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HomeMy WebLinkAbout4.D.3. Approval of Contract for Private Development (including a business subsidy agreement) with Shutterfly Inc. Res. No. 7511 General Business 4. D. 3. SHAKOI'EE TO: Mayor and City Council Mark McNeill,City Administrator FROM: Samantha DiMaggio,Economic Development Coordinator DATE: 11/05/2014 SUBJECT:Approval of Contract for Private Development(including a Business Subsidy Agreement)with Shutterfly,Inc.-Res.No. 7511 (D) Action Sought The City Council is asked to adopt Resolution No. 7511,A Resolution Approving the Contract for Private Development with the Economic Development Authority for the City of Shakopee,Minnesota, Scott County,and Shutterfly,Inc.for Certain Property in the City of Shakopee. Background On August 7,2013,the City Council adopted a resolution agreeing to provide the Developer with the Abatement for a maximum term of nine years and in the maximum amount of$758,771,with an annual maximum of$86,615. On August 7,2013,the City Council also adopted a resolution approving sewer access charge credits from the City to the Developer in the maximum amount of$174,600. On August 7,2013,the Board of Commissioners of the Economic Development Authority for the City of Shakopee,Minnesota,approved a loan to the Developer in the maximum amount of$1,000,000 from the proceeds of a Minnesota Investment Grant from the Department of Employment and Economic Development. Since the August 7,2013 meeting,City and County staff have been negotiating with Shutterfly,Inc.regarding the final Development Agreement,a copy of which is attached. The contract also specifies that 258 new full-time equivalent employees will be created within two years with an average wage of$18.78 per hour. Recommendation Staff recommends that the Council approve the attached Development Agreement. Budget Impact There is no direct budget impact as a result of the proposed action. Relationship to Vision This supports Goal D, "Maintain,improve and create strong partnerships with other public and private sector entities". Requested Action Council should,by motion,Resolution No. 7511,A Resolution Approving the Contract for Private Development with the Economic Development Authority for the City of Shakopee,Minnesota, Scott County, and Shutterfly,Inc. for Certain Property in the City of Shakopee. Attachments: Development Agreement Res.No. 7511 CONTRACT FOR PRIVATE DEVELOPMENT between CITY OF SHAKOPEE,MINNESOTA, ECONOMIC DEVELOPMENT AUTHORITY FOR THE CITY OF SHAKOPEE,MINNESOTA, SCOTT COUNTY,MINNESOTA, and SHUTTERFLY,INC. Dated: October 8,2014 This document was drafted by: KENNEDY&GRAVEN, Chartered(JAE) 470 U.S.Bank Plaza 200 South Sixth Street Minneapolis,Minnesota 55402 Telephone: 337-9300 Error!Bookmark not defined. ARTICLE VI Taxes; Special Assessments Section 6.1. Right to Collect Delinquent Taxes 17 Section 6.2. Reduction of Taxes 17 ARTICLE VII [Reserved] ARTICLE VIII Prohibitions Against Assignment and Transfer; Indemnification Section 8.1. Representation as to Development 20 Section 8.2. Prohibition Against Developer's Transfer of Property and Assignment of Agreement 20 Section 8.3. Release and Indemnification Covenants 21 ARTICLE IX Events of Default Section 9.1. Events of Default Defined 22 Section 9.2. Remedies on Default 22 Section 9.3. No Remedy Exclusive 23 Section 9.4. No Additional Waiver Implied by One Waiver 23 Section 9.5. Attorney Fees 23 Section 9.6. Default by City,Authority or County 23 ARTICLE X Additional Provisions Section 10.1. Conflict of Interests;Representatives Not Individually Liable 25 Section 10.2. Equal Employment Opportunity 25 Section 10.3. Provisions Not Merged With Deed 25 Section 10.4. Titles of Articles and Sections 25 Section 10.5. Notices and Demands 25 Section 10.6. Counterparts 26 Section 10.7. Recording 26 SIGNATURES S-1 SCHEDULE A Development Property A-1 428656v15 JAE 5H155-316 11 TABLE OF CONTENTS Page PREAMBLE 1 ARTICLE I Definitions Section 1.1. Definitions 3 ARTICLE II Representations and Warranties Section 2.1. Representations by the City 6 Section 2.2. Representations by the County 6 Section 2.3. Representations by the Authority 6 Section 2.4. Representations and Warranties by the Developer 6 ARTICLE III Property Tax Abatement Section 3.1. Status of Development Property 8 Section 3.2. Environmental Conditions 8 Section 3.3. Minimum Improvements 8 Section 3.4. City Property Tax Abatement 8 Section 3.5. County Property Tax Abatement 9 Section 3.6. City Development Assistance 10 Section 3.7. Minnesota Investment Fund Grant and Developer Loan. 10 Section 3.8. Payment of Administrative Costs 10 Section 3.9. Records 10 Section 3.10. Business Subsidy Agreement 10 Section 3.11. Restrictions on Use 13 Section 3.12 Job and Wage Maintenance 13 ARTICLE IV Construction of Minimum Improvements Section 4.1. Completion of Construction 14 ARTICLE V Insurance and Condemnation Section 5.1. Insurance 15 428656v15 JAE SH155-316 i CONTRACT FOR PRIVATE DEVELOPMENT THIS CONTRACT FOR PRIVATE DEVELOPMENT(the "Agreement") is made as of October 8, 2014, by and between the CITY OF SHAKOPEE, MINNESOTA, a Minnesota municipal corporation (the "City"), the ECONOMIC DEVELOPMENT AUTHORITY FOR THE CITY OF SHAKOPEE, MINNESOTA, a public body corporate and politic under the laws of the State of Minnesota (the "Authority"), SCOTT COUNTY, MINNESOTA, a political subdivision of the State of Minnesota (the "County"),and SHUTTERFLY, INC.,a Delaware corporation, or any of its affiliates(the"Developer"). RECITALS WHEREAS, pursuant to Minnesota Statutes, Sections 469.1812 through 469.1815 (the "Act"), the City and the County are authorized to abate property taxes in order to increase or preserve tax base and provide employment opportunities; and WHEREAS, the Authority was created pursuant to Minnesota Statutes, Sections 469.090 to 469.1081, as amended (the "EDA Act") and was authorized to transact business and exercise its powers by a resolution of the City Council of the City; and WHEREAS, pursuant to Minnesota Statutes, Sections 1161993 to 116J.995, as amended (the "Business Subsidy Act"),the City,the Authority,and the County are authorized to grant business subsidies to facilitate development in the City,the County,and the State of Minnesota(the"State");and WHEREAS, the Ryan Companies US, Inc., a Minnesota corporation, has constructed an approximately 187,000 square foot building for use as a manufacturing facility, office, and call center (the "Minimum Improvements"), on real property located in the City and described in Exhibit A (the "Development Property"). The Developer has proposed to lease the Minimum Improvements and purchase equipment in order to operate a manufacturing facility with related office, and call center space within the Minimum Improvements; and WHEREAS,pursuant to the Act,the City Council of the City and the Board of Commissioners of the County have each approved resolutions authorizing abatements of a portion of real property taxes on the Development Property;and WHEREAS, the Authority has agreed to submit an application for a Minnesota Investment Fund grant on behalf of the Developer for a grant in the amount of up to $1,000,000, and if received, the Authority will loan the proceeds of the grant to the Developer (the "Authority Loan") pursuant to the terms set forth herein; and WHEREAS, in order to reimburse the Developer for certain costs related to the purchase of the equipment need for its manufacturing facility, the Developer has requested the following assistance: (i) tax abatement from the City for up to nine years in the maximum amount of$758,771 pursuant to the Act,with an annual amount not to exceed $89,431; (ii) tax abatement from the County for up to nine years in the maximum amount of up to $734,878 pursuant to the Act, with an annual maximum not to exceed$86,615; (iii) sewer access charge credits from the City in the amount of up to $174,600; and(iv)the Authority Loan in the amount of up to$1,000,000 WHEREAS, the County,the City and the Authority have determined that the financial assistance provided to the Developer as contemplated herein and the fulfillment generally of this Agreement are in the vital and best interests of the City and the County and the health, safety, morals, and welfare of their 428656v15 JAE SH155-316 1 residents, and in accord with the public purposes and provisions of the applicable State and local laws and requirements under which this Agreement has been undertaken; and NOW, THEREFORE, in consideration of the mutual obligations contained in this Agreement,the parties agree as follows: (The remainder of this page is intentionally left blank.) 428656v15 JAE SH155-316 2 ARTICLE I Definitions Section 1.1. Definitions. In this Agreement, unless a different meaning clearly appears from the context: "Abatement Capacity" means the maximum amount of property taxes that may be abated in any year by a political subdivision under Section 469.1813, subdivision 8 of the Act, as amended. As of the date of this Agreement,the Abatement Capacity for the City is the greater of 10% of the net tax capacity of the City for the taxes payable year to which the abatement applies or$200,000. As of the date of this Agreement, the Abatement Capacity for the County is the greater of 10% of the net tax capacity of the County for the taxes payable year to which the abatement applies or $200,000. Both City and County each have the capacity to grant the respective tax abatements and these abatements will not exceed their capacity mentioned above. "Act"means Minnesota Statutes, Sections 469.1812 through 469.1815, as amended. "Agreement"means this Contract for Private Development,as the same may be from time to time modified,amended,or supplemented. "Authority"means the Economic Development Authority for the City of Shakopee,Minnesota. "Authority Loan"means the forgivable loan from the Authority to the Developer in the amount of $1,000,000 described in Section 3.7 hereof. "Available Abatement" means the sum of the City Available Abatement and County Available Abatement. "Business Day"means any day except a Saturday, Sunday, legal holiday, a day on which the City or County is closed for business, or a day on which banking institutions in the City are authorized by law or executive order to close. "Business Subsidy Act"means Minnesota Statutes, Sections 116J.993 to 116J.995,as amended. "Certificate of Completion"means the certification provided to the Developer,or the purchaser of any part,parcel or unit of the Development Property,pursuant to Section 4.4 of this Agreement. "City"means the City of Shakopee,Minnesota. "City Abatement" means one hundred percent (100%) of the real property taxes (i) generated in any tax-payable year by extending the City's local tax rate for that year against the tax capacity of the Minimum Improvements, excluding the tax capacity of the land (as established each year during the abatement)and excluding any portion of the tax capacity attributable to the areawide tax under Minnesota Statutes,Chapter 473F)as of January 2 in the prior year, and(ii)paid to the City by the County. "City Abatement Resolution" means Resolution No. 7337, approved by the City Council of the City on August 7,2013,regarding abatement of property taxes on the Development Property. 428656v15 JAE 5H155-316 3 "City Available Abatement" means, on each Payment Date, the City Abatement generated in the preceding six(6)months with respect to the Project and remitted to the City by the County, or such lesser amount as shall cause (i) the cumulative principal amount of the City Abatement paid to the Developer during the term of this Agreement to be no more than$758,771 with an annual abatement of no more than $89,431; and (ii)the cumulative principal amount of the City Available Abatement and the County Available Abatement paid to the Developer during the term of this Agreement to be no more than $1,493,649. Both City and County each have the capacity to grant the respective tax abatements and these abatements will not exceed their capacity mentioned above. "City Development Assistance"means sewer access charge credits from the City in the amount of up to$174,600. "Compliance Date" means, for purposes of the job and wage creation goals set forth in Section 3.10 hereof, the date which is two years after the date of issuance of the Certificate of Completion of the Minimum Improvements. "County"means Scott County,Minnesota. "County Abatement" means one hundred percent (100%) of the real property taxes (i) generated in any tax-payable year by extending the County's local tax rate for that year against the tax capacity of the Minimum Improvements excluding the land (as established each year during the abatement) and excluding any portion of the tax capacity attributable to the areawide tax under Minnesota Statutes, Chapter 473F)as of January 2 in the prior year, and(ii)paid to the City by the County. "County Abatement Resolution" means Resolution No. 2013-159, adopted by the Board of Commissioners of the County on August 20, 2013, regarding abatement of property taxes on the Development Property. "County Available Abatement" means, on each Payment Date, the County Abatement generated in the preceding six (6) months with respect to the Project and transferred to the City by the County, or such lesser amount as shall cause (i) the cumulative principal amount of the County Abatement paid to the Developer during the term of this Agreement to be no more than$734,878 with an annual payment of no more than$86,615; and(ii)the cumulative principal amount of the City Available Abatement and the County Available Abatement paid to the Developer during the term of this Agreement to be no more than $1,493,649. Both City and County each have the capacity to grant the respective tax abatements and these abatements will not exceed their capacity mentioned above. "Developer" means Shutterfly, Inc., a Delaware corporation, or its permitted successors and assigns. "Development Property"means the real property described in Schedule A of this Agreement. "Event of Default"means an action by the Developer listed in Article IX of this Agreement. "Gross Salary"means an employee's hourly wage multiplied by the number of hours worked. "Landlord" shall mean Ryan Companies US, Inc. and its successors and assigns to the ownership of the Development Property,including but not limited to Broadstone Net Lease Acquistions,LLC. 428656v15 JAE SH155-316 4 "Minimum Improvements"means the Landlord's construction of a building totaling approximately 187,000 square feet for use as a manufacturing facility, office, and call center on the Development Property. "Payment Date"means each February 1 and August 1,commencing August 1,2016;provided that if any such Payment Date is not a Business Day,the Payment Date shall be the next succeeding Business Day. "Project"means the Development Property as improved with the Minimum Improvements. "State"means the State of Minnesota. "Tax Abatements"means collectively the City Abatement and the County Abatement. "Tax Official" means any County assessor, County auditor, County or State board of equalization,the commissioner of revenue of the State, or any State or federal district court,the tax court of the State,or the State Supreme Court. "Unavoidable Delays" means delays beyond the reasonable control of the party seeking to be excused as a result thereof,including, without limitation,those which are the direct result of strikes, other labor troubles, prolonged adverse weather or acts of God, fire or other casualty to the Minimum Improvements, litigation commenced by third parties which,by injunction or other similar judicial action, directly results in delays, or acts of any federal, state or local governmental unit (other than the City in exercising their rights under this Agreement) which directly result in delays. Unavoidable Delays shall not include delays in the obtaining of permits or governmental approvals necessary to enable construction of the Minimum Improvements by the dates such construction is required under Section 4.3 of this Agreement through no fault by the City or the County. (The remainder of this page is intentionally left blank.) 428656v15 JAE 5H155-316 5 ARTICLE II Representations and Warranties Section 2.1. Representations by the City. The City makes the following representations and warranties as the basis for its covenants herein: (a) The City is a statutory city duly organized and existing under the laws of the State. Under the provisions of the Act, the City has the power to enter into this Agreement and carry out its obligations hereunder. (b) The City proposes to grant abatement of taxes on the Minimum Improvements and provide the City Development Assistance, to assist in financing the construction and equipping of the Minimum Improvements, all for the purposes of increasing tax base, creating employment opportunities, and encouraging economic development within the City. Section 2.2. Representations by the County. The County makes the following representations and warranties as the basis for its covenants herein: (a) The County is a political subdivision of the State, duly organized and existing under the laws of the State. Under the provisions of the Act,the County has the power to enter into this Agreement and carry out its obligations hereunder. (b) The County proposes to grant abatement of taxes on the Development Property and the Minimum Improvements thereon, for the purposes of increasing the tax base, creating employment opportunities and encouraging economic development within the County. Section 2.3. Representations by the Authority. The Authority makes the following representations and warranties as the basis for its covenants herein: (a) The Authority is an economic development authority duly organized and existing under the laws of the State. Under the provisions of the EDA Act,the Authority has the power to enter into this Agreement and carry out its obligations hereunder. (b) The Authority proposes to provide financial assistance to the Developer through the Authority Loan to aid in the cost of equipping the Minimum Improvements for the purpose of increasing tax base,creating employment opportunities,and encouraging economic development within the City. Section 2.4. Representations and Warranties by the Developer. The Developer makes the following representations and warranties as the basis for its covenants herein: (a) The Developer is a corporation, duly organized and in good standing under the laws of the State of Delaware, is not in violation of any provisions of its operating agreement or its bylaws, is duly authorized to transact business within the State, has power to enter into this Agreement and has duly authorized the execution,delivery and performance of this Agreement by proper action of its officers. (b) The Developer has signed a lease with the Landlord for the Minimum Improvements and will separately equip and operate the Minimum Improvements. As required in the lease, the Developer will maintain the facility. The Developer will act in accordance with all local, state and federal laws and 428656v15 JAE SH155-316 6 regulations (including, but not limited to, environmental, zoning, building code and public health laws and regulations). (c) To the best of the Developer's knowledge, it has received no notice or communication from any local, State or federal official that the activities of the Developer with respect to the Minimum Improvements may be or will be in violation of any environmental law or regulation (other than those notices or communications of which the City is aware). The Developer is aware of no facts the existence of which would cause it to be in violation of or give any person a valid claim under any local, state or federal environmental law,regulation or review procedure with respect to the Minimum Improvements. (d) The Developer will cause the Minimum Improvements to be constructed in accordance with all local, State or federal energy-conservation laws or regulations. (e) The Developer will ensure that, in a timely manner, all required permits, licenses and approvals, and all requirements of all applicable local, State and federal laws and regulations will be obtained or met before it causes the Minimum Improvements to be lawfully constructed. (f) Neither the execution and delivery of this Agreement, the consummation of the transactions contemplated hereby, nor the fulfillment of or compliance with the terms and conditions of this Agreement is prevented, limited by or conflicts with or results in a breach of,the terms, conditions or provisions of any corporate restriction or any 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, which default or breach might prevent the Developer from performing its obligations under this Agreement. (g) The Developer shall promptly advise the City,the Authority,and the County in writing of all litigation or claims affecting any part of the Minimum Improvements and all written complaints and charges made by any governmental authority materially affecting the Minimum Improvements or materially affecting the Developer or its business which may delay or require changes in construction of the Minimum Improvements through the date of the Certificate of Completion. (h) The Developer is not in default under any Minnesota business subsidy agreement pursuant to Section 116J.994 of the Business Subsidy Act. (The remainder of this page is intentionally left blank.) 428656v15 JAE SH155-316 7 ARTICLE III Property Tax Abatement Section 3.1. Status of Development Property. As of the date of this Agreement,the Development Property and the Minimum Improvements are owned by the Landlord. The Developer has entered into a lease with the Landlord to lease the Development Property. Pursuant to the lease,the Developer will equip and operate its manufacturing facility within the Minimum Improvements. The City, the Authority, and the County shall have no obligation to acquire the Development Property or any portion thereof Section 3.2. Environmental Conditions. (a) The Developer acknowledges that the City and County make no representations or warranties as to the condition of the soils on the Development Property or the fitness of the Development Property for construction of the Minimum Improvements or any other purpose for which the Developer may make use of such property, and that the assistance provided to the Developer under this Agreement neither implies any responsibility by the City or County for any contamination of the Development Property nor imposes any obligation on such parties to participate in any cleanup of the Development Property. (b) Without limiting its obligations under Section 8.3 of this Agreement, the Developer further agrees that it will indemnify, defend, and hold harmless the City and the County and their governing body members, officers, and employees, from any claims or actions arising out of the presence, if any, of hazardous wastes or pollutants existing on or in the Development Property caused by the Developer's use and operation of the facility, unless and to the extent that such hazardous wastes or pollutants are present as a result of the actions or omissions of the indemnitees. Nothing in this section will be construed to limit or affect any limitations on liability of the City or County under State or federal law, including without limitation Minnesota Statutes,Sections 466.04 and 604.02. Section 3.3. Minimum Improvements. The Developer has signed a lease for the Minimum Improvements to operate a manufacturing facility. The Minimum Improvements consists of the construction of an approximately 187,000 square foot building for use as a manufacturing facility, office, and call center. The Developer agrees to purchase equipment for the operation of its manufacturing facility. Section 3.4. City Property Tax Abatement. (a) Generally. In order to make the Project economically feasible, the City will grant the City Abatement to the Developer commencing August 1, 2016 and continuing through February 1,2025. In no event shall the City Abatement exceed$89,431 in any year or a cumulative total of$758,771 over the term of the City Abatement. In no event shall the City Abatement and the County Abatement provided to the Developer from August 1,2016 through February 1, 2025 exceed $1,493,649. The City Abatement will reimburse the Developer for a portion of the costs of completing the Project. Subject to the City Abatement Capacity,the City shall pay the Developer the City Available Abatement each February 1 and August 1 (each a"Payment Date"), commencing August 1, 2016, and terminating on February 1, 2025. Both City and County each have the capacity to grant the respective tax abatements and these abatements will not exceed their capacity mentioned above. (b) Limitations. The pledge of City Available Abatement is subject to all the terms and conditions of the City Abatement Resolution. The City Available Abatement is payable solely from and to the extent of the City Abatement, and nothing herein shall be construed to obligate the City to make 428656v15 JAE SH155-316 8 payments from any other funds. The amount of the City Available Abatement will vary depending on the actual yearly taxes paid on the Development Property. At the time of this Agreement,the City represents and warrants that it has the capacity to fulfill the total benefits contemplated herein. The Developer further acknowledges that the total property tax abatements payable by the City in any year may not exceed the City Abatement Capacity,all pursuant to Section 469.1813,subdivision 8 of the Act. The City does not warrant or represent that the City Abatement in the amounts pledged under this Agreement will be within the City's Abatement Capacity. The City represents that it has previously granted four other abatements under the Act that are ongoing as of the date of this agreement and which shall be paid prior to the City Abatement hereunder. The City agrees that if the City grants any additional abatements under the Act during the term of this Agreement,the City's Abatement Capacity will be allocated first to the abatements granted prior to the date of this Agreement,next to the City Abatement pledged pursuant to this Agreement,and then to any additional abatements. Section 3.5. County Property Tax Abatement. (a) Generally. In order to make the Project economically feasible,the County will grant the County Abatement to the Developer commencing August 1, 2016 and continuing through February 1,2025. In no event shall the County Abatement exceed$86,615 in any year or a cumulative total of $734,878 over the term of the County Abatement. Further, in no event shall the cumulative City Abatement and County Abatement paid to the Developer during the term of this Agreement exceed an amount of$1,493,649. The County Abatement will reimburse the Developer for a portion of the costs of the Project. Subject to the County Abatement Capacity, the County shall pay the City the County Available Abatement on or before the business day prior to each Payment Date,commencing the business day prior to August 1, 2016 and continuing through the business day prior to February 1, 2025. The transfer by the County of the County Available Abatement to the City will be accompanied by electronic communication to the City's Finance Director providing the amount of the County Available Abatement transferred. The City shall disburse the County Available Abatement received pursuant to this Section to the Developer on each Payment Date. Both City and County each have the capacity to grant the respective tax abatements and these abatements will not exceed their capacity mentioned above. (b) Limitations. The pledge of County Available Abatement is subject to all the terms and conditions of the County Abatement Resolution. The County Available Abatement is payable solely from and to the extent of the County Abatement, and nothing herein shall be construed to obligate the County to make payments from any other funds. The amount of the County Available Abatement will vary depending on the actual yearly taxes paid on the Development Property. At the time of this Agreement, the County represents and warrants that it has the capacity to fulfill the total benefits contemplated herein. The Developer further acknowledges that the total property tax abatements payable by the County in any year may not exceed the County Abatement Capacity, all pursuant to Section 469.1813, subdivision 8 of the Act. The County does not warrant or represent that the County Abatement in the amounts pledged under this Agreement will be within the County's Abatement Capacity. The County represents that it has previously granted five other abatement under the Act that are ongoing as of the date of this agreement and which shall be paid prior to the County Abatement hereunder. The County agrees that if the County grants any additional abatements under the Act during the term of this Agreement, the County's Abatement Capacity will be allocated first to the abatements granted prior to the date of this Agreement, next to the County Abatement pledged pursuant to this Agreement,and then to any additional abatements. Section 3.6. City Development Assistance. In addition to the City Abatement and in consideration for the Developer's promise to cause the construction of,equip and operate the Minimum Improvements and create the jobs set forth in Section 3.10, the City has agreed to provide the Developer with up to 60 428656v15 JAE SH155-316 9 Metropolitan Council Environmental Services sewer access charge credits in the amount of up to $146,100 and 60 City sewer access charge credits in the amount of up to$28,500 for the Minimum Improvements(the "City Development Assistance"). If the Developer does not create the jobs required by Section 3.10 within two years of the Benefit Date,the Developer must repay all or a portion of the City Development Assistance as required by Section 3.10(c). Section 3.7. Minnesota Investment Fund Grant and Developer Loan. (a) The Authority intends to work together with the Developer to apply for a Minnesota Investment Fund Grant ("MIF Grant") from the State of Minnesota Department of Employment and Economic Development in the amount of$1,000,000. If the MIF Grant is obtained,the Authority intends to convey the grant funds to the Developer as a forgivable loan(the"Authority Loan"). (b) In the event that the MIF Grant is obtained, in consideration for the receipt of the proceeds,the Developer shall comply with all the requirements for the receipt of grant funds delineated in the MIF Grant Agreement and any additional documents required to be executed by the Authority including,but not limited to,a loan agreement and a security agreement. (c) In addition, any loan made to the Developer using proceeds of the MIF Grant constitutes a business subsidy and is subject to all of the provisions of Section 3.10 below. If the Developer does not complete the Minimum Improvements and does not create the jobs required by Section 3.10 within two years of the Compliance Date, the Developer must repay all or a portion of the loan provided by the Authority as required by Section 3.10(c). Section 3.8. Payment of Administrative Costs. The Developer will pay to the City all reasonable out-of-pocket costs incurred by the City and the County (including without limitation attorney and fiscal consultant fees) in the negotiation and preparation of this Agreement and other documents and agreements in connection with the development contemplated hereunder (collectively, the "Administrative Costs"). Administrative Costs shall be evidenced by invoices, statements or other reasonable written evidence of the costs incurred by the City or the County. The Developer shall pay the Administrative Costs from time to time within 30 days after receipt of written notice thereof from the City. The City shall transfer to the County any portion of Administrative Costs attributable to the County promptly upon receipt of payment from the Developer. Section 3.9. Records. The City, the Authority, and the County and their respective representatives shall have the right at all reasonable times after reasonable notice, with at least ten (10) days' notice, to inspect, examine and copy all books and records of Developer relating to the jobs and wages created by the Project. The parties to this Agreement will designate one point of contact to administer and manage records requests under this Section 3.9. The City, the Authority and the County acknowledge that the equipment, descriptions of equipment and operations and the layout of the Project are confidential and cannot become part of the public domain. Section 3.10. Business Subsidy Agreement. The provisions of this Section constitute the "business subsidy agreement" in connection with the business subsidy provided by the City, the Authority,and the County for the purposes of the Business Subsidy Act. (a) General Terms. The parties agree and represent to each other as follows: (1) The business subsidy provided to the Developer under this Agreement consists of (i)the City Abatement; (ii) the County Abatement; (iii) the City Development Assistance; and 428656v15 JAE SH155-316 10 (iv) the Authority Loan. All such payments and grants represent forgivable loans that are repayable by the Developer in accordance with this Section. (2) The public purposes of the subsidies are to provide employment opportunities, increase the tax base of the City and the County and encourage economic development within the City and the County. (3) The goals for the subsidies are to secure development of the Minimum Improvements, to maintain the Minimum Improvements as a manufacturing facility, call center and office facility for at least five years as described in clause (6) below, and to create the jobs and wage levels in accordance with Section 3.10(b)hereof. (4) If the goals described in clause (3) are not met, the Developer must make the payments to the City described in Section 3.10(c). (5) The subsidies are needed to induce the Developer to locate its operations in the City, thus enhancing job and tax base growth for the City, the County, and the State as a whole. Absent the subsidy provided in this Agreement,the expansion would likely occur in another city. (6) The Developer must continue operation of the Minimum Improvements as manufacturing facility, call center, and office center for at least five years after the date of the Developer occupies the Minimum Improvements,which shall be evidenced by the issuance of the Certificate of Completion. (7) In addition to the subsidies described in this Section 3.10(a), the Developer has also received financial assistance from the following other"grantors" as defined in the Business Subsidy Act, in connection with the Development Property or the Minimum Improvements: a grant from the Minnesota Department of Employment and Economic Development/Minnesota Job Skills Partnership in the amount of$377,955. (b) Job and Wage Goals. Within two years after the date of issuance of the Certificate of Completion of the Minimum Improvements (the "Compliance Date"), the Developer shall cause to be created at least 258 new full-time equivalent jobs on the Development Property and shall cause the wages for all employees on the Development Property to be no less than an average of $18.78 per hour, exclusive of benefits (based on Gross Salary). Notwithstanding anything to the contrary herein, if the wage and job goals described in this paragraph are met by the Compliance Date, those goals are deemed satisfied despite the Developer's continuing obligations under Sections 3.10(a)(6) and 3.10(d). The City, the Authority, and the County may, after public hearings held by the respective governing body and approval by both bodies, extend the Compliance Date by up to one year, provided that nothing in this section will be construed to limit the City's, the Authority's, or the County's legislative discretion regarding this matter. (c) Remedies. If the Developer fails to meet the goals described in Section 3.10(a)(3), this Agreement will be deemed terminated, and the Developer shall repay to the City upon written demand from the City a"pro rata share"of the City Abatement and the County Abatement, if any,as well as a pro rata share of the amounts disbursed to Developer with respect to the City Development Assistance. Any prorated repayment terms with respect to the Authority Loan will be pursuant to the agreed upon terms set forth in the negotiated agreement between Developer, the City and the Authority. The term "pro rata share"means percentages calculated as follows: 428656v15 JAE SH155-316 11 (i) Jobs Pro Rata Share_if the failure relates to the number of jobs,the jobs required less the jobs created,divided by the jobs required. For example, if Developer actually creates 200 jobs,the Jobs Pro Rata Share shall be(258-200)/258=Jobs Pro Rata Share; (ii) Wage Pro Rata Share-if the failure relates to wages,the number of jobs required less the number of jobs that meet the required wages,divided by the number of jobs required. For example, if Developer actually creates only 200 jobs meeting the average of $18.78 per hour wage requirement,the Wage Pro Rata Share shall be(258-200)/258=Wage Pro Rata Share; (iii) Operations Pro Rata Share - if the failure relates to maintenance of the manufacturing facility, call center, and office facility in accordance with Section 3.10(a)(6), 60 less the number of months of operation as a manufacturing facility, call center, and office facility (where any month in which the facility is in operation for at least 15 days constitutes a month of operation), commencing on the date of the certificate of occupancy (May 27, 2014) and ending with the date the facility ceases operation as determined by the City, divided by 60. For example, if Developer actually operates the Minimum Improvements in Minnesota for 50 months following the issuance of the certification of occupancy, the Operations Pro Rata Share shall be (60-50)/60 =Operations Pro Rata Share; and (iv) if more than one of clauses (i) through (iii) apply, the sum of the applicable percentages,not to exceed 100%. Notwithstanding the foregoing, instead of terminating the payment of the City Abatement, the County Abatement, the City Development Assistance, and the Authority Loan upon the Developer's failure to meet the goals described in Section 3.10(a)(3), the City, the Authority, and the County may independently determine to continue their respective payments under this Agreement but reduce the amount of such assistance using the pro rata reduction formula set forth above. Any amounts received under this Section by the City and related to payments of the City Abatement and the County Abatement shall be distributed between the City and the County based on the pro rata amount of Tax Abatements that have been paid by each entity to the Developer. Promptly upon receipt of any repayment by the Developer, the City will remit to the County a pro rata amount attributable to the Tax Abatements paid by the County. Nothing in this Section shall be construed to limit the City's, Authority's, or County's remedies under Article IX hereof. In addition to the remedy described in this Section and any other remedy available to the City, the Authority, or the County for failure to meet the goals stated in Section 3.10(a)(3),the Developer agrees and understands that it may not a receive a business subsidy from the City, the Authority,the County, or any other grantor(as defined in the Business Subsidy Act) for a period of five years from the date of the failure or until the Developer satisfies its repayment obligation under this Section,whichever occurs first. (d) Reports. The Developer must submit to the City, with a copy to the Authority and the County, a written report regarding business subsidy goals and results by no later than March 1 of each year, commencing March 1, 2014, and continuing until the later of (i) the date the goals stated in Section 3.10(a)(3) are met; (ii) 30 days after expiration of the five-year period described in Section 3.10(a)(6); or (iii) if the goals are not met, the date the subsidy is repaid in accordance with Section 3.10(c). The report must comply with Section 116J.994, subdivision 7 of the Business Subsidy Act and can be found on the website for Minnesota Department of Employment and Economic Development (http://mn.gov/deed/government/business-subsidy/report-forms/index jsp). Pursuant to Section 116J.994, subd. 7(d)of the Business Subsidy Act, if the Developer fails to timely file any report required under this Section, the City will mail the Developer a warning within one week after the required filing date. If, after 14 days of the postmarked date of the warning,the Developer fails to provide a report,the Developer 428656v15 JAE SH155-316 12 must pay to the City a penalty of$100 for each subsequent day until the report is filed. The maximum aggregate penalty payable under this Section is $1,000. The City will file, on behalf of the City, the Authority, and the County,any reports required to be filed with the State under the Business Subsidy Act. Section 3.11. Restrictions on Use. The Developer agrees that it shall operate the Minimum Improvements thereon as a manufacturing facility, office, and call center for the term of this Agreement; provided that after expiration of the five-year period described in Section 3.10(a)(6), the repayment remedy described in Section 3.10(c) will not be imposed on Developer for default under this Section However, if the Developer fails to operate the Minimum Improvements as a manufacturing facility, office, and call center for the term of this Agreement,the City or the County may decrease or discontinue the future payment of City Abatement or County Abatement, as applicable. Section 3.12. Job and Wage Maintenance. Pursuant to Section 3.10(b),the Developer shall cause to be created at least 258 new full-time equivalent jobs in the City. In addition,within five years after the date of the issuance of the certificate of occupancy of the Minimum Improvements (May 27,2014), the Developer shall cause to be created a total of 329 new full-time equivalent jobs (including the 258 jobs required by Section 3.10(b)). The Developer further covenants that within five years after the date the Developer occupies the Minimum Improvements, the Developer shall cause the jobs created pursuant to the terms of this Agreement to have an average wage of at least $18.78 or more, exclusive of benefits (based on Gross Salary). After the expiration of the reporting requirement set forth in Section 3.10(d) under the Business Subsidy Agreement,the Developer must continue to submit to the City,with a copy to the County, a report from the Developer's payroll application that shows the number of employees, their wage levels, along with benefits allocations, in order to determine whether the job and average wage requirements required under this Agreement continue to be met. The report must be filed no later than February 1 of each year during the term of this Agreement. If the Developer fails to meet and sustain the job and average wage requirements set forth in this Section 3.12 during the term of this Agreement, the County and the City may each independently determine whether to continue their respective payments under this Agreement, continue their respective payments but reduce the amount of County Abatement or City Abatement, terminate the payment of County Abatement or City Abatement, or pursue the remedies set forth in Section 9.2 hereof. (The remainder of this page is intentionally left blank.) 428656v15 JAE SH155-316 13 ARTICLE IV Construction of Minimum Improvements Section 4.1. Completion of Construction. The City hereby acknowledges that the Minimum Improvements have been completed by Landlord. (The remainder of this page is intentionally left blank.) 428656v15 JAE SH155-316 14 ARTICLE V Insurance and Condemnation Section 5.1. Insurance. (a) [Reserved] (b) During the term of this Agreement, the Landlord shall maintain, or cause to be maintained, at its cost and expense, and from time to time at the request of the City or the County shall furnish proof of the payment of premiums on,insurance as follows: (i) Insurance against loss and/or damage to the Minimum Improvements under a policy or policies covering such risks as are ordinarily insured against by similar businesses. (ii) Landlord and Developer will maintain comprehensive general public liability insurance, including personal injury liability (with employee exclusion deleted), against liability for injuries to persons and/or property, in the minimum amount for each occurrence and for each year of$2,000,000 and$5,000,000 in the aggregate. (iii) Such other insurance, including workers' compensation insurance respecting all employees of the respective Landlord or Developer, in such amount as is customarily carried by like organizations engaged in like activities of comparable size and liability exposure; provided that the Developer may be self-insured with respect to all or any part of its liability for workers' compensation. (c) All insurance required in Article V of this Agreement shall be taken out and maintained in responsible insurance companies selected as appropriate by the Landlord or Developer which are authorized under the laws of the State to assume the risks covered thereby. Upon reasonable request,the Landlord and/or the Developer will deposit or cause to be deposited with the City certificates of insurance evidencing that such insurance is in force and effect. In lieu of separate policies as outlined in the lease between Landlord and Developer dated July 30, 2013, the Landlord and/or Developer may maintain or cause to be maintained a single policy, blanket or umbrella policies, or a combination thereof, having the coverage required herein. (d) The Landlord will notify the City, the Authority, and the County promptly in the case of damage exceeding$1,000,000 in amount to, or destruction of,the Minimum Improvements or any portion thereof resulting from fire or other casualty. In such event the Landlord will promptly repair,reconstruct and restore the Minimum Improvements to substantially the same or an improved condition or value as it existed prior to the event causing such damage, or with modifications to the Minimum Improvements that are approved by the City, the Authority, and the County in writing, and, to the extent necessary to accomplish such repair, reconstruction and restoration, the Landlord will apply the net proceeds of any insurance relating to such damage received by the Landlord to the payment or reimbursement of the costs thereof. A request to the City, the Authority, and the County to approve modifications to the Minimum Improvements prior to repair, reconstruction or restoration of the Minimum Improvements shall not be unreasonably withheld. Any failure to request such certificate if not received by the Landlord shall constitute a waiver of the Landlord's responsibilities under this Article V. A failure within a commercially reasonable period to repair,reconstruct and restore the Minimum Improvements as required by this Section 5.1(d) will be considered an Event of Default under this 428656v15 JAE SH155-316 15 Agreement. If an Event of Default of the Landlord occurs under this Section 5.1(d), the City, the Authority, and/or the County,following the expiration of the applicable notice and cure period set forth in Section 9.2 of this Agreement, may decrease or discontinue future payments of City Abatement and County Abatement pursuant to Sections 3.10, 3.11 or 3.12, or if the obligations of the Developer set forth in Section 3.10 have not been satisfied, the City, the Authority and the County may require repayment pursuant to Section 3.10(c). No other remedies are available to the City, the Authority or the County for an Event of Default of the Developer or Landlord under this Section 5.1(d). (e) All of the insurance provisions set forth in this Article V shall terminate upon the termination of this Agreement. (The remainder of this page is intentionally left blank.) 428656v15 JAE SH155-316 16 ARTICLE VI Taxes; Special Assessments Section 6.1. Right to Collect Delinquent Taxes. The Developer acknowledges that the City, Authority, and County are providing substantial aid and assistance in furtherance of the Project pursuant to this Agreement. The Developer understands that the City Abatement and County Abatement pledged pursuant to this Agreement are derived from real estate taxes on the Development Property, which taxes must be promptly and timely paid. To that end, so long as the Lease remains in effect, the Developer agrees for itself, its successors and assigns, that it is also obligated by reason of this Agreement and pursuant to its lease with the Landlord to pay before delinquency all real estate taxes assessed against the Development Property and the Minimum Improvements during the term of the Lease. The Developer acknowledges that this obligation creates a contractual right on behalf of the City, the Authority, or the County to sue the Developer or its successors and assigns to collect delinquent real estate taxes and any penalty or interest thereon and to pay over the same as a tax payment to the County auditor. In any such suit, the City, the Authority, and the County shall also be entitled to recover their costs, expenses and reasonable attorney fees. Section 6.2. Reduction of Taxes. Prior to the termination of this Agreement,the Developer will not (a) cause a reduction in the real property taxes paid in respect of the Development Property through willful destruction of the Minimum Improvements or any part thereof; (b)fail to reconstruct the Minimum Improvements if damaged or destroyed, as required under Section 5.1(d) hereof; or(c) convey or transfer or allow conveyance or transfer of its leasehold interests in the Development Property to any entity that is exempt from payment of real property taxes under State law. The Developer may seek a reduction of the assessor's estimated market value of the Development Property. However, such activity must be preceded by written notice from the Developer to the City and the County indicating its intention to do so. Upon receiving such notice,the City and/or the County may suspend or reduce payments of the City Available Abatement or the County Available Abatement, as applicable, until the actual amount of the reduction in market value of the Development Property is determined, whereupon the City and the County will make the suspended payments of City Available Abatement or County Available Abatement, less any amount that the City and/or the County are required to repay the County as a result of any retroactive reduction in market value of the Development Property. During the period that the payments of City Available Abatement or County Available Abatement are subject to suspension, the City and the County may make partial payments of City Available Abatement or County Available Abatement, as applicable, from the amounts subject to suspension, if each determines, in its reasonable discretion, that the amount retained will be sufficient to cover any repayment of property taxes which the County may require. The suspension of payments pursuant to this Section shall not be considered a default under Section 9.1 hereof. (The remainder of this page is intentionally left blank.) 428656v15 JAE SH155-316 17 ARTICLE VII [Reserved.] 428656v15 JAE SH155-316 18 ARTICLE VIII Prohibitions Against Assignment and Transfer; Indemnification Section 8.1. Representation as to Development. The Developer has a leasehold interest in the Development Property and intends to lease the Minimum Improvements for at least as long as the term of this Agreement. Section 8.2. Prohibition Against Landlord's Transfer of Property and Assignment of Agreement. (a) Reserved. (b) In the event the Developer, upon transfer of all or any portion of its leasehold interest in the Development Property or any portion thereof, seeks to be released from its obligations under this Agreement as to the portions of the Development Property that is transferred or assigned, the City, the Authority, and the County shall be entitled to require, except as otherwise provided in the Agreement, as conditions to any such release that: (i) Any proposed transferee shall have the qualifications and financial responsibility, in the reasonable judgment of the City, the Authority, and the County, necessary and adequate to fulfill the obligations undertaken in this Agreement by the Developer as to the portion of the Development Property to be transferred. (ii) Any proposed transferee, by instrument in writing satisfactory to the City, the Authority, and the County and in form recordable in the public land records of the County, shall, for itself and its successors and assigns, and expressly for the benefit of the City, the Authority, and the County, have expressly assumed all of the obligations of the Developer under this Agreement as to the portion of the Development Property to be transferred and agreed to be subject to all the conditions and restrictions to which the Developer is subject as to such portion; provided, however, that the fact that any transferee of, or any other successor in interest whatsoever to, the Development Property, or any part thereof, shall not, for whatever reason, have assumed such obligations or so agreed, and shall not(unless and only to the extent otherwise specifically provided in this Agreement or agreed to in writing by the City,the Authority, and the County)deprive the City,the Authority, and the County of any rights or remedies or controls with respect to the Development Property or any part thereof or the construction and equipping of the Minimum Improvements; it being the intent of the parties as expressed in this Agreement that(to the fullest extent permitted at law and in equity and excepting only in the manner and to the extent specifically provided otherwise in this Agreement) no transfer of, or change with respect to, ownership in the Development Property or any part thereof, or any interest therein, however consummated or occurring, and whether voluntary or involuntary, shall operate, legally or practically, to deprive or limit the City, the Authority, and the County of or with respect to any rights or remedies on controls provided in or resulting from this Agreement with respect to the Minimum Improvements that the City, the Authority, and the County would have had, had there been no such transfer or change. In the absence of specific written agreement by the City, the Authority, and the County to the contrary,no such transfer or approval by the City,the Authority, and the County shall be deemed to relieve the Developer,or any other party bound in any way by this Agreement or otherwise with respect to the construction and equipping of the Minimum Improvements, from any of its obligations with respect thereto. 428656v15 JAE S11155-316 19 (iii) Any and all instruments and other legal documents effecting the transfer of any interest in this Agreement or the Development Property governed by this Article VIII, shall be in a form reasonably satisfactory to the City,the Authority,and the County. In the event the foregoing conditions are satisfied then the Developer shall be released from its obligation under this Agreement, as to the portion of the Development Property that is transferred, assigned or otherwise conveyed. The restrictions under this Section terminate upon issuance of the Certificate of Completion. Section 8.3. Release and Indemnification Covenants. (a) The City, the Authority, and County and the governing body members, officers, agents, servants and employees thereof(the"Indemnified Parties") shall not be liable for and the Developer shall indemnify and hold harmless the Indemnified Parties against any loss or damage to property or any injury to or death of any person occurring at or about or resulting from any defect in the Development Property or the Minimum Improvements related to the Developer's use and operation of the Minimum Improvements. (b) Except for any willful misrepresentation or any willful or wanton misconduct or negligence of the Indemnified Parties, and except for any breach by any of the Indemnified Parties of their obligations under this Agreement, 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 this Agreement, or the transactions contemplated hereby or the lease, equipping, maintenance and operation of the Development Property or the Minimum Improvements. (c) Except for any willful misrepresentation or any willful or wanton misconduct or negligence of the Indemnified Parties,the Indemnified Parties shall not be liable for any damage or injury to the persons or property of the Developer or its officers, agents, servants or employees or any other person who may be about the Development Property or Minimum Improvements during the term of Developer's leasehold interest in the Development Property and the Minimum Improvements. (d) All covenants, stipulations, promises, agreements and obligations of the City, Authority, and County contained herein shall be deemed to be the covenants, stipulations, promises, agreements and obligations of such entities and not of any governing body member,officer,agent, servant or employee of such entities in the individual capacity thereof. 428656v15 JAE SH155-316 20 ARTICLE IX Events of Default Section 9.1. Events of Default Defined. The following shall be "Events of Default" under this Agreement and the term"Event of Default"shall mean,whenever it is used in this Agreement, any one or more of the following events: (a) failure by the Developer to observe or perform any covenant, condition, obligation or agreement on its part to be observed or performed hereunder; (b) if the Developer shall (i) file any petition in bankruptcy or for any reorganization, arrangement, composition, readjustment, liquidation, dissolution, or similar relief under the United States Bankruptcy Act or under any similar federal or State law; or (ii) make a general assignment for benefit of its creditors; or (iii) admit in writing its inability to pay its debts generally as they become due;or (iv) be adjudicated a bankrupt or insolvent. Section 9.2. Remedies on Default. Whenever any Event of Default referred to in Section 9.1 of this Agreement occurs, the City, Authority, or County may each exercise any of the following rights under this Section 9.2 after providing thirty business days' written notice to the Developer of the Event of Default, but only if the Event of Default has not been cured within said thirty business days or, if the Event of Default is by its nature incurable within thirty business days, the Developer does not, within such thirty business day period, provide assurances reasonably satisfactory to the party providing notice of default that the Event of Default will be cured and will be cured as soon as reasonably possible: (a) Suspend its performance under the Agreement until it receives reasonably satisfactory assurances that the Developer will cure its default and continue its performance under the Agreement. (b) Cancel and rescind or terminate its obligations under the Agreement,provided that: (i) if the City terminates its obligations under the Agreement, it shall have no obligation to make payments of City Abatement, except for any payments of City Abatement due and unpaid from periods when the Developer was not in default; (ii) if the County terminates its obligations under the Agreement, it shall have no further obligations to make payments of County Abatement to the City hereunder, except for any payments of County Abatement due and unpaid from periods when the Developer was not in default, and the City shall have no obligation to make payments of County Abatement to the Developer except for any payments of County Abatements due and unpaid from periods when the Developer was not in default; (iii) if the City and County both terminate their obligations hereunder, respectively, this Agreement shall be deemed terminated and the City shall have no further obligations thereunder (except for any payments of City Abatement and County Abatement due and unpaid from periods 428656v15 JAE SH155-316 21 when the Developer was not in default). Except as otherwise provided in Section 3.10(c), the City may not terminate its obligations to make payments under this Agreement unless the City and County have both terminated their obligations hereunder. (c) Take whatever action, including legal, equitable or administrative action, which may appear necessary or desirable to collect any payments due under this Agreement, or to enforce performance and observance of any obligation, agreement, or covenant of the Developer under this Agreement. The City,the Authority and the County shall not have the right to enforce performance of the Developer's obligations to repair, reconstruct or restore the Minimum Improvements with proceeds of insurance pursuant to Section 5.1(d), or the Developer's obligations to create jobs and wages and operate the Minimum Improvements as a manufacturing facility for at least five years under Sections 3.10, 3.11 and 3.12. Notwithstanding the foregoing, the City, the Authority and the County shall have the right to enforce the Developer's repayment obligations set forth in Section 3.10 and 3.12 if the Developer's fails to satisfy the requirements of Sections 3.10 and 3.12. Section 9.3. No Remedy Exclusive. No remedy herein conferred upon or reserved to any party is intended to be exclusive of any other available remedy or remedies,but each and every such remedy shall be cumulative and shall be in addition to every other remedy given under this Agreement or now or hereafter existing at law or in equity or by statute. No delay or omission to exercise any right or power accruing upon any default shall impair any such right or power or shall be construed to be a waiver thereof, but any such right and power may be exercised from time to time and as often as may be deemed expedient. In order for the City, the Authority, or the County to exercise any remedy reserved to it, it shall not be necessary to give notice, other than such notice as may be required in this Article IX. Notwithstanding the foregoing,the remedies of the City,Authority,or County are limited to those remedies expressly set forth in Section 9.2 or Sections 3.6, 3.7, 3.8, 3.10, 3.11, and 3.12 of this Agreement. Without limiting the generality of the foregoing, the City, Authority, or County shall not be entitled to money damages or the remedy of specific performance against Developer. The foregoing does not exclude the monetary payments or repayments the City, Authority and County may be entitled to pursuant in Sections 3.6,3.7,3.8, 3.10, 3.11, 3.12,and 9.5. In addition,the foregoing shall not impair the City,Authority or County's rights to indemnification under Sections 3.2 and 8.3. Section 9.4. No Additional Waiver Implied by One Waiver. In the event any agreement contained in this Agreement should be breached by either party and thereafter waived by the other party, such waiver shall be limited to the particular breach so waived and shall not be deemed to waive any other concurrent,previous or subsequent breach hereunder. Section 9.5. Attorney Fees. Whenever any Event of Default occurs and if the City, the Authority, or Developer shall employ attorneys or incur other expenses for the collection of payments due or to become due or for the enforcement of performance or observance of any obligation or agreement on the part of the Developer, the Authority, or the City under this Agreement, the non-prevailing party or parties in any such action agrees that it shall,within 30 business days of written demand by the prevailing party or parties,pay to the prevailing party or parties the reasonable fees of such attorneys and such other reasonable expenses so incurred. If the County shall employ attorneys or incur other expenses for the collection of payments due or to become due or for the enforcement of performance or observance of any obligation or agreement on the part of the Developer or the City under this Agreement,it shall pay its own attorney fees and expenses, regardless of what party is the prevailing party and shall not pay the attorneys' fees or expenses of any other party to this Agreement. Section 9.6. Default by City, Authority, or County. Notwithstanding anything to the contrary herein, in the event the City, Authority, or County fails to perform any covenant, condition, obligation or 428656v15 JAE SH155-316 22 agreement on its part, and such failure has not been cured within 30 business days after receipt of written notice to the party from the Developer, or if such failure is by its nature incurable within 30 business days, the party does not, within such 30 business day limit, provide assurances reasonably satisfactory to the Developer that the failure will be cured as soon as reasonably possible, then the Developer may exercise such remedies as may be available at law or in equity with respect to the defaulting party. The terms of Sections 9.3,9.4,and 9.5 shall apply in favor of the Developer as well as the City,Authority, and County. (The remainder of this page is intentionally left blank.) 428656v15 JAE SH155-316 23 ARTICLE X Additional Provisions Section 10.1. Conflict of Interests; Representatives Not Individually Liable. The City,Authority, and County and the Developer, to the best of their respective knowledge, represent and agree that no member, official, or employee of the City, the Authority, or the County shall have any personal interest, direct or indirect, in the Agreement, nor shall any such member, official, or employee participate in any decision relating to the Agreement which affects his personal interests or the interests of any corporation, partnership, or association in which he is, directly or indirectly, interested. No member, official, or employee of the City, Authority, or County shall be personally liable to the Developer, or any successor in interest, in the event of any default or breach by the City, Authority, or County or for any amount which may become due to the Developer or successor or on any obligations under the terms of the Agreement. Section 10.2. Equal Employment Opportunity. The Developer, for itself and its successors and assigns, agrees that during the term of this Agreement it will comply with all applicable federal, state and local equal employment and non-discrimination laws and regulations. Section 10.3. Provisions Not Merged With Deed. None of the provisions of this Agreement are intended to or shall be merged by reason of any deed transferring any interest in the Development Property and any such deed shall not be deemed to affect or impair the provisions and covenants of this Agreement. Section 10.4. 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 10.5. Notices and Demands. Except as otherwise expressly provided in this Agreement, a notice, demand, or other communication under the Agreement by either party to the other shall be sufficiently given or delivered if it is dispatched by registered or certified mail, postage prepaid, return receipt requested,or delivered personally; and (a) in the case of the Developer,is addressed to or delivered personally to the Developer at Shutterfly,Inc. Attn:Ray Montalvo 2800 Bridge Parkway Redwood City,CA 94065 and Shutterfly, Inc. Attn: Charlotte Falla 2800 Bridge Parkway Redwood City,CA 94065 (b) in the case of the City, is addressed to or delivered personally to City Hall, 129 Holmes Street South, Shakopee,Minnesota 55379;Attention: City Administrator; 428656v15 JAE SH155-316 24 (c) in the case of the Authority, is addressed to or delivered personally to City Hall, 129 Holmes Street South, Shakopee,Minnesota 55379;Attention: Executive Director; (d) in the case of the County, is addressed to or delivered personally to the County at the Scott County Government Center, 200 Fourth Avenue West, Shakopee, Minnesota 55379; Attention: County Auditor. or at such other address with respect to either such party as that party may,from time to time,designate in writing and forward to the other as provided in this Section. Section 10.6. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall constitute one and the same instrument. Section 10.7. Recording. The City may record this Agreement and any amendments thereto with the Scott County Recorder. The Developer shall pay all costs for recording. (The remainder of this page is intentionally left blank.) 428656v15 JAE SH155-316 25 IN WITNESS WHEREOF,the City,Authority,County, and Developer have caused this Contract for Private Development to be duly executed by their duly authorized representatives as of the date first above written. CITY OF SHAKOPEE,MINNESOTA By: Its: Mayor By: Its: City Administrator STATE OF MINNESOTA ) ) SS. COUNTY OF SCOTT ) The foregoing instrument was acknowledged before me this day of October, 2014, by Brad Tabke,the Mayor of the City of Shakopee,Minnesota,on behalf of the City. Notary Public STATE OF MINNESOTA ) ) SS. COUNTY OF SCOTT ) The foregoing instrument was acknowledged before me this day of October,2014,by Mark McNeill,the City Administrator of the City of Shakopee,Minnesota,on behalf of the City. Notary Public 428656v15 JAE SH155-316 S-1 Execution page of the Authority to the Contract for Private Development, dated as of the date and year first written above. ECONOMIC DEVELOPMENT AUTHORITY FOR THE CITY OF SHAKOPEE,MINNESOTA By: Its: President By: Its: Executive Director STATE OF MINNESOTA ) ) SS. COUNTY OF SCOTT ) The foregoing instrument was acknowledged before me this day of October, 2014, by , the President of the Economic Development Authority for the City of Shakopee,Minnesota,on behalf of the Authority. Notary Public STATE OF MINNESOTA ) ) SS. COUNTY OF SCOTT ) The foregoing instrument was acknowledged before me this day of October, 2014, by Mark McNeill, the Executive Director of the Economic Development Authority for the City of Shakopee, Minnesota,on behalf of the Authority. Notary Public 428656v15 JAE SH155-316 S-2 Execution page of the County to the Contract for Private Development, dated as of the date and year first written above. SCOTT COUNTY,MINNESOTA By: Its: Board Chair By: Its: County Administrator Approved as to form: By: County Attorney STATE OF MINNESOTA ) ) SS. COUNTY OF SCOTT ) The foregoing instrument was acknowledged before me this day of October, 2014, by Tom Wolf, the Board Chair of the Board of Commissioners of Scott County, Minnesota, on behalf of the County. Notary Public STATE OF MINNESOTA ) ) SS. COUNTY OF SCOTT ) The foregoing instrument was acknowledged before me this day of October, 2014, by Gary Shelton,the County Administrator of Scott County,Minnesota,on behalf of the County. Notary Public 428656v15 JAE SH155-316 S-3 Execution page of the Developer to the Contract for Private Development, dated as of the date and year first written above. SHUTTERFLY,INC. By: Its: STATE OF CALIFORNIA ss. COUNTY OF On , before me, , Notary Public, personally appeared , who proved to me on the basis of satisfactory evidence to be the person whose name is subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity, and that by his/her/their signature on the instrument the person, or the entity upon behalf of which the person acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal. (Seal) (Signature) 428656v15 JAE SH155-316 S_4 SCHEDULE A DEVELOPMENT PROPERTY Tract C,Registered Land Survey No. 199, Scott County,Minnesota,together with the appurtenant easements contained in that certain Declaration of Easements and Covenants dated January 13, 2006,filed July 13,2006 as Document No. T 178019 And Lots 1,2,and 3,Block 2,Dean Lakes Fifth Addition,according to the recorded plat thereof, Scott County,Minnesota 428656v15 JAE SH155-316 A-1 CITY OF SHAKOPEE,MINNESOTA RESOLUTION NO.7511 RESOLUTION APPROVING CONTRACT FOR PRIVATE DEVELOPMENT WITH THE ECONOMIC DEVELOPMENT AUTHORITY FOR THE CITY OF SHAKOPEE,MINNESOTA,SCOTT COUNTY AND SHUTTERFLY,INC. FOR CERTAIN PROPERTY IN THE CITY OF SHAKOPEE BE IT RESOLVED by the City Council (the "City Council") of the City of Shakopee, Minnesota (the"City")as follows: Section 1. Recitals. 1.01. Ryan Companies US, Inc., a Minnesota corporation, constructed an approximately 187,000 square foot building for use as a manufacturing facility, office, and call center (the "Minimum Improvements") on real property located in the City and subsequently sold the building to Broadstone Net Lease Acquistions, LLC. Shutterfly, Inc., a Delaware corporation, or any of its affiliates (the "Developer"),has proposed to lease the Minimum Improvements and purchase equipment for the Minimum Improvements in order to operate a manufacturing facility with related office and call center space. 1.02. To help pay for the costs of the Minimum Improvements, the Developer has requested financial assistance from the City in the form of a property tax abatement (the "Abatement") pursuant to Minnesota Statutes, Sections 469.1812 to 469.1815 (the "Abatement Act"). On August 7, 2013, the City Council adopted a resolution agreeing to provide the Developer with the Abatement for a maximum term of nine years and in the maximum amount of $758,771, with an annual maximum of $86,615. On August 7,2013, the City Council also adopted a resolution approving sewer access charge credits from the City to the Developer in the maximum amount of$174,600(the"City Development Assistance"). 1.03. On August 7, 2013, the Board of Commissioners of the Economic Development Authority for the City of Shakopee, Minnesota(the "Authority") approved a loan to the Developer in the maximum amount of $1,000,000 from the proceeds of a Minnesota Investment Grant from the Department of Employment and Economic Development(the"Authority Loan"). 1.04. On August 20, 2013, the Board of Commissioners of Scott County, Minnesota (the "County") agreed to abate a portion of the County's taxes for the benefit of the Developer for a maximum term of nine years in the maximum amount of up to$734,878,with an annual maximum of$86,615. 1.05. A form of Contract for Private Development between the City, the Authority, the County, and the Developer(the "Contract for Private Development") has been presented to the City Council, which sets forth the terms of the Abatements provided by the City and the County, the City Development Assistance,and the Authority Loan. 1.06. The Contract for Private Development incorporates a business subsidy agreement within the meaning of Minnesota Statutes, Sections 1161993 to 116J.995 (the"Business Subsidy Act"), setting certain goals in connection with the subsidy represented by the Abatements,the City Development Assistance, and the Authority Loan. The Contract for Private Development is incorporated herein by reference. 431905v1 JAE SH155-316 1 1.07. On August 7, 2013, the Council conducted a duly noticed public hearing regarding the Abatement and the Business Subsidy described in this resolution, and regarding the business subsidy agreement incorporated in the Contract for Private Development, all in accordance with the Abatement Act and the Business Subsidy Act,at which the views of all interested persons were heard. Section 2. Findings. 2.01. The recitals set forth above are incorporated into this resolution. 2.02. The Contract for Private Development is hereby in all respects authorized, approved, and confirmed and the Mayor and City Administrator are hereby authorized and directed to execute and deliver the Contract for Private Development for and on behalf of the City in substantially the form now on file with the City but with such modifications as shall be deemed necessary, desirable or appropriate,their execution thereof to constitute such conclusive evidence of their approval of any and all modifications therein. Section 3. Implementation. The Mayor and the City Administrator are authorized and directed to execute and deliver any additional agreements, certificates or other documents that the City determines are necessary to implement this resolution. Section 4. Effective Date. This resolution is effective upon the date of its adoption. Approved by the City Council of the City of Shakopee, Minnesota this 4th day of November, 2014. Brad Tabke,Mayor ATTEST: Julie Linnihan,Finance Director/City Clerk 431905v1 JAE SH155-316 2