HomeMy WebLinkAbout4B - E.M. Products
STAFF AGENDA REPORT
AGENDA #:
PREPARED BY:
SUBJECT:
DATE:
4b
BONITA J. CARLSON, ASSISTANT CITY MANAGER6q t/
APPROVE DEVELOPMENT AGREEMENT WITH ED MALONE
JUNE 5,1995
BACKGROUND:
On May 22, 1995, the City council approved creating Tax Increment
District #2-5, in order to provide financial assistance to Ed Malone,
owner of E.M. Products for locating his business in the City of Prior
Lake Waterfront Passage Business Park.
DISCUSSION:
The development agreement was discussed at the May 22, 1995
meeting, however action was postponed until the agreement was
finalized and signed by the Developer, Ed Malone. The terms of the
Development agreement are consistent with the Tax Increment
project plan approved on May 22, 1995. This agreement has been
reviewed and approved by Roger Guenette and City Attorney Glenn
Kessel and has been signed by Ed Malone.
ALTERNATIVES:
1. Approve Developer's Agreement with Ed Malone.
2. Deny approval of Developer's Agreement
RECOMMENDATION: Staff recommends Alternative NO.1.
/,7
Mption and second to approve the Development Agreement with Ed
Malone.
(
/~
1~~(Rft~gr~~~k Ave., Prior Lake, Minnesota 55372-1714 / Ph. (612) 447-4230 / Fax (612) 447-4245
AN EQUAL OPPORTUNITY EMPLOYER
T
,c-,
DEVELOPMENTAGREEM~NT
BY AND BETWEEN
THE CITY OF PRIOR LAKE
AND
EDWARD J. MALONE
I 1995
, """"T"''''''''~'--''''-''--'''._-'''''''''-''-'-'''''-''
TABLE OF CONTENTS
ARTICLE I DEFINITIONS
.......................................................
2
SECTION 1.1 DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE II REPRESENTATIONS AND WARRANTIES .................................. 4
SECTION 2.1 REPRESENTATIONS AND WARRANTIES OF THE CITY .................... 4
SECTION 2.2 REPRESENTATIONS AND WARRANTIES OF THE DEVELOPER ............. 5
ARTICLE III UNDERTAKINGS BY DEVELOPER AND CITY . . . . . . . . " . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 3.1 SALES AND PURCHASE OF THE DEVELOPMENT PROPERTY. . . . . . . . . . . . . . . 7
SECTION 3.2 PURCHASE PRICE ............................................... 7
SECTION 3.3 TITLE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 3.4.COST ESTIMATE RE~TING TO ACQUISITION OF THE DEVELOPMENT
PROPERTY, INFRASTRUCTURE, SITE IMPROVEMENTS AND SOIL CORRECTION . . . . . . . . . . 7
SECTION 3.5 ASSESSMENT AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 3.6 REIMBURSEMENT: DEVELOPER PAYMENTS AND TAX INCREMENT REVENUES 9
SECTION 3.7 GUARANTEE OF PAYMENTS ....................................... 9
SECTION 3.8 TAXES AND SPECIAL ASSESSMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
ARTICLE IV EVENTS OF DEFAULT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 4.1 EVENTS OF DEFAULT DEFINED .................................... 10
SECTION 4.2 REMEDIES ON DEFAULT .......................................... 10
SECTION 4.3 NO REMEDY EXCLUSIVE .... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 4.4 NO IMPLIED WAIVER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 4.5 AGREEMENT TO PAY ATTORNEY'S FEES AND EXPENSES . . . . . . . . . . . . . . . 11
SECTION 4.6 INDEMNIFICATION OF CITY ........................................ 11
ARTICLE V INSURANCE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 5.1 INSURANCE .................................................... 13
ARTICLE VI ADDITIONAL PROVISIONS
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
14
SECTION 6.1 RESTRICTIONS ON USE .......................................... 14
SECTION 6.2 CONFUCTS OF INTEREST .... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 6.3 TITLES OF ARTICLES AND SECTIONS ............................... 14
SECTION 6.4 NOTICES AND DEMANDS ......................................... 14
SECTION 6.5 COUNTERPARTS ................................................ 14
SECTION 6.6 LAW GOVERNING ............................................... 14
ARTICLE VII DEVELOPER'S OPTION TO TERMINATE AGREEMENT ...................... 15
SECTION 7.1 THE DEVELOPER'S OPTION TO TERMINATE ... . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 7.2 ACTION TO TERMINATE .......................................... 15
SECTION 7.3 EFFECT OF TERMINATION ........................................ 15
SECTION 7.4 UMIT A TION OF DAMAGES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
EXHIBIT A DESCRIPTION OF DEVELOPMENT DISTRICT ........... . . . . . . . . . . . . . . . . . . . . A-1
EXHIBIT 8 DESCRIPTION OF DEVELOPMENT PROPERTY. . . . . .. . . . . . . . . . . . . . . . . . . . . . . . 8-1
EXHIBIT C ASSESSMENT AGREEMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C-1
EXHIBIT D ACQUIRED PROPERTY DEED. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . D-1
EXHIBIT E LEASE AGREEMENT WITH EM PRODUCTS, INC. ................. . . . . . . . . . . . E-1
DEVELOPMENT AGREEMENT
THIS AGREEMENT, made as of the _ day of ,1995, by and between the City of Prior Lake,
Minnesota {the .Cityll', a Minnesota municipal corporation and Edward J. Malone, an individual and President of
EM Products, Inc. a Minnesota corporation his personal representatives, successors and assigns, (the
.Develope....) ,
WITNESSETH:
WHEREAS, pursuant to Minnesota Statutes, Section 469.124 through 469.134 the City has formed City
Development District No.2 (the .Development Districtll) the legal des,cription of which is attached hereto as
Exhibit A and has adopted a development program therefore (the IlDevelopment Program"); and
WHEREAS, pursuant to the provisions of Minnesota Statutes, Section 469.174 through 469.179 as
amended, (hereinafter the .Tax Increment Act.), the City will create, within the Development District, an
Economic Development District No. 2-5 (the "Tax Increment District"), the legal description of which is attached
hereto as Exhibit B and will adopt a tax increment financing plan prior to May 31, 1995, therefore (the "Tax
Increment Plan.) which provides for the use of tax increment financing in connection with development within
the Development District; and
WHEREAS, the City will request the County to certify the original tax capacity of the Tax Increment District
pursuant to Section 469.177 of the Tax Increment Act; and
Whereas, the City has agreed to sell and the Developer has agreed to purchase the Development
Property in consideration of the terms and conditions contained in this Agreement; 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 assist the Developer with the financing of the Development
Property and Site Improvements (as defined herein) on the Development Property (as defined herein) as more
particularly set forth in this Agreement; and
WHEREAS, the City believes that the development of a certain Project (as defined herein) and the
construction of the Project, and fulfillment of this Agreement are vital and are in the best interests of the City
will result in increased employment and preservation/enhancement of the tax base and is 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.
NOW, THEREFORE. in consideration of the premises and the mutual obligations of the parties hereto,
each of them does hereby covenant and agree with the other as follows:
ARTICLE I
DEFINITIONS
Section f.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:
Acouired Property Deed means a warranty deed, substantially in the form of the deed attached to this
Agreement as Exhibit D-1, used to convey the Development Property from the City to the Developer;
Aqreement means this Agreement, as the same may be from time to time modified, amended or
supplemented;
Business Dav 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;
Certificate of Completion means the certification in the form of the certificate attached hereto as Exhibit F
and hereby made a part of this Agreement, provided to the Developer pursuant to Section 4.2 of this
Agreement;
City means the City of Prior Lake, Minnesota;
County means Scott County, Minnesota;
Developer means Edward J. Malone, individually;, 3.nd Procidant 3.nd cola c!13.n:holdcr 31 liH Pr0961ctt:,
~
Development District means the real property described in Exhibit A:
Development ProQram means the development program approved in connection with the Development
District;
Excess Tax Increment Revenues means annual Tax Increment Revenues generated from the Project in
excess of the guaranteed payments required of the Developer to the Cjtyi"'fitiJhft~~tty9.;qt$.<Sq$:~~C~~:,J9~tmH~
1';lilliiW!I~ll~~~~J~~~~t~~fu#~~s..Cif.r()~~i~i5v~rtiirient..aid~[i(E9tfi~f.~~gcti9r!r~Y~QQ~,~jq..
Infrastructure means the municipal utilities, roadways, grading and excavation improvements specified, bid
and contracted for by the City of Prior Lake within the Waterfront Passage Business Park.
Development Property means the real property described in Exhibit B of this Agreement;
Leoal and Administrative Expenses means the fees and expenses incurred in connection with the
adoption of the Tax Increment Financing Plan, the preparation of this Development Agreement, and the
issuance of the Tax Increment Note;
Event of Default means any of the events described in Section 4.1;
Payment Date means July 15, 1996, and each December 15 and July 15 of each year thereafter to and
including December 15, 2005; provided, that if any such Payment Date should not be a Business Day, the
Payment Date shall be the next succeeding Business Day;
Proiect means the approximate 28,800 square foot production/warehouse facility and any future
expansions of said facility to be located on the Development Property;
Site Improvements means excavation, grading, filling, utility improvements and extensions, landscaping
2
and access and parking preparations;
Soil Correction means corrective measures or actions necessary to improve or upgrade soil conditions on
the Development Property. Such corrective measures or actions may involve construction techniques such as
.spread footings. and/or excavation of deficient soils and replacement with engineered fill. To be eligible for
reimbursement of these corrective actions the Developer must present reports prepared by a registered soils
engineer and then submit invoices documenting the cost associated with the recommended actions;
State means the State of Minnesota;
Tax Increments means the tax increments derived from the Tax Increment District created in accordance
with the provisions of Minnesota Statutes, Section 469.1 n;
Tax Increment Act means the Tax Increment Financing Act, Minnesota Statutes, Sections 469.174 through
469.179, as amended;
Tax Increment District means Economic Development District No. 2-5 to be established prior to April 30,
1995 on property legally described in Exhibit 8 to be qualified as an economic development district under the
Tax Increment Act;
Tax Increment Financino Plan means the plan approved for the Tax Increment District;
Unavoidable Delays means delays, outside the control of the party claiming its occurrence, which are the
direct result of strikes, other labor troubles, construction material shortages relating to building frame or
envelope, unusually severe or prolonged bad weather, acts of God, fire or other casualty to the Project and/or
Site Improvements, site conditions including the existence of environmental problems, 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 which directly result in delays.
3
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 shall be an "economic development district- within the meaning of
Minnesota Statutes, Section 469.174, Subdivision 12 and will be 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) The City has acquired the Development Property and will convey marketable title to the Development
Property to the Developer for uses in accordance with the Plan and this Agreement.
(5) The City will cooperate with the Developer with respect to any litigation commenced by third parties in
connection with this Agreement.
(6) The City is not a party to any unrecorded contract or agreement affecting the Development Property
that will be binding on the Developer or that will prevent the Developer from completing, owning and operating
the Minimum Improvements as required by this Agreement
(7) There are no claims, actions, suits or other proceedings outstanding to which the City is a party,
resolution of which could have a materially adverse effect on the Development Property, the Minimum
Improvements, or the transactions contemplated by this Agreement.
(8) The City has not incurred any obligation or liability (contingent to otherNise) for brokerage or finder's
fee or agent's commissions or other like payment in connection with this Agreement or the transaction
contemplated hereby, and the City agrees to indemnify and defend against and in respect of any such
obligation and liability based in any way upon agreements, arrangements, or understandings made or claimed
to have been made by the City with any third party.
(9) The City has no knowledge of any requirements to construct ponding on the Development Property to
accommodate storm water retention.
(10) To finance the costs of the activities to be undertaken by the City and Developer, the City proposes,
subject to the further provisions of this Agreement, to apply Tax Increment generated by the Tax Increment
District and other revenues identified within this Agreement, to reimburse public and private costs incurred in
the acquisition of the Development Property and the construction of the Site Improvements and Soil Correction
in the Development District as further provided in this Agreement.
(11) The City has not received any notice from any local, state or federal official that the activities of the
Developer or the City or third parties with respect to the Development Property ge~y}ftifn~~l!fi?~9.~#.~m
Rtgeitfiilimay or will be in violation of any environmental law or regulation (other"th"~i;;..tii'ose"noHc'es;.Tfany~"of
which the Developer has been notified). The City is not aware of any state or federal claim filed or planned to
be filed by any party relating to any violation of any local, state or federal environmental law, regulation or
review procedure, with respect to such property and the City is not aware of any violation of any local, state or
federal law, regulation or review procedure which would give rise to a valid claim under the Minnesota
Environmental Rights Act or other state or federal environmental statute.
4
(12) The City shall make findings required by Section 469.175, Subdivision 3, of the Tax Increment
Financing Act for the Tax Increment District. and set forth in writing the reasons and supporting facts for each
determination.
(13) The City shall endeavor to obtain an Economic Recovery Grant in the amount of $50,000 from the
Minnesota Department of Trade and Economic Development (MnDTED) to be used in support of the Project.
Upon receipt of the grant funds the City will provide a $50,000 subordinated loan to be used by the Developer
for acquisition of machinery and equipment. The loan will be for a term of 10 years, with a 20 year amortiza-
tion schedule and a 10% interest rate. The City has met with MnDTED officials and have been encouraged to
submit an application in support of this Project.
(14) The City will not unreasonably delay, withhold, or condition any consent or action requested of it by
the Developer or otherwise contemplated by this Agreement provided such consent or requested action
complies with all applicable local, state or federal laws or regulations or this Agreement.
Section 2.2. Representations and Warranties of the Developer. The Developer makes the following
representations and warranties:
(1) The Developer has power to enter into this Agreement and to perform its obligations hereunder and is
not in violation of any local, state or federal laws.
(2) The Developer is an individual who serves as President and is the sole shareholder of a duly
organized corporation, validly existing under the laws of this State and has full power and authority to enter into
this Agreement and carry out the covenants contained herein.
(3) The Developer will cause the Project to be installed in accordance with the terms of this Agreement,
the Development Program and all local, state and federal laws and regulations (including, but not limited to,
environmental, zoning, energy conservation, building code and public health laws and regulations).
(4) Subject to Unavoidable Delays, 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 all
applicable local, state, and federal laws and regulations which must be obtained or met before the Project may
be lawfully installed.
(5) To the best of the Developer's knowledge after reasonable investigation, has not received any notice
or communication from any local, state or federal official that the activities of Developer or the City with respect
to the development Property mayor will be in violation of any environmental law or regulation. As of the date
01 the execution of this Agreement, Developer is aware of no facts the existence of which would cause it to be
in violation of any local, state or federal environmental law, regulation or review procedure which would give
any person a valid claim under the Minnesota Environmental Rights Act.
(6) 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 to the Developer provided for in this Agreement.
(7) To the best of the Developer's knowledge after reasonable investigation, 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.
(8) The Developer will cooperate fully with the City with respect to any litigation commenced with respect
to the Project provided, however, that any such litigation settled by the City which would require payment by
the Developer would require that the City obtain the prior written consent of the Developer.
5
(9) The Developer agrees to pay the total amount of any costs, charges, expenses and attorneys fees
reasonably incurred or paid at any time by City because of any Event of Default by Developer as to any
stipulation, agreement, and covenant of this Agreement, 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 interest in the Property or the Project.
(10) The Developer will cooperate fully 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.
(11) The Developer will participate in a Site Plan Review by the City's Development Review Committee
and the City Planning Commission, and will comply with all terms and conditions as set forth within the City's
design standards and covenants for the Waterfront Passage Business Park and as reasonably enforced by said
Development Review Committee and Planning Commission.
(12) Barring Unavoidable Delays, the Project will be completed by July 15, 1996 provided construction
has commenced by October 1, 1995 such that the City will issue a Certificate of Completion on or before that
date. The City has no knowledge of anything which would prevent the Project from being completed by July
15, 1996, subject to Unavoidable Delays, including within its knowledge, an estimate of the reasonable time for
review of the Project by the City and its agencies and commissions.
(13) The Developer and E M Products, Inc. shall execute a lease agreement for the lease of the
Development Property on or before the closing date in substantially the form of Exhibit E attached hereto. The
lease payments shall be guaranteed by the lessor and the term of the lease shall extend through December 15,
2005.
6
ARTICLE III
UNDERTAKINGS BY DEVELOPER AND CITY
Section 3.1. Sales and Purchase of the Develooment Prooertv. City agrees to sell, and Developer agrees
to purchase the Development Property. The qity further agrees to reimburse the Developer 50% of the cost
_iiiii~iiiiu.;~~lll~I~li~~~!!~!~g~~~a~~Q~~':' ga:~:%h~~c'!f~fttmg~
investigation including a Phase I environmental assessment.
Section 3.2. Purchase Price. Developer agrees to pay to the City the Purchase Price.
Section 3.3. ~ City agrees to promptly obtain and shall deliver to Developer a commitment for an
owner's title insurance policy (AL T ^ I\C~~ $yr:gy Form B - 1987) issued by a title insurance company
acceptable to the City and the Developer naming the Developer as the proposed owner-insured of the
Development Property in the amount of the Purchase Price (the "Commitment"). The Commitment shall have a
current date as its effective date and shall commit to insure marketable title in Developer, free and clear of all
mechanics' lien claims, questions of survey, unrecorded interests, rights of parties in possession or other
exceptions. The Commitment shall set forth all levied real estate taxes and special assessments and shall
contain such endorsements as Developer may require. Said commitment shall have attached copies of all
instruments of record which create any easements or restrictions which are referred to in Schedule B of the title
commitment. Developer will be allowed 20 days after receipt of the Commitment and the Survey (as
hereinafter defined) to make an examination thereof and to make any objections to the marketability to the
Development Property, said objections to be made by written notice or to be deemed waived.
If the title to the Development Property, as evidenced by the Commitment and Survey, together with any
appropriate endorsements, is not good and marketable of record in City and is not made so by the Date ot
Closing, Developer may either:
(a) Terminate this Agreement by giving written notice to the City in which event this Agreement shall
become null and void and neither party shall have any further rights or obligation hereunder; or
(b) Elect to accept the title in its unmarketable condition by giving written notice to the City, in which
event the Developer shall hold back funds from the portion of the Purchase Price payable at the closing to cure
the defects and apply said holdback funds for the reasonable costs of curing such defects, including
reasonable attorneys' fees, and pay the unexpended balance to City. (If the amount of said holdback cannot
be mutually agreed to by the City and the Developer, the issuer of the Commitment shall determine the amount
of said holdback).
Section 3.4. Cost Estimate Relatino to Acouisition of the Develooment Property. Infrastructure, Site
Improvements and Soil Correction. The parties agree that the Infrastructure, Site Improvements and Soil
Correction to be constructed by the City and Developer are essential to the successful completion of the
Project. The costs of the acquisition of the Development Property, Infrastructure, Site Improvements and the
Soil Correction, which shall include engineering and all other costs directly related to the making of the Site
Improvements and Soil Correction, together with the Legal and Administrative expenses, are estimated as
follows:
Land Acquisition
and Infrastructure (3.627 acres)
Soil Correction (28,800 SF building)
Administrative Expenses
TOTAL
$270,265
25,000
7.500
$302,765
7
Sources of funding for the identified Project costs are as follows:
Developer Payments
- CQwnpAymQnt Land
- Administrative Fee
- Soil Correction (interim fund)
- Phased Land Payment (due 7/15/96)
(due 12/15/96)
$55,300
7,500
25,000
17,333
17.332
$122,465
180.300
$302,765
SUBTOTAL
TIF Write Down
TOTAL
(1) As indicated herein, the Developer shall make an initial payment of $55,300 to the City upon closing
on the 3.627 acre parcel. The Developer shall also pay a $7,500 Administrative fee at the time of approval of
the Tax Increment plan. To the extent that Soil Correction and Site Improvements are required the Developer
~II ~Wallyfund these cost~~~~~~~a~I~~i~~%#!~~E~ij~~~~~~!~rt[I~~ft~~.
Upon submission of appropriate documentation regarding Soil Correction and Site Improvements these cosis..'
~II be eligible for reimbursement through Excess Tax Increment Revenues generated from the Project.
The Developer shall also be required to pay the City an additional $34,665 as outlined in Section 3.4 as a
final payment for the land acquisition.
(2) The City has undertaken actions for construction of Infrastructure and Site preparation within the
Waterfront Passage Business Park. In regard to the Development Property, the Developer will furnish soil
borings and analysis, inspection of excavation, and soil density tests as necessary, all in accordance with
ASTM specifications and usual and accepted geotechnical engineering practice, and an opinion from a
registered Professional Engineer that the building pad has been properly prepared and is capable of
supporting the foundation for the proposed 28,800 SF facility. In the event that the structural Soil Correction
and Site Improvement cost for the Development Property based upon good faith estimates shall exceed
$25,000 the Developer shall have seven (7) days to terminate this Agreement without any further obligation by
either party and Developer shall be entitled to a refund of all monies previously paid to the City relative to this
transaction.
(3) The City will utilize Tax Increment Financing revenues generated from the Project along with
Developer payments to obtain reimbursement for $270,265 of land acquisition and Infrastructure costs. To the
extent that Tax Increment revenues exceed the amount necessary to satisfy reimbursement of City costs for
land acquisition and Infrastructure and the Developer can document eligible tax increment expenditures, the
City will pay Excess Tax Increments to the Developer.
Section 3.5. Assessment Aqreement. The parties covenant that, effective January 2, 1997, the Develop-
ment Property shall have a minimum market value of $685,000 for purposes of determining tax capacity.
Developer will not challenge any market valuation of the Development Property determined by the Scott County
Assessor for taxes assessed on or after January 2, 1997 to the extent that such valuation is at or below
$685,000. Should the Scott County assessor for any year up to and including 2005, establish a market value
for taxes payable in such year in excess of $685,000, the Developer may challenge at the Board of Equalization
or by filing a tax petition or by such other method as permitted by law, the valuation as determined by the
Assessor but only to the extent that the value exceeds $685,000.
Section 3.6. Reimbursement: Developer Payments and Tax Increment Revenues.
(1) The City shall receive reimbursement for acquisition, Infrastructure and Site Improvements made on
behalf of the Developer under Section 3.4 through the receipt of Developer payments and tax increment
revenues generated from Tax Increment Financing District No. 2-5. Following is a schedule of anticipated
Developer payments and tax increment payments to be made available for reimbursement of City costs:
8
Schedule of Payment
1995 - $62,800
July 15, 1996 - $17,333
December 15, 1996 . $17,332
July 15, 1997 - $13,850
December 15, 1997 - $13,850
July 15, 1998 . $13,850
December 15, 1998 - $13,850
July 15, 1999 - $13,850
December 15, 1999 . $13,850
July 15, 2000 - $13,850
December 15, 2000 - $13,850
July 15, 2001 - $13,850
December 15, 2001 - $13,850
July 15, 2002 - $13,850
December 15, 2002 - $13,850
July 15, 2003 - $13,850
December 15,2003 - $13,850
July 15, 2004 - $13,850
December 15,2004 - $13,850
July 15, 2005 . $13,850
December 15,2005 - $13,850
(2) Pursuant to Section 3.4, the Develope(~ft#.W:~ receive reimbursement of eligible expenditures
including Correction costs incurred. Payment o{th{s'reimbursement is contingent upon the availability of
Excess Tax Increment revenues following reimbursement of City costs as defined herein.
In the event that there are Excess Tax Increment revenues due to an expansion of the initial Project
by the Developer, these revenues shall also be available for reimbursement of eligible expenditures.
Section 3.7. Guarantee of Payments. In the event that the tax increment revenues are less than what is
depicted on the schedule within Section 3.6 (1), the Developer will remit the amount of the shortfall to the City
on or before each July 15 or December 15, commencing on July 15, 1996.
(1) Developer shall not be liable to the City for any shortfall in the tax increment revenues resulting from
actions taken by the City or failure of the City to take any action which results in a reduction in the tax
increment revenues, unless such actions by the City invclve enforcement of regulatory standards or require-
ments necessary to maintain the health, safety or welfare of the community and/or its residents.
Section 3.8. Taxes and Soecial Assessments. Real estate taxes due and payable prior and in the year of
closing shall be paid by the City. Real estate taxes due and payable in the years subsequent to the closing
shall be paid by the Developer. On or prior to the Date of Closing, City shall pay all special assessments,
whether or not then due, then levied against the Development Property or pending for improvements with
respect to which, as of the Date of Closing, the letting of contracts has been duly authorized by appropriate
governmental action.
9
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 anyone or more of the
following events:
(1) Failure by the Developer to timely pay any ad valorem real property taxes assessed with respect to
the Development Property.
(2) Failure by the Developer to cause the installation of the Project to be completed pursuant to the
terms, conditions and limitations of this Agreement.
(3) 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.
(4) Failure by the Developer to substantially observe or perform any other covenant, condition, obligation
or agreement on its part to be observed or performed under this Agreement.
(5) If the Developer shall
(A) file any petition in bankruptcy or for any reorganization, arrangement, composition, readjust-
ment, liquidation, dissolution, or similar relief under the United States Bankruptcy Act of 1978, as
amended or under any similar federal or state law; or
(8) 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 a bankrupt or insolvent; or if a petition or answer proposing the adjucation of
the Developer, 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 ninety (90) 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 ninety (90) days after such appointment, or if the Develop-
er, 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 anyone 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.
(1) The City may suspend its performance under this Agreement until it receives assurances from the
Developer, deemed adequate by the City, that the Developer will cure its default and continue its performance
under this Agreement.
(2) The City may cancel and terminate this Agreement, except that no cancellation may be effective at
any time that the Developer is proceeding in good faith to cure the defect and/or reasonable assurances to the
City as required in (1) above, or if there exists a good faith dispute with the City, mortgagee or creditor as to an
event of default as defined above, and the Developer posts a bond or other security as reasonably adequate to
cure the alleged default.
10
In the event that subsequent to conveyance of the Development Property to the Developer by the City and
prior to receipt by the Developer of the Certificate of Completion for the entire Project, and subject to the terms
of any First Mortgage, if an Event of Default as defined under this Agreement is not cured within thirty (30) days
after written notice to do so, then the City shall have the right to re-enter and take possession of the Acquired
Property and any portion of the Project thereon and to terminate (and revest in the City pursuant to the
provisions of this Section subject only to any superior rights in any holder of a First Mortgage acquiesced in by
the City pursuant to this Agreement) the estate conveyed by the acquired Property Deed to the Developer, it
being the intent of this provision, together with other provisions of this Agreement, that the conveyance of the
acquired Property to the Developer shall be made upon the condition that, in the event of any default under
this Section on the part of the Developer and failure on the part of the Developer to cure such default within the
period and in the manner stated in such subdivision, the City may declare a termination in favor of the City of
the title and of all the Developer's rights and interests in and to the Acquired Property conveyed to the
Developer, and that such title and all rights and interests of the City, and any assigns or successors in interest
of the Developer,and any assigns or successors in interest to and in" the Acquired Property, shall revert to the
City, but only if the events stated in this Agreement have not been cured within the time period provided above,
or, if the events cannot be cured within such time periods, the Developer does not provide assurance to the
City, reasonably satisfactory to the City, that the events will be cured as soon as reasonably possible.
(3) The City may take any action, including legal or administrative action, 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 Remedv 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. Aoreement to Pav Attornev's Fees and Exoenses.
{jJ Whenever any Event of Default occurs and the City shall employ attorneys or incur other expenses for
iii'e 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 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 "'ndemnified Partiesll) 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 arising out of the design, construction, mainte-
nance, or use by Developer, his agents, employees, or contractors of 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.
11
(2) Except for any willful misrepresentation or any 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 if
other persons acting on its behalf or under its direction or control) under this Agreement, or the transactions
contemplated hereby or the acquisition, construction, installation, ownership, and operation of the Project;
iiiiiiiiiiliiiill.II{.~.'"
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 Project causing the Tax Increment District to not qualify
or cease to qualify as a -economic development- under Section. 469.174, Subdivision 12.
(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, as the case may be.
12
ARTICLE V
INSURANCE
Section 5.1. Insurance. The Developer will provide and maintain or cause to be maintained at all times
during the process of constructing the Project (and, from time to time at the request of the City. furnish the City
with proof of payment of premiums on):
(1) Builder's risk insurance, written on the so-cal1ed "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 lIall riskll form of the policy; the interest of the
City shall be protected in accordance with a clause in form and content satisfactory to the City;
(2) Comprehensive general liability insurance (including operations, contingent liability, operations of
subcontractors, completed operations and contractual liability insurance) together with an Owner's Contractors
Policy with limits against bodily injury and property damage of not 'ess that $1,000,000 for each occurrence (to
accomplish the above-required limits, an umbrella excess liability pclicy may be used); and
(3) Worker's compensation insurance, with statutory coverage for all persons engaged in the construction
of the Project.
13
ARTICLE VI
ADDITIONAL PROVISIONS
Section 6.1. Restrictions on Use. The Developer agrees for itself that it shall devote the Development
Property to, and in accordance with, the uses specified in this Agreement. The Developer shall not assign,
transfer or convey the Agreement without the prior written consent of the City except Developer may lease the
Development Property to EM Products, Inc. of which the Developer is the sole shareholder
Section 6.2. Conflicts of Interest. No member of the governing body or other official of the City shall
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 qirectly 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 6.3. 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 6.4. 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:
Edward J. Malone
220 West 90th St.
Bloomington, MN 55420
(2) in the case of the City is addressed to or delivered personally to the City at:
City of Prior Lake
16200 Eagle Creek Ave. S.E.
Prior Lake, Minnesota 55372
or at such other address with respect to any such party as that party may I from time to time, designate in
writing and forward to the other, as provided in this Section.
Section 6.5. Counterparts. This Agreement may be executed in any number of counterparts, each of
which shall constitute one and the same instrument.
Section 6.6. Law Governina. This Agreement will be governed and construed in accordance with the
laws of the State of Minnesota.
14
ARTICLE VII
DEVELOPER'S OPTION TO TERMINATE AGREEMENT
Section 7.1. The Developer's Option to Terminate. This Agreement may be terminated by Developer, if (i)
the Developer is in compliance with all material terms ot this Agreement and no Event of Default has occurred;
and (iij the City fails to comply with any material term of this Agreement. and, after written notice by the
Developer of such failure, the City has failed to cure such noncompliance within ninety (90) days of receipt of
such notice, or, if such noncompliance cannot reasonably be cured by the City within ninety (90) days, of
receipt of such notice, the City has not provided assurances, reasonably satisfactory to the Developer, that
such noncompliance will be cured as soon as reasonably possible.
Section 7.2. Action to Terminate. Termination of this Agreement pursuant to Section 7.1 must be ac-
complished by written notification by the Developer to the City within thirty (30) days after the date when such
option to terminate may first be exercised. A failure by the Developer to terminate this Agreement within such
period constitutes a waiver by the Developer of its rights to terminate this Agreement due to such occurrence
or event.
Section 7.3. Effect of Termination. If this Agreement is terminated pursuant to this Article VII, this
Agreement shall be from such date forward null and void and of no further effect; provided, however, the
termination of this Agreement shall not affect the rights of either party to institute any action, claim or demand
for damages suffered as a result of breach or default of the terms of this Agreement by the other party, or to
recover amounts which had accrued and become due and payable as of the date of such termination. Upon
termination of this Agreement pursuant to this Article VII, the Developer shall be free to proceed with the
Project at its own expense and without regard to the provisions of this Agreement: provided, however, that if
the City financed improvements on behalf of the Developer, the Developer is obligated for reimbursement of
the expenses as set forth in Section 3.5 (1).
Section 7.4. Limitation of Damaaes. By June 30, 1995, if the Developer in his sole discretion is unable to
secure adequate financing, acceptable construction bids, satisfactory appraisal report, satisfactory Phase I
environmental assessment or the parties to this Agreement are unable to reach mutual agreement on
construction and related terms and conditions as set forth within the City's design standards and covenants for
the Waterfront Passage Business Park, then the Developer shall have the option to terminate this Agreement by
sending the City written notice on or before July 15, 1995. Upon termination,in accordance with this Section,
the Developer agrees to execute and deliver to the City such documentation as the City shall deem necessary
to effectively cancel this Agreement.
1S
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 in its name and on its behalf, on or as of the date first above written.
By
Its
By
Its
This is a signature page to the Development Agreement dated as of
and between the City of Prior Lake and Edward J. Malone.
, 1995, by
16
STATE OF MINNESOTA )
): 55
COUNTY OF SCOTT )
The foregoing instrument was acknowledged before me this _ day of
1995, by Lydia Andren and Frank Boyles the Mayor and the City Manager, respectively, of the City of Prior
Lake, Minnesota, a municipal corporation.
Notary Public
STATE OF MINNESOTA )
): 5S
COUNTY OF SCOTT )
':A II ~ :,1""
The foregoing instrument was acknowledged before me this:L.L day of
1995, by Edward J. Malone.
CONNIE M. CARLSON
NOTARY PUBLlC-MINNESOlA
SCOTT COUNTY
My Commission Expires Jan, 31. 2000
v
17
EXHIBIT A
Legal Description of Development District No.2
All of the Southeast Quarter of Section 1, Township 114, Range 22, Scott County, Minnesota.
And that part of the East 1/4 of the Southwest Quarter, Section 1 , Township 114, Range 22, Scott
County, Minnesota, lying northerly of the northerly right-ot-way of Eagle Creek Avenue (County
Road 21). The west line of said East 1/4 shall be parallel with the east line of said Southwest
Quarter.
And that part of the Southwest Quarter, Section 1 , Township 114, Range 22, Scott County,
Minnesota, lying southerly ot the Northerly right-of-way of Eagle Creek Avenue (County Road 21)
and southeasterly of the southeasterly right-at-way line of Franklin Trail (County Road 39) except for
that part of BORGERDING SECOND ADDITION, according to the recorded plat thereof, lying within
said Southwest Quarter.
A-1
EXHIBIT B
Economic Development District No. 2-5
and
Legal Description of Development Property
That part 01 Lot 1 t Block 1, WATERFRONT PASSAGE ADDITION, Scott County, Minnesota described as
follows:
Commencing at the Northeasterly comer of said Lot 1, Block 1; thence North 62 degrees 52 minutes 03
seconds West (record bearing) along the northeasterly line of said Lot 1, Block 1, a distance of 1073.82
feet to the point of beginning of the line to be described; thence South 31 degrees 36 minutes 51
seconds West a distance of 275.72 feet to the southwesterly line 01 said Lot 1. Block 1, and there
terminating.
Containing 3.627 acres.
B-1
~_ ..~~c_~,_,__"~..~..._",, __..__"_~"_'_".,_~' , ,.
EXHIBIT C
ASSESSMENTAGAEEMENT
THIS AGREEMENT, dated as of this _ day of , 1995, by and among the City of Prior Lake
(the -Cityll), Edward J. Malone, ("Developer"), and the Assessor for Scott County (the "Assessor"):
WITNESSETH
WHEREAS, on or before the date hereof the City and Developer have entered into a Development Agreement
dated as of , 1995 (the -Agreement"), regarding certain real property located in the City (the "Oevelop-
ment Property") which property is legally described on Exhibit A atta~hed hereto and hereby made a part
hereof;
WHEREAS, it is contemplated that pursuant to said Agreement, the Developer will undertake the development
of a 28,800 sq. ft. production/warehouse facility and related improvements (the "Projece) on the Development
Property;
Whereas, the City and Developer desire to establish a minimum market value for the portion of the Develop-
ment 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; and
Whereas, the City and the Assessor have reviewed plans and specifications for the Project:
NOW, THEREFORE, the parties to this Agreement, in consideration of the promises, covenants and agree-
ments made by each to the other, do hereby agree as follows:
1.As of January 2, 1996 and thereafter until December 31, 2005, the minimum market value which shall be
assessed for the Project shall be not less than $681,100.
2.The minimum market value herein established shall be of no further force and effect and this Agreement shall
terminate on Oecember 31, 2005.
3.This Agreement shall be promptly recorded by the Developer along with a copy of Minnesota Statutes,
Section 469.177, Subdivision 8, attached as exhibit B and hereby made a part hereof, with the County
Recorded of Scott County, Minnesota. The Developer shall pay all costs of recording.
4.The assessor represents that he 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 above is reasonable.
5.Neither the preamble nor provisions of this Agreement are intended to modify, or shall they be construed as
modifying, the terms of the Agreement between the City and the Developer.
6.This Agreement shall inure to the benefit of and be binding upon the successors and assigns of the parties.
C-1
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.
THE CITY OF PRIOR LAKE, MINNESOTA
(SEAL) BY:
Lydia Andren, Mayor
BY:
Frank Boyles, City Manager
Signature page for Assessment Agreement by and among the City of Prior Lake. Minnesota, Edward J. Malone
and the Assessor for Scott County.
C-2
DEVELOPER
BY
Edward J. Malone
Signature page for Assessment Agreement by and among the City of Prior Lake, Minnesota, Edward J. Malone
and the Assessor for Scott County.
C-3
CONSENT TO ASSESSMENT AGREEMENT
The Prior Lake State Bank (the -Bank-) of Prior Lake, Minnesota, does hereby consent to all terms, conditions
and provisions of the foregoing Assessment Agreement and agrees that, in the event it purchases the
Development Property at a foreclosure sale or acquires the Development Property through a deed in lieu of
foreclosure or otherwise in satisfaction of the indebtedness owed by the Developer, it and its respective
successors and assigns, shall be bound by all terms and conditions of the Assessment Agreement, including
but not limited to the provision which requires that the minimum market value of the Development Property
shall be not less than $681,100 as of January 2, 1996 and thereafter.
IN WITNESS WHEREOF, we have caused this Consent to Assessment Agreement to be executed in its name
and on its behalf as of this day of , 1995.
BY:
Bob Barsness
ITS:President
STATE OF MINNESOTA }
) 55.
COUNTY OF SCOTT }
This instrument was acknowledged before me this day of I 1995. by Bob Barsness,
the President of Prior Lake State Bank. a Corporation. on behalf of the Corporation.
Notary Public
C-4
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 forgoing 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 value assigned to such land and improvements upon
completion 01 the improvements to be constructed thereon shall not be less than $681,100 as of January 2,
1996 and thereafter.
County Assessor for Scott County
STATE OF MINNESOTA )
) SSe
COUNTY OF SCOTT )
This instrument was acknowledged before me this
Arnoldi, the County Assessor of Scott County.
day of
, 1995, by Leroy T.
Notary Public
Signature page for Assessment Agreement by and among the City of Prior Lake, Minnesota, Edward J. Malone
and the Assessor for Scott County.
C-5
5T ATE OF MINNESOTA )
) 55.
COUNlY OF SCOTT )
This instrument was acknowledged before me this
Malone.
day of
Notary Public
STATE OF MINNESOTA )
) S5.
COUNlY OF SCOTT )
, 1995, by Edward J.
This instrument was acknowledged before me this day of , 1995, by Lydia Andren,
the Mayor and Frank Boyles, the City Manager of the City of Prior Lake, Minnesota.
Notary Public
C-6
ATTACHMENT A TO ASSESSMENT AGREEMENT
Legal Descrip~on
That part of Lot 1, Slock 1, WATERFRONT PASSAGE ADDITION, Scott County, Minnesota described as
follows:
Commencing at the Northeasterly comer of said Lot 1, Block 1; thence North 62 degrees 52 minutes 03
seconds West (record bearing) along the northeasterly line of said Lot 1, Block 1, a distance of 1073.82
feet to the point of beginning of the line to be described; thence South 31 degrees 36 minutes 51
seconds West a distance of 275.72 feet to the southwesterly line of said Lot 1, Block 1, and there
terminating.
Containing 3.627 acres.
C-7
EXHIBIT D
ACQUIRED PROPERTY DEED
THIS INDENTURE between the City of Prior Lake, a municipal corporation, organized pursuant to the Laws of
Minnesota (the .Grantor'), and Edward J. Malone, a Developer and President of EM Products, Inc. a corporation
existing under the laws of Minnesota, (the nGranteell):
WITNESSETH, that Grantor in consideration of the sum of fifty-five thousand three hundred dollars, ($55,300) to be
paid upon closing, seventeen thousand three hundred thirty two dollars ($17,332) to be paid by July 15, 1996 and
an additional seventeen thousand three hundred thirty three dollars ($17,333) to be paid by December 15, 1996,
and other good and valuable consideration, the receipt whereof is hereby acknowledged, does hereby grant,
bargain, conveys and warrants to the Grantee, its successors and a,ssigns forever, all the tract or parcel of land
lying and being in the County of Scott and State of Minnesota described on Attachment A attached hereto (such
tract or parcel of land is hereinafter referred to as the uProperty"):
To have and to hold the same, together with the hereditaments and appurtenances thereunto belonging or in
anywise appertaining. to the said Grantee, its successors and assigns, forever. provided as follows:
1. It is understood and agreed that this Deed is subject to the covenants, conditions, restrictions and
provisions of an agreement entered into between the Grantor and Grantee on the _ day of _, 1995,
entitled IIDevelopment Agreement. (hereafter referred to as the IIAgreementll), and that the Grantee shall not
voluntarily convey this property, or any part thereof, without the consent of the Grantor until a certificate of
completion releasing the Grantee from certain obligations of said Agreement as to this Property or such part thereof
then to be conveyed, has been placed of record. This provision shall in no way prevent the Grantee from making
transfers permitted by the Agreement or mortgaging this Property in order to obtain funds for the purchase of
Property hereby conveyed and for erecting improvements thereon in conformity with the Agreement, any applicable
redevelopment plan and applicable provisions of the zoning ordinances of the City of Prior Lake, Minnesota.
Promptly after completion of the improvements in accordance with the provisions of the Agreement. the
Grantor will furnish the Grantee with a Certificate of Completion in the form attached to this Deed as Exhibit F. Such
certification by the Grantor shall be (and the certification itself shall so state) a conclusive determination of
satisfaction and termination of the agreements and covenants of the Agreement and of this Deed with respect to the
obligation of the Grantee, and his successors and assigns, other than those provisions of the Development
Agreement relating to assessment of the Property. All remaining obligations of the Grantee, pursuant to the
Agreement and this Deed shall be personal only.
All certifications provided for herein shall be in such form as will enable them to be recorded with the County
Recorder of Scott County, Minnesota. If the Grantor shall refuse or fail to provide any such certitication in
accordance with the provisions of the Agreement and this Deed, the Grantor shall, within ten (10) days after written
request by the Grantee, provide the Grantee with a written statement indicating in adequate detail in what respects
the Grantee has failed to complete the improvements in accordance with the provisions of the Agreement or is
otherwise in default, and what measures or acts will be necessary, in the opinion of the Grantor, for the Grantee to
take or perform in order to obtain such certification.
2. In the event that an Event of Default occurs under Section 4.1 of the Agreement and the Grantee herein
shall fail to cure such default within the period and in the manner stated in Section 4.2 of the Agreement, then the
Grantor shall have the right to re-enter and take possession of the Property and to terminate and revest in the
Grantor the estate conveyed by this Deed to the Grantee, its assigns or successors in interest, in accordance with
the terms of the Agreement.
IN WITNESS WHEREOF, the Grantor has caused this Deed to be duly executed in its behalf by its Mayor and
City Manager and has caused its corporate seal to be hereunto affixed this _ day of , 1995.
(Seal)
Frank Boyles, City Manager
Lydia Andren, Mayor
^C__c_c_D.:J"
STATE OF MINNESOTA )
) 55.
COUNTY OF SCOTT )
On this day of , 1995, before me personaJly appeared Lydia Andren, the Mayor
and Frank Boyles, to me personally known who by me duly sworn did say that they are the Mayor and City
Manager for the City of Prior Lake, Minnesota (the Grantor), named in the foregoing instrument; that the seal affixed
to said instrument is the seal of said Grantor; that said instrument was signed and sealed on behalf of said Grantor
pursuant to a resolution of its City Council; and said Lydia Andren and Frank Boyles acknowledges said instrument
to be the free act and deed of said.
Notary Public
Notary Public
__ 0-2
ATTACHMENT A TO ACQUIRED PROPERTY DEED
CERTIFICATE OF COMPLETION AND RELEASE OF FORFEITURE
WHEREAS, the City of Prior Lake, Minnesota (the "Grantor"), a municipal corporation organized and operating
pursuant to laws of the State of Minnesota, by a Deed recorded in the Office of the County Recorder or the
Registrar of Titles in and for the County of Scott and State of Minnesota, as Deed Document Number _, has
conveyed to Edward J. Malone, (the -Grantee"), in the State of Minnesota, the following legally described property,
to wit:
That part of Lot 1, Block 1, WATERFRONT PASSAGE ADDITION, Scott County, Minnesota described as
follows:
Commencing at the Northeasterly corner of said Lot 1, Block 1; thence North 62 degrees 52 minutes 03
seconds West (record bearing) along the northeasterly line of said Lot 1, Block 1, a distance of 1073.82 feet to
the point of beginning of the line to be described; thence South 31 degrees 36 minutes 51 seconds West a
distance of 275.72 feet to the southwesterly line of said Lot 1, Block 1, and there terminating.
Containing 3.627 acres.
and
WHEREAS, said Deed incorporated and contained certain covenants and restrictions, the breach of which by
the Grantee, its successors and assigns, would result in a forfeiture and right of re-entry by the Grantor, its
successors and assigns, said covenants and restrictions being set forth in said Deed and in a Development
Agreement executed by and between the Grantor and the Grantee and dated , 1995 (The "Development
Agreement"); and
WHEREAS, the Grantee has to the present date performed said covenants and conditions insofar as it is able
in a manner deemed sufficient by the Grantor to permit the execution and recording of this certification:
NOW, THEREFORE, this is to certify that all building construction and other physical improvements specified to
be done and made by the Grantee have been completed and the above covenants and conditions in said Deed and
Development Agreement have been performed by the Grantee therein and that the provisions for forfeiture of title
and right to reentry for breach of condition subsequent by the Grantor, contained therein, are hereby released
absolutely and forever insofar as they apply to the land described herein, and the County Recorde~ the Registrar of
Titles in and for the County of Scott and State of Minnesota is hereby authorized to accept for recording and to
record the tiling of this instrument, to be a conclusive determination of the satisfactory termination of the covenants
and conditions of said Deed and the Development Agreement which would result in a forfeiture by the Grantee, its
successors and assigns, the right of the Grantor, its successors and assigns, to re-enter and take possession of the
property as set forth in said Deed and the Development Agreement, and that said Deed and the Development
Agreement shall othelWise remain in full force and effect.
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 in its
name and on its behalf, on or as of the date first above written.
EDWARD J.MALONE, DEVELOPER
THE CITY OF PRIOR LAKE
BY
ITS
~ MA\'-31-:35 WED :6: 18
NORTHCO CORP
FAX NO, 95358601
r, '-1"\
!. UL,
OFFICE/WAREHOUSE LEASE
EDWARn J !v{AT ONE
Landlord
and
EM PRODUCTS INC.
Tenant
MAY-31-,S5 WED 16: 19
1.
2.
rJORTHCO CORP
FAX NO, 9535,3601
PI iJ3
TABLE OF CONTENTS
T p_'1~~ ot Premises .
Term of Le-lS~.
1
2
2
3
6
6
6
7
8
8
. 10
11
11
3. Base Rent. . .
4.
Additional Re-nr .
6.
5. Use. .EQ~ssiOtLand Maintenance of ~.Premises
A~si~flment and ~uhleasin~ . .
7. AlteraTions and Improvement~. . .
8. Insurance CQyera~e to b~ ~1aintained by Tenant
9.
10.
11.
12.
13.
14.
15.
16.
11.
18.
19.
20.
21.
22.
23.
24.
Condemnation. .
Loss by Casualt~.
Default. . . . .
Common Areas .
Subordination and Nondisturbance .
Sub~titution of Premises
Notices. . . . .
. . 11
. 12
12
12
AttomeY5' Fees _
Financial Star~ments .
Estoppel Certiticates .
Security Deposit.
. . . . 12
Gtlarant~ . . . .
13
. 13
. . . . l3
14
. . 14
Landlord's Lien .
Brokers. . . .
Miscellaneous.
Addendum . .
MAY-31-95 WED 16: 19
t-JORTHCO CORP
FA:': t~O. 95352.601
D-I.1
! , 04
L051194
OFFlCE/\V ARF:HOlJSE LEASE
THIS LEASE is entered into effective as of 192,5.) by Edward J ?\.faJone)
hereinafter referred to as "Landlord" and EM Products Toe) a ~finnesota
corpcraricn/p<'L.1...... sr.:i"/ ,;,vte pJ. V~.I.~etvrsh1p') hereinafter referred to as 'oT cnant"
L Lease of Premi"es.
~~ 1.'P......m;~.~.." co"'s'...;...~ f'L." . 'ftk~ liB 'ld"-- If ..1....,...- 1-. .__ _l_ ,,~1.=-., ,,~
.....i,; AU.. ....)....), .. lS""ue, C "H~}"O"""VH lJ U\", lil! lug ;)I1U......U uJ ....).ws-II~"....,'u,guu
attached Exhibit A, is hereby leased to Tenant. Th~ Building is located at Cottonwood
Lane, in the City of PriOl" Lake, ~ County, 1'llnnesot1, on the "Land" legally described on
attach~ Exhibit B. The Premises shall be deemed to consist of 28..RnQ net rcnt:..1hle square f~t.
The Building presently consists of 28 xoo net rentable square feet.
"1""""-
.......... V
. ...1- ~ V' t ,.~t .... ' 1
.......I.l.v.., \.u~ UUUI"",....\.Vl Vi ....IH\"II !.> 'H"'" U\"... !l;;;;41\.4Ul"'"
I....L 1 ~ 41 LoJ ll1~ .u '-1.
Ull\.H11~ .
2. ')errn of T .ease.
The "Term" of this Lease is ten (10) years and zaQ (Q) months and shall begin on the
"Commencement Date". The Commencem~nt Date shall be ~mber_1._1995., If Tenant takes
~upancy of t.a'lC Premi3eS prior to the Commencement Dare, such OCCUPC3J1CY shall be subjc~t to
all of the terms and conditions of this Lase. Landlord shall deliver P()s::;t:=~~ion of L'1e Prcfnisc$
to T~n.:;.nt on or prier to the Commencement Date, but no delay beyond the reas\inable contrnI of
Landlord shall affect the validity of this Leas~ nor subject Landlord to any liability. The
obligation to pay Base Rent and Additional Rent shall commenc~ on th~ ~uIier to occur of the
Commenccn1cnt Date (providoo Land!ord has delivered possession of the:: Pr~mi:)e:i t\) T ~nant), or
u~e dat~ T~nant commences doing business fronl the Premises. If TenaJ'lt r(;maljjs in pos~s:;ic,n
of the Premises after the: Term without Landlord"s consent, Landlord shall be entitled to all
remc.di~ available at law or in equity, including the right to ekct to treat T ~n;'1.flt J5 ~ tClla..f"lt from
month to month, subject to all provisions of this Lease but 'W.i(h Base R~nt and Additional Rent
at twice the;: rate charged during the: previous Lease Year.
1
'.....,-1----------.-'''.,''"""
MAY-3L-85 WED 16:20
~'lORTHCO CORP
FA!: ~m, 95358601
~', J5
3_ B~se Rent.
Tc:nant shall pay Base Rent in the amount or amounts set forth on attach~ Exhibit C. Base
Rent, together with Additional Rent pursuant to Section 4, below, shall be payable in monthly
installments due and payable on the first day of each month during the Tc:rm, without norice or
demand, and without any deduction or set-off whatsoever.
On the r~l.st .ll...:. c.. ~a... 'y of tl.,- Cv.Hu....l....~.l."".1t Da.l':' 4llJ.J v... ~""\,.~J. ~l.6lo.~~~d~llg aUH~ \i \.oJ. ~J
of trl~ C01..l"\;;'J.\-'-J...~....t Dat~, n~e R...:n ~L~n be- ajjl.~......d l..p....d..t.~ (bu~ 'lOt. ~O~l1""3.iJJ to l~flo..-t
tt pe t ~. 0... .I"l _ L Ire 1:" 1 Trd. S 11 A r ~~ eo. .A...
0.&.1.. ................0.... u.........cas... AU LU'" vJ.l~u.u...... .l.. .I.J..........l.H ~^ W;JVioh;.\U.] uJU-jU:ll-vo-.). lLJ overage
for-aH !~lL5 f"'H 3.11 :Jlb.ln Cv.. ,p....UU.l........u ..... LU,," J.. UJlUUJ... ~LJV' R~.. ;C...lf oi 1.1.", B"U'-lU
crT 1 '<: h ~ ~-h r- .. ,.1><, T T . tcd ~ t t 4 T"'1 r,;...::u. f" :....:rb (..~,.& tJ Cn.Ll: Y.ll~ '" "..... . 1 ...0..- rn:
... .--.........v. v\4&o.....I......~ VJ. ....'- VILA. .............j......" - ...U_.~ Vl Vl ,Ul\o" ,,---i'"'.l~\.J J. ., ......1' .U\o" ,plo.l\"-"-I! ',.....
:uC. e..."Sc. :,. tL... C!"~ 'C :.....s ~'-...u .;.....~..... ...:..~, "~l\o" ~~")\o" R.....l1t for ~ll~ ~1 ~...~:Ilg- .' '-'ll ~cutd-b'C
.. ,1. ~ ,. .t' .J. ~ .. d.l,.... p- d .. T 1 ~ ,. d.1:1 t .1 T"\! :Q t L 1 ..l . tL
IU..,U..J.!"'H....U V 1 \11....~ l'oS Ut \0" .li 1 Ul.... .p( IV 'u.. L. .lUGU1U U'- .1 Uvu. U I U~ u.l .~ J,...d p..t J .n".':: UI.H i lig i Ie
.)'- Re.J1. 1-''''l..rjl~ JUl ~l'5 ~~l'- 1I~^t .l'~:rr
r....l....}, J~:. t -~J101J .)L...:.r uvt~;l Tcuu..llt u[ rIa,- ...u..U~lit of tL....~ .ldj,..~tlilell[ .lJid
~"'P'I~P'lt f'''-'''lI11 th.....e...1r,... ,., .... B---:O '''':!t '" ...J L '1 ' '1 P ?' .J1..--.-L-_
",-"AU...&,,,, ..I"4.l...lJ. 'A.....l ..Ll...A. 1"'(.1) .......)-..... ..'......ll&. .'1 r....al- ...."'VlJ.I1'- 4L...."'" ~114...1.1 4..1.:JV .1?lVl'1i!~1__'" ...l_V .LA.1iIUl\,,'l\l u.li]
. . .
T,A;h:....h ha."" ~..... ........).1. I....... 11.... ...."'Ju .... UI<.4L. .." \,ol..... v.... .1J,,_y~'b~c-f::;r--th-cse
i..~,..l.Ls ...J~"& tL... v.j~......)tlll"""L. ~Iltv ............V...il~. I[ "~l~ c:?~ 0 ~..) mv~~;ie-~ VI cr;;....vll..:J1uCG. L.l1'~:VIJ
UIJ.J Je.):glla.te ~, Jo}Ipr vpr:...t~ J.~IJ1"'''''''''UI...Ht :ll~lo.^.
4. Additional Rent.
Tena.~t shall pay as ow Additional Rent" ~ ....;1 Jw1 t , s 1-I.-'Cpo.r~v.1J.~~ srl.J..). e-of "Taxes" which shaH
be comprised of: (i) real estate taxes i.Lnd annual installments of spt."Cidl a:is~ssments due ond
payable against tl1e Land, Building and other improvements th~r.eon, (ii) .wy \.aXeS kvi~ or
assessed, in whole or in part, bastd on the value of Ten3nt'.i personal prop~rty on the Pr~mis~s
or ou'1er.;.,ise L., lieu of real es~te taxes, (iii) any taxes on the stream of rental incom~ (\.,her than
income taxes), (iv) all other taxes on the Land, Building, related lmprovemenrs or this Lease and
(v) any sales tax or similar tax assess~d or payable in connection with sc~'ices provided by
Landlord hereunder.
Tenant shall also pay, as Additional Rent, its plop0C~OH.:1tC. S~l.:U~ of all "OperJ.ting
Expenses" incurred by Landlord. Operating Expenses shall include Landlord's costs of
m.lintaini~g, repairing and operating the Land and Building including, but not limi~ed to:
jtlll ~tUl ~cJ ....A1-l~ll~"-~; expenses related to operating, nlaintaining, repairing aI.d h~t'l~\..iH~
landscaping, plaJucrs, paving, curbs, sidewalks, roadways, p3Iking surfaces. drainage facilities,
machines, equipment (Lid lighting facilitjes; expenses related to maintaining any system for
controlled. parking; management fees~ insurance (which may include, but not be 1imit~d to,
hazard, plate glass~ boiler and machinery, liabilirj and Ios:; of rent inSUraJlce) ;.;.s well as losses not
covered by insur3nce (i.e. insura.i1ce todeductibles, It but not in excess of One Thousand Dollars
2
HAY-31-95 WED 16:21
~mRTHCO CORP
t:""v NO gt::'JC::~b-'Ol
_ HI, . ";vvi..J
F. D6
(S1.000.00) per claim); security ~xpenses; costs incurred in renting equipment iicCCSSar:'l or
appropriate for the smooth operation of the Land or Building; costs of contt:srlng the value
of the Land or Building for real estate taxation purposes; expenses of employe.e:> engaged iii the
operation, maintenance or security of the Land and Building; the cost of all s1jppli~s and makrials
used in the operation and maintenance of the Land and Building: the cost of maintenance and
sef';ice agreements for tJ,e Building and the equipment therein; the cost of all utiIiti~s, including,
~i.~'1out limitation, warer, electricity and gas other than uiose items bined dlr~tly to tenant. and
the cost of heating, lighting, air conditioning and ventilating the Building; interiur and exterior
maintenance exp~nses including expenses related to maintenance of the roof, foundarion and
structural porjons of the Buildi.&1g ~.,d the el~trica1, mechanical, plumbing and oth~r systems and
facilities serving the Land and Building; amortization, on a commercially r~sonable basis, of
capital improvements (including interest expc:nses) made to: (i) reduce op~rating cost~ or Cii)
extend u1e life of or oL~er.\lise maintain or repiace a component of any improvement::; on the Land
or :n the '0.,-\',..1:"'0 T "'nA'O-""" rec",..As "egarA;n~ Ope~.:n'" E.,p......,.es .."'....11 b""'" "'~""d.:. 1.,...:1""b~e to
).J I UU H.BlIO' J..A 1U.1 .I.u. ~.. v~u i U, 'E; ..:llU:;.' Cil~ .)1.dU' ~ i1......l~ a\'aHH' ~
Tenant, at the place of business of Landlord's property manager, during normal busin~$;; hours
upon request of Tenant.
T~n~lt shall pay v..-ith its monthly installment of B~ Rent the amount L3..ndlord reasonably
\:stimates for T ...ll....W.' .) p1Vll-oH~\.Ju,ltc .>ll..:u c of all Additional R~nt items. \\"hen Landlord hJ.s
dcternlincd ~~e actual amounts for each such Additional Rent item, Landlord shall ad,,"isc Te~dl1t
of any additional an1011nts due frOITl T~dJ1t or any credit due to Tt:nant. Within fifteen (15) days
of any such notice. Tenant shall pay the additional amount due to L.and1ord, if any. Any
overpayment shall be credited against th~ next Additional Rent payment due. If the Term has
t:xpired, any overpayment shall be promptly refunded to Tenant and any underp;iyment shall be
promptly paid to Landlord. Lmdlord may from tim~ to tim~ adjust the monthly installment of
estimated Additional Rent charges to more accurately reflect Landlord' s curr~r.t ~stim3.te of such
chartres. Landlord pr~s~ntl y calcuhltes those char2:es based on 3. calendar Ve.:ll", arid Tenant's
'-' ~ ..., ..J
obligation shall be pru rated on a calendar basis if the calendar year includes any period of tim~
not within the Term.
If Tenant does not mak-e any payment of any kind due under this Lease when that payment
is due, interest shall accrue on L'1e unpaid amount at an aru'lual rate of ~'O percentage points higher
than the "pricnc" or "r~fcrence rate" announced from time to time by Nor.J,'est Bai',k ~!innescta,
National Association, Minneapolis office, or me highest rate pennitted by law, whichever is lower
(the "Default Rate"), on such payment from the date it is due until actually paid. Any payment
due to Landlord shall be payable at the location from time to time designated by Landlord for
payment of rent.
5. IT5e Possession and 1-faint~nance of the Premi~es.
Tenant shall use the Premises solely for general office.. war.ehmJ.sin~. and manufacturing
purposes and in compliance with all applicable laws, including environmental laws and
3
MAY-31-95 WED 16:22
NORTHCO CORP
FAX ~m. 85358601
p, 07
regulations. It shall be Tenant's obligation to obtain any pennits or licenses required in
connection with Tenanf s use of the Premises.
Tenant shall use the Premises carefully and conduct its business in a reputable manner.
Tenant shall not commit waste or use the Premises in any way that may obligate Landlord to make
any alteration to the Building or other improvements on the Land or in any way deemed
hazardous. Tenant shall not bring onto the Premises or Building any hazardous or regulated
substance without the prior written approval of Landlord. If Landlord consc:nts to any such
request of Tenant (which consent may be withheld by Landlord at Landlord's sole discr~tion) then
upon request of Lmdlcrd, Tenant shall demonstrate to Landlord' oS reasonable satisfaction that the
presence of such materials in the Premises or Tenant's use thereof is in compliance with all
applicable laws and regulations. There shall be no outside storage of equipment, property or
materials owned or used by Tenant or its customers and suppliers. Landlord shall be entitled to
remove such mat:e...~s and, at Landlord's discretion, store the same at Tenant's expense or dispose
of such materials, and Tenant shall not hold Landlord liable for any loss or damag~ related thereto
or associated therewith. Tenant shall not obstruct in any way the sidewalks, parking areas,
receiving docks or other areas serving the Land or Building. Tenant shall not exceed the floor
loading capacity designated by u,dlord for the Premises. All m3.chin~rj and equipment installcti
and used by Tenant shall be properly shielded and shall be installed and maintained, at Tenant's
expense, as Landlord may reasonably direct, so as to be sufficient to eliminate the transmission
of noise, vibration, electrical or other L~terference from the Prenuses to an.)' other area of the Land
or Building. All signage for the Premises shall be in accordance with applicable laws and codes
as well as the sign criteria for the Building adopted from time to time by Land1ord. All signage
shall be subject to the prior written approval of Landlord, which approval shall not be
unreasonably withheld. Non-conforming signage may be removed by Landlord at Tenant's
expense.
Landlord may from time to time enter the Premises to inspect the Premises, show the
Premises to prospective purcha$~rs, lenders or tenants, or to perfonn any work rdated to the
cper:l.tlon or mainten:mce of any present or future irrlprovement on th~ lAi.nd ur wi~L.~n the
Building. Landlord agr---es to make reasonable efforts to minimize any int~rfcr\;nce with Ten;ii1t' ~
use of the Premises. Tenant shall not change the locks on the doors of the Premises without the
prior consent of Landlord, ".hich consent shall not be unreasonably withh..:ld or delayed. In all
events, T ;.:r.:l.l'lt must provide Landlord with keys to the Premises immediately upon :tilY p~rn&itted
cha..'1ge of such locks so that Landlord shall he able to gain access to the Prcrni:~cs in accordance
with the provisions of this Lease.
By occupying the Premises, T~nant shall be conclusively deemed tV have a~~i:"pk'.J tht:
Premises as b~ing in the condition required by this Lease. If requcsh.:...d by L~lndlord. T ~naflt shein
sign, a statement confirming the Commencement Date and ratifying acc~pt;u1\:C \)f the Prt:mi'it><;
At the expiration of the Term, Tenant shall surrender the Premises in good condition arld
repair, broom clean. excepting only reasonable w~ and te.ar and I05s by in5\JreJ \:a-;ualty:
4
MAY-31-9S WED 16:23
flU.... R"THC('\ (',r:R P
,i \, IV 'v'J \.I
F Ai: NO. 9535,S60 1
P ,]Q
i I \ \-J
provided, however, thar Tenant shall surrender the Premises with the HVAC system and its
components in good working order. Tenant shall also remove Tenant's pt:rsonal property and,
if requested by Landlord) trade fixtures, signs and any tenant improvements made at any time to
the Premises and repair any injury or damage to the Premises, Land or Building which results
from such removal. If Tenant fails to do so, Landlord may do so on Tenant's behalf and at
Tenant's expense and without liability on the part of Landlord for any damage that may result.
Tenant shall promptly pay all charges for utilities and related services used in the Premises
and acknowledges that the electricity and. other utilities provided to the Premises are adequa.te for
Tenant's current and expecterl needs. Landlord shall nor be liable if any utility or other seIVice
to the Premises is intemJpted or impaired by any cause reasonably beyond Landlord' s control, and
Landlord sh:1l1 be entitled to temporarily interrupt such services to the Premises if reasonably
necessary in connection with construction, reconstruction maintenance or repair of the Land or
Building or any portion thereof. However, Landlord shall use reasonable efforts to minimize the
interference with Tenant's use of the Premises.
Tc.."3l1( shall be responsible for maintaining the Premises including all systems serving th~
Premises exclusively and all fixtures, interior walls, doors, and windows in as good condition and
repair as the Premises were in on the Commencement Date, reasonable wear and tear and damage
from insured casualty excepted. Tenant shall enter into a maintenance contract for rhe Premises'
HV AC system which shall be in form and substance satisfactory to Landlord. Tenant shall also
establish a regular preventive program for maintenance of the Premises and th~ t1xtures,
equipment and facilities serving the Premises. Tenant shall k~p all poItions of the Premises and
the walkways and areas adjoining the Premises in a clean and orderly condition~ fr~ of
accumulation of dirt and rubbish, and shall be responsible for the cost of replacement of all light
bulbs and all ballasts serving the Premises. Tenant shall keep the walk\vays serving the Premis~s
free of accumulation of snow and ice. If Tenant fails to carry out its obligations hereunder,
Landlord may carry oue Tenant's obligations at Tenanc's expense if Tenant fails to do so within
ten (10) days after written demand from Landlord; provided, however, that no notice shall be
required in an emergency. In any such event, Tenant shall pay Landlord, on denland, the cost
incurred by Landlord plus fifteen percent (15%) of that cost as an administrative fee. Interest shall
accrue on those amounts at the DefaulT Rare from the date Landlord commences such remedial acts
until the: costs have been paid. Subject to Tenant's obligation to keep the walkways serving the
Premises reasonably free of accumulation of ice and snow) Landlord agrees to keep The parking
areas, driveways and wa.l.k--ways serving the Building in good condition and reasonably free of ice
and snow. a;.J. .lLJ.:1: Uh....:H~H \,~~ ....vw...vu ..u....<J.:) :,1 60vJ ...UHJ:~Urr: The costs incurred thcr~by
shall be Ope.rating Expenses hereunder. LaJ'j~lord shall not be required to mole aiiy repairs '~'hich
become necessaI)' by reason of any act or failure to act of Tenant or Tenanf s agents~ employees,
sublessees~ concessionaires, licensees or invitees.
5
MAY-31-95 WED 16:24
UORTHCO CORP
F ti:< ~ml 95358601
P.]9
6. Assi~nment and Suhleasing.
Tenant shall not assign ~js Lease or sublet all or any part of th~ Premises without the prior
written consent of Landlord. Landlord has legitimate concerns regarding the compatibility of new
or different occupants of the Premises, including concerns based upon the use to which such
occupants may make of the Premises, and may therefore withhold its consent to any such Transfer
based upon any concern Landlord may have regarding the use to which the proposed ifw')feree
may put the Premises or based upon concerns related to possible lack of hannony betw'een su.:h
proposed use of tra.nsfer~ and other uses or oCCUpaJlts in the Building (')f concerns related to the
financial strength, char3cter or reputation of th~ transferee. No trarlsfer of any natur~ ~hall relieve
Tenant of primary liability to Landlord hereunder unless Landlord agrees in writing, If Tenant
is a ccrpoI4ncn (ot.'1er than :l publicly traded corporation) or parmership. an)" chans~ in th~ control
of Tenant shall be deemed to be a t!~sfer under this r~. In the event of any tran:;fcr approved
by Landlord \I,;}-dch results in the generation of rent in excess of th.e amvunts charged by L.1njlord
hereunder, Landlord shall be entitled to any such sUq>lus.
7. Alte::it10ns and Improyements.
Tanan" ..:o'h..,l1 -0" alto.. or m...1"'Q> "3!n'" l.mpr....'.e-en~..o the p.... -;....3t' ..,:.l..,'..... "h..3 on'o" "'rl".e-
\.~ "w'l4,U. II ,-. Uo.l I h;l,A~.;u, Y I V" HI II. l l l.<,.;.ill1:)....' ~HHVU~ \ 1\,0 1 1 ..... II U
oJ 4
consent of i-<"L~d!ord. Landlord's consent may he conditioned upon L.ii1d1c,rd bei,lg prcivideJ with
la S a d s..... .;+;c ..:,.,..... ~ .. th ~ .",,~ "'I" ~.:...- ..: .. -' t ~ J:o...._"'..:,,- ... ",,,...A:_n- ..I..
p n n l:-'ecHl a~IUII'> 10... .1 ~ Pl0PO.s~ a. ler.J.uQIl 01 lmpro..eliien . !nl !iliuilVli i~5.uU'II~ (He
identity of the persons \vho will perform the work or provide th~ mat~rials~ and security again5t
mechanic's liens. aU of which must be acceptable to Landlord. All ~u~h work must b~ dune in
a workmJ.rl1ike fashion using ne'N, first-grade materials, Tenant shall b~ r~sporcsibIe for the
"~('o"'''\bt,.", ."'Os... 1.""".,_""A b" T ""91d1ord :n -'-"'l'''''''':'''g "lI!n.' pl"'n~ ...._~ "-""-l''''''''''.:.'n'' .0 l..e- ....l..ml...':>A
6,\,oWW ..... \,0 \w '-., U\.Ul'~ J ~ 1 U 4\w" ","""UI_ .... J 10.1. I., 41lU .')f:J~1.. 111...1llv I'" 4 I,} .)Ulll I llVU
pursU:U'1t to this section 3..a"id for the reasonabI~ costs incurred in ob':;crving the constructi0ii of the
subject impro....ements to d~tenniJle whdh~r th~ Building and its structure an: b~in~ aJvtr.;dy
affected. All such alrerations and improvements shall, at Lmdlordts option, become the exclusive
property of Landlord at the expiration of the Tenn.
Tenant shaH not permit any mechanics or other lien to be levied against the lAnd or
Building unless TenaJ1t shall in good faith contest the same, in which event T~nanr shaH provid~
Landlord ~~'ith security to prot~t Landlord's interest in the Land and Building. Any su~h security
shall be in an atnount at least one hund;ed twenty rive percent (125 %) of the amount of such lien
and be reasonably satisfactory to Landlord. Nothing herein shall be construed as a consent by
Landlord that would subject Landlord's ~$t:;.te in the Land or BuiJdirlg to any lien or liability under
the mechanic' s lien laws of the S ta~ of Minnesota.
8. Ins~.e...cQveng.e tp h~ Maiotaiu~d by Tenant.
Tenant shall maint1in public liability insurance in form and substance reasonably
satisfactory to L.ai1dIord and with an insurer licensed to do busin~ss in the Sw.t~ of .0ofinnesota, and
with mini~um limits of liability of One ~.tillion Dollars ($1,000,000.00), combined single limit.
6
HAY-31-85 WED 16:25
HCRTHCO CORP
F Ht; ~m. 95358601
p, 10
Landlord and Landlord' s mortgagee shall be named as additional insureds and such insurance shall
be primary coverage without right of contribution from similar insurance maintained by Landlord.
Tenant shall also be required to maintainy at its own expense, insurance covering (i) breakage of
plate glass in the Premises and (ii) Tenant's improvements, personal property y supplies and
equipment, in an aI110unt equal to the replacement cost thereof. The amounts of coverage for any
insurance required to be maint3ined by Tenant under this Lease shall be adjusted by Landlord after
consultation with Tenant at the conclusion of each three (3) year period during the Term to an
amount which, in Landlord's opinion, is commercially reasonable. T~nant shall provide Landlord
with duplicates of policies evidencing tht: required insurance to be carried by Tenant hereunder.
Such insurance shall provide that I..a:rtdlord and Landlord' s mortgagee shall be given at least thirty
(30) days notice prior to any cancellation, non-renewal or modification. If T~nant fails [0 obtain
the insurance called for hereunder, Landlord may obtain such insurance at Tenant' s e"pens~.
Failure to provide Landlord with copies of those policies shall be deemerl to be a failure by Tenant
tD obtai.!'! t.i.e required insuf'"l...nce. Tenant agrees not to maintain or ;;tore any material in ur about
the Premises which would in any way impair or invalidate any of the insurance required to be
maintained by T~nant. If Tenant uses the: Pr~mises so as to cause an incr~se in the cost of
insurance on the Land or Building, Tenant shall be responsible for paying any such increase.
Landlord and Tenant hereby release one another from any and allliabiliry or responsibility
(to the other or anyone claiming through or under them by way of subrogation or otherwise) for
any loss or damage covered by property insurance or coverable by a customary policy of the
insurance requir~ by this Lease even if such loss or damage shall have been caused by the fault
or neglige:1ce ot- the other party or anyone to: whom su~h party may be. r~$ponsibI~. Tu that ~ndJ
Landlord shall not be liable to Tenant for any damage occasioned. among other thingsy by
bursting, stcppiJlg, le:lking or ruru~ing of <h"'lY systems, facilities or pipes in or about the Building,
and Tenarlt agrees L'1at all property kept in the Premi~.s shall be so kept at th~ sole risk of Tenan(,
and that it is up to Tena...~t to obtain appropriate insurance to cover that risk.
Tenant agrees to indemnify and d~fend Landlord against any claims) actions, liability and
damages of every kind and nature. and against all costs and expenses, including attorneys' fees,
arlsL."g out of any occurrence on or about the Premises or occasion~d wholly or in part by the use
and occupa~"lcy of the Premis~s or by the business conducted by T\~nant in the Premisc'i or fr,irn
any default by Tenant under this Lease or from any act or negligence of Tenant, its agentsy
ernployo:s, sublessees, c.Jncessionaires, licensees or invitecs. in or about the Premises. including
the failure to conform to applicable environmental laws; provid~d, however, that Tenant's
indemnification shall not apply where ta'ie liability in question is directly 3.ttI1butab te to Landlord' s
gross neoljo-ence or intentional misconduct. This indemnitication sh~JI sur"'i....~ the termination of
~ ~
this Lease. Subject to the provisions of this tease, Landlord agrees to indemnify and defend
Tenant against any claims, actions, damages or liability of every kind in nature~ and agJ.inst all
cost> and eApenses. including reasonable attorneys' fees~ arising from any int~ntional misconduct
or gross negligence of Landlord, its agents or employees.
7
HAY-31-95 WED 16:26
t.IORTHCO CORP
FAX NO. 95358601
P. 11
9. Conde-mnation.
In the event of a cond~mnation or a deed in lieu of condemnation which has the effect of
materially interfering with Tenant's use and occupancy of the Premises, Tenant shall have the
right to terminate this Lease upon thirty (30) days wrir..en notice to Landlord givt:n within ten (10)
days after such taking. If all or a portion of the Building is taken by condemnation or a deed in
lieu of condemnation, Landlord shall have the right to terminate this Lease upon thirty (30) days
written notice given within ninety (90) days after the date of taking. In such event, Landlord shall
be entitled to the entire condemnation award; however, Tenant shall be entitled to any relocation
benefits provided by law. In the event that Landlord elects not to terminate this Lease, Landlord
shall restore the Premises to as near the condition which existed immediately prior to the date of
taking as may be reasonably possible; however, Landlord shall not be required to spend amounts
in excess of the amounts ~ived for the ta.lcing or for the restoration of improvements p~rfo[meJ
by Tenant subsc:quent to the Commencemc:nt Date.
10. I os~ by Casualty.
If more than t\Venty percent (20%) of the Building is damaged by casualty, Landlord may
terrninate this Le:lse provided it gives Tenant notice within ninety (90) day~ of the ddlnagC. ff this
I...e.ase is not so terminated, Landlord shall promptly restore the Premises to as near the condition
vlhich existed immediately prior to such ca~ualty as may be reasonably possible; howev~r,
LJ.ndlord shall not be required to sp~nd amounts in excess of the i05uw.,nce proceeds mad~
available to Landlord or to restora any improvements mad~ by T~nClJ.it subscqu~nt to th~
Commenc.:me:1t Dat~. \\lhether or not Landlord elects to restore the Building: T~nan[' s obligation
to pay :non&Jy instaHments of Base R~nt shall abate during such period .)f time that the Pr~mise$
are untenant:lbIe in the proportion that the untenantable portions of th~ Premises bedIS to tht entire
Prerr..ises. \\!hen Landlord has completed its work required hereunder, Ten~'1t' s obligation to pay
Base Rent shall resume a.~d Tenant shall promptly complete the restoration of the Premises to the
condition \vhich existed immediately prior to the casualty. In the event Landlord has not ...e-;t..)r~d
the Premises to a tenant:..ble condition within one hundred eighty (180) days of Landlord I s notice
that it Li.tends to restore, Tenant may terminate this ~se upon thirty (30) days written notice to
Landlord.
11. Default.
If: Tenant shall fail to pay any payment required under thi~ Lease withi.n five (5) days of
the dat~ the same is due, Tenant shall pay a monthly late fee to offset the additional expenses
incurred by Landlord in dealing with late pa.yments. Th~rc shall be a monthly late fee equal to
the greater of Fifty Dollars ($50.00) or five percent (5 %) of all aTnounts in arrt::ars, and the lat~
fee shall be considered Additional Rent hereunder.
If: (i) Tenant's interest in the Premises is sold under execution or similar legal process,
or (ii) Tenant is adjud1cated a bankrupt or insolvent and such adjudication is not vacated within
8
MAY-31-95 WED 16:27
HORTHCO CORP
F HX ~m, 95352,601
P. 12
thirty (30) days, or (iii) a receiv~r or trustee is appointed for Tenant's business or property and
such appointment is not vacated within thirty (30) days, or (iv) a reorganization of Tenant or any
arrangement with its creditors is approved by a court under the Federal Bankruptcy Act) or (v)
Tenant makes an assignment for the benefit of creditors, or (vi) Tenant's interest under this Lease
shall pass to another by ope:ntion of law, or (vii) Tenant shall admit in writinO' its inabilitv to
c:P .
make any past or future payment called for under this Lease, then Tenant shall be deelned to have
breached a material covenant of this Lease and Landlord may re-enter the Premises and declare
this Lease to be tenninated. .
If: (i) Tenant tails to pay any amount due under this Lease within five (5) days after the
date the payment is due, or (ii) Tenant fails to keep or perform any of the oth~r terms, conditions
or covenants of the Lease for more than thirty (30) days after notice of such failure shall have
been given to Tenant provided that where a cure is not reasonably possible within that period
Tenant shall be entitled to additional time to effect a cure, but not beyond thirty (30) additional
days, so long as Tenant promptly commences acts reasonably calculated to effect a cure and
thereafter diligently prosecutes these acts to compl~tion); then Llndlord, bC:'ldes d.:J1Y oth~r rights
or remedies it may have at law or in equity) may either (a) terminate this Lease upon the
expiration of tive (5) days after written notice is given to Tenant, in which event che Term shall
end on the date 5(:t forth in that notice, or (b) re-enter the Premises in accordance ~'ith applicable
law, dispossess Tenant and/or other occupants of the Premises, remove all property from the
Premises and store the same in a public warehouse or elsewhere at Tenant':i cxp~n::)~, and hold the
Premises without becoming liable for any loss or damage which may be occasioned thereby.
Tenant agrees that such re-entry by Landlord shall not be construed as an election on Landlord' s
part to terminate this Lease, that right, however, being continuously reserved by Landlord.
Landlord shall not be deemed to have dected to terminate this Lease unless I,andlord provides
Tenant with written notice of that election.
If Landlord elects to re--enter the Premises, Landlord may make such alterations and repairs
as may be appropriate in order to relet the Premises, and rdet all or part of the Premises for such
period (which may extend beyond the Term of this Lease), at such rentll. and upon such other
terms and conditions as Landlord in its reasonable discretion believes appropriate. All ~ums
received by Landlord from such reletting shall be applied: first, to the payment of any costs and
expenses of such reler-Jng, including brokerage and attorneys' fees and of costs of such altt:rdtions
and repairs; second, to the payment of any indebtedness oth~r than Base Rt:nt or Additional Rent
due from Tenant to Landlord: third, to the payment of Base Rent, Additional Rent and other
cha...~es due and unpaid hereunder; and the residue, if any, shall be applied in payment of furure
payments for which Tenant is responsible as they become due hereunder. If the sums -;0 n:ceived
during any month are less than the amounts due during that month, Tenant shall pay the
deticiency; if such sums are greater. Tenant shall have no right to the excess. The deficiency shall
be calculated and paid monthly. Not~Nithstanding any such rc-cntr:.f by lAndlord. IAI~dlord may
at any time hereafter elect to terminate this Lease for such previous breach.
9
HAY-31-9S WED 16:27
~~ORTHCO CORP
F A:{ NO. 95358601
p, 13
Should Landlord at any time terminate Tenant's right ot' possession upon a breach without
terminating this Lease) Landlord shall also have the right to accelerate the entire indebtedness
(including the amount of Base Rent and reasonably estimated Additional Rent reserved in this
Lease for the remainder of the Term), reduce the same to present value using a discount rate of
ten percent (10%) per annum and recover a judgment from Tenant in that amount. In addition~
Tenant shall be responsible, and Landlord may recover a judgment from T cnant~ for Landlord I s
actual costs of constructing any leasehold improvements to the Premises which are not being
directly paid for by Tenant together with such brokerage commissions as Landlord may have
incurred in connection with this Lease and any other inducements given to Tenant during the
Term, including any abated rent (collectively, the "Transaction Costs"). Notwithstanding
anything else contained in this Lease to the contrary 7 upon a default of Tenant, whether or not
Landlord shall elect to terminate this Lease, Landlord shall be entitled to recover rhe unamortized
balance of any such Transaction Costs, on an accelerated basis, so as to mak~ the same
immediately due and said amount shall be deemed payable as Additional Rent. For purposes of
this Lease, the "unamortized balance" shall mean the actual total amount of the Transaction Costs
reduced, however, over the Term. as if said sum were being amortized, at an interest rate of
twelve ~p"~nt (12 %) per annum, in equal monthly installments over the number of months Tenant
is to pay Base Rent under this Lease. Landlord's right to so accelerate the unamonized balance
of the Transaction Costs shall be an additional remedy of Landlord and shall be exercisable either
alone or in combination with Landlord I s other remedies as set forth in this Lease.
~fention in this Lease of any particular remedy shall not preclude Landlord from any other
remedy, in law or in equity.
No waiver by Landlord or Tenant of performance by the other pany shall be consid~red
a continuing waiver or shall preclude Landlord or Tenant from exercising its rights in the event
of:1 subsequent def=:.ult. No acceptai'1.ce by Landlord of a p:u1ial payment tender..:.d by Tenant shall
be deemed to be a waiver of the balance of the amount due even if [he tender stites that
acceptance will constitute payment in full.
12. Common Areas. (!ntentionally Omitted)
a.~.
6.lo.
to ~6U(. Lc .u~ce t] ul~lo...J. ~idh.iLd I'Hal fLoul tiilll... tv t~lll"" lo.l!Au6\W ~~ ~~Le7 Ic(..u:un ~.J
a.r J. ~..,. .. · ....... .
.& .lC'-"''-....~ V.l.. ....ft"J1J...ll.lUl
.. .......~, u .... . "'... , 6. ~ OJ ~H ~
. . '1" 1.- %. 'Q' .:l to ' t
\Ju...... ....u --..._v U"'UI.J A.~A.IJ"'.J."'] Ol ~4&'" 4 .l.lo.6.U..:l"'.1 Q.uu, .)HVU.I.\,I
Lh.dl01j J.l.o~:f, t~.e ...v...."on .ou.~,) I..1.i1~1or~ .)I,all Hut du .)u ~u .i ~.;l" J"'1.t lcduc..~ tLc lIu'W'bw
~, .
. . - - . ~ .
. 4 ~lh~"H ~H'" u,..> lo.Hl)!l : "^'..>
10
HAY-31-95 WED 16:28
~mRTHCO CORP
F A:i: NO. 95358601
P. 14
t~U
T ~U~U,l' .; ~^c.l~~~." C. usc.
...v~....a\.~ lva
13. Snborrtinat1on and Nondisturbance.
Tenant agrees that this Lease shall be subordinate to any present or future tirst or junior
mortgages and to any aXld all advances to be made thereunder and to the interest thereon and all
renev.rals, replacements arid extensions thereof provided the mortgagees named in said mortgag~s
shall agree to recognize this Lease in the event of foreclosure if Tenant is not in default. In the
event of any mortgagee electing to have this Lease be deemed a prior lien to its mortgage, then
upon such mortgagee notifying Tenant to that effect, this Lease shall be deemed prior to the lien
of said mortgage, whether this Lease is dated prior to or subsequent to the date of said mortgage.
This provision shall be self-operative but in the event that any such mortgagee shall require that
Tenant execute a document evidencing such subordination, Tenant shall sign an instrument to that
effect and in the event Tenant does not do so within ten (10) days following a written r~ut:st,
Landlord shall be deemed to be Tenant's a.ttorney-in-fact for this purpos~.
14. Substitution of Pr~mise5. (Intentionally Omitted)
~ d l' 1 1 . t."'e~ ...r. . . ~ b .
~H,';HJt I.c..s....r~....s tu,," lJ.blll, Up\JLl tal.&.Jo.tJ \... } .....~J5. ~d.tte.' not~rl;;;...:l...Ill, to ~u ~tlL.I.~~
~ 1 p. L . 1 ' l ;Q "~cf ~J I' , .' t 3:H '
(h LU'- ..\,ouaJ.."l\,ooJ otuC.. ':'k'''"''''~ -",...~u.h tH'" ~~..... ,...10' ....1~ ~...~...L.t....L~ pl...~lu~~5 S I '_'_'lIL..l..:l
. ~ 1 ~ I P . I 11 . i I Id'
~i!J!l\.iA.uHw.k...) ~..e ~n~~ ~~u.l1\- J.oowg... as t~1~ .l.""WI.~(.~, S 1.L. cont.J.J.n eJ.:;;t;;;dl.)a !ll1fhO""liJ~m5
,. . ki: d f .. t 1 '" . . 1-1' ~ P . ---...J-.J. t:rl ~ .i '
'OUJ1J.:u..l.ul~ ul u ~J\'& "tu"""'J.lJ ~o ~UV;)\oo ... .1."'..." ...Ji...Jt w..tll...a i.l1e ".....u.l.~(,!., ~HU ~He .ll,;!'! s..al LU
nv .........&Iot ~^~ th" .......bl--r:rt:s s~:f:cd ill. tl~~ ~\"._ L!J:ord sk111 ~'~J .111 (~1.~Oll.:l.L,l~ 1110... :llg
\,o^p"-u.).....) of T ~..a;a~ :H...:~""Uu: to ~~,h swbst1t-..t:va. of ~t'~~.:..
15. Notlces.
Any notice required or permitted to be given to either party shall be deemed given one day
follo'Ning the date the same is mailed, correctly addressed, by United States certified mail, postage
prepaid) rerum receipt requested, or on the date of personal delivc:ry. Until changed1 notices and
communications to Landlord and Tenant shall be addressed as follows:
As to Landlord:
Edward M. ~ralone
As to Tenant:
E~f Products, Inc.
220 W, 90th Street
Bloomington, ~1N 55420
11
MAY-31-95 WED 16:29
NORTHCO CORP
F HI: NO. 95358601
p, 15
Each party shall have the right to specify as its proper address any other address in the United
States of America by giving to the other party at least fifteen (15) days written notice of a new
address.
16. Attorneys' Fees.
If Landlord employs an attorney in connection with the contest of a mechanic I s lien by
Tenant or in connection with a request for approval by landlord of a proposed assignment or
subletting, Tenant shall be responsible for the attorneys' fees incurred by Landlord.
If either party employs an attorney to enforce its rights following a breach by the other
party 7 the prevailing party shall be entitled to recover its reasonable attorneys' fees incurred
thereb y .
17. financial Statements.
Upon request by Landlord, Tenant agrees to provide Landlord with the most recent balance
sheet and income starement prepared by Tenant's independent accountants and c~rtified to by an
officer/partner of Tenant as b~ing true and correct.
18. Estoppel Certificates.
Within ten (10) days after written notice from Landlord., Tenant shall provide an estoppel
certificate to Landlord and such other party as is directed by Landlord certifying: (a) that this
Lease is in full force and effect and that it has not been assigned, modified, supplemented or
amended in any way (or identifying any assignment, modification, supplement or amendment);
(b) the date of commencement and expiration of the Term or applicable Renewal Term; (c) that
there are no defenses or offsets thereto (or stating those claimed by Tenant); (d) rhe amount of
Base Rent or Additional Rent that has been paid in advance and the amount of security that has
been deposited with the Landlord; (e) the date to which Base Rent or Additional R~nt have been
paid under this Lease; (t) that any Tenant improvements have been completed in accordance with
the requirements of the Lease; and (g) such other information as is reasonably requested by
Landlord. Tenant hereby irrevocably appoints Landlord as its attorney in fact to ex.ecute such a
certifica~ in the event the Tenant shall fail to do so within ten (10) days of the Landlord's notice.
19. Security Deposit. (Intentionally Omitted)
T\;;UdHl has. ~(.Fu~;'lCd yw~lIl LalldlolJ _ Dvi1li~
($ ) to .)\...(.UIC T<::IIa.ull,i P\;,;f{OUllCUI\...~ of Lr.~ ~J.lll~ of trl~.s uas~. If T'U..1.ul
J\"'r.lut~, r:..luJlv...J moil ~1-'FI) dl 01 pill1. of tl,~ s<'.:....,u~ty d~p05~l LV JJl] S\.1111 I.U Lv willet. rt:lIdHl i~
in default or for;my-$Um ';.. ~l~dL Luldlv.ld. IlhJ.} ~^~~W~ L.1 ~ L...1~'Jn of T !,,:lr'~IIll ~ .Jera.u1L~ illdl1d~I'~ ,
bat uvl l;rll~ted"'tU, .J.J'J ...u5~.) .l.d..~~:H~ to l~'H\,;J:....t:"b d~nac"" [0 tL(. PI'_1I1~SC~, L<uIJ Ol Buad~Jlg
'du.sed b J T ~lIdllt 01 lIlo;)\... 101 w hOui T ~u.1J1l ~~ H.~pUI13(Lle, Of to th\; n..l\...ll~Hg of tIle Prell1~5('~.
12
MAY-31-95 WED 16:30
~mRTHCO CORP
F A~\ r~O. 95352601
P. 16
Eaudlord sh:rl:l ha~.e .lbsoIutc. di5l...I.d~UH itl th~ 41tJ}!I~\,.~tiull vf the. s'~uL~lJ dcpO~;l) uu ;)u",h
a.ppE""u.L.vu ~1.~11 :u ~r'N';'Y Cu.!>; .:l. J<;;;[..ult "v] T\..IU..ul 0.1 l~.oli.l ;:111J 1I;:;Ul\-J~C.;) vll1~L""~~1fw .\v~lo.bk
to L411dlo...d. L.Jloro ~1..Jll.';'\I~ the l:QLl to vrr~d OllIJ o. .ll1 vf ltle :)e{(u~ty dl;;P\);)~l db~IlSt
amoUllt!l tl.'-il owed by Ten::lnt LV Lldlord 01 ~.1l1VUl1t5 l(V1ri~h ~;n tL'I\-.dftt-L \.\JIIl\", dlJe. If dH'Y
. . tf .~. . ~. j T ' rl~ . ~ . '~ e~ d fo, .. d .
j?uIl.1on 01 1,.. ~.,u...t) u...~..It.lS so "'yt'..~\"~, ....H.l,ul ~.h ., "., ~Lu~I k:1 '- - .' ~J 5 L,en..J..1t'I" f ~pv;)ll
I . .1.'1'_ _~ . ~r- . ~. d . - .. t
c.a..;). ""I~U 111 all ~...OU..I.L .)UU.l........'H~ L.V n..JtOlC t...., .:l~_uut] '_...rO~lt to J {~"llgllla dUI0UlLt
d 1'1 I ." ., t ,.~ 1 f d f 1 i i' 1: N' t :IIi ~
ail J. \"'lla,HL oS UUtl.U.., tv uO ~c "'.._. ;J\.. .l.h ..... ,.1l 'J . \,. au t aTh. ~..l t 1I~ ~a;)c. 0 l11t~l~;:)_t :, 1 :
d~Hled to ...,,^,.u..~ OU-the-SCCIoAi.:t] depo~:t. IH tb.. ""v,".lt T....u.J...l f...ll.r ..l.ud !ait!,fulll 'oinpl;\,'~ w~th
all of tL\i; ~drts-of tll~5 Lease, the ~"~ul~ll d\;"O~~l :,LJ.l be I.lWtuIH\.;d to T(..llillll wid'~1l ttll~ (J)
w\.o"L ,;,Lf~i the l..ut .1L.j-of-the T .....ia ....AC,,;f>t (L.Ll UJ.l a.kllJJ:""}Jl~.:l.t~ ..1.i'h~h..llt 1lI.J.] be l\...ta.ill~ bJ
~l~lvAJ ...:;; b~ J.Wl:-i 3.b~.~t 'Obl:c:,....L~,..Jl!:) of T....u<i.ut v..1.:...h 1...... - aut )....t lll.HuloJ 01 wltll l~~P~ct
to w h~, ~l Cu 11 lf1U tdt~OU;) a1J. ~ aut )' lo-t COw r'l~t:l. (~u.lwh d~ Add~t.i.VllJ.1 R\..tr.l .ldj u~tLL1(.H t5).
20. Guar:1nr)'.
Tenant has delivered to Landlord the guaranty or guaranr~s of Tenantls obligations
attached hereto as Exhib.iLI2.
21. l"andlord' s T It'''n. (tntentionally Omitted)
T ...Haut 11(.1 cL J g14Ul.s L.JlulJ a. ....Olit~HU~Ug Si;;CUL~lJ ~ut~(C~l [vi 411 y pel] 1l1\...uts Ju~ to
I::.and101~ pUl Su.lItt- to Ll.:~ L....,;.s.c ....fV!l .J.l ovod~t Uo.lUi.,plll'uL, hAl..u es, fUlllir u[', III n.utvl)' ,
~UUlltS. ....Vi"'. .1...... .:1f:~- a.r.d ",l:._... pCbO:..u r'j,Up\..l tJ of T .....d..l,H{ loc;lf.".d ;11 the P1,ellli ')~ tOo-ether
~~lL. J.J.l] tJ[0('~S ~~ler....of. Tk ~..uf!l.....tJ ..o"~.l.~ by tll~~ !c~u..itJ ~lI~\".l~'( ~1(all11(lt be l\..Hlvycd
h0l11 the Ple!hi:=.~s-....:thoul lll~ ~l:or ....OIL.;~ut o[ LJ....cl1v..J :';,It] all 'JLE5.ltion~ ~11J1_ to ~,dlo(d
h,-"",,\.Uid...... !>>h.J.l ~l~..... b~d di!.I...L2u.g,\..J, fll(h~d\..d, r")~~'''''''L, lk.1t lCH1VV~ oi .3udl HI;;lfi3 ~.5
p~llH:~...~J~~ if ~u,h l.e.uu..J. ~~ fur .t'u"'r'..Is~.J of 11...,tJ1.'l""iHg ~u.l...l1 ~le.11s "",~lll ;)~III&l.h ~tc.ll~ of
,<=uu.a,;y-co~uk'oll.l.bh:; va1u~. III tl,~ ~.~.,t of '" \k-f.l..",lt ",..d,-, u,;, L<:a,~, l~dlldluld: i~~ :dd~i~~
to'~) otu\...1. i.loll~') 01 r~fi"ieJ~..s lJl.v...dI...J ~t 1.1...., ~uJ.tJ VI ,t-"..,a..>U..ll,t ~o tIll,') klSC. ~l,a::ll Layc:.'3:H
t.ii;,lt~ ~d ...e.ului:~ und~;. tL_ "C'u:fvl.w C~.hUUl~..I...:..J C....dl..., ill,=l\Jd~l1~ ~~thout 1~1I1ikltioll tll~ ligbt
to sdl-'i:hcpr~jStIbj~t t~ the so;;-"'l~tl ~Ht~;.,-:).. d'-~~libed ~ll t112s l\ad~lLliAl cil p....hE~ \.11 t1dv~[(.
~~ upvu t........ (:0) cWo} S not.:~ tu T~flJ.ut. T I...l.ldllt .lol.(':) to ...."'..Cuk.. ~Udl t~\ 1J.1I\..~IIE ~takill~l(b J.11d
olll\~[ ~'I~L.UI..~.lts He...e5w~1 vi .J.PlhOY1:~[', ~u u...d101.d'.') l<;;A.~uUdblc d~..".lLt~lJll, t\J fk.1fe""t the
.. 1 b d
;}~ulltJ lut\..1 I...)t dl..l~ ) ""H.At\.; .
22. Brokr-rs.
Tenant warrants that it has not engaged or dealt with any broker in connection with this
uast:. ulL"'L ~h~i '__'0-- ~I.d T;..u..:..ut .:1.gl,-",;3 to ~l1d...,.llll~fli \k.f"'"dJ aJlll1lcl.,J l411~kJLJ hdllllk:$$
from-and--~ J.ny d.lill~ for .l b.l.o1.....rt ~ 1"...... \.11 hhd....l.'!. f,-~ ,b~._d~d by .1.11)'011(. ullilO..l tlld..ll tl.o~e
spi.A.~ft.~ "boy""", 011 4.\..'-Ouut uf 411J dd~.u5~ w ~tll T ~Uu..I1t ~11 ""UHlll..~tioH ..y Ilh this ~;}\...
13
HAY-31-95 wED 16:31
rJGRTHCO CORP
F H:< ~JO. 9535B60 1
PI 17
23. Miscellaneous.
This Lease and any exhibits attached hereto set forth the entire agreement between
Landlord and Tenant. Tenant acknowledges that it has not relied upon any representations or
warranties except as are expressed in this Lease. Any modifications to this Lease must be in
writing and signed by Landlord and Tenant in order to be enforceable. The obligations and
benefits hereunder shall inure to and be binding upon the respective successors and assigns of
Landlord and Tenant. TIlls Lease s.hall be construed and enforced "in accordance with the laws of
Minnesota. If any term or provision of this Lease or the application thereof to any person or
circumstances shall be invalid or unenforceable, the remainder of this Lease or the application to
persons or circumstances oth~r than those to which it is held invalid or unenforceable shall be
valid and enforced to the full extent permitted by law. This Lease may be simultaneously
executed in several counterparts) each of which shall be an original and all of which shall
constitute but one and the same instrumc:nt.
24. Addendum.
Attached to tlus Lease is an Addendum incorporating additional terms and conditions. As
used in this Lease, the term "Lease" shall be deemed to include the Add~ndum and Exhibits
attached hereto.
Dated this
day of
t 1995.
L.lj\roLORD:
ED\V ARD J. ~1ALO~'E
By
Edward J. l\1alone
TEN~~T:
ThI PRODUCTS, Inc., a l\1.innesota Corporation
By
Its
c: \ wp~inbO\ \Io'PJ<x s\d~nnia\.:mprodl~
14
HAY-31-9S WED 16:31
NORTHCO CORP
F H;t: HO. 9535.9601
~ 1'~
; t .!. 1_'
EXHIBIT A
Premises
HAY-31-95 WED 16:32
NORTHCO CORP
FAX NO. 95358601
P. 19
EXHmn: B
Legal Description of the Land
MAY-31-95 WED 16:33
NORTHCO CORP
FAX NO. 95358601
P. 20
RXHTRrr c
Schedule of Base Rent
Market rate but not l~ss than amountS sufficient to pay principal and interest on all debt
service during the Term of the Lease.
At least thirty (30) days prior to the Commencement Date, and each Ye4I thereafter,
Landlord shall estimate the annual debt service for all mortgages due during the Term of L'1e
Lease. l..3u.,dlord shall also estimate al1Y amounts deemed necessary, if any. to Lindlord in
order to achieve a market rate Base Rent, if "market" is greater than amounts $ufficieat to pay
principal and interest on all debt sef"'llice. Tenant shall pay one-t\Velfth (1/12) of this amount
due each month as Base Rent.
Landlord shall adjust this Base Rent during th~ T..-:rm of the ~sc to fund ~ny shortfalls
caused by interest rate adjustments on the mortgages.
For purpOSeS of this Exhibit, the term "Fair ~farkct Rent" shall be d.:tined as tl1c rental
ratA: for the Premis~s as established by the market for such spac~ in the southwestern suburban
area of 1finne..1.polis, assuming both the Landlord and Tenant to be prudent people willing to
lease t...;e Premises, but under no compulsion to do so, and taking into account all pertinent
factors including, but not limited to, th~ terms and condirions of th~ Lease exclusive of the n~t
rental rate. the then-existing condition of the Premises, the presence or absence of tenant
inducements of allowances, Hnd th:: tenant inducements or allowdnces typically being provided
in comparable industrial space in comparable buildings.
Landlord shall deliver to Tenant a notice stating the amount Landlord bclic'.-es to be the
Fair 1-rark~t Rent (th~ "Rent r-':otice") sixty (60) days prior to the commen(:cment of the
ext~ns;on t~rni h~rCHnd~r. TeniU,r shaH give written notice to Landlord of it'; disa?rccmcnt
within t\A,'enty (20) days after its receipt of the Rent Notice.
If Tenant gives Landlord written notice of disagreement than wirhin fifteen (15) days
there.'lrrer Landlord and Tenant shall meet in an effort to negotiate, in good faith. the Fair
Market Rent. If Landlord and Tenant have not agreed upon the Fair ~1arket Rent within sixty
(60) days clfter Tenant gives Landlord its written notice of disagreement, the Fair ~1arket R~:1t
shall b~ determined by appraisal.
If Landlord and Tenant are not able to agree upon the Fair ~farket Rene within the
prescribed time P'=riod, then Land!ord ~d Tenant shall attempt to aei~ in good faith upon a
single appraiser or broker within fifteen (15) days after the expiration of said sixty (60) day
period. If lAndlord and Tenant are unable: to agree upon a singI~ appraiser or broker within
such time period, then Landlord and Tenant shall each appoint one (1) appraiser or broker not
MAY-31-95 WED 16:33
t\jCRTHCO:ORP
FAZ ~10. 95353601
p ~ 2:
later than fifteen (15) days thereafter. Within ten (10) days after the appointment of both
appraisers or brokers. the two (2) appointed appraisers or brokers shall appoint a third
appraiser or broker. If either Landlord or Tenant fails to appoint its appraiser or broker withIn
the prescribed fifteen (15) day time period, the single appraiser or broker appointed by the
other party thereto shall determine the: Fair Market Rent. If both parties fail to appoint an
appraiser or broker within the prescribed time periods, then the tirst appraiser or broker
thereafter selected by a party shall detennine the Fair Market Rent. Each party shall bear the
cost of its own appraiser or broker and the parties shall share equally the cost of the single or
third appraiser or broker t if one is appointed. If appraisers are used, such appraisers shall
have at least tive (5) years experience in the appraisal of commercial real property. If brokers
are used~ such brokers shall have at least five (5) years experience in the sales and leasing of
commercial real propeny.
If a single appraiser or broker is chosen, then such appraiser or broker shall determine
the Falf Market Rent. Othc:rwise, the Fair ~farket Rent shall be the arithmetical avenge of
the two (2) of the three (3) appraisals which are closest in amount~ and the third appraisal shall
be disregarded. Landlord and Tenant shall instrUct the appraiser(s) or broker(s) to complete
their determination of Fair Market Rent not later than thirty (30) days after their appointment.
If the Fair Market Rent has not been determined prior to the commencenlent of the extension
term. then Tenant shall pay to Landlord the Annual Base Rent specitie.d by Landlord in the
Rc::nt Notice until such time as the new Fair :rv!arket Rent is determined. \\Then the Fair ~lark~t
Rent is determined by said appraiser(s) or broker(s), if Fair Market Rent as 50 determined is a
sum greater than Tenant has paid in accordance with the Rent Notice, Tenant shall
immediately pay to Landlord the difference between such amounts and shall thereafter make
the monthly payments of Annual Base Rent as d~termined pursuant to these provisions. If Fm-
~{arket Rent, as so determined, is less than Tenant has paid in accordance with the Rent
Notice, Landlord shall immediately pay to Tenant the difference and Tenant shall thereafter
make the monthly payments of Annual Base Rent equal to the Fair Market Rent as determin~
pursuant to the provisions of this section.
19
MA'(-31-95 WED 16:3J
t{ORTHCO CORP
F A:~ NO. 95358601
F. 22
EXHIBIT D
Guaranty
The undersigned, , (herein referred to as "Guarantorlt), in
consideration of, and in order to induce the execution and delivery by Edward J. ~la1one, as
Landlord, of the Lease dated , 1994 (the '.Lease") to E?<.f Products, Inc.,
as Tenant, do hereby unconditionally guarantee the payment when due, of all amounts of rent
or other payments which may become due under the terms and provisions of said Lease and
the performance of all other obligations of the Lease thereunder. during L~e first _ n10nths
of the term of the Lease, subject to the other provisions contained in this Guaranty.
The Guarantor hereby waives notice of acct:ptance hereof, of any action uken or
omitted in reliance hereon, and of any default of the Tenant with respect to any term or
provision of said Lease.
The Guarantor agrees that said Lease may be modified, amended, and supplem~nted in
any manner, including the renewal or extension of said Lease without Guarantor's consent and
agrees that no such amendment, modification, supplement, renewal or extension shall release,
affect, or llnpair liability under this Guaranty. The Guarantor also agrees that its liability
hereunder shall not be affected, reducedt or impaired by reason of the t"ailure to pursue or
enforce any other right or remedy J and the Guarantor waives all rights to require the Landlord,
under said Lease, to pursue, enforce or resort to any and all such rights or remedies.
Notvlithstanding the foregoing J the Guarantor in no event shall be liable for an amount
greater than $ , and provided Tenant is not in default under any of the terms or
conditions contained in the Lease, during the first _ months of the term of the Lease, this
Guaranty shall expire months from the date of Tenant's occupancy.
Date:
, 1994
MAY-31-95 WED 16:35
HGRTHCO CORP
F AZ r,m. 9535B60 i
r"\ -,'-'
tl L~
AOS! 194
ADDEND1JM
THIS ADDfu'IDtThr is attached to and made part of that certain Office/\Varehouse Lease
dated , 1995, by and between Edward J. Malone, hereinafter referred to as
"Landlord" and El\1 Products, Inc., a ~esota corporation, hereinafter r~ferred to as
"Tenant", for that space located at Cottonwood Lane, Prior Lake, Minnesota.
NOW THEREFORE, it is agreed and accepted he tween the parties, as follows:
1. OPTION(S) TO EXTENQ:
Provided Tenant is not in default under the teons and conditions of the Lease. Tenant shall
have the right and option to extend the Tenn of the Lease as set forth herein, upon the
same terms and conditions of this Lease, excepting Base Rent, which ~hall be adjusted as
set forth in Section (b) below. Tenant shall deliver to Landlord notice of its election to
extend the Term of the Lease on or before the respective Option Exercise Dates as set forth
in Section (c) below.
(a) Extension Tenns: Two (2) five-year Extension Term$ from: December 1, 2000,
and December 1,2005, respectively.
(b) Base Reru: Base Rent for each Extension Term shall be at the th~n market rate,
but shall not be less than Base Rent as defined by Exhibit C of the Lease.
(c) Option E'"(er~ates: Six (6) months prior t\) the expiration of the current Term
of the Lease or if the first option to extend the term is exercised) then with respect
to the exercise of the second option to extend the term, the ~xpiration of the tirst
extension term.
IN \\tTINESS VlHEREOF, Landlord and Tenant have executed this Addendum as of the
cIa y and year first above written.
LANDLORD:
ED\V ARD J. MALONE
By
Edward J. ~falone
TENA.~T:
Thl PRODUCTS,INC., a I\,tinnesota corporation
By
Its
c:: \wpwiooO\ wpdoc: j\d~l'lni l&\(mpt'Od~tld