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2022-04-01 Development Agreement between City of Albertville & Scherer Limited Partnership DEVELOPMENT AGREEMENT BY AND BETWEEN CITY OF ALBERTVILLE, MINNESOTA AND SCHERER LIMITED PARTNERSHIP This document drafted by: TAFT STETTINIUS & HOLLISTER LLP 2200 IDS Center 80 South 8th Street Minneapolis, Minnesota 55402 72865020v5 TABLE OF CONTENTS Page ARTICLE I DEFINITIONS 2 Section 1.1 Definitions 2 ARTICLE II REPRESENTATIONS AND WARRANTIES 5 Section 2.1 Representations and Warranties of the City 5 Section 2.2 Representations and Warranties of the Developer 5 ARTICLE III UNDERTAKINGS BY DEVELOPER AND CITY 7 Section 3.1 Development Property; City Charges; Site Improvements 7 Section 3.2 Limitations on Undertaking of the City 7 Section 3.3 Reimbursement: TIF Note 7 Section 3.4 Business Subsidies Act 8 Section 3.5 Execution of Assessment Agreement 9 Section 3.6 Real Property Taxes 10 Section 3.7 Prohibition Against Transfer of Project and Assignment of Agreement 10 ARTICLE IV EVENTS OF DEFAULT 11 Section 4.1 Events of Default Defined 11 Section 4.2 Remedies on Default 11 Section 4.3 No Remedy Exclusive 12 Section 4.4 No Implied Waiver 12 Section 4.5 Agreement to Pay Attorney's Fees and Expenses 12 Section 4.6 Indemnification of City 12 ARTICLE V ADDITIONAL PROVISIONS 14 Section 5.1 Restrictions on Use 14 Section 5.2 Conflicts of Interest 14 Section 5.3 Titles of Articles and Sections 14 Section 5.4 Notices and Demands 14 Section 5.5 Counterparts 15 Section 5.6 Law Governing 15 Section 5.7 Expiration 15 Section 5.8 Provisions Surviving Rescission or Expiration 15 Section 5.9 Assignability of TIF Note 15 Section 5.10 Amendment 15 EXHIBIT A DESCRIPTION OF DEVELOPMENT PROPERTY A-1 EXHIBIT B FORM OF ASSESSMENT AGREEMENT B-1 EXHIBIT C SITE IMPROVEMENTS C-1 EXHIBIT D FORM OF TIF NOTE D-1 72865020v5 DEVELOPMENT AGREEMENT THIS AGREEMENT, made as of the 1st day of April, 2022, by and between the City of Albertville, Minnesota (the "City"), a municipal corporation existing under the laws of the State of Minnesota and Scherer Limited Partnership, a Minnesota limited partnership (the "Developer"), WITNESSETH: WHEREAS, pursuant to Minnesota Statutes, Section 469.124 to 469.133, the City has heretofore established Municipal 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, Section 469.174 through 469.1794, as amended (hereinafter, the "Tax Increment Act"), the City has heretofore established, within the Development District, Tax Increment Financing District No. 20 (the "Tax Increment District") and has adopted a tax increment financing plan therefor (the "Tax Increment Plan") which provides for the use of tax increment financing in connection with certain development within the Development District; and WHEREAS, in order to achieve the objectives of the Development Program 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 finance certain costs of a Project (as hereinafter defined) to be constructed within the Tax Increment District as more particularly set forth in this Agreement; and WHEREAS, the City believes that the development and construction of the Project, and fulfillment of this Agreement are vital and are in the best interests of the City, the health, safety, morals and welfare of residents of the City, and in accordance with the public purpose and provisions of the applicable state and local laws and requirements under which the Project has been undertaken and is being assisted; and WHEREAS, the requirements of the Business Subsidy Law, Minnesota Statutes, Section 116J.993 through 116J.995, apply to this Agreement; WHEREAS, the City has adopted criteria for awarding business subsidies that comply with the Business Subsidy Law, after a public hearing for which notice was published; and WHEREAS, the Council has approved this Agreement as a subsidy agreement under the Business Subsidy Law. 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: 72865020v5 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 appears from the context: Agreement means this Agreement, as the same may be from time to time modified, amended or supplemented; Assessment Agreement means the agreement, in substantially the form of the agreement contained in Exhibit B attached hereto and hereby made a part of this Agreement, among the Developer, the City and the Assessor for the County, entered into pursuant to Article III of this Agreement; Assessor's Minimum Market Value means the agreed minimum market value of the Development Property and Project and for calculation of real property taxes as determined by the Assessor for the County pursuant to the Assessment Agreement; Business Day means any day except a Saturday, Sunday or a legal holiday or a day on which banking institutions in the City are authorized by law or executive order to close; City means the City of Albertville, Minnesota; City Charges means a portion the building permit fee and the water and sewer access fees in the amount of$98,000. City Expenses means, collectively, the aggregate costs to the City, totaling $700,000, for the land write down of the Development Property in the amount of$602,000 and the waived City Charges in the amount of$98,000; County means Wright County, Minnesota; Developer means Scherer Limited Partnership, a Minnesota limited partnership, its successors and assigns; Development District means Municipal Development District No. 1, including the real property described in the Development Program; Development Program means the development program approved in connection with the Development District; Development Property means the real property described in Exhibit A attached to this Agreement; Event of Default means any of the events described in Section 4.1 hereof; 2 72865020v5 Note Payment Date means the August 1 immediately following the date on which the City has been fully reimbursed for the City Expenses and each February 1 and August 1 of each year thereafter to and including February 1, 2033; provided, that if any such Note Payment Date should not be a Business Day, the Note Payment Date shall be the next succeeding Business Day; Prime Rate means the rate of interest from time to time publicly announced by U.S. Bank Trust Company, National Association in St. Paul, Minnesota, as its "reference rate" or any successor rate, which rate shall change as and when that prime rate or successor rate changes; Project means the construction of an approximately 60,000 square foot truss manufacturing facility located on the Development Property to be leased by the Tenant; Purchase Agreement means that certain agreement between the City and the Developer for the purchase of the Development Property from the City; Site Improvements means the site improvements undertaken or to be undertaken on the Development Property, more particularly described on Exhibit C attached hereto; State means the State of Minnesota; Tax Increment Act means Minnesota Statutes, Sections 469.174 through 469.1794, as amended; Tax Increment District means Tax Increment Financing District No. 20 located within the Development District, a description of which is set forth in the Tax Increment Financing Plan, which was qualified as an economic development district under the Tax Increment Act; Tax Increment Financing Plan means the tax increment financing plan approved for the Tax Increment District by the City Council on March 21, 2022, and any future amendments thereto; Tax Increments means 97% of the tax increments derived from the Development Property which have been received and retained by the City in accordance with the provisions of Minnesota Statutes, Section 469.177; Tenant means Scherer Bros. Lumber Co. a Minnesota corporation, its successors and assigns; Termination Date means the earlier of(i) February 1, 2033, (ii) the date the TIF Note is paid in full, (iii) the date on which the Tax Increment District expires or is otherwise terminated, or(iv)the date this Agreement is terminated or rescinded in accordance with its terms; TIF Note means the Tax Increment Revenue Note (Scherer Limited Partnership Project) to be executed by the City and delivered to the Developer pursuant to Article III hereof, a copy of which is attached hereto as Exhibit D; 3 72865020v5 Unavoidable 'Delays means delays, outside the control of the party claiming its occurrence, which are the direct result of strikes, other labor troubles, supply chain delays and material shortages, declarations of any state, federal or local government, pandemics, epidemics, 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, or acts of any federal, state or local governmental unit (other than the City)which directly result in delays; and 4 72865020v5 ARTICLE II REPRESENTATIONS AND WARRANTIES Section 2.1 Representations and Warranties of the City. The City makes the following representations and warranties: (1) The City is a municipal corporation and has the power to enter into this Agreement and carry out its obligations hereunder. (2) 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. (3) The development contemplated by this Agreement is in conformance with the development objectives set forth in the Development Program. (4) To finance certain costs within the Tax Increment District, the City proposes, subject to the further provisions of this Agreement and an interfund loan resolution adopted by the City Council on March 21, 2022, to apply Tax Increments to (i) reimburse itself for the City Expenses, and (ii) only after the City Expenses have been reimbursed in full, to reimburse the Developer for a portion of the costs of the construction of the Site Improvements as further provided in this Agreement. (5) The City makes no representation or warranty, either expressed or implied, as to the Development Property or its condition or the soil conditions thereon, or that the Development Property shall be suitable for the Developer's purposes or needs. Section 2.2 Representations and Warranties of the Developer. The Developer makes the following representations and warranties: (1) The Developer is a Minnesota limited partnership and has the power and authority to enter into this Agreement and to perform its obligations hereunder and doing so will not violate its articles, bylaws, or the laws of the State and by proper action has authorized the execution and delivery of this Agreement. (2) The Developer shall cause the Project to be constructed 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 and public health laws and regulations). (3) The construction of the Project would not be undertaken by the Developer, and in the opinion of the Developer would not have been or be economically feasible within the reasonably foreseeable future, without the assistance and benefit to the Developer provided for in this Agreement. (4) The Developer will obtain, or cause to be obtained, in a timely manner, all required permits, licenses and approvals, and will meet, in a timely manner, all requirements of 5 72865020v5 all applicable local, state, and federal laws and regulations which must be obtained or met before the Project may be lawfully constructed. (5) Neither the execution and delivery of this Agreement, the consummation of the transactions contemplated hereby, nor the fulfillment of or compliance with the terms and conditions of this Agreement is prevented, limited by or conflicts with or results in a breach of, the terms, conditions or provision of any contractual restriction, evidence of indebtedness, agreement or instrument of whatever nature to which the Developer is now a party or by which it is bound, or constitutes a default under any of the foregoing. (6) The Developer and the Tenant shall cooperate in a commercially reasonable manner with the City with respect to any litigation commenced with respect to the Project. (7) The Developer and the Tenant shall cooperate in a commercially reasonable manner with the City in resolution of any traffic, parking, trash removal or public safety problems which may arise in connection with the construction and operation of the Project as a result of the Developer's or its contractors acts or omissions. (8) The construction of the Project shall commence as soon as reasonably possible after the Developer acquires the Development Property and barring Unavoidable Delays, shall be substantially completed by December 31, 2022. (9) The Developer acknowledges that the Tax Increments projections contained in the Tax Increment Financing Plan are estimates only and the Developer acknowledges that it shall place no reliance on the amount of projected Tax Increments and the sufficiency of Tax Increments to reimburse the Developer for a portion of the costs of the construction of the Site Improvements as provided in Article III. 6 72865020v5 ARTICLE III UNDERTAKINGS BY DEVELOPER AND CITY Section 3.1 Development Property; City Charges; Site Improvements. The City agrees to sell the Developer the Development Property for the purchase price set forth in the Purchase Agreement in accordance with the provisions of the Purchase Agreement. The City agrees to waive the city charges as set forth in the Purchase Agreement. The parties agree that the construction and installation of the Site Improvements are essential to the successful completion of the Project. The City shall reimburse the Developer for the lesser of(a) $400,000, or (b) the actual and eligible costs of the Site Improvements actually incurred and paid by the Developer(the "Reimbursement Amount") as further provided in Section 3.3. Section 3.2 Limitations on Undertaking of the City. Notwithstanding the provisions of Sections 3.1, the City shall have no obligation to the Developer under this Agreement to reimburse the Developer for the costs identified in Section 3.1, if the City, at the time or times such payment is to be made, is entitled under Section 4.2 to exercise any of the remedies set forth therein as a result of an Event of Default which has not been cured, but such unpaid amounts shall become payable, without interest accruing thereon in the meantime, if said Event of Default shall thereafter have been cured; provided that the City has not canceled and rescinded the Agreement pursuant to Section 4.2(2). Section 3.3 Reimbursement: TIF Note. The City shall reimburse the Developer as described in Section 3.1 for the Reimbursement Amount through the issuance of the City's TIF Note in substantially the form attached to this Agreement as Exhibit D, subject to the following conditions: (1) The TIF Note shall be dated, issued and delivered when (i) the Developer shall have demonstrated in writing to the reasonable satisfaction of the City that the construction of the Project has been completed and a certificate of occupancy has been issued by the City for the Project, and (ii) that the Developer has incurred and paid all costs of the construction of the Site Improvements, as described in and limited by Section 3.1 and shall have submitted paid invoices for the costs of the Site Improvements in an amount not less than the Reimbursement Amount. (2) The principal amount of the TIF Note shall be payable solely from 97% of the Tax Increments. (3) On the first Note Payment Date after the City has been reimbursed the City Expenses and on each Note Payment Date thereafter and subject to the provisions of the TIF Note, the City shall pay, against the principal outstanding on the TIF Note, the Tax Increments received by the City during the preceding 6 months. All such payments shall be applied to reduce the principal of the TIF Note. (4) The TIF Note shall be a special and limited obligation of the City and not a general obligation of the City, and only the Tax Increments shall be used to pay the principal of the TIF Note. 7 72865020v5 (5) The City's obligation to make payments on the TIF Note on any Note Payment Date or any date thereafter shall be conditioned upon the requirements that: (i) there shall not at that time be an Event of Default that has occurred and is continuing under this Agreement, and (ii)this Agreement shall not have been terminated or rescinded. (6) The TIF Note shall be governed by and payable pursuant to the additional terms thereof, as set forth in Exhibit D. In the event of any conflict between the terms of the TIF Note and the terms of this Section 3.3, the terms of the TIF Note shall govern. The issuance of the TIF Note pursuant and subject to the terms of this Agreement, and the taking by the City of such additional actions as bond counsel for the TIF Note may require in connection therewith, are hereby authorized and approved by the City. Section 3.4 Business Subsidies Act. (1) In order to satisfy the provisions of Minnesota Statutes, Sections 116J.993 to 116J.995 (the "Business Subsidies Act"), the Developer acknowledges and agrees that the amount of the "Business Subsidy" granted to the Developer under this Agreement is (i) the appraised value of the Development Property which is $602,000, (ii) the City Charges waived in the amount of $98,000, and (iii) reimbursement of the costs of the Site Improvements in the amount of $400,000, and that the Business Subsidy is needed because the Project is not sufficiently feasible for the Developer to undertake without the Business Subsidy. The Tax Increment District is an economic development district and the public purpose of the Business Subsidy is to encourage the construction of a manufacturing facility in the City (the "Goals"). After holding a public hearing March 21, 2022, the City has determined that creation and retention of jobs is not a goal of the subsidy for the Project and consequently has set the wage and job goals hereunder at zero. (2) If the Goals are not met, the Developer agrees to repay all of the Business Subsidy to the City, plus interest ("Interest") set at the implicit price deflator defined in Minnesota Statutes, Section 275.70, Subdivision 2, accruing from and after the date the Goals are not met, compounded semiannually. (3) The Developer agrees to (i) report its progress on achieving the Goals to the City until the date the Goals are met or, if the Goals are not met, until the date the Business Subsidy is repaid, (ii) include in the report the information required in Minnesota Statutes, Section 116J.994, Subdivision 7 on forms developed by the Minnesota Department of Employment and Economic Development, and (iii) send completed reports to the City. The Developer agrees to file these reports no later than March 1 of each year commencing March 1, 2023, and within 30 days after the deadline for meeting the Goals. The City agrees that if it does not receive the reports, it will mail the Developer a warning within one week of the required filing date. If within 14 days of the post marked date of the warning the reports are not made, the Developer agrees to pay to the City a penalty of$100 for each subsequent day until the report is filed up to a maximum of$1,000. (4) The Developer agrees to continue operations within the City for at least five (5) years after the "Benefit Date", which is the date the Developer completes construction of the Project. 8 72865020v5 (5) There are no other state or local government agencies providing financial '- assistance for the Project other than the City. (6) The general partner of the Developer is S.B. General Partner, Inc., which is wholly owned by the Tenant. (7) The Developer certifies that it does not appear on the Minnesota Department of Employment and Economic Development's list of recipients that have failed to meet the terms of a business subsidy agreement. Section 3.5 Execution of Assessment Agreement. (1) Simultaneously with the execution of this Agreement, the Developer and the City shall execute an Assessment Agreement pursuant to the provisions of Minnesota Statutes, Section 469.177, Subdivision 8, specifying the Assessor's Minimum Market Value for the Development Property and the Project for calculation of real property taxes. Specifically, the Developer shall agree to a market value for the Development Property and the Project which will result in a market value as of January 2, 2023 of not less than $5,100,000 until December 31, 2032 (such minimum market value at the time applicable is herein referred to as the "Assessor's Minimum Market Value"). Nothing in the Assessment Agreement shall limit the discretion of the Assessor to assign a market value to the property in excess of such Assessor's Minimum Market Value. The Assessment Agreement shall remain in effect until the earlier of (i) December 31, 2032; or (ii) the date of termination of this Agreement. The Assessment Agreement shall be certified by the Assessor for the County as provided in Minnesota Statutes, Section 469.177, Subdivision 8, upon a finding by the Assessor that the Assessor's Minimum Market Value represents a reasonable estimate based upon the plans and specifications for the Project to be constructed on the Development Property and the market value previously assigned to the Development Property. Pursuant to Minnesota Statutes, Section 469.177, Subdivision 8, the Assessment Agreement shall be filed for record in the office of the county recorder or registrar of titles of the County, and such filing shall constitute notice to any subsequent encumbrancer 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 any mortgage recorded against the Development Property. The City agrees to release the Assessment Agreement of record after the termination thereof at the request of the Developer. (2) The Developer may seek through petition or other means to have the market value for the Development Property and the Project reduced if the market value exceeds the Assessor's Minimum Market Value. Until the TIF Note is fully paid, such activity must be preceded by written notice from the Developer to the City indicating its intention to do so. Upon receiving such notice, or otherwise learning of the Developer's intentions, the City may suspend payments due under the TIF Note until the actual amount of the reduction is determined, whereupon the City will make the suspended payments less any amount that the City is required to repay the County as a result of any reduction in market value of the Development Property. During the period that the payments are subject to suspension, the City may make partial payments on the TIF Note if it determines, in its sole and absolute discretion that the amount retained will be sufficient to cover any repayment which the County may require. The City's suspension of 9 72865020v5 payments on the TIF Note pursuant to this Section shall not be considered a default under this Agreement. Section 3.6 Real Property Taxes. Prior to the Termination Date, the Developer shall pay all real property taxes payable with respect to all and any parts of the Development Property acquired and owned by it until the Developer's obligations have been assumed by any other person pursuant to the provisions of this Agreement. The Developer agrees that, so long as it owns all or any portion of the Development Property, prior to the Termination Date: (1) It will not seek administrative review or judicial review of the applicability of any tax statute relating to the ad valorem property taxation of real property contained on the Development Property determined by any tax official to be applicable to the Project or the Developer or raise the inapplicability of any such tax statute as a defense in any proceedings with respect to the Development Property, including delinquent tax proceedings; provided, however, "tax statute" does not include any local ordinance or resolution levying a tax; (2) It will not seek administrative review or judicial review of the constitutionality of any tax statute relating to the taxation of real property contained on the Development Property determined by any tax official to be applicable to the Project or the Developer or raise the unconstitutionality of any such tax statute as a defense in any proceedings, including delinquent tax proceedings with respect to the Development Property; provided, however, "tax statute" does not include any local ordinance or resolution levying a tax; and (3) It will not seek any tax deferral or abatement, either presently or prospectively authorized under Minnesota Statutes, Section 469.1813, or any other State or federal law, of the ad valorem property taxation of the Development Property between the date of execution of this Agreement and the Termination Date. Section 3.7 Prohibition Against Transfer of Project and Assignment of Agreement. The Developer represents and agrees that prior to the Termination Date of this Agreement, except for the Lease to the Tenant, the Developer shall not transfer the Project or any part thereof or any interest therein, without the prior written approval of the City. The City shall be entitled to require as conditions to any such approval that: (1) Any proposed transferee shall have the qualifications and financial responsibility, in the reasonable judgment of the City, necessary and adequate to fulfill the obligations undertaken in this Agreement by the Developer. (2) Any proposed transferee, by instrument in writing satisfactory to the City shall, for itself and its successors and assigns, and expressly for the benefit of the City, have expressly assumed all of the obligations of the Developer under this Agreement and agreed to be subject to all the conditions and restrictions to which the Developer is subject. (3) There shall be submitted to the City for review and prior written approval all instruments and other legal documents involved in effecting the transfer of any interest in this Agreement or the Project. 10 72865020v5 ARTICLE IV EVENTS OF DEFAULT Section 4.1 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: (1) Failure by the Developer to timely pay any ad valorem real property taxes and special assessments levied against the Development Property and all public utility or other City payments due and owing with respect to the Development Property when due and payable. (2) Failure by the Developer to cause the construction of the Project to be completed pursuant to the terms, conditions and limitations of this Agreement. (3) Failure of the Developer to observe or perform any other covenant, condition, obligation or agreement on its part to be observed or performed under this Agreement. (4) 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. (5) If the Developer shall: (A) 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 (B) make an assignment for the benefit of its creditors; or (C) admit in writing its inability to pay its debts generally as they become due; or (D) be adjudicated as bankrupt or insolvent; or if a petition or answer proposing the adjudication of the Developer as 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 sixty (60) days after the filing thereof; or a receiver, trustee or liquidator of the Developer, or of the Project, or part thereof, shall be appointed in any proceeding brought against the Developer, and shall not be discharged within sixty (60) days after such appointment, or if the Developer, shall consent to or acquiesce in such appointment. Section 4.2 Remedies on Default. Whenever any Event of Default referred to in Section 4.1 occurs and is continuing, the City, as specified below, may take any one or more of the following actions after the giving of thirty (30) days' written notice to the Developer, but only if the Event of Default has not been cured within said thirty (30) days: 11 72865020v5 (1) The City may suspend its performance under this Agreement and the TIF Note until it receives assurances from the Developer, deemed adequate by the City, that the Developer will cure its default and continue its performance under this Agreement. (2) The City may cancel and rescind the Agreement and the TIF Note. (3) The City may take any action, including legal or administrative action, in law or equity, which may appear necessary or desirable to enforce performance and observance of any obligation, agreement, or covenant of the Developer under this Agreement. Section 4.3 No Remedy Exclusive. No remedy herein conferred upon or reserved to the City is intended to be exclusive of any other available remedy or remedies, but each and every such remedy shall be cumulative and shall be in addition to every other remedy given under this Agreement or now or hereafter existing at law or in equity or by statute. No delay or omission to exercise any right or power accruing upon any default shall impair any such right or power or shall be construed to be a waiver thereof, but any such right and power may be exercised from time to time and as often as may be deemed expedient. Section 4.4 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 4.5 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 or performance or observance of any obligation or agreement on the part of the Developer herein contained, the Developer agrees that it shall, on demand therefor, pay to the City the reasonable fees of such attorneys and such other expenses so incurred by the City. Section 4.6 Indemnification of City. (1) The Developer releases from and covenants and agrees that the City, its governing body members, officers, agents, including the independent contractors, consultants and legal counsel, servants and employees thereof (hereinafter, for purposes of this Section, collectively the "Indemnified Parties") shall not be liable for and agrees to indemnify and hold harmless the Indemnified Parties against any loss or damage to property or any injury to or death of any person occurring at or about or resulting from any defect in the Project, provided that the foregoing indemnification shall not be effective for any actions of the Indemnified Parties that are not contemplated by this Agreement or result from the gross negligence or willfull or wanton misconduct of the Indemnified Parties. (2) Except for any willful misrepresentation or any gross negligence or willful or wanton misconduct of the Indemnified Parties, the Developer agrees to protect and defend the Indemnified Parties,now and forever, and further agrees to hold the aforesaid harmless from any claim, demand, suit, action or other proceeding whatsoever by any person or entity whatsoever arising or purportedly arising from the actions or inactions of the Developer (or other persons acting on its behalf or under its direction or control) under this Agreement, or the transactions 12 72865020v5 contemplated hereby or the acquisition, construction, installation, ownership, and operation of the Project; provided, that this indemnification shall not apply to the warranties made or obligations undertaken by the City in this Agreement or to any actions undertaken by the City which are not contemplated by this Agreement but shall, in any event and without regard to any fault on the part of the City, apply to any pecuniary loss or penalty (including interest thereon from the date the loss is incurred or penalty is paid by the City at a rate equal to the Prime Rate) as a result of the Developer operating the Project so that the Tax Increment District does not qualify or ceases to qualify as an "economic development district" under Section 469.174, Subdivision 12, of the Act and Section 469.176, Subdivision 4c. or to violate limitations as to the use of Tax Increments as set forth in Section 469.176, Subdivision 4c. (3) 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 the City and not of any governing body member, officer, agent, servant or employee of the City. 13 72865020v5 ARTICLE V ADDITIONAL PROVISIONS Section 5.1 Restrictions on Use. Until the Termination Date, the Developer agrees for itself, its successors and assigns and every successor in interest to the Development Property, or any part thereof, that the Developer and such successors and assigns shall operate, or cause to be operated, the Project as a manufacturing facility and shall devote the Development Property to, and in accordance with, the uses specified in this Agreement. Section 5.2 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 the Agreement which affects his or her personal interests or the interests of any corporation, partnership or association in which he or she is directly or indirectly interested. No member, official or employee of the City shall be personally liable to the City in the event of any default or breach by the Developer or successor or on any obligations under the terms of this Agreement. Section 5.3 Titles of Articles and Sections. Any titles of the several parts, articles and sections of the Agreement are inserted for convenience of reference only and shall be disregarded in construing or interpreting any of its provisions. Section 5.4 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 (1) in the case of the Developer is addressed to or delivered personally to: Scherer Limited Partnership Attention: Peter Scherer 9401 73rd Ave N#400 Brooklyn Park, MN 55428 (2) in the case of the City is addressed to or delivered personally to the City at: City of Albertville, Minnesota Attention: City Administrator Albertville City Hall 5959 Main Avenue Albertville, MN 55301 14 72865020v5 with a copy to: Taft Stettinius & Hollister LLP Attention: Mary Ippel 2200 IDS Center 80 South 8th Street Minneapolis, MN 55402 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 5.5 Counterparts. This Agreement may be executed in any number of counterparts, each of which shall constitute one and the same instrument. Section 5.6 Law Governing. This Agreement will be governed and construed in accordance with the laws of the State. Section 5.7 Expiration. This Agreement shall terminate on the Termination Date, unless earlier terminated or rescinded in accordance with its terms and upon such termination, the City will execute and deliver to the Developer a recordable termination of this Agreement at the request of the Developer. Section 5.8 Provisions Surviving Rescission or Expiration. Sections 4.5 and 4.6 shall survive any rescission, termination or expiration of this Agreement with respect to or arising out of any event, occurrence or circumstance existing prior to the date thereof. Section 5.9 Assignability of TIF Note. The TIF Note may only be assigned pursuant to the terms of the TIF Note and shall not be unreasonably withheld. Section 5.10 Amendment. This Agreement may be amended only by written agreement approved by the City and the Developer. 15 72865020v5 IN WITNESS WHEREOF, the City has caused this Agreement to be duly executed in its name and on its behalf and its seal to be hereunto duly affixed, and the Developer has caused this Agreement to be duly executed on its behalf, on or as of the date first above written. CITY OF ALBERTVILLE, MINNESOTA Iti Mayor t � BY Its ity Adminis tor This is a signature page to the Development Agreement byand between the Cityof Albertville g pg p g and Scherer Limited Partnership. S-1 72865020v5 SCHERER LIMITED PARTNERSHIP By S. B. General Partner, Inc., its general partner By Its f . ate. This is a signature page to the Development Agreement by and between the City of Albertville and Scherer Limited Partnership. S-2 72865020v5 EXHIBIT A DESCRIPTION OF DEVELOPMENT PROPERTY Property located in the City of Albertville, Wright County, Minnesota with the following description: Lot 1, Block 1, Scherer Limited Partnership Addition, Wright County, Minnesota A-1 72865020v5 EXHIBIT B FORM OF ASSESSMENT AGREEMENT THIS AGREEMENT, dated as of this 1st day of April, 2022, is by and among the City of Albertville, Minnesota (the "City"), and Scherer Limited Partnership, a Minnesota limited partnership (the "Developer"), and the Wright County Assessor (the "Assessor"). WITNES SETH WHEREAS, the City and the Developer have entered into a Development Agreement dated as of April 1, 2022 (the "Development Agreement") regarding certain real property located in the City (the "Development Property") which property is legally described on Exhibit A attached hereto and made a part hereof. WHEREAS, it is contemplated that pursuant to said Agreement, the Developer will construct a Project on the Development Property as described in the Development Agreement. WHEREAS, the City and Developer desire to establish a minimum market value for the Development Property and the improvements constructed or to be constructed thereon, pursuant to Minnesota Statutes, Section 469.177, Subdivision 8. WHEREAS, the Developer has acquired the Development Property. WHEREAS, the Assessor has reviewed the plans and specifications for the improvements and the market value previously assigned to the land upon which the improvements are to be constructed, and that the "minimum market value" as set forth below is reasonable. NOW, THEREFORE, the parties to this Agreement, in consideration of the promises, covenants and agreements made by each to the other, do hereby agree as follows: 1. As of January 2, 2023 through and thereafter until December 1, 2032 the minimum market value which shall be assessed for the Project shall be not less than$5,100,000. 2. The minimum market value herein established shall be of no further force and effect and this Agreement shall terminate on the earlier of: (i) December 31, 2032; or (ii) the date of termination of the Development Agreement. 3. This Agreement shall be recorded by the City with the County Recorder of Wright County, Minnesota. The Developer shall pay all costs of recording. 4. Neither the preamble nor provisions of this Agreement are intended to, or shall they be construed as, modifying the terms of the Agreement between the City and the Developer. 5. This Agreement shall inure to the benefit of and be binding upon the successors and assigns of the parties. B-1 72865020v5 IN WITNESS WHEREOF, the City, the Developer and the Assessor have caused this Agreement to be executed in their names and on their behalf all as of the date set forth above. CITY OF ALBERTVILLE, MINNESOTA (SEAL) By Its Mayor By Its City Administrator STATE OF MINNESOTA ) ) ss COUNTY OF WRIGHT ) The foregoing instrument was acknowledged before me this day of 2022, by , the Mayor, and , the City Administrator of the City of Albertville on behalf of said City. Notary Public Signature page for Assessment Agreement by and between the City of Albertville, Minnesota, Scherer Limited Partnership, and the Wright County Assessor. B-2 72865020v5 SCHERER LIMITED PARTNERSHIP By Its STATE OF MINNESOTA ) ) ss. COUNTY OF ) The foregoing instrument was acknowledged before me this day of 2022, by , the of Scherer Limited Partnership, a Minnesota limited partnership, on behalf of said limited partnership. Notary Public Signature page for Assessment Agreement by and between the City of Albertville, Minnesota, Scherer Limited Partnership, and the Wright County Assessor. B-3 72865020v5 CERTIFICATION BY COUNTY ASSESSOR The undersigned, having reviewed the plans and specifications for the improvements to be constructed and the market value assigned to the land upon which the improvements are to be constructed, and being of the opinion that the minimum market value contained in the foregoing Agreement appears reasonable, hereby certifies as follows: The undersigned Assessor, being legally responsible for the assessment of the above described property, hereby certifies that the market values assigned to such land and improvements are reasonable. County Assessor for Wright County STATE OF MINNESOTA ) ) ss. COUNTY OF WRIGHT ) This instrument was acknowledged before me on , 2022, by , the County Assessor of Wright County. Notary Public Signature page for Assessment Agreement by and between the City of Albertville, Minnesota, Scherer Limited Partnership, and the Wright County Assessor. B-4 72865020v5 EXHIBIT A TO ASSESSMENT AGREEMENT LEGAL DESCRIPTION OF DEVELOPMENT PROPERTY Lot 1, Block 1, Scherer Limited Partnership Addition, Wright County, Minnesota B-5 72865020v5 EXHIBIT C SITE IMPROVEMENTS Engineering Environmental Testing Foundations and Footings Grading/earthwork Landscaping, including irrigation Onsite Utilities Onsite Road, Curb, Gutter, Driveway, Sidewalk and Streetscape Improvements Outdoor Lighting Parking Site Preparation Site Utilities Soil Testing & Boring Storm Water/Ponding Survey C-1 72865020v5 EXHIBIT D FORM OF TIF NOTE No. R-1 $ UNITED STATES OF AMERICA STATE OF MINNESOTA COUNTY OF WRIGHT CITY OF ALBERTVILLE TAX INCREMENT REVENUE NOTE (SCHERER LIMITED PARTNERSHIP PROJECT) The City of Albertville, Minnesota (the "City"), hereby acknowledges itself to be indebted and, for value received, hereby promises to pay the amounts hereinafter described (the "Payment Amounts") to Scherer Limited Partnership (the "Developer"), or its registered assigns (the "Registered Owner"), but only in the manner, at the times, from the sources of revenue, and to the extent hereinafter provided. The principal amount of this Note shall equal from time to time the principal amount stated above, as reduced to the extent that such principal installments shall have been paid in whole or in part pursuant to the terms hereof; provided that the sum of the principal amount listed above shall in no event exceed $400,000 as provided in that certain Development Agreement, dated as of April 1, 2022, as the same may be amended from time to time (the "Development Agreement"), by and between the City and the Developer. This Note bears no interest. The amounts due under this Note shall be payable on the August 1 immediately following the date on which the City has been fully reimbursed for the costs of the acquisition of the Development Property (as defined in the Development Agreement) and the City Charges (as defined in the Development Agreement) in the amount of$700,000, and on each February 1 and August 1 thereafter to and including February 1, 2033, or, if the first should not be a Business Day (as defined in the Development Agreement), the next succeeding Business Day (the "Payment Dates"). On each Payment Date, the City shall pay by check or draft mailed to the person that was the Registered Owner of this Note at the close of the last business day of the City preceding such Payment Date an amount equal to the Tax Increments (hereinafter defined) received by the City during the six month period preceding such Payment Date. All payments made by the City under this Note shall be applied to principal. This Note is prepayable by the City, in whole or in part, on any date. The Payment Amounts due hereon shall be payable solely the Tax Increments (as defined in the Development Agreement) from the Development Property (as defined in the Development Agreement) within the City's Tax Increment Financing District Tax Increment Financing District No. 20 (the "Tax Increment District") within its Municipal Development District No. 1 which are D-1 72865020v5 paid to the City and which the City is entitled to retain pursuant to the provisions of Minnesota Statutes, Sections 469.174 through 469.1794, as the same may be amended or supplemented from time to time (the "Tax Increment Act"). This Note shall terminate and be of no further force and effect following the termination of the Tax Increment District, on any date upon which the City shall have terminated the Development Agreement under Section 4.2(2) thereof or the Developer shall have terminated the Development Agreement under Article V thereof, or on the date that all principal payable hereunder shall have been paid in full, whichever occurs earliest. The City makes no representation or covenant, expressed or implied, that the Tax Increments will be sufficient to pay, in whole or in part, the amounts which are or may become due and payable hereunder. The City's payment obligations hereunder shall be further conditioned on the fact that no Event of Default under the Development Agreement shall have occurred and be continuing at the time payment is otherwise due hereunder, but such unpaid amounts shall become payable, without interest accruing thereon in the meantime, if said Event of Default shall thereafter have been cured; and, further, if pursuant to the occurrence of an Event of Default under the Development Agreement the City elects to cancel and rescind the Development Agreement, the City shall have no further debt or obligation under this Note whatsoever. Reference is hereby made to all of the provisions of the Development Agreement, including without limitation Section 3.3 thereof, for a fuller statement of the rights and obligations of the City to pay the principal of this Note, and said provisions are hereby incorporated into this Note as though set out in full herein. This Note is a special, limited revenue obligation and not a general obligation of the City and is payable by the City only from the sources and subject to the qualifications stated or referenced herein. This Note is not a general obligation of the City of Albertville, Minnesota, and neither the full faith and credit nor the taxing powers of the City are pledged to the payment of the principal of this Note and no property or other asset of the City, save and except the above-referenced Tax Increments, is or shall be a source of payment of the City's obligations hereunder. This Note is issued by the City in aid of financing a project pursuant to and in full conformity with the Constitution and laws of the State of Minnesota, including the Tax Increment Act. This Note may be assigned only with the consent of the City, which consent will not be unreasonably withheld, delayed or conditioned. In order to assign the Note, the assignee shall surrender the same to the City either in exchange for a new fully registered note or for transfer of this Note on the registration records for the Note maintained by the City. Each permitted assignee shall take this Note subject to the foregoing conditions and subject to all provisions stated or referenced herein. IT IS HEREBY CERTIFIED AND RECITED that all acts, conditions, and things required by the Constitution and laws of the State of Minnesota to be done, to have happened, and to be performed precedent to and in the issuance of this Note have been done, have happened, and have been performed in regular and due form, time, and manner as required by D-2 72865020v5 law; and that this Note, together with all other indebtedness of the City outstanding son the date hereof and on the date of its actual issuance and delivery, does not cause the indebtedness of the City to exceed any constitutional, statutory or charter limitation thereon. IN WITNESS WHEREOF, City of Albertville, Minnesota, by its City Council, has caused this Note to be executed by the manual signatures of its Mayor and City Administrator and has caused this Note to be issued on and dated , 20 . City Administrator Mayor DO NOT EXECUTE UNTIL THE CONSTRUCTION OF THE PROJECT IS COMPLETE AND PAID INVOICES FOR THE SITE IMPROVEMENTS ARE GIVEN TO THE CITY - REFER TO SECTION 3.3(1). D-3 72865020v5 CERTIFICATION OF REGISTRATION It is hereby certified that the foregoing Note, as originally issued on 20 , was on said date registered in the name of Scherer Limited Partnership, and that, at the request of the Registered Owner of this Note, the undersigned has this day registered the Note in the name of such Registered Owner, as indicated in the registration blank below, on the books kept by the undersigned for such purposes. NAME AND ADDRESS OF DATE OF SIGNATURE OF REGISTERED OWNERS REGISTRATION CITY ADMINISTRATOR Scherer Limited Partnership Attention: Peter Scherer 9401 73rd Ave N #400 Brooklyn Park, MN 55428 , 20 , 20 , 20 , 20 D-4 72865020v5