal Guaranty, the Corporate Guaranty and the Mortgages (all as defined in the Amended and Restated Agreement) (collectively, the “Development Documents”), and hereby authorizes City Administrator to negotiate the final term thereof and, in their discretion and at such time as they may deem appropriate, to execute the Development Documents on behalf of the City, and to carry out, on behalf of the City, the City’s obligations thereunder when all conditions precedent thereto have been satisfied. 2.02. The approval hereby given to the Development Documents includes approval of such additional details therein as may be necessary and appropriate and such modifications thereof, deletions therefrom and additions thereto as may be necessary and appropriate and approved by legal counsel to the City and by the City Administrator and the Mayor; and said officers are hereby authorized to approve said changes on behalf of the City. The execution of any instrument by the appropriate officers of the City herein authorized shall be conclusive evidence of the approval of such document in accordance with the terms hereof. This Resolution shall not constitute an offer and the Development Documents shall not be effective until the date of execution thereof as provided herein. In the event of absence or disability of the officers, any of the documents authorized by this Resolution to be executed may be executed without further act or authorization of the City Council by any duly designated acting official, or by such other officer or officers of the City Council as, in the opinion of the City Attorney, may act in their behalf. 2.03. Upon execution and delivery of the Development Documents, 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 Development Documents. Page 215 of 327 Adopted on August 19, 2024, by the City Council of the City of Elk River, Minnesota. John J. Dietz, Mayor ATTEST: Tina Allard, City Clerk Page 216 of 327 Subordination Agreement This Agreement made this day of 2024, by the City of Elk River, Minnesota (“City”) for the benefit of Twin Cities-Metro Certified Development Company, a Minnesota Non-Profit Corporation (“TCM”). City of Elk River, Minnesota is the Mortgagee and owner of a Mortgage given by Jade Elk Properties LLC, a Minnesota limited liability company, as Mortgagor, dated filed as Document No. in the Office of the County Recorder of Sherburne County, Minnesota in the original principal amount of $1,378,019.60 (“Mortgage No. 1”) Mortgage No. 1 constitutes a lien against the real property (“the Real Property”) owned by Jade Elk Properties LLC and the Real Property is located in Sherburne County, and is legally described as follows: See Attached Exhibit “A” TCM has agreed to make a loan to Jade Elk Properties LLC in the amount of $4,824,000.00 secured by a Mortgage (“Mortgage No. 2”) dated filed , as Document No. against the Real Property, provided that the City of Elk River, Minnesota will agree that the lien of Mortgage No. 2 shall be prior and superior to any right, title interest, claim or lien which the City of Elk River, Minnesota may have in or to the Real Property by virtue of Mortgage No. 1. Now, therefore, in consideration of the premises and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Initiative Foundation agrees that the lien of Mortgage No. 2 shall be superior to any right, title, interest, claim or lien which the City of Elk River, Minnesota may have in or upon the Real Property by virtue of Mortgage No. 1. City of Elk River, Minnesota By: By: Its: Mayor Its: City Clerk Page 1 of 2 Page 217 of 327 STATE OF Minnesota ) ) ss COUNTY OF ) On this ________ day of ____________________, 2024, before me personally appeared , the Mayor of the City of Elk River, Minnesota known to be the person described as who executed the foregoing instrument; and acknowledged that he/she executed the same on behalf of the . Notary Public STATE OF Minnesota ) ) ss COUNTY OF ) On this ________ day of ____________________, 2024, before me personally appeared , the City Clerk of the City of Elk River, Minnesota known to be the person described as who executed the foregoing instrument; and acknowledged that he/she executed the same on behalf of the . Notary Public Drafted By: Twin Cities-Metro Certified Development Company 3495 Vadnais Center Drive Vadnais Heights, Minnesota 55110 651-481-8081 Page 2 of 2 Page 218 of 327 SUBORDINATION AGREEMENT (Amended and Restated Development Assistance Agreement) THIS SUBORDINATION AGREEMENT (Amended and Restated Development Assistance Agreement) (this “Agreement”) is made as of this ____ day of August, 2024, by the between and the CITY OF ELK RIVER, MINNESOTA, a statutory city organized and existing under the laws of the State of Minnesota (the “City”), in favor of FIRST BANK ELK RIVER, a Minnesota state banking corporation (together with its successors and assigns, “FBER”). RECITALS A. Pursuant to a certain Construction Loan Agreement dated of even date herewith by and among Jade Elk Properties LLC, a Minnesota limited liability company (“HoldCo”) and Heritage Millwork, Inc., a Minnesota corporation (“OpCo” and together with HoldCo, collectively, the “Borrowers”) and FBER, FBER has agreed to make construction loans available to Borrowers in the aggregate maximum principal amount of up to $17,554,000.00 (collectively, the “FBER Loans”) to finance a portion of the costs of constructing and equipping an approximately 113,000 square foot industrial warehouse facility (the “Improvements”) on certain real property located in Elk River, Minnesota and legally described on Exhibit A attached hereto (the “Property”) (the Property and the Improvements are collectively, the “Project”). The FBER Loans are evidenced by (i) that certain Promissory Note No. 1 dated of even date herewith, executed and delivered by Borrowers and payable to the order of FBER in the original principal amount of $12,730,000.00 (“FBER Note No. 1”), and by that certain Promissory Note No. 2 dated of even date herewith, executed and delivered by Borrowers and payable to the order of FBER in the original principal amount of $4,824,000.00 (“FBER Note No. 2” and together with Note No. 1, collectively, the “FBER Notes”). B. FBER Note No. 1 is secured by, among other things, a certain Mortgage, Security Agreement and Fixture Financing Statement dated of even date herewith, executed by HoldCo in favor of FBER, encumbering the Property (as such mortgage may be amended, modified or supplemented, “FBER Mortgage No. 1”). C. FBER Note No. 2 is secured by, among other things, a certain Mortgage, Security Agreement and Fixture Financing Statement dated of even date herewith, executed by HoldCo in favor of FBER, encumbering the Property (as such mortgage may be amended, modified or Page 219 of 327 2 supplemented, “FBER Mortgage No. 2” and together with FBER Mortgage No. 1, collectively, the “FBER Mortgages”). D. The FBER Notes are further secured, by among other things, that certain Security Agreement dated of even date herewith, executed by OpCo in favor of FBER (the “FBER Security Agreement”). E. The Borrowers’ obligations under the FBER Notes are guaranteed by PLM Properties, LLC, a Minnesota limited liability company (“PLM”) pursuant to that certain Company Guaranty of even date herewith, executed by PLM in favor of FBER, and by Patrick Menth, an individual (“Patrick”), Linda Menth, an individual (“Linda”), David Menth, an individual (“David”), Joseph Menth (“Joseph”), and Anna Plude, an individual (“Anna”) pursuant to those certain Personal Guaranties of even date herewith executed by Patrick, Linda, David, Joseph, and Anna in favor of FBER (the “FBER Personal Guaranties” and together with the FBER Company Guaranty, collectively, the “FBER Guaranties”) (the FBER Loan Agreement, the FBER Notes, the FBER Mortgages, the FBER Guaranties, and any other document evidencing and/or securing the FBER Loans are hereafter the “FBER Loan Documents”). F. The City and PLM are parties to that certain Development Assistance Agreement dated as of June 25, 2024 (the “Original Development Assistance Agreement”), with respect to the purchase and development of the Property, which Original Development Assistance Agreement has been amended and restated in its entirety by that certain Amended and Restated Development Assistance Agreement dated August __, 2024 by and between HoldCo, OpCo and the City (the “Development Assistance Agreement”). G. To evidence HoldCo’s obligations under the Development Assistance Agreement, HoldCo executed that certain Purchase Price Note dated of even date herewith, payable to the order of the City in the original principal amount of $1,378,019.60 (the “DAA Note”). H. The DAA Note is secured by a certain Mortgage dated of even date herewith, executed by HoldCo in favor of the City, encumbering the Property (as such mortgage may be amended, modified or supplemented, the “DAA Mortgage”). I. The DAA Note is guaranteed by OpCo pursuant to that certain Corporate Guaranty dated as of even date herewith, executed by OpCo in favor of the City (the “DAA Company Guaranty”) and by Patrick, David, Joseph and Anna pursuant to those certain Personal Guaranties dated as of even date herewith, executed by Patrick, David, Joseph and Anna in favor of the City (the “DAA Personal Guarantees,” and together with the DAA Company Guaranty, collectively, the “DAA Guaranties”) (the Development Assistance Agreement, the DAA Note, the DAA Mortgage and the DAA Guaranties, and any other document evidencing or securing the DAA Note are hereafter the “DAA Documents”). J. Pursuant to that certain Quit Claim Deed dated as of August _____, 2024 (the “Deed”), (i) the City has conveyed to HoldCo the Property and (ii) the City has reserved a Right of Re-Entry For Breach of Condition Subsequent as set forth on Exhibit A attached to the Deed (the “Re-Entry Right”). Page 220 of 327 3 K. Pursuant to that certain Assessment Agreement dated __________, 202__ (the “Assessment Agreement”), the Borrowers have agreed to establish a minimum market value for the Project as of January 2, 2026 and lasting until 2035. L. As a condition to making the FBER Loans available to the Borrowers, FBER requires that the City subordinate its rights under the DAA Documents, the Deed and the Assessment Agreement to the FBER Mortgages and the payment of all amounts due to FBER under the FBER Loan Agreement, the FBER Notes and the other FBER Loan Documents. NOW THEREFORE, in order to induce FBER to make the FBER Loans, the City hereby agrees as follows: 1. Defined Terms. Unless the context otherwise provides, each capitalized term not defined herein shall have the meaning therefor specified in the Development Assistance Agreement. 2. Subordination. The City agrees that any and all payments owed by the Borrowers to the City arising under and pursuant to the Development Assistance Agreement, the DAA Mortgage and the other DAA Documents, and the DAA Guarantors to the City contained in the DAA Note, the DAA Guaranties, and the other DAA Documents, are subject, junior and subordinate to all now existing or hereafter arising rights, interests and liens held by FBER pursuant to the FBER Mortgages, the FBER Security Agreement, the FBER Notes, the FBER Guaranties, and the other FBER Loan Documents. In the event of a default under the FBER Loans and upon written notice from FBER to the City, the City shall not demand nor accept, and the Borrowers and the Guarantors shall not make payment of any Shortfall required under Section 2(a) of the DAA Note or the DAA Guaranties without the prior written consent of FBER. The City further agrees that any and all now existing or hereafter arising rights, interests and liens, if any, of the City under the Deed (including, without limitation, the Re-Entry Right) are subject, junior and subordinate to all now existing or hereafter arising rights, interests and liens held by FBER pursuant to the FBER Mortgages and the other FBER Loan Documents. Prior to the delivery of a certificate of occupancy by the City, the City agrees that its rights, interests and liens, if any, of the City under the Assessment Agreement (including without limitation the establishment of a minimum market value) are subject, junior and subordinate to all now existing or hereafter arising rights interests and liens held by the FBER pursuant to the FBER Mortgages and the other FBER Loan Documents provided that such subordination shall be released upon a delivery of a certificate of occupancy by the City. In addition to the foregoing, the City agrees that, following a foreclosure of the FBER Mortgages, the Bank shall not be required to satisfy the obligations of the Developer (as that term is defined in the Development Assistance Agreement) under Section 3.1 (Construction of Project), Section 3.2 (Commencement and Completion of Construction, Section 3.7 (Agreement to Pay Purchase Price Note), Section 3.9 (c) (Job and Wage Goals), Section 3.10 (Developer to Pay City Fees and Expenses), and Section 3.11 (Restrictions on Use in Economic Development TIF District), and that such sections are subordinate to the FBER Mortgages. In addition, any right or remedy of the City under Section 3.4 (Conveyance Subject to Right of Re-entry) is subordinate to the FBER Mortgages, any right or remedy of the City under Section 3.9(d) is subordinate to the FBER Mortgages, any agreed upon minimum assessed value set forth in Section 4.2 of the Page 221 of 327 4 Development Assistance Agreement is subordinate to the FBER Mortgages prior to the issuance of a certificate of occupancy by the City, and any contractual right to collect delinquent real estate taxes from FBER under Section 4.3 (Right to Collect Delinquent Taxes) is subordinate to the FBER Mortgages (but no such subordination shall impact the normal City or county process for collecting delinquent real estate taxes). FBER may also sell the Property following a foreclosure of the FBER Mortgages notwithstanding the provisions of Section 5.2 (Prohibition against Transfer of Property and Assignment of Agreement). A foreclosure of the FBER Mortgages prior to the delivery of a certificate of occupancy by the City shall result in the termination of all rights of the City under any of the foregoing Development Assistance Agreement, DAA Mortgage, Deed and Assessment Agreement, but the DAA Guaranties shall survive such foreclosure. In addition, in the event of such foreclosure, FBER shall utilize efforts to secure a new owner whose use of the property complies with Minnesota Statutes, Section 469.174 through 469.1794 (the “TIF Act”) to allow the City to collect tax increments from the property. Notwithstanding anything herein to the contrary, this Agreement shall in no way limit any of the City’s rights and remedies under the DAA Documents prior to an event of default under the FBER Loans or the City’s remedies of specific performance or injunctive relief under the Development Assistance Agreement. 3. Construction Completion. The City acknowledges and agrees that neither FBER, nor its successors or assigns, shall be obligated to construct or complete the Project; provided, however, that, (i) if FBER or its successors or assigns acquire the Property by foreclosure or by a conveyance in lieu of foreclosure, the City acknowledges and agrees that, upon substantial completion of the Project pursuant to and in accordance with the Development Assistance Agreement, FBER shall be entitled to seek from the City a Certificate of Completion for the Project in accordance with the terms set forth in the Development Assistance Agreement and (ii) by its acceptance hereof, FBER acknowledges and agrees that the City shall have no obligation to make any Tax Increment available to the Borrowers or their successors and/or assigns pursuant to the terms of the Development Assistance Agreement unless all of the terms, covenants and conditions related to the Tax Increment as set forth in the Development Assistance Agreement have been satisfied or waived. 4. Entire Agreement; Modifications. The City acknowledges that FBER is not a party to the Development Assistance Agreement, that this Agreement constitutes the entire agreement between the City and FBER with respect to the Development Assistance Agreement, and that this Agreement may be amended only in a writing executed by the City and FBER. 5. Successors and Assigns. This Agreement shall be binding upon the parties hereto and their respective successors and assigns and shall inure to the benefit of the parties hereto and their respective successors and assigns, including any subsequent holder of the FBER Mortgages and/or the DAA Mortgage. 6. Notices. Any notices and other communications permitted or required by the provisions of this Agreement shall be in writing and shall be deemed to have been properly given or served by (i) personal delivery, (ii) depositing the same with the United States Postal Service, or any official successor thereto, designated as Registered or Certified Mail, Return Receipt Requested, bearing adequate postage, (iii) depositing the same with a reputable private courier or Page 222 of 327 5 overnight delivery service, in each case addressed as hereafter provided. Each such notice shall be effective upon (a) immediately upon personal delivery, (b) three (3) days after being deposited in the U.S. Mail, or upon delivery by facsimile or electronic mail, or (c) one (1) Business Day after being deposited with such courier service. The time period within which a response to any such notice must be given, however shall commence to run from the date of receipt of the notice by the addressee thereof. Rejection or other refusal to accept or the inability to deliver because of changed address of which no notice was given shall be deemed to be receipt of the notice sent. By giving to the other party hereto at least ten (10) days' notice thereof, either party hereto shall have the right from time to time to change its address and shall have the right to specify as its address any other address within the United States of America: To the City: City of Elk River, Minnesota 13065 Orono Parkway Elk River, Minnesota 55330 Attention: City Administrator To FBER: First Bank Elk River 812 Main Street Elk River, Minnesota 55330 Attention: Scott D. Fritz 7. Governing Law and Construction. This Agreement shall be governed by, and construed and interpreted in accordance with, the internal substantive laws of the State of Minnesota, without giving effect to the conflicts of laws, rules and principals of such state. 8. Consent to Jurisdiction. The City hereby submits and consents to the personal jurisdiction to the courts of Wright County, Minnesota and the courts of the United States of America located in that state for the enforcement of this instrument and waives any and all personal rights under the laws of any state or the United States of America to object to jurisdiction in such courts. Litigation may be commenced in the state court of general jurisdiction for any of such counties or the United States District Court located in Minnesota, at the election of FBER. Nothing contained herein shall prevent FBER from bringing any action in any other state or jurisdiction against any other person or exercising any rights against any security given to FBER. Commencement of any such action or proceeding in any other state or jurisdiction shall not constitute a waiver of consent to jurisdiction of or the submission made by the City to personal jurisdiction within the State of Minnesota. In the event an action is commenced in another jurisdiction or venue under any tort or contract theory arising directly or indirectly from the relationship created by this Agreement, FBER, at its option, shall be entitled to have the case transferred to one of the jurisdictions and venues above described or any other jurisdiction, or if such transfer cannot be accomplished under applicable law, to have such case dismissed without prejudice. 9. Waiver of Jury Trial. THE CITY AND FBER, BY ITS ACCEPTANCE HEREOF, EACH HEREBY VOLUNTARILY, KNOWINGLY, INTENTIONALLY, IRREVOCABLY AND UNCONDITIONALLY WAIVE ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE (WHETHER BASED UPON CONTRACT, TORT OR OTHERWISE) BETWEEN THE CITY AND FBER ARISING OUT OF OR IN ANY WAY Page 223 of 327 6 RELATED TO THIS AGREEMENT OR ANY RELATIONSHIP BETWEEN THE CITY AND FBER. THIS PROVISION IS A MATERIAL INDUCEMENT TO FBER TO PROVIDE THE FBER LOANS DESCRIBED HEREIN AND IN THE OTHER FBER LOAN DOCUMENTS. 29357716v4 11750.42 [Remainder of Page Intentionally Left Blank] Page 224 of 327 IN WITNESS WHEREOF, the City has executed this Agreement as of the day and year first written above. CITY OF ELK RIVER, MINNESOTA By: Mayor By: City Administrator STATE OF MINNESOTA ) ) ss. COUNTY OF HENNEPIN ) The foregoing instrument was acknowledged before me this ____ day of August, 2024, by __________________, the Mayor, and ______________, the City Administrator of the City of Elk River, on behalf of the City. Notary Public This Instrument Drafted By: Winthrop & Weinstine, P.A. (TJK) 225 South Sixth Street, Suite 3500 Minneapolis, MN 55402 Page 225 of 327 Exhibit A to Subordination Agreement Legal Description of Property That certain property located in the City of Elk River, Sherburne County, Minnesota, legally described as Lot 1, Block 1, Nature’s Edge Business Center Fifth Addition. Page 226 of 327 AMENDED AND RESTATED DEVELOPMENT ASSISTANCE AGREEMENT BY AND AMONG THE CITY OF ELK RIVER, MINNESOTA, JADE ELK PROPERTIES LLC AND HERITAGE MILLWORK, INC. Dated as of: __________, 2024 This document was drafted by: KENNEDY & GRAVEN, Chartered (GAF) 150 South 5th Street, Suite 700 Minneapolis, MN 55402 Telephone: (612) 337-9300 Page 227 of 327 TABLE OF CONTENTS Page i EL185\77\970529.v2 ARTICLE I DEFINITIONS.............................................................................................................3 Section 1.1 Definitions.......................................................................................................3 ARTICLE II REPRESENTATIONS, WARRANTIES AND COVENANTS .................................6 Section 2.1 Representations and Warranties of the City....................................................6 Section 2.2 Representations and Warranties of the Developer..........................................6 Section 2.3 Representations and Warranties of the Company...........................................7 ARTICLE III PROJECT AND FINANCIAL ASSISTANCE ...........................................................9 Section 3.1 Construction of Project...................................................................................9 Section 3.2 Commencement and Completion of Construction..........................................9 Section 3.3 Construction Plans..........................................................................................9 Section 3.4 Conveyance Subject to Right of Re-entry ....................................................10 Section 3.5 Certificate of Completion .............................................................................10 Section 3.6 Purchase Price Note......................................................................................11 Section 3.7 Agreement to Pay Note Pledged Tax Increment Shortfall............................11 Section 3.8 Energy Rebate...............................................................................................12 Section 3.9 Business Subsidy Agreement........................................................................12 Section 3.10 Developer to Pay City Fees and Expenses....................................................13 Section 3.11 Restrictions on Use in Economic Development TIF District .......................14 Section 3.12 Compliance with Environmental Requirements...........................................15 ARTICLE IV INSURANCE; ASSESSMENT AGREEMENT; TAXES ........................................16 Section 4.1 Insurance.......................................................................................................16 Section 4.2 Assessment Agreement.................................................................................17 Section 4.3 Right to Collect Delinquent Taxes................................................................18 ARTICLE V CHANGE IN USE OF PROJECT; PROHIBITIONS AGAINST ASSIGNMENT AND TRANSFER; INDEMNIFICATION.....................................19 Section 5.1 Change in Use of Project ..............................................................................19 Section 5.2 Prohibition against Transfer of Property and Assignment of Agreement.....................................................................................................19 Section 5.3 Release and Indemnification Covenants.......................................................19 ARTICLE VI DEVELOPER AND COMPANY EVENTS OF DEFAULT....................................20 Section 6.1 Events of Default Defined ............................................................................20 Section 6.2 Remedies on Default.....................................................................................20 Section 6.3 No Remedy Exclusive...................................................................................21 Section 6.4 No Implied Waiver .......................................................................................21 Section 6.5 Agreement to Pay Attorney’s Fees and Expenses ........................................21 ARTICLE VII ADDITIONAL PROVISIONS..................................................................................22 Section 7.1 Conflicts of Interest; City Representatives Not Individually Liable ............22 Section 7.2 Titles of Articles and Sections......................................................................22 Section 7.3 Notices and Demands ...................................................................................22 Section 7.4 Counterparts..................................................................................................22 Section 7.5 Recording......................................................................................................22 Section 7.6 Law Governing .............................................................................................23 Section 7.7 Conflicts of Interest.......................................................................................23 Page 228 of 327 TABLE OF CONTENTS (continued) Page ii EL185\77\970529.v2 Section 7.8 Interpretation; Concurrence..........................................................................23 Section 7.9 Governing Data.............................................................................................23 EXHIBIT A LEGAL DESCRIPTION OF DEVELOPMENT PROPERTY ..........................................A-1 EXHIBIT B PURCHASE PRICE NOTE ................................................................................................B-1 EXHIBIT C CERTIFICATE OF COMPLETION...................................................................................C-1 EXHIBIT D CERTIFICATE OF RELEASE...........................................................................................D-1 EXHIBIT E ASSESSMENT AGREEMENT...........................................................................................E-1 EXHIBIT F PERSONAL GUARANTY ..................................................................................................F-1 EXHIBIT G CORPORATE GUARANTY..............................................................................................G-1 EXHIBIT H DEVELOPMENT PROPERTY MORTGAGE...................................................................H-1 EXHIBIT I CURRENT FACILITY MORTGAGE...................................................................................I-1 Page 229 of 327 1 EL185\77\970529.v2 AMENDED AND RESTATED DEVELOPMENT ASSISTANCE AGREEMENT THIS AGREEMENT (the “Agreement”) is made as of the __ day of ________, 2024, by and among the CITY OF ELK RIVER, MINNESOTA (the “City”), a municipal corporation and political subdivision organized and existing under the Constitution and laws of the State of Minnesota, JADE ELK PROPERTIES LLC, a Minnesota limited liability company (the “Developer”), and HERITAGE MILLWORK, INC., a Minnesota corporation (the “Company”), and amends and restates in its entirety the Development Assistance Agreement (the “Original Agreement”), dated as of June 25, 2024, by and among the City, the Company and PLM Properties, LLC, a Minnesota limited liability company (the “Original Developer”) WITNESSETH: WHEREAS, pursuant to Minnesota Statutes, Sections 469.124 through 469.134, the City has established Development District No. 1 (the “Development District”) and has adopted a development program therefor (the “Development Program”); and WHEREAS, pursuant to the provisions of Minnesota Statutes, Sections 469.174 through 469.1794, as amended (the “Tax Increment Act”), the City has created Tax Increment Financing (Economic Development) District No. 29 (Heritage Millwork Development Project) (the “Tax Increment District”), and has adopted a tax increment financing plan therefor (the “Tax Increment Financing Plan”) which provides for the use of tax increment financing in connection with development within the Development District; and WHEREAS, pursuant to the Tax Increment Act, the City is authorized to undertake certain activities to facilitate the development of real property by private enterprise; and WHEREAS, the City intends to convey certain property in the City (the “Development Property”) to the Developer pursuant to a certain Purchase Agreement (the “Purchase Agreement”) for the purposes of constructing an approximately 110,000 square foot industrial warehouse facility (the “Project”) in accordance with the terms hereof to be operated by the Company, and has requested that the City accept the Purchase Price Note (as hereinafter defined) as payment for a portion of the Purchase Price (as hereinafter defined) for the Development Property; and WHEREAS, the City believes that the development of the Development Property pursuant to this Agreement and the 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 Development Program has been undertaken; and WHEREAS, in order to achieve the objectives of the Development Program and Tax Increment Financing Plan and particularly to make the land in the Development District available for development 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 and the Tax Increment Financing Plan by providing tax increment financing to pay the Purchase Price Note pursuant to the terms of this Agreement; and WHEREAS, the City, pursuant to Minnesota Statutes, Section 469.192, is authorized to make loans to qualifying businesses located within the City for economic development; and WHEREAS, the Developer has requested that the City exercise its authority and grant an energy rebate to the Developer (the “Energy Rebate”) in accordance with the terms of this Agreement; and Page 230 of 327 2 EL185\77\970529.v2 WHEREAS, the Purchase Price Note and the Energy Rebate constitute a business subsidy within the meaning of Minnesota Statutes, Sections 116J.993 through 116J.995, as amended (the “Business Subsidy Act”), and the City has adopted criteria for awarding business subsidies that comply with the Business Subsidy Act, after a public hearing for which notice was published in compliance with the Business Subsidy Act; and WHEREAS, the City Council of the City has held a duly noticed public hearing on the business subsidy provided as represented by the Purchase Price Note and the Energy Rebate and this Agreement constitutes a subsidy agreement under the Business Subsidy Act; and WHEREAS, pursuant to a certain Assignment of Purchase Agreement, the Original Developer assigned their rights, title and interest in and to the Purchase Agreement to the Developer; and WHEREAS, to finance the Project, the Developer has received (i) construction loans from First Bank Elk River, a Minnesota state banking corporation (the “Bank”), in the aggregate maximum principal amount of up to $17,554,000 (collectively, the “Bank Loan”), and (ii) a loan (the “SBA Loan” and, together with the Bank Loan, the “Priority Loans”) from Twin Cities-Metro Certified Development Company, a Minnesota nonprofit corporation (the “SBA Lender” and, together with the Bank, the “Lenders”), assigned to the U.S. Small Business Administration, in an amount not to exceed $4,824,000, and the Lenders, and as a condition of giving the Developer the Priority Loans, require that the City execute a certain Subordination Agreements by and between the City and the Lender, pursuant to which the City agrees to subordinate its rights under this Agreement and related documents to the payment of all amounts due to the Lenders under the documents related to the Priority Loans; and WHEREAS, the City, the Developer and the Company now wish to amend and restate the Original Agreement as further provided herein; 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: Page 231 of 327 3 EL185\77\970529.v2 ARTICLE I DEFINITIONS Section 1.1 Definitions. All capitalized terms used and not otherwise defined herein shall have the following meanings unless a different meaning clearly applies from the context: Agreement means this Amended and Restated Development Assistance Agreement, which amends and restates the Original Agreement, and as the same may be from time to time modified, amended or supplemented; Assessment Agreement means the agreement between the City and Developer in substantially the form attached hereto as Exhibit E; Bank means First Bank Elk River, a Minnesota state banking corporation; Bank Loan means the loans to the Developer from the Bank to finance the Project in the aggregate maximum principal amount of up to $17,554,000; Benefit Date means the date on which a Certificate of Occupancy for the Project is issued by the City; Business Day means any day other than Saturdays, Sundays and any “legal holiday”, which shall mean any state or federal holiday for which financial institutions or post offices are generally closed in the State of Minnesota for observance thereof. If any date herein set forth for the performance of any obligations by a party hereto or for the delivery of any instrument or notice as herein provided should be on a Saturday, Sunday or legal holiday, the compliance with such obligations or delivery shall ipso facto be extended to the next business day following such Saturday, Sunday or legal holiday; Business Subsidy Act means Minnesota Statutes, Sections 116J.993 to 116J.995, as amended; Certificate of Completion means the certification in the form of the certificate attached hereto as Exhibit C and made a part of this Agreement, provided to the Developer, pursuant to Section 3.5 of this Agreement; Construction Plans means the plans, specifications, drawings and related documents of the construction work to be performed by the Developer on the Project and the Development Property which (a) shall be as detailed as the plans, specifications drawings and related documents which are submitted to the appropriate building officials of the City, and (b) shall include at least the following for each building: (1) site plan; (2) foundation plan; (3) basement plans; (4) floor plan for each floor; (5) cross sections of each (length and width); (6) elevations (all sides); (7) landscape plan; and (8) such other plans or supplements to the foregoing plans as the City may reasonably request to allow it to ascertain the nature and quality of the proposed construction work; City means the City of Elk River, Minnesota; Closing Date or Closing means not later than September 30, 2024, or such other date as agreed to by the City and Developer on which the City will convey title to the Development Property to the Developer; Company means Heritage Millwork, Inc., a Minnesota corporation, and its successors and assigns; Page 232 of 327 4 EL185\77\970529.v2 Corporate Guarantor means the Company; Corporate Guaranty means the Corporate Guaranty in substantially the form set forth in Exhibit F, executed by the Corporate Guarantor; County means Sherburne County, Minnesota; Current Facility Mortgage means the mortgage on the Company’s current facility in substantially the form set forth in Exhibit I to be executed by the Original Developer in favor of the City to secure the Purchase Price Note; Developer means Jade Elk Properties LLC, a Minnesota limited liability company, and its successors and assigns; Development District means the real property located within Development District No. 1; Development Program means the program approved for the Development District; Development Property means the real property located in the City of Elk River, Sherburne County, Minnesota legally described in Exhibit A attached hereto; Development Property Mortgage means the mortgage on the Development Property in substantially the form set forth in Exhibit H to be executed by the Developer in favor of the City to secure the Purchase Price Note; ERMU means the Elk River Municipal Utilities; Energy Rebate means the rebate from the City to the Developer described in Section 3.8 hereof; Event of Default means any of the events described in Section 6.1; Guaranties means the Corporate Guaranty and the Personal Guaranties; Guarantors mean the Corporate Guarantor and the Personal Guarantors; Lease means the lease agreement between the Developer and the Company pursuant to which the Developer leases the Development Property and the Project to the Company for operation of the Company’s business on the Development Property; Lenders means the SBA Lender and the Bank; Market Value or Market Valuation means the market value of real property as determined by the county assessor in accordance with Minnesota Statutes, Section 273.11 (or as finally adjusted by any assessor, board of equalization, commissioner of revenue, or any court); Maturity Date means February 1, 2035; Mortgages means the Development Property Mortgage and the Current Facility Mortgage; Original Agreement means the Development Assistance Agreement, by and among the City, the Original Developer and the Company, dated as of June 25, 2024; Original Developer means PLM Properties, LLC, a Minnesota limited liability company; Page 233 of 327 5 EL185\77\970529.v2 Payment Date means August 1 of the year commencing on August 1, 2026 and each February 1 and August 1 thereafter until the earlier of (a) the Maturity Date, or (b) the date that the Purchase Price Note has been paid in full, defeased, or terminated in accordance with its terms; Personal Guarantors means, collectively, Patrick Menth, David Menth, Linda Menth, Anna Pulde and Joseph Menth, all individuals; Personal Guaranties means the Personal Guaranty in substantially the form set forth in Exhibit F, executed by each of the Personal Guarantors; Priority Loans mean the Bank Loan and the SBA Loan; Project means the approximately 110,000 square industrial warehouse facility to be constructed by the Developer on the Development Property in accordance with the Construction Plans approved by the City; Purchase Agreement means the Purchase Agreement, dated as of June 25, 2024, between the City and the Original Developer for the sale of the Development Property, as assigned to the Developer; Purchase Price Note has the meaning set forth in Section 3.6(a) hereof; Purchase Price Note Pledged Tax Increment means, on each Payment Date, 95% of the Tax Increment attributable to the Development Property and paid to the City by the County in the six (6) months preceding the Payment Date; SBA Lender means Twin Cities-Metro Certified Development Company, a Minnesota nonprofit corporation; SBA Loan mean the loan from the SBA Lender assigned to the U.S. Small Business Administration, in an amount not to exceed $4,824,000; Security Documents mean the Mortgages and the Guaranties; State means the State of Minnesota; Tax Increment means the tax increments derived from the Development Property and the improvements thereon which have been received and are permitted to be retained by the City in accordance with the TIF Act including, without limitation, Minnesota Statutes, Sections 469.177; 469.176, Subd. 4h; and 469.175, Subd. 1a, as the same may be amended from time to time; Tax Increment Act means Minnesota Statutes, Sections 469.174 through 469.1794, as amended; Tax Increment District means Tax Increment Financing District No. 29 (Heritage Millwork Development Project), as adopted by the City on June 3, 2024, which is qualified as an economic development district under the Tax Increment Act; Tax Increment Financing Plan means the City’s Tax Increment Financing Plan for the Tax Increment District, as approved by the City on June 3, 2024 and as may be amended from time to time; Termination Date means the later of (a) date of the City’s last receipt of Tax Increment from the Tax Increment District in accordance with Section 469.176, subdivision 1b(3) of the Tax Increment Act; or (b) the date the Purchase Price Note has been paid in full, defeased, or terminated in accordance with Page 234 of 327 6 EL185\77\970529.v2 its terms; and Unavoidable Delays means delays, beyond the reasonable control of the party seeking to be excused as a result thereof, which are the direct result of strikes, other labor troubles, unusually severe or prolonged bad weather, acts of God, fire or other casualty to the Project, litigation commenced by third parties which, by injunction or other similar judicial action or by the exercise of reasonable discretion, directly results in delays, delays in delivery of materials for the Project, or acts of any federal, state or local governmental unit which directly result in delays. Page 235 of 327 7 EL185\77\970529.v2 ARTICLE II REPRESENTATIONS, WARRANTIES AND COVENANTS Section 2.1 Representations and Warranties of the City. The City makes the following representations, warranties and covenants: (a) The City is a municipal corporation and political subdivision organized under the provisions of the Constitution and laws of the State of Minnesota and has the power to enter into this Agreement and carry out its obligations hereunder. (b) The Tax Increment District is an “economic development district” within the meaning of Minnesota Statutes, Section 469.174, subdivision 12, and was created, adopted and approved in accordance with the terms of the Tax Increment Act. (c) The Project as detailed in this Agreement is in conformance with the development objectives set forth in the Development Program and Tax Increment Financing Plan. (d) The City makes no representation or warranty, either express or implied, as to the Development Property or its condition, or that the Development Property shall be suitable for the Developer’s or the Company’s purposes or needs. Section 2.2 Representations and Warranties of the Developer. The Developer makes the following representations, warranties and covenants: (a) The Developer is a limited liability company duly organized and in good standing under the laws of the State of Minnesota, is not in violation of any provisions of its organizational documents or the laws of the State, is duly authorized to transact business within 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 governing members. (b) If the Developer acquires the Development Property in accordance with this Agreement, the Developer will construct, operate and maintain the Project in accordance with the terms of this Agreement, the Development Program, and all applicable local, state and federal laws and regulations (including, but not limited to, environmental, zoning, energy conservation, building code, labor and public health laws and regulations). (c) The Developer has received no notice or communication from any local, state, or federal official that the activities of the Developer or the City in the Development Program may be or will be in violation of any environmental law or regulation (other than those notices or communications of which the City is aware). The Developer is not aware of any facts the existence of which would cause it to be in violation of or give any person a valid claim under any local, state, or federal environmental law, regulation, or review procedure. (d) The Developer has the power to enter into this Agreement, the Purchase Agreement, the Development Property Mortgage, and the Purchase Price Note, and to perform the obligations thereunder and by entering into and performing its obligations under this Agreement, the Purchase Agreement, the Development Property Mortgage, the Purchase Agreement, and the Purchase Price Note, the Developer will not be in violation of the its articles of organization, operating agreement or member control agreement or the laws of the State. (e) The Developer will obtain or cause to be obtained, in a timely manner, all required Page 236 of 327 8 EL185\77\970529.v2 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 Project may be lawfully constructed. (f) The construction of the Project would not be undertaken by the Developer, and in the opinion of the Developer, would not be economically feasible within the reasonably foreseeable future, without the assistance and benefit provided for in this Agreement. (g) The Developer will reasonably cooperate with the City with respect to any litigation commenced with respect to the Project; provided, however, that neither the Developer nor the Company shall be obligated to settle any litigation to which it is a party unless it approves such settlement in its sole discretion. (h) The financing commitments which the Developer and the Company have obtained to finance construction of the Project, together with the equity funds available to the Developer and the Company, together with financing provided by the City pursuant to this Agreement and the Purchase Price Note will be sufficient to enable the Developer and the Company to successfully complete the Project. (i) The Developer will reasonably cooperate with the City in resolving any traffic, parking, trash removal or public safety problems which may arise in connection with the construction of the Project. (j) The Developer understands that the City may subsidize or encourage the development of other developments in the City, including properties that compete with the Development Property and the Project, and that such subsidies may be more favorable than the terms of this Agreement, and that City has not represented that development of the Development Property will be favored over the development of other properties. (k) The Developer is not currently in default under any business subsidy agreement with any grantor, as such terms are defined in the Business Subsidy Act. (l) The Developer did not obtain a building permit for any portion of the Project or for any other improvements on the Development Property not included in the calculation of the original tax capacity before the date of original approval of the TIF Plan by the City. (m) The total development costs of the Project are estimated to be approximately $21,460,700, and the sources of revenue to pay such costs are approximately $ 20,072,680.40, excluding the Purchase Price Note and the Energy Rebate, and the Developer has been unable to obtain additional private financing for the total development costs. (n) The proposed Project hereunder would not occur but for the Purchase Price Note and the Energy Rebate being provided by the City hereunder. (o) The Developer represents that the Company is moving its current warehouse operations from Ramsey, Minnesota and consolidating its existing facility in the City to the Development Property due to challenges related to expanding at its existing site in Ramsey. The Developer represents that the Project will result in a net increase in jobs in the State. Section 2.3 Representations and Warranties of the Company. The Company makes the following representations, warranties and covenants: Page 237 of 327 9 EL185\77\970529.v2 (a) The Company is a Minnesota corporation duly organized and in good standing under the laws of the State of Minnesota, is not in violation of any provisions of its organizational documents or the laws of the State, is duly authorized to transact business within 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 governing members. (b) The Company shall operate and maintain the Project in accordance with the terms of this Agreement, the Development Program, and all applicable local, state and federal laws and regulations (including, but not limited to, environmental, zoning, energy conservation, building code, labor and public health laws and regulations). (c) The Company has the power to enter into this Agreement and the Corporate Guaranty and to perform the obligations thereunder and by entering into and performing its obligations under this Agreement and the Corporate Guaranty, the Company will not be in violation of its articles of incorporation, bylaws or the laws of the State. (d) The Company will cooperate fully with the City with respect to any litigation commenced with respect to the Project; provided, however, that the Company shall not be obligated to settle any litigation to which it is a party unless it approves such settlement in its sole discretion. (e) The financing commitments which the Developer and the Company have obtained to finance construction of the Project, together with the equity funds available to the Developer and the Company, together with financing provided by the City pursuant to this Agreement and the Purchase Price Note will be sufficient to enable the Developer and the Company to successfully complete the Project. (f) The Company is not currently in default under any business subsidy agreement with any grantor, as such terms are defined in the Business Subsidy Act. (g) The Company understands that the City may subsidize or encourage the development of other developments in the City, including properties that compete with the Development Property and the Project, and that such subsidies may be more favorable than the terms of this Agreement, and that City has not represented that development of the Development Property will be favored over the development of other properties. Page 238 of 327 10 EL185\77\970529.v2 ARTICLE III PROJECT AND FINANCIAL ASSISTANCE Section 3.1 Construction of Project. The Developer agrees that it will construct the Project on the Development Property in conformance with the Construction Plans. Section 3.2 Commencement and Completion of Construction. Subject to Unavoidable Delays, the Developer shall commence, or cause to be commenced, construction of the Project beyond the point of site preparation by December 31, 2024. Subject to Unavoidable Delays, the Developer shall have substantially completed, or caused to be completed, the construction of the Project by December 31, 2025. The Project will be constructed by the Developer on the Development Property in conformity with the Construction Plans approved by the City. Prior to completion, upon the request of the City, and subject to applicable safety rules, the Developer will provide the City reasonable access to the Development Property. “Reasonable access” means at least one site inspection per week during regular business hours. During construction, marketing and rentals of the Project, the Developer will deliver progress reports to the City from time to time as reasonably requested by the City. Section 3.3 Construction Plans. The Developer shall cause Construction Plans to be provided to the City, which shall be subject to approval by the City as provided in this Section 3.3. The Construction Plans shall provide for the Project to be constructed on the Development Property, and shall be in conformity with this Agreement, and all applicable federal, state and local laws and regulations. The City shall approve the Construction Plans in writing if: (a) the Construction Plans conform to the terms and conditions of this Agreement; (b) the Construction Plans conform to all applicable federal, state and local laws, ordinances, rules and regulations; (c) the Construction Plans are adequate for purposes of this Agreement to provide for the construction of the Project; and (d) no Event of Default under the terms of this Agreement has occurred; provided, however, that any such approval of the Construction Plans pursuant to this Section 3.3 shall constitute approval for the purposes of this Agreement only and shall not be deemed to constitute approval or waiver by the City with respect to any building, zoning or other ordinances or regulation of the City, and shall not be deemed to be sufficient plans to serve as the basis for the issuance of a building permit if the Construction Plans are not as detailed or complete as the plans otherwise required for the issuance of a building permit. The Construction Plans must be rejected in writing by the City, accompanied by a written statement of the City specifying the respects in which the Construction Plans submitted by the Developer fail to conform to the requirements of this Section 3.3, within 60 days of submission or shall be deemed to have been approved by the City. If the City rejects the Construction Plans in whole or in part, the Developer shall submit new or corrected Construction Plans within 60 days after receipt by the Developer of the written notification of the rejection and written statement of the City’s reasons for such rejection. The provisions of this Section 3.3 relating to approval, rejection and resubmission of corrected Construction Plans shall continue to apply until the Construction Plans have been approved by the City; provided, however, that in any event the Developer shall submit Construction Plans which are approved prior to commencement of construction of the Project. Approval of the Construction Plans by the City shall not relieve the Developer of any obligation to comply with the terms and provisions of this Agreement, or the provision of applicable federal, state and local laws, ordinances and regulations, nor shall approval of the Construction Plans by the City be deemed to constitute a waiver of any Event of Default. If the Developer desires to make any material modification to the scope, size or use of the Project or to the site plan therefor after the Construction Plans have been approved by the City, the Developer shall submit the proposed revised Construction Plans to the City for its approval. If such material change in the Construction Plans conforms to the approval criteria listed in this Section 3.3 with respect to the Page 239 of 327 11 EL185\77\970529.v2 original Construction Plans, the revised Construction Plans shall be deemed approved by the City unless rejected in writing within 30 days by the City with a written statement of the City’s reasons for such rejection. If the Developer desires to make any change which does not materially modify the scope, size or use of the Project or the site plan therefor, the Construction Plans need not be resubmitted. Approval of Construction Plans hereunder is solely for purposes of this Agreement and shall not constitute approval for any other City purpose. Section 3.4 Conveyance Subject to Right of Re-entry. The City’s conveyance of the Development Property to the Developer pursuant to the Purchase Agreement will be made subject to a right of re-entry for breach of conditions subsequent in favor of the City. The condition subsequent is that, barring any Unavoidable Delays, the Developer shall have completed construction of the foundation of the Project on the Development Property in accordance with permits issued by the City by not later than December 31, 2024. If Developer fails to satisfy such condition subsequent, the City shall provide written notice to the Developer and the Developer shall have 30 days from receipt of the City’s notice to complete construction of the foundation of the Project. Failure to complete construction in such timeframe shall constitute a breach of the condition subsequent and the Developer shall re-convey the Development Property back to the City, without cost to the City. If the Developer fails to re-convey the Development Property to the City, the City may elect to exercise its right of reentry by commencing an action in Sherburne County District Court to establish the breach of the condition subsequent. If the City establishes a breach of the condition subsequent, title to and the right to possession of the Development Property and title to all improvements located thereon reverts to the City, without cost to the City, and the Developer is not entitled to any compensation from the City for the value of the Development Property or any improvements the Developer has made to the Development Property. The Developer must record the Certificate of Release set forth in the Deed in the proper County land records at its expense. Section 3.5 Certificate of Completion. The Developer shall notify the City when construction of the Project has been substantially completed. The City shall conduct any inspections of the Project it determines necessary in order to determine whether the Project has been constructed in substantial conformity with the approved Construction Plans. If the City determines that the Project has not been constructed in substantial conformity with the approved Construction Plans, the City shall deliver a written statement to the Developer indicating in adequate detail the specific respects in which the Project has not been constructed in substantial conformity with the approved Construction Plans and the Developer shall have a reasonable period of time to remedy such deficiencies. The City shall re- inspect the Project within a reasonable period of time after receiving notice that such deficiencies have been remedied in order to determine whether the Project has been constructed in substantial conformity with the approved Construction Plans and this Agreement. Within a reasonable period of time after determining that the Project has been constructed in substantial conformity with the approved Construction Plans, the City will furnish to the Developer a Certificate of Completion certifying the completion of the Project after determining that the following conditions precedent have been satisfied: (a) There shall exist no uncured Event of Default hereunder; (b) The City has issued a certificate of occupancy for the Project; (c)The City shall have reasonably determined that the Project has been substantially completed and constructed in accordance with all local, state and federal laws and regulations (including without limitation environmental, zoning, building code, and public health laws and regulations), and any applicable permits and in substantial conformity with this Agreement and the final construction plans approved by the City in connection with issuing construction permits, each as applicable; (d) The Developer shall certify to the City that all costs related to the Project and the Page 240 of 327 12 EL185\77\970529.v2 development of the Development Property, including without limitation, payments to all contractors, subcontractors, and project laborers, have been paid prior to the date of the request to the City. The Certificate of Completion issued for the Project shall conclusively satisfy and terminate the agreements and covenants of the Developer in this Agreement solely with respect to construction of the Project. The issuance of a Certificate of Completion under this Agreement shall not be construed to relieve the Developer of any inspection or approval required by any City department in connection with the construction, completion or occupancy of the Project nor shall it relieve the Developer of any other obligations under this Agreement. Section 3.6 Purchase Price Note. (a) The purchase price to be paid to the City by the Developer in exchange for the conveyance of the Development Property is $1,378,020.60 (the “Purchase Price”). The Purchase Price shall be paid in cash from the Developer in the amount of $1.00 and a purchase price note from the Developer in the amount of $1,378,019.60 evidencing the Developer’s obligation to repay a loan for a portion of the Purchase Price for the Development Property with interest (the “Purchase Price Note”) in substantially the form attached hereto as Exhibit B. The Purchase Price Note shall accrue interest at the rate of 5.00% per annum. On each Payment Date, the City will credit against the principal amount of the Purchase Price Note plus accrued interest thereon at the rate of 5.00% per annum, the Purchase Price Note Pledged Tax Increment. (b) The City is pledging Purchase Price Note Pledged Tax Increment to repayment of the Purchase Price Note. The Developer has no right or interest in any Tax Increment. The City retains the right to use any other legally available City funds to prepay the principal of and interest on the Purchase Price Note on any date. Section 3.7 Agreement to Pay Purchase Price Note. (a) Pledged Tax Increment Shortfall. Annually on or before December 31 in the years 2026 through 2035, the City shall calculate whether the February and August payments of Purchase Price Note Pledged Tax Increment have been at or greater than the principal and interest due on the Purchase Price Note for that year, as shown on the amortization schedule attached to the Purchase Price Note. If, in the City’s sole discretion, the Purchase Price Note Pledged Tax Increment has been less than the annual amount due under the Purchase Price Note for such year, the Developer shall pay an amount equal to the deficiency (a “Shortfall”). The Developer is obligated to pay a Shortfall within 15 days after receipt of a written notice from the City containing evidence of a Shortfall. (b) Ownership Transfer. (i) If, prior to the Maturity Date, the Developer shall sell or otherwise transfer ownership of the Development Property, the Developer shall be required to pay the remaining outstanding balance of principal and interest the Purchase Price Note within 30 days of said transfer. (ii) If, prior to the Maturity Date, the Company, the Developer, or the Personal Guarantors sell or otherwise transfer any ownership interest, shares, or membership interest of or in the Company or the Developer, the Developer shall be required to pay the remaining outstanding balance of principal and interest on the Purchase Price Note within 30 days of said transfer. Notwithstanding the foregoing, Section 3.7(b)(iii) shall not apply to any sale or transfer of ownership interests, share, or membership interests by Patrick to his children. Page 241 of 327 13 EL185\77\970529.v2 (c) Priority Loans Refinanced. If, prior to the Maturity Date, either of the Priority Loans are refinanced in an amount exceeding the principal balance of the Priority Loans on the Closing Date, the Developer shall be required to pay the remaining outstanding balance of the Purchase Price Note within 30 days of said refinancing. (d) Security Documents. Prior to the Closing Date, the Developer shall deliver the Assessment Agreement to the City to guarantee the amount of Purchase Price Note Pledged Tax Increment and shall deliver the Security Documents to the City to guarantee performance of the Developer’s obligation to pay any Shortfalls or to otherwise pay the Purchase Price Note as provided in this Agreement. Section 3.8 Energy Rebate. (a) The City agrees to waive its applicable payment in lieu of taxes (“PILOT”) from ERMU for the Project for two years (the “Energy Rebate”). ERMU will pay the applicable payment in lieu of taxes for the Project to the City on annual basis commencing on the first-year anniversary of the issuance of a Certificate of Completion by the City and continuing for a period of two years. Upon receipt of funds from ERMU, the City will pay the Energy Rebate to the Developer within 30 days of receipt thereof. The Energy Rebate shall be provided to the Developer only upon the satisfaction of the following conditions: (i) The Developer has received the Certificate of Completion; (ii) The Developer has complied with all provisions of the ERMU PILOT policy and the City is eligible to receive and waive PILOT payments for the Project; and (iii) The provision of the Energy Rebate has been approved by ERMU. (b) The estimated value of the Energy Rebate to the Developer is $10,000 payable over a period of 24 months. The final amount of the Energy Rebate shall be calculated monthly by ERMU and the City in their sole discretion. The City makes no warranties or representations to the Developer regarding the total amount of the Energy Rebate to be provided to the Developer. The City is providing the Energy Rebate to the Developer in the form of a forgivable loan. If the Developer does not comply with the provisions of Section 3.9, then the Developer is obligated to repay such loan as set forth therein. If the Developer complies with the job and wage goals of Section 3.9 hereof, then the forgivable loan will be forgiven in full. Section 3.9 Business Subsidy Agreement. (a)Public Purpose. In order to satisfy the provisions of the Business Subsidy Act, the Developer and the Company acknowledge and agree that the amount of the “Business Subsidy” granted to the Developer under this Agreement is the Purchase Price Note and the Energy Rebate, and that the Project is not feasible for the Developer and the Company to undertake without the Business Subsidy. The public purpose of the Business Subsidy is to develop industrial warehousing facilities, help develop underutilized land in the City, increase the tax base in the City and the State, and stimulate the creation of jobs, including construction jobs. (b)Operation of Site. The Company shall continue its operations at the Development Property (the “Qualified Facility”) for at least 5 years after the Benefit Date (defined hereinafter). The Project will be a Qualified Facility as long as the Development Property is operated by the Company. The parties agree that the “Benefit Date” is the date that the City delivers the Certificate of Completion. Page 242 of 327 14 EL185\77\970529.v2 (c)Job and Wage Goals. By or before the “Compliance Date”, defined as the date two years after the Benefit Date, the Company shall cause at least 60 full-time equivalent jobs to be located at the Development Property with an hourly wage of at least $21.00 per hour exclusive of benefits within two years from the Benefit Date. Notwithstanding anything to the contrary herein, if the wage and job goals described in this paragraph are met by the Compliance Date, those goals are deemed satisfied despite the Developer’s continuing obligations under Sections 3.9(b). The City may, after a public hearing, extend the Compliance Date by up to one year, provided that nothing in this section will be construed to limit the City’s legislative discretion regarding this matter. (d)Remedies. If the Company fails to meet the goals described in Section 3.9(b) and 3.9(c), the Developer shall repay to the City upon written demand from the City a “pro rata share” of the principal amount of the Purchase Price Note and the Energy Rebate with interest thereon at the implicit price deflator rate as provided in Section 116J.994, subd. 6 of the Business Subsidy Act, accrued from the Benefit Date to the date of payment. The term “pro rata share” means percentages calculated as follows: (i) if the failure relates to the number of jobs, the jobs required less the jobs created, divided by the jobs required; (ii) if the failure relates to wages, the number of jobs required less the number of jobs that meet the required wages, divided by the number of jobs required; (iii) if the failure relates to maintenance of the facility as a Qualified Facility in accordance with Section 3.9(b) 60 less the number of months of operation as a Qualified Facility (where any month in which the Qualified Facility is in operation for at least 15 days constitutes a month of operation), commencing on the Benefit Date and ending with the date the Qualified Facility ceases operation as determined by the City, divided by 60; and (iv) if more than one of clauses (i) through (iii) apply, the sum of the applicable percentages, not to exceed 100%. Nothing in this Section shall be construed to limit the City’s remedies under Article VI hereof. In addition to the remedy described in this Section and any other remedy available to the City for failure to meet the goals stated in Section 3.9, the Company and the Developer agree and understand that they may not receive a business subsidy from the City or any grantor (as defined in the Business Subsidy Act) for a period of 5 years from the date of the failure or until the Developer satisfies its repayment obligation. (e)Reports. The Developer must submit to the City a written report regarding business subsidy goals and results by no later than February 1 of each year, commencing February 1, 2026 and continuing until the later of (i) the date the goals stated in Sections 3.9(b) and (c) are met; (ii) 30 days after expiration of the period described in Section 3.9(b); or (iii) if the goals are not met, the date the subsidy is repaid in accordance with Section 3.9(d). The report must comply with Section 116J.994, subdivision 7 of the Business Subsidy Act. The City will provide information to the Developer regarding the required forms. If the Developer fails to timely file any report required under this Section, the City will mail the Developer a warning within one week after the required filing date. If, after 14 days of the postmarked date of the warning, the Developer fails to provide a report, the Developer must pay to the City a penalty of $100 for each subsequent day until the report is filed. The maximum aggregate penalty payable under this Section is $1,000. (f)Other assistance. In addition to the Purchase Price Note and the Energy Rebate being provided by the City pursuant to this Agreement, the Economic Development Authority of the City is providing the Developer with a microloan in the amount of $200,0000 to assist with financing the Project. Page 243 of 327 15 EL185\77\970529.v2 (g)Parent Corporation. Neither the Developer nor the Company have parent corporations. Section 3.10. Developer to Pay City Fees and Expenses. The Developer will pay all reasonable Administrative Costs (as defined below) of the City and must pay such costs to the City within 30 days after receipt of a written invoice from the City describing the amount and nature of the costs to be reimbursed. For the purposes of this Agreement, the term “Administrative Costs” means out of pocket costs incurred by the City, including without limitation legal, financial advisor, and other consultant costs of the City, all attributable to or incurred in connection with the establishment of the TIF District and adoption of TIF Plan and the review, negotiation and preparation of this Agreement (together with any other agreements entered into between the parties hereto contemporaneously therewith) and the review and approvals of other documents and agreements in connection with the Project or in connection with any amendments to any of the foregoing . In addition, certain engineering, environmental advisor, legal, land use, zoning, subdivision and other costs related to the development of the Development Property are required to be paid as provided in accordance with the City’s planning, zoning, and building fee schedules. The parties acknowledge that the Developer deposited $10,000 with the City toward payment of the Administrative Costs. If such costs exceed such amount, then at any time, but not more often than monthly, the City will deliver written notice to the Developer setting forth any additional fees and expenses, together with suitable billings, receipts or other evidence of the amount and nature of the fees and expenses, and the Developer agrees to pay all fees and expenses within 30 days of the City’s written request. Section 3.11. Restrictions on Use in Economic Development TIF District. (a) The TIF District is an economic development tax increment financing district within the meaning of the TIF Act and is subject, among other things, to the limitations of the types of uses permitted within the TIF District specified in section 469.176, subd. 4c of the TIF Act. Prior to the Termination Date, no more than 15 percent of the square footage of the Project may be used for a purpose other than: (i) The manufacturing or production of tangible personal property, including processing resulting in the change in condition of the property; (ii) Warehousing, storage, and distribution of tangible personal property, excluding retail sales; (iii) Research and development related to the activities listed in clause (1) or (2); or (iv) Space necessary for and related to the activities listed in clauses (1) to (3). The Developer understands and acknowledges that a violation of the above limitations on use may cause the termination of the TIF District and constitutes an Event of Default under this Agreement. The Developer agrees to notify the City immediately if at any time prior to the Termination Date more than 15 percent of the Project are occupied by any use other than one or more of the above uses. The Developer agrees to indemnify, defend and hold harmless the City for any damages or costs resulting from a failure to limit the Project to the uses allowed in an economic development tax increment financing district including but not limited to repaying the outstanding principal amount of the Purchase Price Note plus accrued interest thereon. In addition to the repayment of the outstanding principal amount of the Purchase Price Note, plus accrued interest thereon, damages or costs will include a reimbursement of any tax increment the City may be required or agrees to repay as a result of any action taken under Section 469.1771 of the TIF Act for violation of said act relating to disqualification of the TIF District or any other costs associated with any compliance audit. If the City is required to reimburse tax increment to the County or any other governmental entity pursuant to Minnesota Statutes, Section 469.1771 or any other provision of the TIF Act for any reason Page 244 of 327 16 EL185\77\970529.v2 related to action or inaction by the Developer, the Developer agrees to reimburse a similar amount to the City within 30 days’ written notice by the City to the Developer. The City may add interest on the unpaid balance at the rate authorized by Minnesota Statutes, section 549.09 beginning on the 31st day after notice to the Developer. Failure by the Developer to reimburse the City pursuant to this Section shall constitute a lien on the Development Property. (b) The limitation on the allowable uses in the TIF District specified in subsection (1) above is based solely on compliance with the requirements of the TIF Act for an economic development district. In addition, the City’s zoning ordinance and other land use regulations restrict the uses permissible in the TIF District and include other limitations on development. The Developer acknowledges and agrees to comply with all such regulations. (c) The City shall have the right to make a physical inspection of the Project in order to ensure compliance with the terms of this Agreement and the requirements of the TIF Act with regard to economic development districts. Such inspection shall be limited to regular business hours and upon at least 24 hours’ notice by the City to the Developer. Absent probable cause regarding a violation of the TIF Act regarding allowable uses for economic development districts, such inspections shall not occur more than once within any 12-month period. Section 3.12 Compliance with Environmental Requirements. (h)The Developer shall comply with all applicable local, state, and federal environmental laws and regulations, and will obtain, and maintain compliance under, any and all necessary environmental permits, licenses, approvals or reviews. (i)The City makes no warranties or representations regarding, nor does it indemnify the Developer with respect to, the existence or nonexistence on or in the vicinity of the Development Property or anywhere within the TIF District of any toxic or hazardous substances or wastes, pollutants or contaminants (including, without limitation, asbestos, urea formaldehyde, the group of organic compounds known as polychlorinated biphenyls, petroleum products including gasoline, fuel oil, crude oil and various constituents of such products, or any hazardous substance as defined in the Comprehensive Environmental Response, Compensation and Liability Act of 1980 (“CERCLA”), 42 U.S.C. §§ 961-9657, as amended) (collectively, the “Hazardous Substances”). (j)The Developer agrees to take all necessary action to remove or remediate any Hazardous Substances located on the Development Property to the extent required by and in accordance with all applicable local, state and federal environmental laws and regulations. Page 245 of 327 17 EL185\77\970529.v2 ARTICLE IV INSURANCE; ASSESSMENT AGREEMENT; TAXES Section 4.1 Insurance. (a) The Developer will provide and maintain at all times during the process of constructing the Project an All Risk Broad Form Basis Insurance Policy and, from time to time during that period, at the request of the City, furnish the City with proof of payment of premiums on policies covering the following: (i) Builder’s risk insurance, written on the so-called “Builder’s Risk -- Completed Value Basis,” in an amount equal to one hundred percent (100%) of the insurable value of the Project at the date of completion, and with coverage available in nonreporting form on the so- called “all risk” form of policy. The interest of the City shall be protected in accordance with a clause in form and content satisfactory to the City; (ii) Commercial general liability insurance (including operations, contingent liability, operations of subcontractors, completed operations, and contractual liability insurance) together with an Owner’s Policy with limits against bodily injury and property damage of not less than $1,000,000 for each occurrence (to accomplish the above-required limits, an umbrella excess liability policy may be used). The City shall be listed as an additional insured on the policy; and (iii) Workers’ compensation insurance, with statutory coverage, provided that the Developer may be self-insured with respect to all or any part of its liability for workers’ compensation. (b) Upon completion of construction of the Project 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 City shall furnish proof of the payment of premiums on, insurance as follows: (i) Insurance against loss and/or damage to the Project under a policy or policies covering such risks as are ordinarily insured against by similar businesses. (ii) Commercial general public liability insurance, including personal injury liability (with employee exclusion deleted), against liability for injuries to persons and/or property, in the minimum amount for each occurrence and for each year of $1,000,000, and shall be endorsed to show the City as additional insureds. (iii) Such other insurance, including workers’ compensation insurance respecting all employees of the Developer, in such amount as is customarily carried by like organizations engaged in like activities of comparable size and liability exposure; provided that the Developer may be self-insured with respect to all or any part of its liability for workers’ compensation. (c) All insurance required in Section 4.1 of this Agreement shall be taken out and maintained in responsible insurance companies selected by the Developer that are authorized under the laws of the State to assume the risks covered thereby. Upon request, the Developer will deposit annually with the City 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 Section 4.1 of this Agreement, each policy shall contain a provision that the insurer shall not cancel nor modify it in Page 246 of 327 18 EL185\77\970529.v2 such a way as to reduce the coverage provided below the amounts required herein without giving written notice to the Developer and the City at least thirty (30) days before the cancellation or modification becomes effective. In lieu of separate policies, the Developer may maintain a single policy, blanket or umbrella policies, or a combination thereof, having the coverage required herein, in which event the Developer shall deposit with the City a certificate or certificates of the respective insurers as to the amount of coverage in force upon the Project. (d) The Developer agrees to notify the City immediately in the case of damage exceeding $250,000 in amount to, or destruction of, the Project or any portion thereof resulting from fire or other casualty. In such event the Developer will forthwith repair, reconstruct, and restore the Project 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. The Developer shall complete the repair, reconstruction, and restoration of the Project, regardless of whether the net proceeds of insurance received by the Developer for such purposes are sufficient to pay for the same. Any net proceeds remaining after completion of such repairs, construction, and restoration shall be the property of the Developer. (e) In lieu of the Developer’s obligation to reconstruct the Project as set forth in this Section, the Developer shall have the option of paying to the City an amount that, in the opinion of the City, is sufficient to pay in full the outstanding principal and accrued interest on the Purchase Price Note. (f) The Developer and the City agree that all of the insurance provisions set forth in this Section 4.1 shall terminate upon the termination of this Agreement. Section 4.2 Assessment Agreement. (a) On the Closing Date, the Developer and the City shall execute an Assessment Agreement in substantially the form attached hereto as Exhibit E. The Developer shall be responsible for obtaining the certification of the County Assessor to the Assessment Agreement and for recording the Assessment Agreement against the Development Property. The Assessment Agreement shall specify the Assessor’s Minimum Market Value for the Development Property for calculation of real property taxes. Specifically, the Developer agrees to a minimum market value for the Development Property as of January 2, 2026, for taxes payable in the year 2027, of not less than $8,238,400 (such minimum market value is herein referred to as the “Assessor’s Minimum Market Value”). (b) Nothing in the Assessment Agreement shall limit the discretion of the County Assessor to assign a market value to the Development Property in excess of the Assessor’s Minimum Market Value or prohibit the Developer from seeking through the exercise of legal or administrative remedies a reduction in market value of the Development Property for property tax purposes; provided however, that the Developer shall not seek a reduction of such market value below the Assessor’s Minimum Market Value for any year’s assessment for which the Assessment Agreement shall remain in effect. The Assessment Agreement shall remain in effect with respect to the payable 2026 through the payable 2035 real estate property taxes. (c) The Assessment Agreement must be certified by the County Assessor, as provided in Minnesota Statutes, Section 469.177, Subdivision 8, upon a finding by the County Assessor that the Assessor’s Minimum Market Value is reasonable. Pursuant to Minnesota Statutes, Section 469.177, Subdivision 8, the filing by the Developer of the Assessment Agreement in the office of the County Recorder and/or Registrar of Titles, as applicable, shall constitute notice to any subsequent encumbrancer Page 247 of 327 19 EL185\77\970529.v2 or purchaser of the Development Property (or part thereof), whether voluntary or involuntary, and such Assessment Agreement shall be binding and enforceable in its entirety against any such subsequent purchaser or encumbrancer, including the holder of or mortgagee under any mortgage. (d) Throughout the term of the Assessment Agreement, the Developer shall take no action, and suffer no circumstances to exist or action to be taken by others (to the extent the Developer may prevent the same), the effect of which would be to render the Development Property or any portion thereof to be no longer generally subject to real property taxation. The Developer agrees that prior to the termination of the Assessment Agreement: (i) It will not seek administrative review or judicial review of the applicability of any tax statute relating to the taxation of the Development Property determined by any tax official to be applicable or raise the inapplicability of any such tax statute as a defense in any proceedings, including delinquent tax proceedings; (ii) It will not seek administrative review or judicial review of the constitutionality of any tax statute relating to the taxation of the Development Property determined by any tax official or raise the unconstitutionality of any such tax statute as a defense in any proceedings, including delinquent tax proceedings; and (iii) It will not seek any tax deferral or abatement, either presently or prospectively authorized under any State or federal law, of the taxation of the Development Property. Section 4.3 Right to Collect Delinquent Taxes. The Developer acknowledges that the City is providing substantial aid and assistance to the Project through the Purchase Price Note and the Energy Rebate, the Developer agrees for itself, its successors, and assigns, that in addition to the obligation pursuant to statute to pay real estate taxes, it is also obligated by reason of this Agreement to pay before delinquency all real estate taxes assessed against the Development Property and the Project. The Developer acknowledges that this obligation creates a contractual right on behalf of the City through the Termination Date 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 auditor. In any such suit in which the City is the prevailing party, the City shall also be entitled to recover its costs, expenses, and reasonable attorney fees. Page 248 of 327 20 EL185\77\970529.v2 ARTICLE V CHANGE IN USE OF PROJECT; PROHIBITIONS AGAINST ASSIGNMENT AND TRANSFER; INDEMNIFICATION Section 5.1 Change in Use of Project. The Developer and the Company agree for themselves, and their successors and assigns, they shall devote the Development Property to, and in accordance with, the uses specified in this Agreement. The Developer and the Company warrant the continued use of the Development Property as a facility meeting the requirements of an economic development district, pursuant to the Tax Increment Act. The conversion of any portion of the Project to any other use shall result in the termination of the Tax Increment District and require immediate payment in full of the outstanding balance of the Purchase Price Note. Section 5.2 Prohibition against Transfer of Property and Assignment of Agreement. The Developer and the Company represent and agree that prior to the Termination Date of this Agreement neither the Developer nor the Company shall, except for the Lease between the Company and the Developer, transfer or sell in any form the Development Property or any part thereof or any interest therein, or assign this Agreement or enter into any contract or agreement to do any of the same. The transfer or sale in any form of the Development Property or any part thereof or any interest therein by the Developer shall be an Event of Default hereunder the Developer shall pay the outstanding principal of and interest on the Purchase Price Note within 30 days of such request from the City. Section 5.3 Release and Indemnification Covenants. (a) Except for any willful misrepresentation or willful or wanton misconduct of the Indemnified Parties as hereinafter defined, and except for any breach by any of the Indemnified Parties of their obligations under this Agreement, the Developer and the Company release from any covenants and agree that the City and the governing body members, officers, agents, servants, and employees thereof (the “Indemnified Parties”) shall not be liable for and agree 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 or about or resulting from any defect in the Development Property or the Project. (b) Except for any willful misrepresentation or willful or wanton misconduct of the Indemnified Parties, and except for any breach by any of the Indemnified Parties of their obligations under this Agreement, the Developer and the Company agree to protect and defend the Indemnified Parties, now and forever, and further agree 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, maintenance, and operation of the Development Property and the Project. (c) Except for any willful misrepresentation or willful or wanton misconduct of the Indemnified Parties, and except for any breach by any of the Indemnified Parties of their obligations under this Agreement, the Indemnified Parties shall not be liable for any damage or injury to the persons or property of the Developer or the Company or their officers, agents, servants, or employees or any other person who may be on the Development Property or the Project. (d) All covenants, stipulations, promises, agreements and obligations of the City contained herein shall be deemed to be the covenants, stipulations, promises, agreements, and obligations of such entity and not of any governing body member, officer, agent, servant, or employee of such entities in the individual capacity thereof. Page 249 of 327 21 EL185\77\970529.v2 ARTICLE VI DEVELOPER AND COMPANY EVENTS OF DEFAULT Section 6.1 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 any one or more of the following events: (a) Failure by the Developer and/or the Company to substantially observe or perform any other covenant, condition, obligation or agreement on its part to be observed or performed under this Agreement, the Purchase Price Note, or the Security Agreements or if any certification, representation, or warranty by the Developer or the Company to the City is substantiated by evidence to be untrue or misrepresented. (b) Failure by the Developer and/or the Company to timely pay any ad valorem real property taxes or special assessments assessed with respect to the Development Property. (c) Failure by the Developer to cause the construction of the Project to be completed pursuant to the terms, conditions and limitations of this Agreement. (d) The holder of any mortgage on the Development Property or any improvements thereon, or any portion thereof, commences foreclosure proceedings as a result of any default under the applicable mortgage documents. (e) Failure by the Developer to make a payment within 10 days after such payment is due under the Purchase Price Note or pursuant to Section 3.7. (f) Failure by the Guarantors to make a payment due under the Guaranties. (g) If the Developer, the Company or any of the Guarantors shall; (i) file any petition in bankruptcy or for any reorganization, arrangement, composition, readjustment, liquidation, dissolution, or similar relief under the United States Bankruptcy Act of 1978, as amended or under any similar federal or state law; or (ii) make an assignment for the benefit of its creditors; or (iii) admit in writing its inability to pay its debts generally as they become due; or (iv) be adjudicated a bankrupt or insolvent; or if a petition or answer proposing the adjudication of the Developer, the Company or any of the Guarantors, as a bankrupt or its reorganization under any present or future federal bankruptcy act or any similar federal or state law shall be filed in any court and such petition or answer shall not be discharged or denied within 90 days after the filing thereof; or a receiver, trustee or liquidator of the Developer or the Company, or of the Project, or part thereof, shall be appointed in any proceeding brought against the Developer or the Company, and shall not be discharged within 90 days after such appointment, or if the Developer or the Company, as applicable, shall consent to or acquiesce in such appointment. Section 6.2 Remedies on Default. Whenever any Event of Default referred to in Section 6.1 occurs and is continuing, the City may take any one or more of the following actions after the giving of 30 days’ written notice to the Developer and the Company, but only if the Event of Default has not been cured within said 30 days. Page 250 of 327 22 EL185\77\970529.v2 (a) The City may suspend its performance under this Agreement until it receives assurances from the Developer and the Company, deemed adequate by the City, that the Developer or the Company, as applicable, will cure the default and continue its performance under this Agreement. (b) The City may cancel and rescind this Agreement, in whole or in part. (c) The City may require the Developer to repay the Purchase Price Note plus accrued interest thereon in full or in part and exercise its remedies available under the Security Documents. (d) If the Event of Default constitutes a breach of the condition subsequent set forth in the Right of Re-entry the City reserves in a deed conveying the Development Property to the Developer, the City may exercise its Right of Re-entry. (e) The City may seek specific performance of the obligations of the Developer, the Company or any of the Guarantors pursuant to this Agreement, the Purchase Agreement, the Purchase Price Note and the Security Documents or damages to the extent otherwise set forth herein as to any obligation, agreement, or covenant of the Developer, the Company or any of the Guarantors under this Agreement, the Purchase Agreement, the Purchase Price Note or the Security Documents. (f) (f) The City may take any action at law, including legal or administrative action, in law or equity, which may appear necessary or desirable to enforce the performance or observance of any obligation, agreement, or covenant of the Developer or the Company under this Agreement. Section 6.3 No Remedy Exclusive. No remedy herein conferred upon or reserved to the City is intended to be exclusive of any other available remedy or remedies, but each and every such remedy shall be cumulative and shall be in addition to every other remedy given under this Agreement or now or hereafter existing at law or in equity or by statute to the extent provided herein. 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 6.4 No Implied Waiver. In the event any agreement contained in this Agreement should be breached by any party and thereafter waived by any 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. Section 6.5 Agreement to Pay Attorney’s Fees and Expenses. Whenever any Event of Default occurs and the City shall employ attorneys or incur other expenses for the collection of payments due or to become due or for the enforcement of performance or observance of any obligation or agreement on the part of the Developer or the Company herein contained, the Developer and the Company agree, jointly and severally, that they shall, on demand therefor, pay to City the reasonable fees of such attorneys and such other expenses so incurred by it. In addition, the Developer and the Company agree, jointly and severally, to pay the total amount of any actual costs, charges, expenses and attorneys fees reasonably incurred or paid at any time by the City because of any Event of Default by the Developer or the Company as to any stipulation, agreement, and covenant of this Agreement, the Purchase Agreement, the Purchase Price Note or the Security Documents, resulting in any suit or proceeding at law or in equity to which the City shall become a party in reference to the Developer’s or the Company’s interest in the Development Property or the Project. Page 251 of 327 23 EL185\77\970529.v2 ARTICLE VII ADDITIONAL PROVISIONS Section 7.1 Conflict of Interests; City Representatives Not Individually Liable. The City, the Developer and the Company, to their actual knowledge, represent and agree that no member, official, or employee of the City 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 that affects his or her personal interests or the interests of any corporation, partnership, or association in which he or she, directly or indirectly, is interested. No member, official, or employee of the City shall be personally liable to the Developer or the Company, or any successor in interest, in the event of any default or breach by the City or for any amount that may become due to the Developer or the Company or any successor or on any obligations under the terms of the Agreement. Section 7.2 Titles of Articles and Sections. Any titles of the several parts, articles and sections of this Agreement are inserted for convenience of reference only and shall be disregarded in construing or interpreting any of its provisions. Section 7.3 Notices and Demands. Except as otherwise expressly provided in this Agreement, a notice, demand or other communication under this Agreement by any party to any other shall be sufficiently given or delivered if it is dispatched by registered or certified mail, postage prepaid, return receipt requested; or delivered personally, and (a) in the case of the Developer is addressed to or delivered personally to: Jade Elk Properties LLC c/o CPEC1031, LLC 222 South Ninth Street, Suite 4050 Minneapolis, MN 55402 Attn: Patrick Menth (b) in the case of the Company is addressed to or delivered personally to: Heritage Millwork, Inc. 19830 Polk Street Elk River, MN 55330 Attn: Patrick Menth (c) in the case of the City is addressed to or delivered personally to the City at: City of Elk River, Minnesota 13065 Orono Parkway Elk River, Minnesota 55330 Attn: City Administrator or at such other address with respect to any such party as that party may, from time to time, designate in writing and forward to the other, as provided in this Section. Section 7.4 Counterparts. This Agreement may be executed in any number of counterparts, each of which shall constitute one and the same instrument. Section 7.5 Recording. The City may record this Agreement and any amendments thereto Page 252 of 327 24 EL185\77\970529.v2 with the recorder and/or registrar of titles of the County, as applicable. The Developer shall pay all costs for recording. The Developer’s obligations under this Agreement are covenants running with the land for the term of this Agreement, enforceable by the City against the Developer, its successor and assigns, and every successor in interest to the Development Property, or any part thereof or any interest therein. Section 7.6 Law Governing. This Agreement will be governed and construed in accordance with the laws of the State of Minnesota. Section 7.7. Conflicts of Interest. No member of the governing body or other official of the City shall have any financial interest, direct or indirect, in this Agreement, the Development Property or the Project, or any contract, agreement or other transaction contemplated to occur or be undertaken thereunder or with respect thereto, nor shall any such member of the governing body or other official participate in any decision relating to this Agreement which affects his or her personal interests or the interests of any corporation, partnership or association in which he or she is directly or indirectly interested. No member, official or employee of the City shall be personally liable to the Developer in the event of any default or breach by the City or successor or on any obligations under the terms of this Agreement. Section 7.8. Interpretation; Concurrence. The language in this Agreement shall be construed simply according to its generally understood meaning, and not strictly for or against any party and no interpretation shall be affected by which party drafted any part of this Agreement. By executing this Agreement, the parties acknowledge that they (a) enter into and execute this Agreement knowingly, voluntarily and willingly of their own volition with such consultation with legal counsel as they deem appropriate; (b) have had a sufficient amount of time to consider this Agreement’s terms and conditions, and to consult an attorney before signing this Agreement; (c) have read this Agreement, understand all of its terms, appreciate the significance of those terms and have made the decision to accept them as stated herein; and (d) have not relied upon any representation or statement not set forth herein. Section 7.9. Government Data. The Developer has been required to provide certain data to the City or its consultants in connection with applying for financial assistance in constructing the Project. It is also likely that the Developer will be required to provide additional data to the City or consultants in the course of administering the TIF District to ensure compliance with this Agreement and the TIF Act. All data provided to the City or its consultants is government data within the meaning of the Minnesota Statutes, Chapter 13 (the “MGDPA”). The parties recognize that some of the data provided by the Developer to the City or its their consultants may be nonpublic data as defined by the MGDPA. The parties acknowledge that the City is subject to the MGDPA and will handle all government data in its possession in accordance with the MGDPA, notwithstanding any other agreement or understanding to the contrary. Page 253 of 327 S-1 EL185\77\970529.v2 IN WITNESS WHEREOF, each of the City, the Developer and the Company has caused this Agreement to be duly executed in its name and on its behalf, on or as of the date first above written. CITY OF ELK RIVER, MINNESOTA By_____________________________________ Its Mayor By ____________________________________ Its City Clerk STATE OF MINNESOTA ) )ss COUNTY OF SHERBURNE ) The foregoing instrument was acknowledged before me this ______ day of ___________________, 2024, by John J. Dietz and Tina Allard, the Mayor and the City Clerk, respectively, of the City of Elk River, Minnesota (the “City”), a municipal corporation and political subdivision of the State of Minnesota, on behalf of the City. ___________________________________ Notary Public Page 254 of 327 S-2 EL185\77\970529.v2 JADE ELK PROPERTIES LLC By ___________________________________________ Its ___________________________________________ STATE OF MINNESOTA ) )ss COUNTY OF SHERBURNE ) The foregoing instrument was acknowledged before me this _____ day of ___________________, 2024, by _________________________________, as the ______________ of Jade Elk Properties LLC, a Minnesota limited liability company. ___________________________________ Notary Public This is a signature page to the Amended and Restated Development Assistance Agreement by and among the City of Elk River, Minnesota, Jade Elk Properties LLC and Heritage Millwork, Inc. Page 255 of 327 S-3 EL185\77\970529.v2 HERITAGE MILLWORK, INC. By ___________________________________________ Its ___________________________________________ STATE OF MINNESOTA ) )ss COUNTY OF SHERBURNE ) The foregoing instrument was acknowledged before me this _____ day of ___________________, 2024, by _________________________________, as the ______________ of Heritage Millwork, Inc., a Minnesota corporation. ___________________________________ Notary Public This is a signature page to the Amended and Restated Development Assistance Agreement by and among the City of Elk River, Minnesota, Jade Elk Properties LLC and Heritage Millwork, Inc. Page 256 of 327 A-1 EL185\77\970529.v2 EXHIBIT A LEGAL DESCRIPTION OF DEVELOPMENT PROPERTY That certain property located in the City of Elk River, Sherburne County, Minnesota, legally described as Lot 1, Block 1 Nature’s Edge Business Center Fifth Addition. Page 257 of 327 B-1 EL185\77\970529.v2 EXHIBIT B PURCHASE PRICE NOTE $1,378,019.60 Date of Issuance: _________, 2024 JADE ELK PROPERTIES LLC, a Minnesota limited liability company (the “Developer”), for value received, hereby promises to pay to the CITY OF ELK RIVER, MINNESOTA (the “City”), at its designated principal office or such other place as the City may designate in writing, the principal sum of ONE MILLION THREE HUNDRED SEVENTY EIGHT THOUSAND NINETEEN DOLLARS and 60/100ths Dollars ($1,378,019.60), or so much thereof as remains outstanding from time to time (the “Principal Balance”), on this Purchase Price Note (the “Note”) pursuant to that certain Purchase Agreement, dated as of June 25, 2024, between the City and the Developer (the “Purchase Agreement”) and that certain Amended and Restated Development Assistance Agreement, between the City, Heritage Millwork, Inc., a Minnesota corporation (the “Company”), and the Developer, dated ________, 2024 (the “Development Assistance Agreement”), with interest as hereinafter provided, in any coin or currency which at the time or times of payment is legal tender for the payment of private debts in the United States of America. All terms capitalized used herein and not defined have the definitions given such terms in the Purchase Agreement or the Development Assistance Agreement, as applicable. 1. Commencing on the Closing Date and continuing until the Principal Balance of, and all accrued interest on, this Note has been repaid in full, interest shall accrue on the Principal Balance at a rate of 5.00% per annum (the “Interest Rate”). Interest shall be calculated on the basis of a 360-day year of twelve 30-day months. 2. This Note shall be paid as follows: (a) The amounts due under this Note shall be payable in semiannual installments, commencing August 1, 2026, and on each February 1 and August 1 thereafter to and including February 1, 2035, or, if the first day of either February 1 or August 1 should not be a Business Day (as defined in the Development Assistance Agreement), the next succeeding Business Day (the “Payment Dates”) in the amounts shown in the schedule below constituting payments of principal and interest due (each a “Payment Installment”). On each Payment Date, the City will credit against the Payment Installment then due, an amount equal to the Purchase Price Note Pledged Tax Increment received by the City in the 6- month period preceding such Payment Date. If, on December 1 of each year commencing December 31, 2026 and continuing through December 1, 2035, the Purchase Price Pledged Tax Increment received by the City in the 12-month period preceding each August 1 payment date is less than the amount shown in the schedule below for such 12 month period, the Developer shall pay, by check or draft mailed to the City, an amount equal to the deficiency (the “Shortfall”). The Developer is obligated to pay a Shortfall within 15 days after receipt of a written notice from the City requesting payment for such Shortfall. Date Amount Date Amount Date Amount Date Amount 8/1/2026 $37,985.50 2/1/2029 $109,422.00 8/1/2031 $120,556.00 8/1/2033 $128,595.00 2/1/2027 $37,985.50 8/1/2029 $113,015.00 2/1/2032 $120,556.00 2/1/2034 $128,595.00 8/1/2027 $78,382.50 2/1/2030 $113,015.00 8/1/2032 $124,511.50 8/1/2034 $132,811.50 2/1/2028 $78,382.50 8/1/2030 $116,725.00 2/1/2033 $124,511.50 2/1/2035 $132,811.50 Page 258 of 327 B-2 EL185\77\970529.v2 8/1/2028 $109,422.00 2/1/2031 $116,725.00 (b) Payments shall be applied first to interest due on the Principal Balance and thereafter to reduction of the Principal Balance. (c) All outstanding principal of and interest on this Note shall be due and payable in full on the earlier of (i) the date an Event of Default occurs under the Development Assistance Agreement and all applicable cure periods have expired; (ii) a transfer or sale of the Development Property as set forth in Section 3.7(b) of the Development Assistance Agreement; (iii) a transfer or sale of the Company as set forth in Section 3.7(b) of the Development Assistance Agreement; (iv) certain refinancings of the Priority Loans (as defined in the Development Assistance Agreement) as set forth in Section 3.7(c) of the Development Assistance Agreement; or (v) the Maturity Date. 3. The Developer or the City shall have the right to prepay this Note fully or partially at any time without penalty. Any partial prepayment shall be applied first to any unpaid, accrued interest with the balance, if any, applied to the Principal Balance. 4. This Note is given pursuant to the Purchase Agreement and the Development Assistance Agreement, as both may be amended from time to time. Failure of the Developer to observe or perform any material covenant, condition, obligation or agreement on its part to be observed or performed under this Note shall constitute an Event of Default under the Development Assistance Agreement and is subject to the remedies of the City thereunder. All of the agreements, conditions, covenants, provisions, and stipulations contained in the Development Assistance Agreement are hereby made a part of this Note to the same extent and with the same force and effect as if they were fully set forth herein. It is agreed that time is of the essence of this Note. 5. This Note is secured by the Security Documents. 6. The outstanding Principal Balance of this Note and accrued interest and all other amounts due hereon shall, at the option of the City, become immediately due and payable, upon the occurrence of an Event of Default (as defined in the Development Assistance Agreement), or at any time thereafter, subject to any notice and cure periods provided in the Development Assistance Agreement and the Security Documents. Failure to exercise the option provided herein shall not constitute a waiver of the right to exercise the same subsequently or in the event of any subsequent Event of Default. The remedies of the City, as provided herein and in the Development Assistance Agreement and Security Documents, shall be cumulative and concurrent, may be pursued singly, successively, or together, and, at the sole discretion of the City, and may be exercised as often as occasion therefor shall occur. 7. The City shall not be deemed, by any act of omission or commission, to have waived any of its rights or remedies hereunder unless such waiver is in writing and signed by the City and then only to the extent specifically set forth in the writing. A waiver with reference to one event shall not be construed as continuing or as a bar to or waiver of any right or remedy as to a subsequent event. This Note may not be amended, modified, or changed except only by an instrument in writing signed by the party against whom enforcement of any such amendment, modifications, or change is sought. 8. In the event that the principal of this Note or any other amount due hereunder shall not be paid when due (whether or not upon declaration of an Event of Default), the Developer shall pay all costs of collection and enforcement of this Note, the Security Documents, and the Development Assistance Agreement, including, but not limited to, all reasonable attorneys’ fees, court costs, and expenses incurred by the City in connection with such collection or the protection or enforcement of any rights or security Page 259 of 327 B-3 EL185\77\970529.v2 interests under this Note, the Security Documents or the Development Assistance Agreement, whether or not any lawsuit is ever filed. In addition, the Developer shall pay all fees and expenses due under the Development Assistance Agreement, including, but not limited to, all fees and expenses of the Lender in administering, supplementing or amending the loan evidenced by this Note and the Development Assistance Agreement. All payments required pursuant to this Section shall be due and payable upon delivery the Lender of an invoice therefor to the Developer, and any unpaid amounts shall be added to the principal amount of the Note and accrue interest after 30 days of nonpayment. 9. Except as otherwise provided in this Note, the Development Assistance Agreement and the Security Documents, the Developer hereby (a) waives demand, presentment for payment, notice of nonpayment, protest, notice of protest, and all other notice; (b) agrees to any substitution, exchange, addition, or release of any party or person primarily or secondarily liable hereon; and (c) agrees that City shall not be required first to institute any suit or to exhaust its remedies against the Developer or any other person or party in order to enforce payment of this Note. 10. If any term of this Note, or the application thereof to any person or circumstances shall, to any extent, be invalid or unenforceable, the remainder of this Note, or the application of such term to persons or circumstances other than those to which it is invalid or unenforceable shall not be affected thereby, and each term of this Note shall be valid and enforceable to the fullest extent permitted by law. 11. Upon the occurrence of an Event of Default or any time thereafter, the City shall have the right of setoff on any and all amounts due under this Note by the Developer to the City against any indebtedness or obligation of the City to the Developer. 12. The outstanding principal balance of this Note, accrued interest thereon, and all other amounts due hereon shall, at the option of the City, become immediately due and payable, upon the occurrence of an Event of Default, or at any time thereafter. Failure to exercise the option provided herein shall not constitute a waiver of the right to exercise the same subsequently or in the event of any subsequent Event of Default. 13. It is intended that this Note is made with reference to and shall be construed as a Minnesota contract and governed by the laws thereof. 14. IT IS HEREBY CERTIFIED AND RECITED that all conditions, acts, and things required to exist, happen, and be performed precedent to or in the issuance of this Note do exist, have happened, and have been performed in regular and due form as required by law. Page 260 of 327 B-4 EL185\77\970529.v2 IN WITNESS WHEREOF, the Developer has caused this Note to be duly executed as of the date and year first written above. JADE ELK PROPERTIES LLC By: __________________________________________ Its:___________________________________________ Page 261 of 327 C-1 EL185\77\970529.v2 EXHIBIT C CERTIFICATE OF COMPLETION The City of Elk River, Minnesota (the “City”), a municipal corporation hereby certifies that all building construction and other physical improvements specified to be done and made by Jade Elk Properties LLC, a Minnesota limited liability company (the “Developer”), have been completed and the covenants and conditions in that certain Amended and Restated Development Assistance Agreement, dated as of _________, 2024, by and among the City, the Developer, and Heritage Millwork, Inc., a Minnesota corporation, as the same may be amended from time to time (the “Development Assistance Agreement”), with respect to the construction of the Project have been performed by the Developer therein. CITY OF ELK RIVER, MINNESOTA By_____________________________________ Its Mayor By ____________________________________ Its City Clerk STATE OF MINNESOTA ) ): ss COUNTY OF SHERBURNE ) The foregoing instrument was acknowledged before me this ______ day of ___________________, 2024, by _________________ and ____________________, the Mayor and the City Clerk, respectively, of the City of Elk River, Minnesota (the “City”), a municipal corporation and political subdivision of the State of Minnesota, on behalf of the City. ___________________________________ Notary Public Page 262 of 327 D-1 EL185\77\970529.v2 EXHIBIT D CERTIFICATE OF RELEASE 1.Recitals. 1.1.Recital One. Jade Elk Properties LLC, a Minnesota limited liability company (the “Developer”), is the owner of the real property legally described on the attached Exhibit A (the “Development Property”). 1.2.Recital Two. The Developer acquired title to the Development Property from the City of Elk River, Minnesota (the “City”) pursuant to a deed dated _________ ____, 2024 and recorded in the office of the Sherburne County Recorder on ___________________ as Document No. ______________ (the “Deed”). 1.3.Recital Three. The Deed includes a right of re-entry for breach of conditions subsequent in favor of the City (the “Right of Re-entry”). 1.4.Recital Four. The City, the Developer and Heritage Millwork, Inc., a Minnesota corporation, are parties to a Amended and Restated Development Assistance Agreement recorded in the office of the Sherburne County Recorder on ______________ as Document No. _____________ (the “Development Assistance Agreement”). 1.5.Recital Five. Pursuant to Section 3.4 of the Development Assistance Agreement, the Developer is obligated to commence, or cause to be commenced, construction of the foundation of the Project (as defined in the Development Assistance Agreement) on the Development Property by December 31, 2024. 1.6.Recital Six. The City’s Right of Re-entry would be triggered by the Developer’s failure to commence, or cause to be commenced, construction of the foundation of the Project by the date 12 months from the date of the Deed, subject to Unavoidable Delays. 1.7.Recital Seven. The Developer has represented to the City that the Developer has commenced construction of the foundation of the Project and has requested this Certificate of Release from the City. 2.Certificate of Release. The City hereby certifies that the Developer has satisfied its obligations with respect to commencing construction of the foundation of the Project on the Development Property. The City further acknowledges and agrees that the Development Property is released from the Right of Re-Entry. Page 263 of 327 D-2 EL185\77\970529.v2 IN WITNESS WHEREOF, the City has caused this certificate to be duly executed on its behalf by the President and Secretary this ____ day of _______________, 2024 CITY OF ELK RIVER, MINNESOTA By Its Mayor And By Its City Clerk STATE OF MINNESOTA ) ) ss. COUNTY OF SHERBURNE ) The foregoing instrument was acknowledged before me this ______ day of ___________________, 2024, by _________________ and ____________________, the Mayor and the City Clerk, respectively, of the City of Elk River, Minnesota (the “City”), a municipal corporation and political subdivision of the State of Minnesota, on behalf of the City. _____________________________________________ Notary Public DRAFTED BY: KENNEDY & GRAVEN, Chartered (GAF) 150 South 5th Street, Suite 700 Minneapolis, MN 55402 Telephone: (612) 337-9300 Page 264 of 327 A-1 EL185\77\970529.v2 EXHIBIT E FORM OF ASSESSMENT AGREEMENT THIS ASSESSMENT AGREEMENT, dated as of _________ ___, 2024 by and between the City of Elk River, Minnesota (the “City”) and Jade Elk Properties LLC, a Minnesota limited liability company (the “Developer”), and certified by the County Assessor for Sherburne County, Minnesota (the “Assessor”): WITNESSETH WHEREAS, the City, the Developer and Heritage Millwork, Inc., a Minnesota corporation, have entered into a certain Amended and Restated Development Assistance Agreement, dated as of ______, 2024 (the “Development Assistance Agreement”), regarding certain real property located in the City of Elk River, Sherburne County, Minnesota (the “Development Property”), which property is legally described on the Exhibit A attached to and made a part of this Assessment Agreement; WHEREAS, the Development Assistance Agreement provides that the Developer will construct certain improvements (the “Project”) on the Development Property; WHEREAS, the City and the Developer desire to establish certain minimum market values for the Development Property and the Project thereon, all as the same may exist from time to time pursuant to Minnesota Statutes, Section 469.177, Subdivision 8; WHEREAS, the Developer represents that it has acquired and now owns fee title to all of the Development Property; WHEREAS, the Developer, the City, and the Assessor have reviewed certain plans for the Project: NOW, THEREFORE, the parties to this Assessment Agreement, in consideration of the promises, covenants and agreements herein, do hereby agree as follows: 1. As of January 2, 2026, the minimum market value which shall be assigned to and assessed for the Development Property for purposes of real estate property taxation for taxes payable 2027 through 2035, both inclusive, shall be not less than $8,238,400. It is the express intent hereof that said minimum market value shall apply with respect to the payable 2027 through the payable 2035 real property taxes, both inclusive. 2. This Assessment Agreement and the attached Certification of the Assessor shall be promptly recorded by the Developer, with the County Recorder and/or the Registrar of Titles (as applicable) of Sherburne County, Minnesota, and shall be filed against the Development Property. 3. Neither any preamble nor any provision of this Assessment Agreement is intended to modify the terms of the Development Assistance Agreement. 4. This Assessment Agreement shall inure to the benefit of and be binding upon the successors and assigns of the parties, shall be governed by and interpreted pursuant to Minnesota law, and may be executed in counterparts, each of which shall constitute an original hereof and all of which shall Page 265 of 327 A-2 EL185\77\970529.v2 constitute one and the same instrument. Page 266 of 327 A-3 EL185\77\970529.v2 IN WITNESS WHEREOF, the City and the Developer have caused this Assessment Agreement to be executed in their names and on their behalf by their duly authorized representatives all as of the date set forth above. CITY OF ELK RIVER, MINNESOTA By: __________________________________________ Its Mayor By: __________________________________________ Its City Clerk STATE OF MINNESOTA ) ) ss. COUNTY OF SHERBURNE ) The foregoing instrument was acknowledged before me this ______ day of ___________________, 2024, by John J. Dietz and Tina Allard, the Mayor and the City Clerk, respectively, of the City of Elk River, Minnesota (the “City”), a municipal corporation and political subdivision of the State of Minnesota, on behalf of the City. _____________________________________________ Notary Public Signature page for Assessment Agreement by and between the City of Elk River, Minnesota and Jade Elk Properties LLC. Page 267 of 327 A-4 EL185\77\970529.v2 Jade Elk Properties LLC, By ____________________________________ Its_________________________________ STATE OF MINNESOTA ) ) ss. COUNTY OF SHERBURNE ) This instrument was acknowledged before me on _________ ___, 2024, by _________, of Jade Elk Properties LLC, a Minnesota limited liability company, on behalf of Jade Elk Properties LLC. _____________________________________________ Notary Public Signature page for Assessment Agreement by and between the City of Elk River, Minnesota and Jade Elk Properties LLC. Page 268 of 327 A-5 EL185\77\970529.v2 CERTIFICATION BY COUNTY ASSESSOR The undersigned, having reviewed certain plans for the Project to be constructed and the market value assigned to the land upon which the Project are to be constructed, as described in this Assessment Agreement, hereby states as follows: The undersigned Assessor, being legally responsible for the assessment of the above described property, hereby certifies that the $8,238,400 market value hereinabove assigned to the Development Property and Project are reasonable. _____________________________________________ County Assessor for Sherburne County STATE OF MINNESOTA ) ) SS COUNTY OF SHERBURNE ) This instrument was acknowledged before me on ____________, 2024, by _________________, the County Assessor of Sherburne County. _____________________________________________ Notary Public Page 269 of 327 A-6 EL185\77\970529.v2 EXHIBIT A TO ASSESSMENT AGREEMENT Legal Description of Development Property The property located in the City of Elk River, Sherburne County, Minnesota legally described as: Lot 1, Block 1 Nature’s Edge Business Center Fifth Addition. Page 270 of 327 F-1 EL185\77\970529.v2 EXHIBIT F FORM OF PERSONAL GUARANTY [PERSONAL GUARANTOR] __________, 2024 FOR VALUABLE CONSIDERATION, the receipt and sufficiency of which is hereby acknowledged, and in consideration of and to induce financial accommodations of any kind, with or without security, given or to be given or continued at any time and from time to time by the CITY OF ELK RIVER, MINNESOTA, a municipal corporation and political subdivision of the State of Minnesota (the “City”), to or for the account of JADE ELK PROPERTIES LLC, a Minnesota limited liability company (the “Developer”), the undersigned (the “Guarantor”) absolutely and unconditionally guaranty to the City the full and prompt payment if and when due, whether at maturity or earlier by reason of acceleration or otherwise, of any and all indebtedness, obligations and liabilities of the Developer (and any and all successors of the Developer) to the City, now or hereafter existing including the that certain Purchase Price Note of even date herewith, in the original aggregate principal amount of $1,378,019.60, executed and delivered by the Developer to the City, in accordance with the terms of the Amended and Restated Development Assistance Agreement, dated ________, 2024, between the Developer and the City, absolute or contingent, independent, joint, several or joint and several, secured or unsecured, due or to become due, contractual or tortious, liquidated or unliquidated, arising by assignment or otherwise, including without limitation all indebtedness, obligations and liabilities owed by the Developer (and any and all successors of the Developer) as a member of any partnership, syndicate, association or other group, and whether incurred by the Developer (or any successor of the Developer) as principal, surety, endorser, guarantor, accommodation party or otherwise (collectively, the “Indebtedness”); and the Guarantor agrees to pay on demand all of the City’s fees, costs, expenses and reasonable attorneys’ fees in connection with the Indebtedness, any security therefor, and this guaranty, plus interest on such amounts at the highest rate then applicable to any of the Indebtedness. The City may at any time and from time to time, without consent of or notice to the Guarantor, without incurring responsibility to the Guarantor, without releasing, impairing or affecting the liability of the Guarantor hereunder, upon or without any terms or conditions, and in whole or in part: (1) sell, pledge, surrender, compromise, settle, release, renew, subordinate, extend, alter, substitute, exchange, change, modify or otherwise dispose of or deal with in any manner and in any order any Indebtedness, any evidence thereof, or any security or other guaranty therefor; (2) accept any security for, or other guarantors of, any Indebtedness; (3) fail, neglect or omit to obtain, realize upon or protect any Indebtedness or any security therefor, to exercise any lien upon or right to any money, credit or property toward the liquidation of the Indebtedness, or to exercise any other right against the Developer, the Guarantor, any other guarantor or any other person; and (4) apply any payments and credits to the Indebtedness in any manner and in any order. No act, omission or thing, except full payment and discharge of the Indebtedness, which but for this provision could act as a release or impairment of the liability of the Guarantor hereunder, shall in any way release, impair or otherwise affect the liability of the Guarantor hereunder, and the Guarantor waives any and all defenses of the Developer pertaining to the Page 271 of 327 F-2 EL185\77\970529.v2 Indebtedness, any evidence thereof, and any security therefor, except the defense of discharge by payment. The failure of any person or persons to sign this or any other guaranty shall not release, impair or affect the liability of the Guarantor hereunder. This guaranty is a primary obligation of the Guarantor and the City shall not be required to first resort for payment of the Indebtedness to the Developer or any other person, its properties or estates, or any security or other rights or remedies whatsoever. The Guarantor shall be and remain liable for any deficiency remaining after foreclosure of any mortgage or security interest securing the Indebtedness, whether or not the liability of the Developer or any other person for such deficiency is discharged pursuant to statute, judicial decision or otherwise. The liability of the Guarantor under this guaranty is in addition to and shall be cumulative with all other liabilities of the Guarantor to the City, as guarantor or otherwise, without any limitation as to amount, unless the writing evidencing or creating such other liability specifically provides to the contrary. If any payment applied by the City to the Indebtedness is thereafter set aside, recovered, rescinded or required to be returned for any reason (including without limitation the bankruptcy, insolvency or reorganization of the Developer or any other person), the Indebtedness to which such payment was applied shall for the purposes of this guaranty be deemed to have continued in existence, notwithstanding such application, and this guaranty shall be enforceable as to such Indebtedness as fully as if such application had never been made. The Guarantor waives: (1) notice of acceptance of this guaranty and of the creation and existence of the Indebtedness; (2) presentment, demand for payment, notice of dishonor, notice of nonpayment, and protest of any instrument evidencing the Indebtedness; and (3) all other demands and notices to the Guarantor or any other person and all other actions to establish the liability of the Guarantor hereunder. The Guarantor consents to the personal jurisdiction of the state and federal courts located in the State of Minnesota in connection with any controversy related to this guaranty, waives any argument that venue in such forums is not convenient, and agrees that any litigation initiated by the Guarantor against the City in connection with this guaranty shall be venued in either the District Court of Sherburne County, Minnesota, or the United States District Court, District of Minnesota. All property of the Guarantor, now or hereafter in the possession, control or custody of or in transit to the City for any purpose, including without limitation the balance of every account of the Guarantor with and each claim of the Guarantor against the City, shall be subject to a lien and security interest in favor of the City, as security for all liabilities of the Guarantor to the City, and shall be subject to be set off against any and all such liabilities, and the City may at any time and from time to time at its option and without notice appropriate and apply any such property toward the payment of any and all such liabilities. The Guarantor agrees to promptly provide the City from time to time with financial statements of the Guarantor, in form and substance acceptable to the City, at least once every 12 months and as otherwise requested by the City. The Guarantor agrees to promptly provide the City from time to time with such other information respecting the condition (financial and otherwise), business and property of the Guarantor as the City may request, in form and substance acceptable to the City. The Guarantor waives all claims, rights and remedies which the Guarantor may now have or hereafter acquire against any person at any time now or hereafter liable to payment of any of the Indebtedness and as to any collateral security, including but not limited to all claims, rights and remedies of contribution, indemnification, exoneration, reimbursement, recourse and subrogation, whether or not such claim, right or remedy arises in equity, under contract, by statute, under common law or otherwise, whether or not the Indebtedness has been fully paid, and all payments and recoveries under this guaranty shall be considered equity investments by the Guarantor in the Developer; provided, nothing contained in this guaranty shall deprive the Guarantor of any claim, right or remedy, after the Indebtedness has been fully paid, against any person other than the Developer. No delay or failure by the City in exercising any right, and no partial or single exercise thereof shall constitute a waiver thereof. No waiver of any rights Page 272 of 327 F-3 EL185\77\970529.v2 hereunder, and no modification or amendment of this guaranty shall be effective unless the same is in writing duly executed by the City, and each such waiver, if any, shall apply only with respect to the specific instance involved and shall not impair or affect the rights of the City or the provisions of this guaranty in any other respect at any other time. This guaranty shall continue until written notice of revocation of this guaranty, executed by the Guarantor, has been received by the City; provided, no revocation of this guaranty shall affect in any manner any liability of the Guarantor under this guaranty with respect to Indebtedness arising before the City receives such written notice of revocation, and the sole effect of revocation of this guaranty shall be to exclude from this guaranty Indebtedness thereafter arising which is unconnected with Indebtedness theretofore arising or transactions theretofore entered into. Any invalidity or unenforceability of any provision or application of this guaranty shall not affect other lawful provisions and applications hereof and to this end the provisions of this guaranty are declared to be severable. This guaranty shall bind the Guarantor and the heirs, representatives, successors and assigns of the Guarantor, and of each of them respectively, and shall benefit the City, its successors and assigns. This guaranty shall be governed by and construed in accordance with the laws of the State of Minnesota. Agrees that the City shall not be required to first resort for payment to the Developer or any other person, corporation or entity, or their properties or estate, or any other right or remedy whatsoever, prior to enforcing this Guaranty. Agrees that this Guaranty shall be construed as a continuing, absolute, and unconditional guaranty without regard to (1) the validity, regularity or enforceability or the Obligations or the disaffirmance thereof in any insolvency or bankruptcy proceeding relating to the Developer; or (2) any event or any conduct or action of the Developer or the City or any other party which might otherwise constitute a legal or equitable discharge of a surety or guarantor but for this provision. The Guarantor is an owner of the Developer and the Guarantor acknowledges and agrees that the Indebtedness is being utilized by the Developer to finance the acquisition of certain property in the City (the “Property”), to construct an industrial warehouse facility for Heritage Millwork, Inc., a Minnesota corporation, and such acquisition, business improvements and relocation will materially financially benefit the Guarantor and, therefore, the Guarantor’s obligations under this Guaranty are proper, valid and enforceable. The Guarantor agrees to deliver to the City: (i) on or before the earlier of thirty (30) days after its completion or one hundred twenty (120) days following each calendar year, the signed personal financial statement of the Guarantor, in a form acceptable to City and dated as of December 31st of the immediately preceding year, which financial statement presents the financial condition (including all guaranty and other contingent obligations) of the Guarantor as of such date; and (ii) as soon as available, but in no event later than their required filing, the federal income tax return, including all schedules and forms, for the applicable year for the Guarantor. In addition, Guarantor agrees with reasonable promptness, to provide to City such further information regarding the business, operations, affairs and financial and other condition of the Guarantor as the City may reasonably request. The Guarantor warrants and represents to the City as follows: a.Enforceability. This Guaranty constitutes the legal, valid and binding obligation of the Guarantor, enforceable in accordance with its terms (subject, as to enforceability, to limitations resulting from bankruptcy, insolvency or other similar laws affecting creditors' rights generally). Page 273 of 327 F-4 EL185\77\970529.v2 b.Litigation. There is no action, suit or proceeding pending or, to the knowledge of the Guarantor, threatened against or affecting the Guarantor which, if adversely determined, would have a material adverse effect on the condition (financial or otherwise), property or assets of the Guarantor, or which would question total validity of this Guaranty or any instrument, document or other agreement related hereto or required hereby, or impair the ability of the Guarantor to perform his or her obligations hereunder or thereunder. c.Default. Guarantor is not in default of a material provision under any material agreement, instrument, decree or order to which he or she is a party or by which he or she or his or her property is bound or affected. d.Consents. No consent, approval, order or authorization of, or registration, declaration or filing with, or notice to, any governmental authority or any third party is required in connection with the execution and delivery of this Guaranty or any of the agreements or instruments herein mentioned to which Guarantor is a party or the carrying out or performance of any of the transactions required or contemplated hereby or thereby or, if required, such consent, approval, order or authorization has been obtained or such registration, declaration or filing has been accomplished or such notice has been given prior to the date hereof. e.Taxes. Guarantor has filed all tax returns required to be filed and has paid all taxes shown thereon to be due, including interest and penalties, which are not being contested in good faith and by appropriate proceedings and none of them has any information or knowledge of any objections to or claims for additional taxes in respect of federal income or excess profits tax returns for prior years. THE GUARANTOR REPRESENTS, CERTIFIES, WARRANTS AND AGREES THAT THE GUARANTOR HAS READ ALL OF THIS GUARANTY AND UNDERSTAND ALL OF THE PROVISIONS OF THIS GUARANTY. THE GUARANTOR ALSO AGREES THAT COMPLIANCE BY THE CITY WITH THE EXPRESS PROVISIONS OF THIS GUARANTY SHALL CONSTITUTE GOOD FAITH AND SHALL BE CONSIDERED REASONABLE FOR ALL PURPOSES. [PERSONAL GUARANTOR] Page 274 of 327 H-1 EL185\77\970529.v2 EXHIBIT G FORM OF CORPORATE GUARANTY Elk River, Minnesota _________, 2024 FOR VALUABLE CONSIDERATION, the receipt and sufficiency of which is hereby acknowledged, and in consideration of and to induce financial accommodations of any kind, with or without security, given or to be given or continued at any time and from time to time by the CITY OF ELK RIVER, MINNESOTA, a municipal corporation and political subdivision of the State of Minnesota (the “City”), to or for the account of JADE ELK PROPERTIES LLC, a Minnesota limited liability company (the “Developer”), HERITAGE MILLWORKS, INC., a Minnesota corporation (the “Corporate Guarantor”), absolutely and unconditionally Guaranties to the City the full and prompt payment if and when due, whether at maturity or earlier by reason of acceleration or otherwise, of any and all indebtedness, obligations and liabilities of the Developer (and any and all successors of the Developer) to the City, now or hereafter existing, absolute or contingent, independent, joint, several or joint and several, secured or unsecured, due or to become due, contractual or tortious, liquidated or unliquidated, arising by assignment or otherwise, including without limitation all indebtedness, obligations and liabilities owed by the Developer (and any and all successors of the Developer) as a member of any partnership, syndicate, association or other group, and whether incurred by the Developer (or any successor of the Developer) as principal, surety, endorser, guarantor, accommodation party or otherwise now or hereafter existing including the that certain Purchase Price Note of even date herewith, in the original aggregate principal amount of $1,378,019.60, executed and delivered by the Developer to the City, in accordance with the terms of the Amended and Restated Development Assistance Agreement, dated ________, 2024, between the Developer and the City, (collectively, the “Indebtedness”); and the Corporate Guarantor agrees to pay on demand all of the City’s fees, costs, expenses and reasonable attorneys’ fees in connection with the Indebtedness, any security therefor, and this guaranty, plus interest on such amounts at the highest rate then applicable to any of the Indebtedness. The City may at any time and from time to time, without consent of or notice to the Corporate Guarantor, without incurring responsibility to the Corporate Guarantor, without releasing, impairing or affecting the liability of the Corporate Guarantor hereunder, upon or without any terms or conditions, and in whole or in part: (1) sell, pledge, surrender, compromise, settle, release, renew, subordinate, extend, alter, substitute, exchange, change, modify or otherwise dispose of or deal with in any manner and in any order any Indebtedness, any evidence thereof, or any security or other guaranty therefor; (2) accept any security for, or other guarantors of, any Indebtedness; (3) fail, neglect or omit to obtain, realize upon or protect any Indebtedness or any security therefor, to exercise any lien upon or right to any money, credit or property toward the liquidation of the Indebtedness, or to exercise any other right against the Developer, the Corporate Guarantor, any other guarantor or any other person; and (4) apply any payments and credits to the Indebtedness in any manner and in any order. No act, omission or thing, except full payment and discharge of the Indebtedness, which but for this provision could act as a release or impairment of the liability of the Corporate Guarantor hereunder, shall in any way release, impair or otherwise affect the liability of the Corporate Guarantor hereunder, and the Corporate Guarantor waives any and all defenses of the Developer pertaining to the Indebtedness, any evidence thereof, and any security therefor, except the defense of discharge by payment. The failure of any person or persons to sign this or any other guaranty shall not release, impair or affect the liability of the Corporate Guarantor hereunder. This guaranty is a primary obligation of the Corporate Guarantor and the City shall not be required to first resort for payment of the Indebtedness to the Developer or any other person, their Page 275 of 327 G-2 EL185\77\970529.v2 properties or estates, or any security or other rights or remedies whatsoever. The Corporate Guarantor shall be and remain liable for any deficiency remaining after foreclosure of any mortgage or security interest securing the Indebtedness, whether or not the liability of the Developer or any other person for such deficiency is discharged pursuant to statute, judicial decision or otherwise. The liability of the Corporate Guarantor under this guaranty is in addition to and shall be cumulative with all other liabilities of the Corporate Guarantor to the City, as guarantor or otherwise, without any limitation as to amount, unless the writing evidencing or creating such other liability specifically provides to the contrary. If any payment applied by the City to the Indebtedness is thereafter set aside, recovered, rescinded or required to be returned for any reason (including without limitation the bankruptcy, insolvency or reorganization of the Developer or any other person), the Indebtedness to which such payment was applied shall for the purposes of this guaranty be deemed to have continued in existence, notwithstanding such application, and this guaranty shall be enforceable as to such Indebtedness as fully as if such application had never been made. The Corporate Guarantor waives: (1) notice of acceptance of this guaranty and of the creation and existence of the Indebtedness; (2) presentment, demand for payment, notice of dishonor, notice of nonpayment, and protest of any instrument evidencing the Indebtedness; and (3) all other demands and notices to the Corporate Guarantor or any other person and all other actions to establish the liability of the Corporate Guarantor hereunder. The Corporate Guarantor consents to the personal jurisdiction of the state and federal courts located in the State of Minnesota in connection with any controversy related to this guaranty, waives any argument that venue in such forums is not convenient, and agrees that any litigation initiated by the Corporate Guarantor against the City in connection with this guaranty shall be venued in either the District Court of Sherburne County, Minnesota, or the United States District Court, District of Minnesota. All property of the Corporate Guarantor, now or hereafter in the possession, control or custody of or in transit to the City for any purpose, including without limitation the balance of every account of the Corporate Guarantor with and each claim of the Corporate Guarantor against the City, shall be subject to a lien and security interest in favor of the City, as security for all liabilities of the Corporate Guarantor to the City, and shall be subject to be set off against any and all such liabilities, and the City may at any time and from time to time at its option and without notice appropriate and apply any such property toward the payment of any and all such liabilities. The Corporate Guarantor agrees to promptly provide the City from time to time with financial statements of the Corporate Guarantor, in form and substance acceptable to the City, at least once every 12 months and as otherwise requested by the City. The Corporate Guarantor agrees to promptly provide the City from time to time with such other information respecting the condition (financial and otherwise), business and property of the Corporate Guarantor as the City may request, in form and substance acceptable to the City. The Corporate Guarantor waives all claims, rights and remedies which the Corporate Guarantor may now have or hereafter acquire against any person at any time now or hereafter liable to payment of any of the Indebtedness and as to any collateral security, including but not limited to all claims, rights and remedies of contribution, indemnification, exoneration, reimbursement, recourse and subrogation, whether or not such claim, right or remedy arises in equity, under contract, by statute, under common law or otherwise, whether or not the Indebtedness has been fully paid, and all payments and recoveries under this guaranty shall be considered equity investments by the Corporate Guarantor in the Developer; provided, nothing contained in this guaranty shall deprive the Corporate Guarantor of any claim, right or remedy, after the Indebtedness has been fully paid, against any person other than the Developer. No delay or failure by the City in exercising any right, and no partial or single exercise thereof shall constitute a waiver thereof. No waiver of any rights hereunder, and no modification or amendment of this guaranty shall be effective unless the same is in writing duly executed by the City, and each such waiver, Page 276 of 327 G-3 EL185\77\970529.v2 if any, shall apply only with respect to the specific instance involved and shall not impair or affect the rights of the City or the provisions of this guaranty in any other respect at any other time. This guaranty shall continue until written notice of revocation of this guaranty, executed by the Corporate Guarantor, has been received by the City; provided, no revocation of this guaranty shall affect in any manner any liability of the Corporate Guarantor under this guaranty with respect to Indebtedness arising before the City receives such written notice of revocation, and the sole effect of revocation of this guaranty shall be to exclude from this guaranty Indebtedness thereafter arising which is unconnected with Indebtedness theretofore arising or transactions theretofore entered into. Any invalidity or unenforceability of any provision or application of this guaranty shall not affect other lawful provisions and applications hereof and to this end the provisions of this guaranty are declared to be severable. This guaranty shall bind the Corporate Guarantor and the representatives, successors and assigns of the Corporate Guarantor, and of each of them respectively, and shall benefit the City, its successors and assigns. This guaranty shall be governed by and construed in accordance with the laws of the State of Minnesota. The Corporate Guarantor is or will be the occupant of certain property in the City (the “Property”). Developer has acquired the Property and will be leasing it to the Corporate Guarantor pursuant to a certain lease agreement (the “Lease”). Developer and the Corporate Guarantor are under common ownership. The Corporate Guarantor acknowledges and agrees that the Indebtedness is being utilized by Developer to finance the acquisition the Property to construct an industrial warehouse facility for Corporate Guarantor and, therefore, the Corporate Guarantor’s obligations under this Guaranty are proper, valid and enforceable. This Guaranty has been approved by unanimous consent of the board of governors of the Corporate Guarantor. THE ENTITY GUARANTOR REPRESENTS, CERTIFIES, WARRANTS AND AGREES THAT THE UNDERSIGNED HAVE READ ALL OF THIS GUARANTY AND UNDERSTAND ALL OF THE PROVISIONS OF THIS GUARANTY. THE ENTITY GUARANTOR ALSO AGREES THAT COMPLIANCE BY THE LENDER WITH THE EXPRESS PROVISIONS OF THIS GUARANTY SHALL CONSTITUTE GOOD FAITH AND SHALL BE CONSIDERED REASONABLE FOR ALL PURPOSES. HERITAGE MILLWORKS, INC., a Minnesota corporation By: Its: Page 277 of 327 EL185\77\970529.v2 EXHIBIT H DEVELOPMENT PROPERTY MORTGAGE MORTGAGE THE MAXIMUM PRINCIPAL INDEBTEDNESS SECURED BY THIS MORTGAGE IS $1,378,019.60. THIS MORTGAGE (the “Mortgage”) is given on ________, 2024, from JADE ELK PROPERTIES LLC, a Minnesota limited liability company (“Developer”), to the CITY OF ELK RIVER, MINNESOTA, a municipal corporation and political subdivision of the State of Minnesota (“City”). Developer owes City the principal sum of ONE MILLION THREE HUNDRED SEVENTY- EIGHT THOUSAND ONE HUNDRED NINETEEN DOLLARS AND 60/100 ($1,378,019.60), which debt is evidenced by a Purchase Price Note of even date herewith (the “Note”), the terms and conditions of which are incorporated herein and matures on February 1, 2035, or such earlier date provided in the Note. This Mortgage secures to City: (a) the repayment of the debt evidenced by the Note, and all renewals, extensions, and modifications of the Note; (b) the payment of all other sums, with interest thereon, advanced to protect the security of this Mortgage; (c) the performance of Developer’s covenants and agreements under this Mortgage and the Note; and (d) is subject to the terms and conditions of that certain Amended and Restated Development Assistance Agreement, between the Developer and the City, dated ________, 2024 (the “Development Assistance Agreement”). For this purpose, Developer does hereby mortgage, grant, and convey to City, with power of sale, the property located in the City, and legally described in EXHIBIT A attached hereto, together with all the improvements now or hereafter erected on the property, and all easements, appurtenances, and fixtures now or hereafter a part of the property. All replacements and additions shall also be covered by this Mortgage. All of the foregoing is referred to in this Mortgage as the “Property.” DEVELOPER COVENANTS that Developer is lawfully seized of the estate hereby conveyed and has the right to mortgage, grant, and convey the Property and that the Property is free from all encumbrances except as may be further stated in EXHIBIT B attached hereto (the “Permitted Encumbrances”). Developer warrants and will defend generally the title to the Property against all claims and demands, subject to any encumbrances of record. Page 278 of 327 H-2 EL185\77\970529.v2 Developer and City agree as follows: 1. PAYMENT OF PRINCIPAL AND INTEREST; LATE CHARGES. Developer shall promptly pay when due the principal of and accrued interest on the debt evidenced by the Note and any late charges due under the Note. 2. CHARGES; LIENS. Developer shall pay all taxes, assessments, charges, fines, and impositions attributable to the Property which may attain priority over this Mortgage, and leasehold payments or ground rents, if any. Developer shall pay these obligations on time directly to the person owed payment. Developer shall promptly discharge any lien which has priority over this Mortgage except the Permitted Encumbrances, unless Developer: (a) agrees in writing to the payment of the obligation secured by the lien in a manner reasonably acceptable to City; (b) contests in good faith the lien by, or defends against enforcement of the lien in, legal proceedings which in City’s opinion operate to prevent the enforcement of the lien; or (c) secures from the holder of the lien an agreement satisfactory to City subordinating the lien to this Mortgage. If City determines that any part of the Property is subject to a lien other than the Permitted Encumbrances which may attain priority over this Mortgage, City may give Developer a notice identifying the lien. Developer shall satisfy the lien or notify City of its intent to take one or more of the actions set forth above within 30 days of the giving of notice. 3. HAZARD OR PROPERTY INSURANCE. For so long as this Mortgage is in effect, Developer shall continuously maintain insurance in accordance with the provisions of the Development Assistance Agreement. Further, City hereby acknowledges that this Section 3 shall be subject to Section 4.1 of the Development Assistance Agreement. If under Section 15 the Property is acquired by City, Developer’s right to any insurance policies and proceeds resulting from damage to the Property prior to the acquisition shall pass to City to the extent of the sums secured by this Mortgage immediately prior to the acquisition. 4. ASSIGNMENT OF LEASES AND RENTS. Developer hereby assigns to City, as additional security, all leases, rents, and profits now due or which may become due under or by virtue of any lease, license, sublease, or agreement, whether written or verbal, for the use or occupancy of the Property, or any part thereof, whether before or after foreclosure or during any redemption period, and City shall have the power irrevocably to manage, control and lease the Property and collect such leases, rents, and profits. However, this Section 4 shall be enforceable by City only during such period of time as an Event of Default (as defined in the Development Assistance Agreement) shall have occurred and shall be continuing hereunder. 5. PROTECTION OF THE PROPERTY. Developer shall not destroy or damage the Property or commit waste on the Property. Developer shall be in default if any forfeiture action or proceeding, whether civil or criminal, is begun that in City’s good faith judgment could result in forfeiture of the Property or otherwise materially impair the lien created by this Mortgage or City’s security interest. Developer may cure such a default and reinstate, as provided in Section 13, by causing the action or proceeding to be dismissed with a ruling that, in City’s good faith determination, precludes forfeiture of Developer’s interest in the Property or other material impairment of the lien created by this Mortgage or City’s security interest. Developer shall also be in default if Developer gave materially false or inaccurate information or statements to City in connection with the loan evidenced by the Note. Developer shall keep the Property in good repair and shall not commit waste or permit impairment or deterioration of the Property Page 279 of 327 H-3 EL185\77\970529.v2 6. PROTECTION OF CITY’S RIGHTS IN THE PROPERTY. If Developer fails to perform the covenants and agreements contained in this Mortgage, or there is a legal proceeding that may materially affect City’s rights in the Property (such as a proceeding in bankruptcy, condemnation or forfeiture), City, upon written notice to Developer, may do and pay for whatever is necessary to protect the value of the Property and City’s rights in the Property. City’s actions may include paying any sums secured by a lien which has priority over this Mortgage, appearing in court, paying reasonable attorneys’ fees and entering on the Property to make repairs. Although City may take action under this Section 6, City is not required to do so. Any amounts disbursed by City under this Section 6 shall become additional debt of Developer secured by this Mortgage. Unless Developer and City agree to other terms of payment, these amounts shall bear interest from the date of disbursement at a rate equal to the interest rate on the Note and shall be payable, with interest, upon notice from City to Developer requesting payment. 7. INSPECTION. City or its agent may make reasonable entries upon and inspections of the Property upon reasonable prior notice that specifies reasonable cause for such entry and inspection to Developer subject to the rights of tenants pursuant to any leases. City shall use reasonable efforts to avoid disturbing business operations on the Property during such inspections. 8. CONDEMNATION. The proceeds of any award or claim for damages, direct or consequential, in connection with any condemnation or other taking of any part of the Property, or for conveyance in lieu of condemnation, are hereby assigned and shall be paid to City subject to the following paragraph. In the event of a total taking of the Property, the proceeds shall be applied to the sums secured by this Mortgage, whether or not then due, with any excess paid to Developer. In the event of a partial taking of the Property in which the fair market value of the Property immediately before the taking is equal to or greater than the amount of the sums secured by this Mortgage immediately before the taking, unless Developer and City otherwise agree in writing, if any, the sums secured by this Mortgage shall be reduced by the amount of the proceeds multiplied by the following fraction: (a) the total amount of the sums secured immediately before the taking, divided by (b) the fair market value of the Property immediately before the taking. Any balance shall be paid to Developer. In the event of a partial taking of the Property in which the fair market value of the Property immediately before the taking is less than the amount of the sums secured immediately before the taking, unless Developer and City otherwise agree in writing or unless applicable law otherwise provides, the proceeds shall be applied to the sums secured by this Mortgage whether or not the sums are then due. 9. FORBEARANCE BY CITY NOT A WAIVER. Any forbearance by City in exercising any right or remedy shall not be a waiver of or preclude the exercise of any right or remedy. 10. SUCCESSORS AND ASSIGNS BOUND. The covenants and agreements of this Mortgage shall bind and benefit the successors and assigns of City and Developer. 11. NOTICES. Any notice to Developer provided for in this Mortgage shall be given by delivering it personally or by mailing it by first class United States mail, postage prepaid, return receipt requested. The notice shall be directed to Developer at Jade Elk Properties LLC, c/o CPEC1031, LLC, 222 South Ninth Street, Suite 4050, Minneapolis, MN 55402, Attn: Patrick Menth, or any other address Developer designates by notice to City. Any notice to City shall be given or mailed to 13065 Orono Parkway, Elk River, Minnesota 55330, Attn: City Administrator, or any other address City designates by notice to Developer. Any notice provided for in this Mortgage shall be deemed to have been given to Page 280 of 327 H-4 EL185\77\970529.v2 Developer or City when given as provided in this paragraph. 12. GOVERNING LAW; SEVERABILITY. This Mortgage shall be governed by the law of the State of Minnesota. In the event that any provision or clause of this Mortgage or the Note conflicts with applicable law, such conflict shall not affect other provisions of this Mortgage or the Note which can be given effect without the conflicting provision. To this end, the provisions of this Mortgage and the Note are declared to be severable. 13. BORROWER’S RIGHT TO REINSTATE. If Developer meets certain conditions, Developer shall have the right to have enforcement of this Mortgage discontinued at any time prior to the earlier of: (a) 5 days before sale of the Property pursuant to any power of sale contained in this Mortgage; or (b) entry of a judgment enforcing this Mortgage. Those conditions are that Developer: (a) pays City all sums which then would be due under this Mortgage and the Note as if no acceleration had occurred; (b) cures any default of any other covenants or agreements; (c) pays all expenses incurred in enforcing this Mortgage, including, but not limited to, reasonable attorneys’ fees; and (d) takes such action as City may reasonably require to assure that the lien of this Mortgage, City’s rights in the Property and Developer’s obligation to pay the sums secured by this Mortgage shall continue unchanged. Upon reinstatement by Developer, this Mortgage and the obligations secured hereby shall remain fully effective as if no acceleration had occurred. 14. HAZARDOUS SUBSTANCES. Developer shall not cause or permit the presence, use, disposal, storage, or release of any hazardous substances on or in the Property, except those solvents, oils, cleaning materials, and other substances as are used in the ordinary course of Developer’s business. Developer shall not do, and will use its best efforts not to allow anyone else to do, anything affecting the Property that is in violation of any environmental law. Developer shall promptly give City written notice of any investigation, claim, demand, lawsuit or other action by any governmental or regulatory agency or private party involving the Property and any hazardous substance or environmental law of which Developer has actual knowledge. If Developer learns, or is notified by any governmental or regulatory authority, that any removal or other remediation of any hazardous substance affecting the Property is necessary, Developer shall promptly take all necessary remedial actions in accordance with that environmental law. As used in this Section 14, “hazardous substances” are those substances defined as toxic or hazardous substances by environmental law and the following substances: gasoline, kerosene, other flammable or toxic petroleum products, volatile solvents, materials containing asbestos or formaldehyde, and radioactive materials. As used in this Section 14, “environmental law” means federal or state laws that relate to environmental protection. 15. ACCELERATION; REMEDIES. City shall give notice to Developer prior to acceleration following Developer’s breach of any covenant or agreement in this Mortgage. The notice shall specify: (a) the default; (b) the action required to cure the default; (c) a date, not less than 30 days from the date the notice is given to Developer by which the default must be cured, provided, however, if Developer is diligently pursuing a cure, Developer shall have such additional time as is reasonably necessary to complete the cure; and (d) that failure to cure the default on or before the date specified in the notice may result in acceleration of the sums secured by this Mortgage and sale of the Property. The notice shall further inform Developer of the right to reinstate after acceleration and sale. If the default is not cured on or before the date specified in the notice, City at its option may require immediate payment in full of any sums secured by this Mortgage without further demand and may invoke the power of sale and any other remedies permitted by law. City shall be entitled to collect all expenses incurred in pursuing the remedies provided in this Section 15, including, but not limited to, reasonable attorneys’ Page 281 of 327 H-5 EL185\77\970529.v2 fees. If City invokes the power of sale, City shall cause a copy of a notice of sale to be served upon any person in possession of the Property. City shall publish a notice of sale, and the Property shall be sold at public auction in the manner prescribed by law. City or its designee may purchase the Property at any sale. The proceeds of the sale shall be applied in the following order: (a) to all expenses of the sale, including, but not limited to, reasonable attorneys’ fees; (b) to all sums secured by this Mortgage; and (c) any excess to the person or persons legally entitled to it. 16. RELEASE OF MORTGAGE. Upon payment of all sums secured by this Mortgage, City shall discharge this Mortgage without charge to Developer. Developer shall pay any recordation costs. 17. TRANSFER OF THE PROPERTY OR A BENEFICIAL INTEREST IN DEVELOPER. If Developer sells or conveys all or any part of the Property or any interest in the Property (or if a beneficial interest in Developer is sold or transferred and Developer is not a national person) without City's prior written consent, City may, at its option, require immediate payment in full of all sums secured by this Mortgage as set forth in the Note. 18. ADDITIONAL COVENANTS. Developer covenants: (a) to warrant title to the Property, (b) to pay all other mortgages, liens, charges or encumbrances against the Property as and when they become due, (c) to pay the indebtedness of the Note as herein provided, (d) to pay all real estate taxes on the Property (e) that the Property shall be kept in repair and no waste shall be committed as provided in Section 5, (f) to continuously maintain insurance in accordance with the provisions of the Development Assistance Agreement for so long as this Mortgage is in effect; and (g) that the whole of the principal sum shall become due after an Event of Default related to the payment of any installment of principal or interest, or of any tax, or in the performance of any other covenant, at the option of City; provided, however, that if City declares an Event of Default and requires payment in full of all sums secured by this Mortgage, then Developer may, in its sole discretion, elect to convey title to the Property to City and, in that event, City shall forgive the unpaid balance of all sums secured by this Mortgage and release Developer from its obligations under this Mortgage, the Note and the Development Assistance Agreement without further liability. Page 282 of 327 H-6 EL185\77\970529.v2 This Mortgage was duly executed by Developer on the date and year first written above. JADE ELK PROPERTIES LLC By ___________________________________________ Its ___________________________________________ STATE OF MINNESOTA ) )ss COUNTY OF SHERBURNE ) The foregoing instrument was acknowledged before me this _____ day of ___________________, 2024, by _________________________________, as the ______________ of Jade Elk Properties LLC, a Minnesota limited liability company. Notary Public This document drafted by: KENNEDY & GRAVEN, CHARTERED (GAF) 100 S 5th St., Suite 700 Minneapolis, Minnesota 55402 (612) 337-9300 Page 283 of 327 H-7 EL185\77\970529.v2 EXHIBIT A TO MORTGAGE LEGAL DESCRIPTION That certain property located in the City of Elk River, Sherburne County, Minnesota, legally described as Lot 1, Block 1 Nature’s Edge Business Center Fifth Addition. Page 284 of 327 H-8 EL185\77\970529.v2 EXHIBIT B TO MORTGAGE PERMITTED ENCUMBRANCES Page 285 of 327 EL185\77\970529.v2 EXHIBIT I CURRENT FACILITY MORTGAGE MORTGAGE THE MAXIMUM PRINCIPAL INDEBTEDNESS SECURED BY THIS MORTGAGE IS $500,000. THIS MORTGAGE (the “Mortgage”) is given on ________, 2024, from PLM PROPERTIES, LLC, a Minnesota limited liability company (“Developer”), to the CITY OF ELK RIVER, MINNESOTA, a municipal corporation and political subdivision of the State of Minnesota (“City”). Developer owes City the principal sum of $1,378,019.60 (the “Debt”), which Debt is evidenced by a Purchase Price Note of even date herewith (the “Note”), the terms and conditions of which are incorporated herein and matures on February 1, 2035, or such earlier date provided in the Note. This Mortgage secures a portion of the Debt to City in the amount of FIVE HUNDRED THOUSAND DOLLARS AND 00/100 ($500,000.00) and secures: (a) the repayment of the debt evidenced by the Note, and all renewals, extensions, and modifications of the Note; (b) the payment of all other sums, with interest thereon, advanced to protect the security of this Mortgage; (c) the performance of Developer’s covenants and agreements under this Mortgage and the Note; and (d) is subject to the terms and conditions of that certain Amended and Restated Development Assistance Agreement, between the Developer and the City, dated ________, 2024 (the “Development Assistance Agreement”). For this purpose, Developer does hereby mortgage, grant, and convey to City, with power of sale, the property located in the City, and legally described in EXHIBIT A attached hereto, together with all the improvements now or hereafter erected on the property, and all easements, appurtenances, and fixtures now or hereafter a part of the property. All replacements and additions shall also be covered by this Mortgage. All of the foregoing is referred to in this Mortgage as the “Property.” DEVELOPER COVENANTS that Developer is lawfully seized of the estate hereby conveyed and has the right to mortgage, grant, and convey the Property and that the Property is free from all encumbrances except as may be further stated in EXHIBIT B attached hereto (the “Permitted Encumbrances”). Developer warrants and will defend generally the title to the Property against all claims and demands, subject to any encumbrances of record. Page 286 of 327 I-2 EL185\77\970529.v2 Developer and City agree as follows: 1. PAYMENT OF PRINCIPAL AND INTEREST; LATE CHARGES. Developer shall promptly pay when due the principal of and accrued interest on the debt evidenced by the Note and any late charges due under the Note. 2. CHARGES; LIENS. Developer shall pay all taxes, assessments, charges, fines, and impositions attributable to the Property which may attain priority over this Mortgage, and leasehold payments or ground rents, if any. Developer shall pay these obligations on time directly to the person owed payment. Developer shall promptly discharge any lien which has priority over this Mortgage except the Permitted Encumbrances, unless Developer: (a) agrees in writing to the payment of the obligation secured by the lien in a manner reasonably acceptable to City; (b) contests in good faith the lien by, or defends against enforcement of the lien in, legal proceedings which in City’s opinion operate to prevent the enforcement of the lien; or (c) secures from the holder of the lien an agreement satisfactory to City subordinating the lien to this Mortgage. If City determines that any part of the Property is subject to a lien other than the Permitted Encumbrances which may attain priority over this Mortgage, City may give Developer a notice identifying the lien. Developer shall satisfy the lien or notify City of its intent to take one or more of the actions set forth above within 30 days of the giving of notice. 3. HAZARD OR PROPERTY INSURANCE. For so long as this Mortgage is in effect, Developer shall continuously maintain insurance in accordance with the provisions of the Development Assistance Agreement. Further, City hereby acknowledges that this Section 3 shall be subject to Section 4.1 of the Development Assistance Agreement. If under Section 15 the Property is acquired by City, Developer’s right to any insurance policies and proceeds resulting from damage to the Property prior to the acquisition shall pass to City to the extent of the sums secured by this Mortgage immediately prior to the acquisition. 4. ASSIGNMENT OF LEASES AND RENTS. Developer hereby assigns to City, as additional security, all leases, rents, and profits now due or which may become due under or by virtue of any lease, license, sublease, or agreement, whether written or verbal, for the use or occupancy of the Property, or any part thereof, whether before or after foreclosure or during any redemption period, and City shall have the power irrevocably to manage, control and lease the Property and collect such leases, rents, and profits. However, this Section 4 shall be enforceable by City only during such period of time as an Event of Default (as defined in the Development Assistance Agreement) shall have occurred and shall be continuing hereunder. 5. PROTECTION OF THE PROPERTY. Developer shall not destroy or damage the Property or commit waste on the Property. Developer shall be in default if any forfeiture action or proceeding, whether civil or criminal, is begun that in City’s good faith judgment could result in forfeiture of the Property or otherwise materially impair the lien created by this Mortgage or City’s security interest. Developer may cure such a default and reinstate, as provided in Section 13, by causing the action or proceeding to be dismissed with a ruling that, in City’s good faith determination, precludes forfeiture of Developer’s interest in the Property or other material impairment of the lien created by this Mortgage or City’s security interest. Developer shall also be in default if Developer gave materially false or inaccurate information or statements to City in connection with the loan evidenced by the Note. Developer shall keep the Property in good repair and shall not commit waste or permit impairment or deterioration of the Property Page 287 of 327 I-3 EL185\77\970529.v2 6. PROTECTION OF CITY’S RIGHTS IN THE PROPERTY. If Developer fails to perform the covenants and agreements contained in this Mortgage, or there is a legal proceeding that may materially affect City’s rights in the Property (such as a proceeding in bankruptcy, condemnation or forfeiture), City, upon written notice to Developer, may do and pay for whatever is necessary to protect the value of the Property and City’s rights in the Property. City’s actions may include paying any sums secured by a lien which has priority over this Mortgage, appearing in court, paying reasonable attorneys’ fees and entering on the Property to make repairs. Although City may take action under this Section 6, City is not required to do so. Any amounts disbursed by City under this Section 6 shall become additional debt of Developer secured by this Mortgage. Unless Developer and City agree to other terms of payment, these amounts shall bear interest from the date of disbursement at a rate equal to the interest rate on the Note and shall be payable, with interest, upon notice from City to Developer requesting payment. 7. INSPECTION. City or its agent may make reasonable entries upon and inspections of the Property upon reasonable prior notice that specifies reasonable cause for such entry and inspection to Developer subject to the rights of tenants pursuant to any leases. City shall use reasonable efforts to avoid disturbing business operations on the Property during such inspections. 8. CONDEMNATION. The proceeds of any award or claim for damages, direct or consequential, in connection with any condemnation or other taking of any part of the Property, or for conveyance in lieu of condemnation, are hereby assigned and shall be paid to City subject to the following paragraph. In the event of a total taking of the Property, the proceeds shall be applied to the sums secured by this Mortgage, whether or not then due, with any excess paid to Developer. In the event of a partial taking of the Property in which the fair market value of the Property immediately before the taking is equal to or greater than the amount of the sums secured by this Mortgage immediately before the taking, unless Developer and City otherwise agree in writing, if any, the sums secured by this Mortgage shall be reduced by the amount of the proceeds multiplied by the following fraction: (a) the total amount of the sums secured immediately before the taking, divided by (b) the fair market value of the Property immediately before the taking. Any balance shall be paid to Developer. In the event of a partial taking of the Property in which the fair market value of the Property immediately before the taking is less than the amount of the sums secured immediately before the taking, unless Developer and City otherwise agree in writing or unless applicable law otherwise provides, the proceeds shall be applied to the sums secured by this Mortgage whether or not the sums are then due. 9. FORBEARANCE BY CITY NOT A WAIVER. Any forbearance by City in exercising any right or remedy shall not be a waiver of or preclude the exercise of any right or remedy. 10. SUCCESSORS AND ASSIGNS BOUND. The covenants and agreements of this Mortgage shall bind and benefit the successors and assigns of City and Developer. 11. NOTICES. Any notice to Developer provided for in this Mortgage shall be given by delivering it personally or by mailing it by first class United States mail, postage prepaid, return receipt requested. The notice shall be directed to Developer at 19830 Polk Street, Elk River, MN 55330, Attn: Patrick Menth, or any other address Developer designates by notice to City. Any notice to City shall be given or mailed to 13065 Orono Parkway, Elk River, Minnesota 55330, Attn: City Administrator, or any other address City designates by notice to Developer. Any notice provided for in this Mortgage shall be deemed to have been given to Developer or City when given as provided in this paragraph. Page 288 of 327 I-4 EL185\77\970529.v2 12. GOVERNING LAW; SEVERABILITY. This Mortgage shall be governed by the law of the State of Minnesota. In the event that any provision or clause of this Mortgage or the Note conflicts with applicable law, such conflict shall not affect other provisions of this Mortgage or the Note which can be given effect without the conflicting provision. To this end, the provisions of this Mortgage and the Note are declared to be severable. 13. BORROWER’S RIGHT TO REINSTATE. If Developer meets certain conditions, Developer shall have the right to have enforcement of this Mortgage discontinued at any time prior to the earlier of: (a) 5 days before sale of the Property pursuant to any power of sale contained in this Mortgage; or (b) entry of a judgment enforcing this Mortgage. Those conditions are that Developer: (a) pays City all sums which then would be due under this Mortgage and the Note as if no acceleration had occurred; (b) cures any default of any other covenants or agreements; (c) pays all expenses incurred in enforcing this Mortgage, including, but not limited to, reasonable attorneys’ fees; and (d) takes such action as City may reasonably require to assure that the lien of this Mortgage, City’s rights in the Property and Developer’s obligation to pay the sums secured by this Mortgage shall continue unchanged. Upon reinstatement by Developer, this Mortgage and the obligations secured hereby shall remain fully effective as if no acceleration had occurred. 14. HAZARDOUS SUBSTANCES. Developer shall not cause or permit the presence, use, disposal, storage, or release of any hazardous substances on or in the Property, except those solvents, oils, cleaning materials, and other substances as are used in the ordinary course of Developer’s business. Developer shall not do, and will use its best efforts not to allow anyone else to do, anything affecting the Property that is in violation of any environmental law. Developer shall promptly give City written notice of any investigation, claim, demand, lawsuit or other action by any governmental or regulatory agency or private party involving the Property and any hazardous substance or environmental law of which Developer has actual knowledge. If Developer learns, or is notified by any governmental or regulatory authority, that any removal or other remediation of any hazardous substance affecting the Property is necessary, Developer shall promptly take all necessary remedial actions in accordance with that environmental law. As used in this Section 14, “hazardous substances” are those substances defined as toxic or hazardous substances by environmental law and the following substances: gasoline, kerosene, other flammable or toxic petroleum products, volatile solvents, materials containing asbestos or formaldehyde, and radioactive materials. As used in this Section 14, “environmental law” means federal or state laws that relate to environmental protection. 15. ACCELERATION; REMEDIES. City shall give notice to Developer prior to acceleration following Developer’s breach of any covenant or agreement in this Mortgage. The notice shall specify: (a) the default; (b) the action required to cure the default; (c) a date, not less than 30 days from the date the notice is given to Developer by which the default must be cured, provided, however, if Developer is diligently pursuing a cure, Developer shall have such additional time as is reasonably necessary to complete the cure; and (d) that failure to cure the default on or before the date specified in the notice may result in acceleration of the sums secured by this Mortgage and sale of the Property. The notice shall further inform Developer of the right to reinstate after acceleration and sale. If the default is not cured on or before the date specified in the notice, City at its option may require immediate payment in full of any sums secured by this Mortgage without further demand and may invoke the power of sale and any other remedies permitted by law. City shall be entitled to collect all expenses incurred in pursuing the remedies provided in this Section 15, including, but not limited to, reasonable attorneys’ fees. Page 289 of 327 I-5 EL185\77\970529.v2 If City invokes the power of sale, City shall cause a copy of a notice of sale to be served upon any person in possession of the Property. City shall publish a notice of sale, and the Property shall be sold at public auction in the manner prescribed by law. City or its designee may purchase the Property at any sale. The proceeds of the sale shall be applied in the following order: (a) to all expenses of the sale, including, but not limited to, reasonable attorneys’ fees; (b) to all sums secured by this Mortgage; and (c) any excess to the person or persons legally entitled to it. 16. RELEASE OF MORTGAGE. Upon the earlier of (a) the payment in full of the $200,000 loan from the Economic Development Authority of the City of Elk River, a public body corporate and politic of the State of Minnesota, by the Company (as defined in the Development Assistance Agreement), or (b) the issuance by the City of a certificate of occupancy to the Project (as defined in the Development Assistance Agreement), City shall discharge this Mortgage without charge to Developer. Developer shall pay any recordation costs. 17. TRANSFER OF THE PROPERTY OR A BENEFICIAL INTEREST IN DEVELOPER. If Developer sells or conveys all or any part of the Property or any interest in the Property (or if a beneficial interest in Developer is sold or transferred and Developer is not a national person) without City's prior written consent, City may, at its option, require immediate payment in full of all sums secured by this Mortgage as set forth in the Note. 18. ADDITIONAL COVENANTS. Developer covenants: (a) to warrant title to the Property, (b) to pay all other mortgages, liens, charges or encumbrances against the Property as and when they become due, (c) to pay the indebtedness of the Note as herein provided, (d) to pay all real estate taxes on the Property (e) that the Property shall be kept in repair and no waste shall be committed as provided in Section 5, (f) to continuously maintain insurance in accordance with the provisions of the Development Assistance Agreement for so long as this Mortgage is in effect; and (g) that the whole of the principal sum shall become due after an Event of Default related to the payment of any installment of principal or interest, or of any tax, or in the performance of any other covenant, at the option of City; provided, however, that if City declares an Event of Default and requires payment in full of all sums secured by this Mortgage, then Developer may, in its sole discretion, elect to convey title to the Property to City and, in that event, City shall forgive the unpaid balance of all sums secured by this Mortgage and release Developer from its obligations under this Mortgage, the Note and the Development Assistance Agreement without further liability. Page 290 of 327 I-6 EL185\77\970529.v2 This Mortgage was duly executed by Developer on the date and year first written above. PLM PROPERTIES, LLC By ___________________________________________ Its ___________________________________________ STATE OF MINNESOTA ) )ss COUNTY OF SHERBURNE ) The foregoing instrument was acknowledged before me this _____ day of ___________________, 2024, by _________________________________, as the ______________ of PLM Properties, LLC, a Minnesota limited liability company. Notary Public This document drafted by: KENNEDY & GRAVEN, CHARTERED (GAF) 100 S 5th St., Suite 700 Minneapolis, Minnesota 55402 (612) 337-9300 Page 291 of 327 I-7 EL185\77\970529.v2 EXHIBIT A TO MORTGAGE LEGAL DESCRIPTION That certain property located in the City of Elk River, Sherburne County, Minnesota, legally described as [INSERT] Page 292 of 327 I-8 EL185\77\970529.v2 EXHIBIT B TO MORTGAGE PERMITTED ENCUMBRANCES Page 293 of 327