HomeMy WebLinkAbout3.B. Approval of Contract for Private Development (including a business subsidy agreement) with Shutterfly, Inc. Res. No. 2014-6 Consent Business
3• B.
SHAKOPEE
TO: Economic Development Authority
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. 2014-6
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.
Action Sought
The Economic Development Authority is asked to adopt Resolution No. 2014-6,A Resolution Approving the
Contract for Private Development with the City of Shakopee,Minnesota, Scott County, and Shutterfly, Inc. for
Certain Property in the City of Shakopee.
Attachments: Res.No.2014-6
Development Agreement
ECONOMIC DEVELOPMENT AUTHORITY FOR THE
CITY OF SHAKOPEE,MINNESOTA
RESOLUTION NO.2014-6
RESOLUTION APPROVING CONTRACT FOR PRIVATE
DEVELOPMENT WITH THE CITY OF SHAKOPEE,SCOTT COUNTY AND SHUTTERFLY,
INC.FOR CERTAIN PROPERTY IN THE CITY OF SHAKOPEE
BE IT RESOLVED by the Board of Commissioners (the "Board") of Economic Development
Authority for the City of Shakopee,Minnesota(the"Authority")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 of Shakopee, Minnesota(the"City") and subsequently
sold the building to Broadstone Net Lease Acquistions,LLC. Shutterfly, Inc., a Delaware corporation(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 held a public hearing and 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 the date hereof, the Board of 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 Board, 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 116J.993 to 1161995 (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.
1.07. On August 7,2013,the City Council of the City, as designee of the Authority, conducted a
duly noticed public hearing regarding the Authority Loan and the Business Subsidy described in this
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resolution, and regarding the business subsidy agreement incorporated in the Contract for Private
Development, all in accordance with 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 President and Executive Director are hereby authorized and directed to execute and deliver
the Contract for Private Development for and on behalf of the Authority in substantially the form now on file
with the Authority 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 President and the Executive Director are authorized and directed to
execute and deliver any additional agreements, certificates or other documents that the Authority determines
are necessary to implement this resolution.
Section 4. Effective Date. This resolution is effective upon the date of its adoption.
Sworn and Executed Under My Hand this 4th day of November,2014
Matt Lehman,President
Mark McNeill,Executive Director
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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
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TABLE OF CONTENTS
Page
PREAMBLE
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
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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
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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:
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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 1161993 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 SH155-316 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.
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428656v15 JAE SH155-316 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 1161994 of the Business Subsidy Act.
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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 MW 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 MW 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 MW 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 1161994,
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
428656vI5 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.
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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.
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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.
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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.
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428656v15 JAE 5H155-316 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 SH155-316 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.
428656vI5 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.
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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 5H155-316 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.
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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
428656vI5 JAE SH155-316 A-1