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CITY OF JACKSON, MN / JEDC

BUSINESS SUBSIDY, LOAN AND DEVELOPMENT AGREEMENT DEVELOPMENT PARK 4


THIS AGREEMENT is made on November , 2012, by and between the City of Jackson, Minnesota, a Minnesota municipal corporation with its office and mailing address at 80 West Ashley Street, Jackson, MN 56143 (the City); and Jackson Economic Development Corporation, a Minnesota not-for-profit corporation with registered office at 80 West Ashley Street, Jackson, MN 56143 (JEDC). Recitals A. JEDC, with a primary goal of creating jobs, develops real property within and adjacent to the City for industrial and other uses. B. JEDC has entered into agreements to purchase three (3) contiguous tracts of real property in Section 13, Des Moines Township (together the Properties), that are suitable for industrial, commercial and residential development. B.1. One of the Properties, herein called the Torgerson Farm, is comprised of 104.5 acres, more or less, and is legally described as on attached EXHIBIT A. B.2. Another of the Properties, herein called the Schneekloth Tract, is comprised of 2.38 acres, more or less, and is described as on attached EXHIBIT B. B.3. The third of the Properties, herein called the Kauffman Tract, is comprised of 0.52 acre, more or less, and is described as on attached EXHIBIT C. C. The City owns real property, herein called the City Tract, adjacent to the Properties and described as on attached EXHIBIT D. D. 4. E. The agreements to purchase mentioned in recital B above are contingent upon JEDC obtaining financing satisfactory to it for purchase of the Properties. F. The City actively supports the creation and retention of employment opportunities within its locale and has committed to assist JEDC in financing the purchase and development of the Properties (the Project). G. The City and JEDC have agreed upon specific terms and conditions for the Citys loan to JEDC and desire to reduce their agreement to writing. Agreement FOR VALUABLE CONSIDERATION, IT IS HEREBY AGREED by and between the City and JEDC as follows: SECTION 1 Loan The Properties and the City Tract are together herein called Development Park

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1.1. Loan. If JEDC closes its purchase of the Properties, the City, contemporaneously with said closing and in order to facilitate the purchase, shall lend to JEDC the principal sum of One Million Five Hundred Thousand Dollars ($1,500,000), according to the following terms (the Loan). 1.1.1. Payments: Contemporaneously with the closing of a sale by JEDC of all or any part of the Properties, and to the extent that the Loan is then unpaid, JEDC shall pay to the City an amount equal to the sellers net proceeds of sale to be applied against the Loan. 1.1.2. Interest: The unpaid balance of principal of the Loan from time to time shall bear interest from the date of the Loan at the rate of 55/100th percent (0.55%) per annum. 1.1.3. Late payment charge. JEDC shall pay a late payment charge equal to five percent (5%) of the full amount of any payment due pursuant to this contract which is not received by the City by the end of fifteen (15) calendar days after its due date. 1.1.4. Contingent balloon payment. Unless the Loan is renewed and its maturity date is extended as provided in subsection 1.2. following, the then-remaining balance of principal plus all accrued and unpaid interest shall be paid in full on the date of the 120-month anniversary of the Loan. 1.1.5. Pre-Payment: JEDC may repay the Loan in full or in part on any date, without penalty. 1.2. Extension. If the Loan is not paid in full on or before its 120-month anniversary date, then, at JEDCs option and subject to JEDCs qualification as hereinafter provided, the Loan will be renewed and the due date for payment in full of the Loan will be extended to the date of the 240-month anniversary of the Loan (the Extension), provided, that JEDC has qualified for the Extension. 1.2.1. Qualifications: To qualify for the Extension, JEDC must do the following: 1.2.1.1. Pay all installments of principal when due pursuant to subsection 1.1. above; 1.2.1.2. Pay all annual payments of interest when due, as specified in subsection 1.3. below; and 1.2.1.3. Pay all real estate taxes and special assessments assessed against the Properties when due. 1.2.2. Interest on Extension: If the due date of the Loan is extended as aforesaid, then the unpaid balance of the Loan from time to time shall bear interest as follows: 1.2.2.1. From the 120-month anniversary date of the Loan to the 180month anniversary date of the Loan at a rate equal to the 5-year Treasury Note rate quoted by the Federal Home Loan Bank of Des Moines, or its successor in interest, on said 120-month anniversary date; and 1.2.2.2. From the 180-month anniversary date of the Loan to the 240month anniversary date of the Loan (the Maturity Date) at a rate equal to the 5-year Treasury Note rate quoted by the Federal Home Loan Bank of Des Moines, or its successor in interest, on said 180-month anniversary date.

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1.2.3. Interest cap: Notwithstanding the foregoing, interest on any Extension shall not exceed Two and One-half percent (2.5%). 1.2.4. Other terms: Except for the rate of interest to be modified as aforesaid, all other original terms and conditions of the Loan shall be and remain in full force and effect during the Extension. 1.3. When interest payable. Except as otherwise provided herein, all accrued and unpaid interest whether accruing during the initial term of the Loan or during the Extension is payable annually on the anniversary date of the Loan, until the Loan is paid in full. 1.5. Note. Contemporaneously with closing of JEDCs purchase of the Properties and the closing of the Loan, JEDC shall make and deliver to the City its promissory note evidencing the Loan in form satisfactory to the City (the Note). SECTION 2 Security for Repayment of Loan As security for repayment and contemporaneously with closing of the Loan, 2.1. Mortgage. JEDC shall grant to the City a mortgage against the Properties to include an assignment of rents and to be in form acceptable to the City (the Mortgage). 2.2. Deed in lieu of foreclosure. JEDC shall execute and deliver to the City a Quit Claim Deed to the Properties (the QC Deed), to be held in escrow by the City and to be recorded only as a deed in lieu of foreclosure in the event of default by JEDC. SECTION 3 Annexation 3.1. Petition. JEDC hereby petitions the City to annex, as soon as is practicable, that part of the Torgerson Farm except that part thereof that is to be conveyed by way of exchange for the Kauffman Tract that is beyond the corporate limits of the City (the Annexation Area). 3.2. Differential taxation. The tax rate on the Annexation Area shall be increased from the Township rate in substantially equal proportions over six (6) years to equality with the tax rate on property already within the City, as per Minn. Stat. 414.035. 3.3. Other documents. JEDC shall promptly execute and deliver to the City such other documents as the City may reasonably request from time to time to facilitate the annexation. SECTION 4 Infrastructure 4.1. Roadway. As soon as is practicable following closing of the Loan and JEDCs purchase of the Properties, JEDC shall dedicate to the public or, in the alternative, convey to the City by Quit Claim Deed, a strip of land 100 feet wide across Development Park 4 for highway purposes (the Road). 4.1.1. As soon as is practicable and financially feasible, the City shall cause a 10-ton street to be constructed and installed upon the Road. 4.1.2. Location. The Road shall be located approximately as depicted on EXHIBIT E attached hereto and made a part hereof by this reference.

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4.2. Other infrastructure. As development occurs, the City shall extend such infrastructure, i.e. streets, municipal sanitary sewer service, municipal water service, electricity, storm water collection service,(the Infrastructure), as may be needed from time to time to support such development. SECTION 5 City Tract As soon as is practicable after alternate City Street Shop facilities are available for occupancy, the City shall do the following: 5.1. Clear the City Tract by vacating and removing or demolishing the buildings and other structures on the City Tract; and 5.2. Cause the City Tract to be made shovel ready for new development. (As contemplated by this agreement, shovel ready means having completed environmental studies and all necessary remediation.) 5.3. The City shall dedicate for use as a public street so much of the City Tract as will provide for a right-of-way 100 feet wide for access from U.S. Hwy. 71 to that part of Development Park 4 located Easterly of the City Tract. SECTION 6 Financing of Infrastructure The City and JEDC anticipate and intend that grants, tax increment financing, tax abatements, special assessments, and such other funding sources as may be then available may be used to facilitate and to support redevelopment and development of Development Park 4. 6.1. Grants: JEDC shall cooperate with the City in applying for such grants as may be available to provide funding for the design and construction of the Road and Infrastructure to serve the Development Park 4. 6.2. Tax increment financing: JEDC shall cooperate with the City in establishing Development Park 4 or parts thereof as redevelopment and development districts for tax increment financing. 6..3. Tax abatements: JEDC shall cooperate with the City in regard to tax abatements to support and subsidize redevelopment and development of Development Park 4. SECTION 7 Special Assessments 7.1. Levying. Upon completion of construction of Infrastructure from time to time, the City may specially assess the benefitted properties for their proportionate shares of an amount no greater than [i] the amount paid by the City to survey for, design, and construct the Infrastructure plus [[ii] the cost of filing this document for record in the office of the County Recorder, together the Special Assessments. 7.2. Deferments. Payment of the first installment of Special Assessments against unimproved property shall be deferred until such time as [i] the subject tract is sold by JEDC, or [ii] the construction of improvements, whichever occurs earlier, as per Minn. Stat. 429.061.

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7.3. Interest on deferred assessments. Deferred Special Assessments shall accrue interest at the same rate as the Loan from time to time. SECTION 8 Releases of Mortgage 8.1. Partial releases. If JEDC pays to the City an amount equal to or greater than $15,000 per acre, the City shall execute and deliver to JEDC a partial release of mortgage for the subject tract. 8.2. Development for lease. If JEDC develops and leases a part of the Properties, then an amount equal to [i] the mutually agreed sales price for that tract plus [ii] interest at the Loan rate on an amount equal to the costs of Infrastructure assessed against that tract, shall be amortized and paid to the City over a term of ten (10) years, regardless of the term of lease with JEDCs tenant. SECTION 9 Sales Promotion 9.1. Promotions. JEDC [i] shall vigorously promote the sale and development of tracts within Development Park 4 for industrial and commercial development, consistent with the Citys Comprehensive Plan, as modified and amended from time to time, and [ii] shall cooperate and coordinate with other development organizations within the City to promote for commercial and residential development where appropriate in Development Park 4. 9.2. Consults with City. JEDC shall advise the City Administrator regularly and shall advise the City Council directly and promptly on invitation to do so of JEDCs efforts and progress toward promoting, selling, and developing tracts within Development Park 4. SECTION 10 Business Subsidies Act 10.1. Subsidies. In order to satisfy the provisions of the Business Subsidies Act, Minnesota Stat. 116J.993 to 116J.995 (the Act), the City and JEDC acknowledge and agree that the business subsidies granted to JEDC under this agreement is in the form of the Loan described in SECTION 1 and the deferred special assessments described in SECTION 4 of this Agreement (the Business Subsidies). 10.2. Need. The Business Subsidies are needed because acquiring and developing the Properties is not financially feasible without it. 10.3. Public purposes. The public purpose of the Business Subsidies is to enable securing the Properties for industrial, commercial and residential development that will increase the tax base, provide new employment opportunities, extend public infrastructure, and increase sales of municipal utility services. 10.4. Goals): 1.1. above; 10.4.2. Pay all annual payments of interest when due, as specified in subsection 1.3. above; and Goals. JEDC and its successors in interest shall meet the following goals (the 10.4.1. Pay all installments of principal when due pursuant to subsection

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10.4.3. the Properties when due.

Pay all real estate taxes and special assessments assessed against

10.5. Failure to meet Goals. If JEDC fails to meet the Goals, the City may declare an event of default. 10.6. Agencies involved. The City is the only state or local government agency providing financial assistance for the Loan. 10.7. Public hearing. The City shall conduct a public hearing as required by the Act. SECTION 11 Default 11.1. Default: JEDC shall be in default under this agreement upon the happening of any of the following events and failure to cure within thirty (30) business days after written notice of default is given by the City: 11.1.1. Nonpayment, when due, of any amount payable under the terms of this Agreement; 11.1.2. Nonpayment, when due, of any amount payable to JEDCs contractors or sub-contractors who provide labor or materials for improvement of the Properties or any of them; 11.1.3. JEDC becomes insolvent or generally unable to pay debts as they mature or makes an assignment for the benefit of creditors, or if any voluntary bankruptcy proceeding is commenced by JEDC, or if any involuntary bankruptcy proceeding is not contested by JEDC; 11.1.4. Entry against JEDC of a final judgment that the City reasonably deems will have a material, adverse impact on JEDCs ability to meet its obligations under this Agreement, unless the enforcement of such judgment is stayed within thirty (30) days of entry of the judgment, in which event the existence of such judgment shall not constitute a default so long as the stay of enforcement remains in effect; 11.1.5. If JEDC fails to carry out or comply with any other terms or conditions set forth in this Agreement. 11.2. Remedies upon default restricted: In the event of default and failure to cure within the time allotted therefor, 11.2.1. The City may record the QC Deed as a deed in lieu of foreclosure and/or foreclose the Mortgage by advertisement. 11.2.2. JEDC shall not be liable to the City for any deficiencies on the Note and Mortgage. 11.2.3. No delays or failure by the City to exercise any right or remedy shall be a waiver of such right or remedy. SECTION 12 Insurance 12.1. Insurance. Until such time as the Loan is paid in full, JEDC shall procure and maintain in full force and effect:

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12.1.1. Liability insurance in at least the amount of One Million Dollars ($1,000,000) against claims for bodily injury, death, and property damage occurring on or about the Properties; and 12.1.2. All risk property insurance with respect to the Properties, naming the City as an additional loss payee as its interest may appear. 12.2. General requirements. 12.2.1. Each policy of insurance that JEDC is required to procure and maintain pursuant to this contract: 12.2.1.1. Shall be issued by an insurance company licensed to do business in the State of Minnesota and acceptable to City; 12.2.1.2. Shall be maintained in full force and effect at all times while any amount of the Loan remains unpaid under this contract; and 12.2.1.3. Shall provide for not less than ten (10) days written notice to the City before cancellation, non-renewal, termination, or change in coverage. 12.3. Proof. On reasonable request JEDC shall deliver to City a duplicate original or certificate of such insurance policy and other documentation to prove that such insurance is being maintained in full force and effect. SECTION 13 Conditions Precedent The Citys obligations hereunder are subject to receipt of the executed Note, Mortgage, and QC Deed and to JEDCs compliance with the following additional conditions: 13.1. Truth and accuracy, as of the closing date, of all representations and warranties made by JEDC to the City in connection with this loan and receipt by the City of such documents and other evidence as the City may reasonably request. 13.2. Receipt by the City from JEDC of all documents in connection with this agreement and transactions contemplated hereby, satisfactory in form and substance to the City. 13.3. The payment by JEDC of all closing costs and expenses, including but not limited to document preparation, applicable filing, recording, and other fees and the Citys reasonable closing expenses. SECTION 14 Miscellaneous 14.1. Nondiscrimination: The provisions of Minnesota Statutes, Section 181.59, which relate to civil rights and discrimination, shall be considered a part of this agreement as though wholly set out in full. 14.2. Assignment restricted: JEDC shall not assign this contract without first obtaining the written consent of the City to such assignment in each instance. 14.3. Amendment. This Agreement may be modified and amended but only by a written instrument signed on behalf of the City and JEDC.

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14.4. Governing Law: The laws of the State of Minnesota shall govern any dispute arising hereunder; and the parties agree that the proper venue for any action concerning a breach of this loan agreement, the enforcement of the Citys security interests, or any other matter arising between the parties affected by this agreement shall be venued in Minnesota District Court in Jackson County. 14.5. Binding Effect: This agreement shall inure to the benefit of and shall be binding upon JEDC, the City, and their respective successors in interest. 14.6. Entire Agreement: This document, which may be executed in two or more counterparts, each of which shall be considered an original document, contains the entire agreement of the parties and superseded all prior agreements, both oral and written, between them regarding the subject matter of this agreement. IN WITNESS WHEREOF, the City and JEDC have caused this agreement to be duly executed effective as of the date first above written. City of Jackson, Minnesota By: Wayne Walter, Mayor and Attest: Jennifer J. Bromeland City Administrator By: Bradley W. Anderson, Secretary
Jackson Economic Development Authority

By: Clayton Lewis, President

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