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HomeMy WebLinkAbout09.24.07 Work Session Packet City ofFamrington 325 Oak Street Famrington, MN 55024 Mission Statement Through teamwork and cooperation, the City of Farmington provides quality services that preserve our proud past and foster a promising future. AGENDA SPECIAL CITY COUNCIL MEETING SEPTEMBER 24, 2007 6:00 P.M. CITY COUNCIL CHAMBERS Action Taken 1. CALL TO ORDER 6:00 P.M. 2. PLEDGE OF ALLEGIANCE 3. ROLL CALL 4. APPROVEAGENDA 5. PETITIONS, REQUESTS AND COMMUNICATIONS a) Review and Approval of Vermillion River Crossing Closing Documents- City Attorney 6. ADJOURN SECOND AMENDMENT TO DEVELOPMENT CONTRACT THIS SECOND AMENDMENT TO DEVELOPMENT CONTRACT (the "Amendment") dated this day of ,2007, by, between and among the CITY OF FARMINGTON, a Minnesota municipal corporation ("City"), and VERMILLION RIVER CROSSING, LLC, a Minnesota limited liability company ("Developer"), and for the sole purpose of consent, DOUGHERTY FUNDING, LLC, a Minnesota limited liability company ("Lender"). RECITALS A. As a condition of final plat approval for VERMILLION RIVER CROSSINGS the Developer was required to enter into a Development Contract providing for the construction of specified public and private improvements. The City and Developer entered into that certain Development Contract dated August 1, 2005, recorded October 26, 2005 in the office of the Dakota County Recorder as Document No. 2374405 (the "Development Contract"). B. The Developer assigned the Development Contract to the Lender for collateral purposes pursuant to that certain Assignment of Development Contract and Development Rights dated September 9, 2005 (the "Collateral Assignment"). C. The Development Contract was modified by that certain First Amendment to Development Contract between the parties dated May 15, 2006, recorded in the office of the Dakota County Recorder as Document No. 2431735 (the "First Amendment"). D. The Development Contract provided a deadline for construction of the public improvements, established financial security to ensure satisfactory completion of those improvements, and specified the terms under which the Developer could transfer the rights and obligations under the contract to successors. E. The Developer has requested and the City is willing to amend the Development Contract in those specified provisions. The Lender has agreed to consent to this Second Amendment. 130949v04 JJJ :r09/20/2007 1 NOW, THEREFORE, the City and Developer, in consideration of the executed Development Contract, the First Amendment, and the mutual promises and covenants contained herein, now mutually agree to amend the existing Development Contract by modifying the Development Contract as follows: 1. COMPLETION DATE FOR PUBLIC IMPROVEMENTS. All public improvements shall be completed by the Developer no later than December 31, 2008. By November 1,2007, Developer shall improve Dushane Parkway by grading and installing a compacted Class 5 or other suitable aggregate surface as approved by the City Engineer from Spruce Street to its current terminus within the development. Developer shall maintain and plow the road until completed in accordance with City approved plans and specifications and accepted by the City. 2. SECURITY FOR COMPLETION OF IMPROVEMENTS. Developer may substitute a letter of credit in a form and amount approved by the City to secure the satisfactory construction by the Developer of the required public improvements. The letter of credit shall be subject to the modification, reduction and retainage provisions in the Development Agreement. 3. REAPPORTIONMENT OF SPECIAL ASSESSMENTS. The special assessment previously levied by the City against Lot 1 Block 1 of Vermillion River Crossings 1 st Addition (Credit Union parcel) for City installed improvements to Spruce Street shall be reduced to zero and the previously levied amount shall be reallocated proportionately against the remaining developable acreage in the Project (excluding McDonald's and Northfield Clinic lots). Developer hereby consents to the reassessment specified herein and waives any and all appeal rights under ~429.081 or other law. 4. TRANSFER OF RIGHTS AND OBLIGATIONS. Developer may transfer or otherwise assign its obligations and rights under the Development Contract, as amended, to lAND, LLC a Minnesota limited liability company. CITY OF FARMINGTON By: Kevan A. Soderberg, Mayor By: Peter J. Herlofsky, City Administrator DEVELOPER: Vermillion River Crossing, LLC By: Its: By: Its: STATE OF MINNESOTA 130949v04 JJJ:r09/20/2007 2 ( ss. COUNTY OF DAKOTA ) The foregoing instrument was acknowledged before me this day of ,2007, by Kevan A. Soderberg, Mayor, and by Peter J. Herlofsky, City Administrator, of the City of Farmington, a Minnesota municipal corporation, on behalf of the corporation and pursuant to the authority granted by its City Council. Notary Public 130949v04 JJJ:r09/20/2007 3 STATE OF MINNESOTA ) ( ss. COUNTY OF DAKOTA ) The foregoing instrument was acknowledged before me this day of 2007, by the of Vermillion River Crossing, LLC, a Minnesota limited liability company, on behalf of the company. Notary Public DRAFTED BY: CAMPBELL KNUTSON Professional Association 317 Eagandale Office Center 1380 Corporate Center Curve Eagan, MN 55121 Telephone: (651) 452-5000 [JJJ] 130949v04 JJJ:r09/20/2007 4 The undersigned hereby consents to and approves the terms and conditions set forth in the foregoing Second Amendment to Development Contract as of the date set forth below. Dated: ,2007. DOUGHERTY FUNDING, LLC BY: Name: Title: STATE OF MINNESOTA ) ( ss. COUNTY OF ) The foregoing instrument was acknowledged before me this day of by the Funding, LLC, a Delaware limited liability company, on behalf of the company. ,2007, of Dougherty NOTARY PUBLIC DRAFTED BY: CAMPBELL KNUTSON Professional Association 317 Eagandale Office Center 1380 Corporate Center Curve Eagan, MN 55121 Telephone: (651) 452-5000 [JJJ] 130949v04 JJJ :r09/20/2007 5 CITY IMPROVEMENTS DISBURSING AGREEMENT THIS DISBURSING AGREEMENT (this "Agreement") is made and entered into as of this _ day of September, 2007, by and among lAND, LLC, a Minnesota limited liability company ("Borrower"), whose address is 25929 Ipava Avenue, Lakeville, Minnesota 55044, DOUGHERTY FUNDING LLC, a Delaware limited liability company ("Lender"), whose address is 90 South Seventh Street, Suite 4300, Minneapolis, Minnesota 55402, COMMERCIAL PARTNERS TITLE, LLC, as agent for TICOR TITLE INSURANCE COMPANY ("Title Company"), whose address is 200 South Sixth Street, Suite 1300, Minneapolis, Minnesota 55402, and the CITY OF FARMINGTON ("City"), whose address is 325 Oak Street, Farmington, Minnesota 55024, Attention: RECITALS WHEREAS, Borrower and Lender have entered into an Amended and Restated Construction Loan Agreement dated of even date herewith (together with any amendments thereto, the "Loan Agreement") providing for a construction loan in the maximum principal amount of Five Million Six Hundred Thousand and Noll 00 Dollars ($5,600,000.00), of which Three Million Thirty Thousand Six Hundred Twenty-seven and Noll 00 Dollars ($3,030,627.00) has been previously deposited with the Title Company (the "Loan") pursuant to a Disbursing Agreement dated as of September 9, 2005. The remaining proceeds of the Loan are to be used by the Borrower solely to pay for the improvements identified on Exhibit A (the "Project") [REVISE] to be located on a portion of the real estate described in Exhibit B attached hereto (the "Property"). The proceeds of the Loan are to be secured by, among other things, an Amended and Restated Construction Mortgage, Security Agreement, Assignment of Rents and Fixture Filing (the "Mortgage") given by Borrower in favor of Lender encumbering the Project. WHEREAS, Borrower and City have entered into a certain Development Contract dated as of August 1,2005, amended by the First Amendment to Development Contract dated May 15, 2006 and the Second Amendment to Development Contract dated (collectively, the "Development Agreement"), setting forth obligations on the part of Developer to construct the Proj ect. Pursuant to Section 27 of the Development Agreement, City requires that Borrower provide certain security to assure the payment and performance of the Project, which such security shall be in an amount and form acceptable to City (the "Security"). City has agreed to accept such Loan as the Security. WHEREAS, the Title Company has issued a mortgagee's title insurance policy, as amended by (collectively, the "Title Policy") relating to Lender's Mortgage encumbering the Project in the amount of Five Million Six Hundred Thousand and NollOO Dollars ($5,600,000.00), which is identified as the Title Company's File No. 25314. WHEREAS, Borrower, Lender and City have requested that the Title Company (i) issue the Title Policy insuring the lien of the Mortgage from the consequences of possible mechanics' liens as construction of the Project progresses, and (ii) act as disbursing agent for the disbursement of the Loan proceeds in accordance with the terms of the Loan Agreement and of this Agreement. AGREEMENT In consideration of the above recitals, of Lender's agreement to make the Loan to Borrower under the Loan Agreement, and of the mutual agreements set forth below, the parties agree as follows: 1. Definitions; Recitals. All capitalized terms not otherwise defined in this Agreement shall have the meanings given to them in the Loan Agreement. The recitals set forth above are incorporated into this Agreement by reference. 2. Contractors and Contracts. Borrower shall submit to the Title Company a copy of the Total Project Cost Statement (including the General Contractor's Sworn Construction Statement) and shall advise Lender and the Title Company of the name of the General Contractor and each Subcontractor. Borrower shall also furnish to Lender (and the Title Company if so requested) a copy of the general construction contract with the General Contractor (the "General Contractor's Contract") and if required under the terms of the Loan Agreement, each contract with each of the Subcontractors. Borrower shall keep the Title Company and Lender advised at all times of the names of all Subcontractors, and of the type of work, material or services and of the dollar amount covered by each of their respective contracts with Borrower. It is understood that only (a) the General Contractor, (b) those Subcontractors whose names, contract descriptions and, after a request therefor, contracts have been furnished to Lender and the Title Company, and (c) the other parties identified on the Sworn Project Cost Statement, shall be entitled to receive a disbursement of Loan proceeds under this Agreement. 3. Issuance of Title Policy. Prior to the first disbursement of funds under this Agreement, the Title Company shall be prepared to furnish to Lender the Title Policy in the form required pursuant to those certain Escrow Instructions dated as of September _, 2007 between Winthrop & Weinstine, P .A., counsel for Lender, and the Title Company. 4. Amount of Advances. Borrower may obtain advances for disbursement to the General Contractor or Subcontractors only to the extent of the amount currently due to each for work satisfactorily completed or material actually incorporated into the Improvements by the General Contractor or Subcontractors, less any retainage required under the terms of the Loan Agreement or the Development Agreement, and Borrower agrees that all sums requested hereunder for disbursements shall not exceed that amount. Lender shall not be required to approve any advance under this Agreement until all conditions required to be satisfied by the Borrower under the Loan Agreement and this Agreement have been so satisfied. 5. Advances Through Title Company. The parties acknowledge that Lender has advanced all Loan proceeds to the Title Company. The Title Company shall establish an interest-bearing general account for ordinary construction expenditures in which the Loan proceeds and any funds supplied by Borrower will be held and be disbursed. - 2 - 6. Requirements for Advance. Whenever Borrower desires to obtain an Advance, Borrower shall submit a signed Request For Advance to Lender and the City (specifying what portion of the Request For Advance pertains to Loan proceeds) and the Title Company at least ten (10) business days prior to the date on which the requested Advance is to be made (the "Advance Date"). Borrower shall also simultaneously submit to the Title Company the following: (1) Statements, waivers, affidavits, supporting waivers, and releases of lien from such persons and in such forms, as may be required by the Title Company, for the purpose of providing the title insurance coverage specified in this Agreement covering the current disbursement. (2) Invoices and other supporting evidence as may be requested by the Lender or Title Company to establish the cost or value of the Improvements for which Advances are to be made or as may be required by the Loan Agreement. (3) Approval by the Lender of the current Request For Advance. The Title Company shall perform a search of the appropriate records and, within five (5) business days after receiving the foregoing items, shall (i) give Lender notice by telephone if any intervening liens are disclosed (other than those expressly listed in the Policy), and (ii) only with respect to that portion of an Advance of Loan proceeds, deliver to Lender a date-down endorsement which includes and insures the current Advance within the coverage of the Policy. If any such intervening liens (or other matters which in the Lender's sole judgment jeopardizes its security interest in the Project) are discovered by the Title Company, the Title Company shall refrain from making further disbursements from the General Account until Lender notifies the Title Company that such intervening liens or other matters have been waived by Lender or satisfied. Upon demand of Lender, in accordance with the terms of the Loan Agreement, Borrower shall immediately cause any such liens or other matters to be satisfied of record or bonded, or shall make other arrangements with respect to the discharge thereof satisfactory to Lender. If all of the terms and conditions of the Loan Agreement and this Agreement have been complied with by the Borrower, if no default or Event of Default exists under the Loan Agreement, if Lender has approved the Request For Advance (if required hereunder), and if the Request For Advance is for Loan proceeds, Lender shall approve the Advance in a manner satisfactory to the Title Company and Lender in the principal amount of the requested Advance (less any retainage required under the Loan Agreement and any amounts payable by Lender outside of this Agreement). The Title Company shall, as promptly as possible thereafter, if all of the conditions of this Agreement have been complied with in a manner satisfactory to the Title Company, and if the Title Company has not received notice from Lender that a default or an Event of Default exists under the Loan Agreement, disburse the Loan proceeds by delivering to the General Contractor, or at the Lender's request or the Title Company's option, to each of the Subcontractors entitled to receive any of such proceeds, by check or wire transfer, the amounts set forth in such Request For Advance. - 3 - Notwithstanding the foregoing, the Title Company shall not disburse any portion of the Loan proceeds without prior written consent by the City. The City agrees promptly to review any Request for Advance, and shall approve disbursements within ten (10) business days of the City receiving the Request for Advance which (i) are for payment of the costs of the Project, based upon which the amount ofthe security was calculated, and (ii) are in reasonable proportion to the estimated costs set forth in Exhibit A, (iii) are for work which has been approved by the City Engineer in accordance with the City's standards for approval and acceptance of public improvements, and (iv) do not exceed ninety percent (90%) of the amounts set forth in Exhibit A with respect to any categories of improvements until the warranty period for such categories of improvements have expired in accordance with the Development Agreement. The City agrees to accept, in lieu of any undisbursed portion of the Loan still on deposit with the Title Company, a letter of credit issued by a Minnesota commercial bank in the amount of such undisbursed portion of the Loan and otherwise in the form required by the Development Agreement, and upon receipt of such letter of credit agrees to consent to disbursement of such undisbursed portion ofthe Loan in any manner directed by Lender. 7. Disbursement to City. In the event Borrower commences construction of the Project and thereafter defaults under the Development Agreement and such default is not cured by the Borrower pursuant to the Development Agreement or the Lender pursuant to the Consent to Assignment and Agreement, City may draw on the Loan to pay the costs actually incurred by City to complete the Project or cure the default under the Development Agreement. In order to draw on the Loan, City shall provide Title Company with the following items: (a) if to cure a default under the Development Agreement other than to complete the Project: (i) A written statement executed by an authorized official of City which states the nature of default under the Development Agreement; and (ii) A request for disbursement (AIA Form G7011702) for an advance ofthe Loan; and (b) ifto complete the Project: (iii) (i) and (ii) above; (iv) A certificate executed by an authorized official of City certifying the portion of the Project completed at that time, that each contractor, subcontractor, or materialman specified in the request for disbursement has satisfactorily completed the work for which payment is requested, and that all funds previously disbursed to City have been applied as per City's previous request for disbursement; (v) Waivers of mechanic's liens and materialman's liens for the Project included in the previous request for disbursement; and - 4- (vi) Such other evidence as the Title Company may reasonably require to substantiate all payments which are to be made out of such requested disbursement. Upon receipt of the foregoing items, the Title Company shall disburse such portion of the Loan as requested by City within ten (10) business days of receipt of the City's written request if the funds are to be used to complete the Project and three (3) business days if the funds are to be used to cure any other default under the Development Agreement. Notwithstanding any of the foregoing, any such disbursement from the Loan to City shall not be more than that amount of the Loan then deposited and only for the actual costs incurred by City to complete the unfinished work ofthe Project or to cure the default under the Development Agreement. 8. Title Company Records. The Title Company shall keep records showing the names of all Subcontractors and other payees to whom disbursements of Loan proceeds are made by the Title Company, the date of each disbursement, and the amount of each disbursement, which records may be inspected by the Borrower and Lender. 9. Improper Documentation. If the Title Company shall determine, in its reasonable judgment, that proper documentation to support a given disbursement, as required by this Agreement, has not been furnished (or there is an error, inconsistency or contradiction in the documentation), the Title Company shall withhold payment of all or such portion of such disbursement as shall not be so supported by proper documentation, and shall promptly notify Borrower and Lender of the discrepancy in or omission of such documentation. Until such time as such discrepancy or omission is corrected to the satisfaction of the Title Company, it shall withhold such amount. 10. Inspection of Proiect. Borrower shall be responsible for making inspections of the Improvements during the course of construction, and shall determine to its own satisfaction that the work done or material supplied by the General Contractor and Subcontractors to whom disbursements are to be made out of each Advance has been properly done or supplied in accordance with applicable contracts with the General Contractor and such Subcontractors. The Title Company and the Lender shall not be required to conduct any inspection of the Improvements on behalf of the Borrower. 11. Title Charges. All title and construction escrow charges incurred in connection with this Agreement shall be the responsibility of the Borrower. 12. Loan Balance. If at any time during the course of construction, the total of the unpaid Project Costs as indicated by the column totals on the Total Project Cost Statement or the General Contractor's Sworn Construction Statement exceeds the aggregate sum of the undisbursed Loan proceeds, the Title Company shall notify Lender and shall not make any further disbursements under the terms of this Agreement until the Borrower has deposited with the Title Company an amount equal to such excess, or unless specifically directed to do so by the Lender. Borrower represents to Lender and Title Company that at the date of this Agreement, the aggregate funds available for construction payments are sufficient to complete the Project. - 5 - 13. Lender's and Title Company's Liability. It is expressly understood and agreed that neither the Title Company nor the Lender assumes any liability or responsibility for the satisfactory completion of the Improvements, for the adequacy of funds advanced or disbursed by either of them pursuant hereto and to the Loan Agreement to complete the Project, for inspections during construction, or for any acts on the part of Borrower or the General Contractor or the Subcontractors to be performed in the construction ofthe Improvements. 14. Notices. Any notice required or permitted to be given by any party hereto to any other party hereto under the terms of this Agreement shall be deemed to have been given on the date the same is deposited in the United States mail, registered or certified, return receipt requested, postage prepaid, addressed to the party to which the notice is to be given at the address set forth above, or to any other address specified in a notice given by such party to the other parties not less than ten (10) days prior to the effective date of the address change. 15. Approval of Documents. All documents required to be delivered by Borrower to Lender or the Title Company pursuant to this Agreement shall be in form and content acceptable to Lender or the Title Company, as the case may be. 16. Compliance with Internal Revenue Code. Title Company agrees that it is the "closer" for the transaction described in this Agreement, and that it will disburse all payments to the General Contractor, Subcontractors, and others required by this Agreement, and that for the purposes of the information reporting requirements by the Internal Revenue Service, shall file any informational returns and any other documentation required by the Internal Revenue Service, and any state information returns required by the applicable state revenue agency relating to the closing of transactions and disbursing of closing and construction funds. The Title Company agrees to provide copies of such documentation to Lender and other records relating to the disclosure requirements of this Section upon written request of Lender. The Title Company agrees to save, indemnify, defend, and hold Lender and the Borrower harmless from any losses, claims, damages or costs of any kind or nature relating to the Title Company's failure to comply with the requirements of this Section. This indemnity shall be effective notwithstanding any other indemnification provision or exculpation provision of this Agreement releasing the Title Company from responsibilities for actions or omissions of the Title Company in connection with this Agreement. 17. No Third Party Beneficiary. The undersigned agree that is Agreement is not intended by any of the undersigned to give any benefits, rights, privileges, actions or remedies to any person, partnership, firm or corporation other than Borrower, Lender, Title Company and City as a third party beneficiary or otherwise under any theory of law. 18. Construction Loan Agreement. It is expressly understood and agreed to by the Borrower and Lender that the terms and provisions of this Agreement do not change, amend, modify or in any way supersede the terms and provisions ofthe Loan Agreement. 19. Counterpart Signatures. This Agreement may be executed by each party in one or more counterparts, each of which shall be deemed an original and all of which taken together shall constitute one binding document. - 6- IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written. BORROWER: LENDER: lAND, LLC, a Minnesota limited liability company DOUGHERTY FUNDING LLC, a Delaware limited liability company By Its By Its TITLE COMPANY: CITY: COMMERCIAL PARTNERS TITLE, LLC, as Agent for TICOR TITLE INSURANCE COMPANY CITY OF FARMINGTON By Its By Its - 7 - EXHIBIT A IMPROVEMENTS TO PROJECT Grading/Erosion Control Sanitary Sewer Water Main Storm Sewer Street Construction $ 800,438 $ 171,843 $ 319,642 $ 317,910 $ 636,296 Monuments St. Lights/Signs Landscaping Site Amenities Two Years Principal and Interest on Assessments $ 25,748 $ 1,250 $ 206,250 $ 176,250 $ 375,000 EXHIBIT B LEGAL DESCRIPTION Lot 1, Block 1, Lot 1, Block 2, Lot 1, Block 3, Lot 2, Block 3, Lot 1, Block 4 and Outlots A, B, C, E, F, G, H, I and J, Vermillion River Crossings, according to the recorded plat thereof, Dakota County, Minnesota, together with Declaration of Protective Covenants and Easements dated , filed , as Document 3398465v1 10269-18 CONSENT TO ASSIGNMENT AND AGREEMENT THIS CONSENT TO ASSIGNMENT AND AGREEMENT ("Agreement") is made as of the _ day of September, 2007, by and among lAND, LLC, a Minnesota limited liability company, as successor and assign of Vermillion River Crossing, LLC, a Minnesota limited liability company (the "Developer"), DOUGHERTY FUNDING LLC, a Delaware limited liability company (together with its successors and assigns, the "Lender"), and the CITY OF FARMINGTON, a Minnesota municipal corporation (the "City"). WIT N E SSE T H: WHEREAS, the Developer and the City have entered into that certain development contract dated as of August 1,2005, amended by the First Amendment to Development Contract dated May 15, 2006 and the Second Amendment to Development Contract dated , the Abatement Agreement between the Developer and the City dated , and the Development Agreement dated May 15, 2006 (the "Contracts"), with respect to the property more particularly described on Exhibit A hereto; and WHEREAS, Lender has agreed to make a loan of up to Five Million Six Hundred Thousand and Noll 00 Dollars ($5,600,000.00) to the Developer (the "Loan") for the purpose of financing the Project described in the Contracts (the "Project"), and is the holder of (i) an Amended and Restated Construction Mortgage, Security Agreement, Assignment of Rents and Leases and Fixture Filing which encumbers the Property (the "Mortgage"), and (ii) a Collateral Assignment of Development Contract pursuant to which the Developer will assign the Contracts to the Lender for collateral purposes (the "Assignment"); WHEREAS, the Contracts specify, among other things, that the City must approve of any assignment of the Contracts by the Developer; WHEREAS, the Lender would be unwilling to make the Loan without the assurances provided in this Agreement; and WHEREAS, capitalized terms used herein that are not otherwise defined herein shall have the meanings attributed to them in the Contracts. NOW, THEREFORE, in consideration of the premises and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows: 1. Consent to Asshmment. The City acknowledges that the Developer's interest under the Contracts as to the Property shall be assigned to the Lender, and the City hereby gives its consent to such assignment. Such assignment shall not constitute a default under the Contracts nor in any way alter or affect the Developer's rights and obligations under the Contracts. 2. Representations Regarding the Contracts. The City hereby represents, warrants and certifies to Lender that as of the date hereof: (a) the Contracts are attached hereto as Exhibit B and have not been modified, supplemented or amended in any way, except as attached; (b) the Contracts are in full force and effect and constitute a legal, valid and binding obligation ofthe City; and ( c) neither the City nor the Developer is in default under any of the terms, covenants or provisions of the Contracts and no notice of default under the Contracts has been served by or upon the City, and the City, to the best of its knowledge, knows of no event which, but for the passage of time or the giving of notice, or both, would constitute an event of default by the City or the Developer under the Contracts. 3. Recognition of Successor Developer. The City shall, upon receipt of written notice from Lender stating that it is exercising its right under the Assignment to assume the Developer's position under the Contracts recognize Lender as the Developer under the Contracts without further consent from the Developer or court order. The City agrees that, ifthe interest of the Developer in the Contracts shall be assumed by Lender, or in the event of a foreclosure sale of the Property to any other person or entity, then the City shall recognize Lender or such purchaser, grantor, or other successor to the Developer's interest ("Successor Developer") as the Developer under the Contracts upon such Successor Developer's request and Lender shall not be (a) liable for any accrued obligation of the Developer or for any act or omission of the Developer, whether prior to or after such foreclosure or sale, or (b) subject to any offsets or counterclaims or similar claims which shall have accrued to the City against the Developer prior to the date upon which Lender or other Successor Developer shall become the owner of the Property. Successor Developer's liability under the Contracts shall be limited to the extent ofthe interest of the Successor Developer in the Property and in no event shall Successor Developer be personally liable under the Contracts. 4. Further Amendments of the Contracts. The Developer and the City shall not, without obtaining the prior written consent of Lender, (a) enter into any agreement which terminates the Contracts or amends or modifies the Contracts, (b) terminate the Contracts without cause, or (c) assign the Contracts or any part thereof relating to the Property; and any such amendment, modification, termination, prepayment, voluntary surrender, assignment or subletting, without Lender's prior consent, shall not be binding upon Lender. 5. Copies of Notices/Lender's Opportunitv to Cure. The City will promptly furnish Lender at the address set forth beneath its signature below with a copy of all notices given by the City to the Developer under the provisions of the Contracts. In addition, the City agrees that no notice or demand with respect to a default or breach of the Contracts by the Developer shall be effective unless Lender has been given notice of such default and has failed to cure such default or breach (however, Lender shall not be obligated to cure any such default or breach) within whichever period of time is longer (a) thirty (30) days after receipt of such notice or (b) such period of time following such notice as the Developer has to cure the default which gives rise to such alleged right of cancellation, reduction or abatement. 6. Notices Generally. Any notice or election to be given hereunder shall be in writing, addressed to the party at the address stated below that party's signature on this - 2 - Agreement and shall be (a) delivered in person to the receiving party by the other party, his agent or a professional courier service, (b) sent United States certified or registered mail, postage prepaid, return receipt requested, or (c) sent by telecopy to the receiving party at the telecopy phone number stated below the receiving party's signature on this Agreement. Any such notice or election shall be deemed effective upon the earlier of the actual receipt of the notice or election or (i) if delivered in person, then when such notice or election is delivered to an individual at the receiving party's address who is apparently authorized to accept deliveries, (ii) if sent by United States certified or registered mail, then one day after such notice or election is deposited with the United States Postal Service, or (iii) if sent by telecopy, then at the time sent and confirmed by the sender's transmitted copy of such notice or election. 7. Parties Bound. This Agreement shall bind and inure to the benefit of the successors and assigns of the parties hereto; provided that the Developer shall not assign its rights and obligations hereunder without the consent of the City and the Lender. 8. Only Written Amendments. This Agreement may not be modified in any manner or terminated except by an instrument in writing executed by the parties hereto. 9. Governing Law. This Agreement shall be governed by and construed under the laws of the State of Minnesota. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] - 3 - IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the month, day and year first written above. lAND, LLC, a Minnesota limited liability company By Its Address: 25929 Ipava Avenue Lakeville, Minnesota 55044 Attention: Facsimile Number: (952) DOUGHERTY FUNDING LLC, a Delaware limited liability company By Gregory A. Bolin, Its Senior Vice President Address: 90 South Seventh Street, Suite 4300 Minneapolis, Minnesota 55402 Facsimile Number: (612) 317-2045 CITY OF FARMINGTON By Kevan A. Soderberg, Mayor By Peter J. Herlofsky, Jr., Its City Administrator Address: Peter Herlofsky, Jr., City Administrator 325 Oak Street Fannington, Minnesota 55024 Facsimile Number: (952) 463-2591 - 4- STATE OF MINNESOTA ) ) ss. COUNTY OF ) The foregoing instrument was acknowledged before me this _ day of September, 2007, by , the of lAND, LLC, a Minnesota limited liability company, on behalf of such limited liability company. Notary Public STATE OF MINNESOTA ) ) ss. COUNTY OF ) The foregoing instrument was acknowledged before me this _ day of September, 2007 by Gregory A. Bolin, the Senior Vice President of Dougherty Funding LLC, a Delaware limited liability company, on behalf of such limited liability company. Notary Public STATE OF MINNESOTA ) ) ss. COUNTY OF ) The foregoing instrument was acknowledged before me this _ day of September, 2007, by Kevan A. Soderberg and Peter J. Herlofsky, Jr., the Mayor and the City Administrator, respectively, of the City of Farmington, Minnesota, on behalf of the City of Farmington, Minnesota. Notary Public - 5 - EXHIBIT A LEGAL DESCRIPTION Lot 1, Block 1, Lot 1, Block 2, Lot 1, Block 3, Lot 2, Block 3, Lot 1, Block 4 and Outlots A, B, C, E, F, G, H, I and J, Vermillion River Crossings, according to the recorded plat thereof, Dakota County, Minnesota, together with Declaration of Protective Covenants and Easements dated , filed , as Document - 6- EXHIBIT B [Copy of the Contracts to be attached] 3397450v3 10269-18 - 7 - SECOND AMENDMENT TO DEVELOPMENT CONTRACT THIS SECOND AMENDMENT TO DEVELOPMENT CONTRACT (the "Amendment") dated this day of ,2007, by, between and among the CITY OF FARMINGTON, a Minnesota municipal corporation ("City"), and VERMILLION RIVER CROSSING, LLC, a Minnesota limited liability company ("Developer"), and for the sole purpose of consent, DOUGHERTY FUNIDNGFUNDING, LLC, a Minnesota limited liability company ("Lender"). RECITALS A. As a condition of final plat approval for VERMILLION RIVER CROSSINGS the Developer was required to enter into a Development Contract providing for the construction of specified public and private improvements. The City and Developer entered into that certain Development Contract dated August 1, 2005, recorded October 26, 2005 in the office of the Dakota County Recorder as Document No. 2374405 (the "Development Contract"). B. The Developer assigned the Development Contract to the Lender for collateral purposes pursuant to that certain Assignment of Development Contract and Development Rights dated September 9, 2005 (the "Collateral Assignment"). C. The Development Contract was modified by that certain First Amendment to Development Contract between the parties dated May 15, 2006, recorded in the office of the Dakota County Recorder as Document No. 2431735 (the "First Amendment"). D. The Development Contract provided a deadline for construction of the public improvements, established financial security to ensure satisfactory completion of those improvements, and specified the terms under which the Developer could transfer the rights and obligations under the contract to successors. E. The Developer has requested and the City is willing to amend the Development Contract in those specified provisions. The Lender has agreed to consent to this Second Amendment. 130949vQ+04 JJJ:94r09/W2Q!2007 1 NOW, THEREFORE, the City and Developer, in consideration of the executed Development Contract, the First Amendment, and the mutual promises and covenants contained herein, now mutually agree to amend the existing Development Contract by modifying the Development Contract as follows: 1. COMPLETEIONCOMPLETION DATE FOR PUBLIC IMPROVEMENTS. All public improvements shall be completed by the Developer no later than December 31, 2008. By AugustNovember 1, 2007, Developer shall improve Duscheno J\vonueDushane Parkwav by grading and installing a compacted Class 5 or other suitable aggregate surface as approved by the City Engineer from Spruce Street to its current terminus within the development. Developer shall maintain and plow the road until comoleted in accordance with Citv aooroved olans and soecifications and acceoted bv the ~. 2. SECURITY FOR COMPLETION OF IMPROVEMENTS. Developer may substitute a letter of credit in a form and amount approved by the City to secure the satisfactory construction by the Developer of the required public improvements. The letter of credit shall be subiect to the modification. reduction and retainaae orovisions in the Develooment Aareement. 3. REAPPORTIONMENT OF SPECIAL ASSESSMENTS. The soecial assessment oreviouslv levied bv the Citv aaainst Lot 1 Block 1 of Vermillion River Crossinas 1 st Addition (Credit Union oarcel) for Citv installed imorovements to Soruce Street shall be reduced to zero and the oreviouslv levied amount shall be reallocated orooortionatelv aaainst the remainina develooable acreaae in the Proiect (excludina McDonald's and Northfield Clinic lots). Develooer herebv consents to the reassessment soecified herein and waives anv and all aooeal riahts under &429.081 or other law. 4. TRANSFER OF RIGHTS AND OBLIGATIONS. Developer may transfer or otherwise assign its obligations and rights under the Development Contract to .. as amended. to lAND. LLC a Minnesota limited Iiabilitv comoanv. CITY OF FARMINGTON By: Kevan A. Soderberg, Mayor By: Peter J. Herlofsky, City Administrator DEVELOPER: Vermillion River Crossing, LLC By: Its: By: Its: 130949v9+~ JJJ:G4rQ9,./W6Q/2007 2 STATE OF MINNESOTA ) ( ss. COUNTY OF DAKOTA ) The foregoing instrument was acknowledged before me this day of ,2007, by Kevan A. Soderberg, Mayor, and by Peter J. Herlofsky, City Administrator, of the City of Farmington, a Minnesota municipal corporation, on behalf of the corporation and pursuant to the authority granted by its City Council. Notary Public 130949vQ-HH JJJ: Q4rfl2lW2Q/2007 3 STATE OF MINNESOTA ) ( ss. COUNTY OF DAKOTA ) The foregoing instrument was acknowledged before me this day of 2007, by the of Vermillion River Crossing, LLC, a Minnesota limited liability company, on behalf of the company. Notary Public DRAFTED BY: CAMPBELL KNUTSON Professional Association 317 Eagandale Office Center 1380 Corporate Center Curve Eagan, MN 55121 Telephone: (651) 452-5000 [JJJ] 130949vG-H14 JJJ: G4rJ.l2/00-2.Q/2007 4 The undersigned hereby consents to and approves the terms and conditions set forth in the foregoing Second Amendment to Development Contract as of the date set forth below. Dated: ,2007. DOUGHERTY FUNDING, LLC BY: Name: Title: STATE OF MINNESOTA ) ( ss. COUNTY OF ) The foregoing instrument was acknowledged before me this day of by the Funding, LLC, a Delaware limited liability company, on behalf of the company. ,2007, of Dougherty NOTARY PUBLIC DRAFTED BY: CAMPBELL KNUTSON Professional Association 317 Eagandale Office Center 1380 Corporate Center Curve Eagan, MN 55121 Telephone: (651) 452-5000 [ JJJ] 130949vQ-l-lM JJJ:94r09/002QJ2007 5 Document comparison done by Workshare DeltaView on Thursday, September 20, 2007 1 :57:26 PM Document 1 Document 2 Renderin set PowerDocs://docs\ 130949\ 1 PowerDocs:/ /docs/130949/4 Standard Insertion Deletion Moved from Moved to Style change Format change Moved deletion Inserted cell Deleted cell Moved cell Slit/Mer ed cell Paddin cell Cou nt 12 8 o o o o 20 <8 LOAN>CITY IMPROVEMENTS DISBURSING AGREEMENT THIS DISBURSING AGREEMENT (this "Agreement") is made and entered into as of this <9th><_ > day of September, <~><2007.> by and among <VERMILLION RIVER CROSSINC><IAND>, LLC, a Minnesota limited liability company ("Borrower"), whose address is <11831 Energy Way, :\pple Valley><25929 Ioava Avenue. Lakeville>, Minnesota <~><55044.> DOUGHERTY FUNDING LLC, a Delaware limited liability company ("Lender"), whose address is 90 South Seventh Street, Suite 4300, Minneapolis, Minnesota 55402, COMMERCIAL PARTNERS TITLE, LLC, as agent for TICOR TITLE INSURANCE COMPANY ("Title Company"), whose address is 200 South Sixth Street, Suite 1300, Minneapolis, Minnesota 55402, and the CITY OF FARMINGTON ("City"), whose address is 325 Oak Street, Farmington, Minnesota 55024, Attention:< Lee Mann>< >. RECITALS WHEREAS, Borrower and Lender have entered into <a><an Amended and Restated> Construction Loan Agreement dated <as of September 9, 2005><of even date herewith> (together with any amendments thereto, the "Loan Agreement") providing for a construction loan in the maximum principal amount of Five Million <Fi-ve><Six> Hundred <SeveRty >Thousand and No/IOO Dollars ($<5,570,000.00><5.600.000.00>), of which Three Million Thirty Thousand Six Hundred Twenty-seven and No/lOO Dollars ($3,030,627.00) has been <oreviouslv >deposited with the Title Company <on the date hereof >(the "Loan")<~>< oursuant to a Disbursing Agreement dated as ofSeotember 9.2005. The remaining> proceeds of the Loan are to be used by the Borrower solely to pay for the improvements identified on Exhibit A (the "Project") <[REVISE] >to be located on a portion of the real estate described in Exhibit B <attached hereto which, upon recordiRg of the plat for VermillioR River Crossings, shall be replaced with Exhibit B 1 aJ'Id Exhibit B 2 >attached hereto (the "Property"). The proceeds of the Loan are to be secured by, among other things, <a><an Amended and Restated> Construction Mortgage, Security Agreement, Assignment of Rents and Fixture Filing (the "Mortgage") given by Borrower in favor of Lender encumbering the Project. WHEREAS, Borrower and City have entered into a certain Development Contract dated as of August 1, <~><2005. amended bv the First Amendment to Develooment Contract dated May 15. 2006 and the Second Amendment to Develooment Contract dated (collectivelv. >the "Development Agreement"), setting forth obligations on the part of Developer to construct the Project. Pursuant to Section 27 of the Development Agreement, City requires that Borrower provide certain security to assure the payment and performance of the Project, which such security shall be in an amount and form acceptable to City (the "Security"). City has agreed to accept such Loan as the Security. WHEREAS, the Title Company has issued a <Commitment for Title Insl:lraflce for a >mortgagee's title insurance policy<-{><. as amended bv (collectivelv. >the "Title Policy") relating to Lender's Mortgage encumbering the Project in the amount of Five Million <FP.<e><Six> Hundred <SevoRty >Thousand and No/100 Dollars ($<5,570,000.00><5.600.000.00>), which is identified as the Title Company's File No. 25314. WHEREAS, Borrower, Lender and City have requested that the Title Company (i) issue the Title Policy insuring the lien of the Mortgage from the consequences of possible mechanics' liens as construction of the Project progresses, and (ii) act as disbursing agent for the disbursement of the Loan proceeds in accordance with the terms of the Loan Agreement and of this Agreement. AGREEMENT In consideration of the above recitals, of Lender's agreement to make the Loan to Borrower under the Loan Agreement, and of the mutual agreements set forth below, the parties agree as follows: 1. Definitions: Recitals. All capitalized terms not otherwise defined in this Agreement shall have the meanings given to them in the Loan Agreement. The recitals set forth above are incorporated into this Agreement by reference. 2, Contractors and Contracts. Borrower shall submit to the Title Company a copy of the Total Project Cost Statement (including the General Contractor's Sworn Construction Statement) and shall advise Lender and the Title Company ofthe name of the General Contractor and each Subcontractor. Borrower shall also furnish to Lender (and the Title Company if so requested) a copy of the general construction contract with the General Contractor (the "General Contractor's Contract") and if required under the terms of the Loan Agreement, each contract with each of the Subcontractors. Borrower shall keep the Title Company and Lender advised at all times of the names of all Subcontractors, and of the type of work, material or services and of the dollar amount covered by each of their respective contracts with Borrower. It is understood that only (a) the General Contractor, (b) those Subcontractors whose names, contract descriptions and, after a request therefor, contracts have been furnished to Lender and the Title Company, and (c) the other parties identified on the Sworn Project Cost Statement, shall be entitled to receive a disbursement of Loan proceeds under this Agreement. 3. Issuance of Title Policy. Prior to the first disbursement of funds under this Agreement< to porsons other than the City>, the Title Company shall be prepared to furnish to Lender<,> the Title Policy in the form required pursuant to those certain Escrow Instructions dated as of September <~>< . 20m> between Winthrop & Weinstine, P.A., counsel for Lender, and the Title Company. 4. Amount of Advances. Borrower may obtain advances for disbursement to the General Contractor or Subcontractors only to the extent of the amount currently due to each for work satisfactorily completed or material actually incorporated into the Improvements by the General Contractor or Subcontractors, less any retainage required under the terms of the Loan Agreement or the Development Agreement, and Borrower agrees that all sums requested hereunder for disbursements shall not exceed that amount. Lender shall not be required to approve any advance under this Agreement until all conditions required to be satisfied by the Borrower under the Loan Agreement and this Agreement have been so satisfied. - 2 - 5. Advances Through Title Companv. The parties acknowledge that Lender has advanced all Loan proceeds to the Title Company. The Title Company shall establish an interest-bearing general account for ordinary construction expenditures in which the Loan proceeds and any funds supplied by Borrower will be held and be disbursed. 6. Requirements for Advance. Whenever Borrower desires to obtain an Advance, Borrower shall submit a signed Request For Advance to Lender and the City (specifying what portion of the Request For Advance pertains to Loan proceeds) and the Title Company at least ten (10) business days prior to the date on which the requested Advance is to be made (the "Advance Date"). Borrower shall also simultaneously submit to the Title Company the following: (1) Statements, waivers, affidavits, supporting waivers, and releases oflien from such persons and in such forms, as may be required by the Title Company, for the purpose of providing the title insurance coverage specified in this Agreement covering the current disbursement. (2) Invoices and other supporting evidence as may be requested by the Lender or Title Company to establish the cost or value of the Improvements for which Advances are to be made or as may be required by the Loan Agreement. (3) Approval by the Lender of the current Request For Advance. The Title Company shall perform a search of the appropriate records and, within five (5) business days after receiving the foregoing items, shall (i) give Lender notice by telephone if any intervening liens are disclosed (other than those expressly listed in the Policy), and (ii) only with respect to that portion of an Advance of Loan proceeds, deliver to Lender a date-down endorsement which includes and insures the current Advance within the coverage of the Policy. If any such intervening liens (or other matters which in the Lender's sole judgment jeopardizes its security interest in the Project) are discovered by the Title Company, the Title Company shall refrain from making further disbursements from the General Account until Lender notifies the Title Company that such intervening liens or other matters have been waived by Lender or satisfied. Upon demand of Lender, in accordance with the terms of the Loan Agreement, Borrower shall immediately cause any such liens or other matters to be satisfied of record or bonded, or shall make other arrangements with respect to the discharge thereof satisfactory to Lender. If all of the terms and conditions of the Loan Agreement and this Agreement have been complied with by the Borrower, if no default or Event of Default exists under the Loan Agreement, if Lender has approved the Request For Advance (if required hereunder), and if the Request For Advance is for Loan proceeds, Lender shall approve the Advance in a manner satisfactory to the Title Company and Lender in the principal amount of the requested Advance (less any retainage required under the Loan Agreement and any amounts payable by Lender outside of this Agreement). The Title Company shall, as promptly as possible thereafter, if all of the conditions of this Agreement have been complied with in a manner satisfactory to the Title Company, and if the Title Company has not received notice from Lender that a default or an Event of Default exists under the Loan Agreement, disburse the Loan proceeds by delivering to - 3 - the General Contractor, or at the Lender's request or the Title Company's option, to each of the Subcontractors entitled to receive any of such proceeds, by check or wire transfer, the amounts set forth in such Request For Advance. Notwithstanding the foregoing, the Title Company shall not disburse any portion of the Loan proceeds without prior written consent by the City. The City agrees promptly to review any Request for Advance, and shall approve disbursements within ten (10) business days of the City receiving the Request for Advance which (i) are for payment of the costs of the Project, based upon which the amount ofthe security was calculated, and (ii) are in reasonable proportion to the estimated costs set forth in Exhibit A, (iii) are for work which has been approved by the City Engineer in accordance with the City's standards for approval and acceptance of public improvements, and (iv) do not exceed ninety percent (90%) of the amounts set forth in Exhibit A with respect to any categories of improvements until the warranty period for such categories of improvements have expired in accordance with the Development Agreement. The City agrees to accept, in lieu of any undisbursed portion of the Loan still on deposit with the Title Company, a letter of credit issued by a Minnesota commercial bank in the amount of such undisbursed portion of the Loan and otherwise in the form required by the Development Agreement, and upon receipt of such letter of credit agrees to consent to disbursement of such undisbursed portion of the Loan in any manner directed by Lender. 7. Disbursement to City. In the event Borrower commences construction of the Project and thereafter defaults under the Development Agreement and such default is not cured by the Borrower pursuant to the Development Agreement or the Lender pursuant to the Consent to Assignment and Agreement, City may draw on the Loan to pay the costs actually incurred by City to complete the Project or cure the default under the Development Agreement. In order to draw on the Loan, City shall provide Title Company with the following items: (a) if to cure a default under the Development Agreement other than to complete the Project: (i) A written statement executed by an authorized official of City which states the nature of default under the Development Agreement; and (ii) A request for disbursement (AlA Form G701/702) for an advance of the Loan; and (b) if to complete the Project: (iii) (i) and (ii) above; (iv) A certificate executed by an authorized official of City certifying the portion of the Project completed at that time, that each contractor, subcontractor, or materialman specified in the request for disbursement has satisfactorily completed the work for which payment is requested, and that all funds previously disbursed to City have been applied as per City's previous request for disbursement; -4- (v) Waivers of mechanic's liens and materialman's liens for the Project included in the previous request for disbursement; and (vi) Such other evidence as the Title Company may reasonably require to substantiate all payments which are to be made out of such requested disbursement. Upon receipt of the foregoing items, the Title Company shall disburse such portion of the Loan as requested by City within ten (10) business days of receipt of the City's written request if the funds are to be used to complete the Project and three (3) business days if the funds are to be used to cure any other default under the Development Agreement. Notwithstanding any of the foregoing, any such disbursement from the Loan to City shall not be more than that amount of the Loan then deposited and only for the actual costs incurred by City to complete the unfinished work of the Project or to cure the default under the Development Agreement. 8. Title Company Records. The Title Company shall keep records showing the names of all Subcontractors and other payees to whom disbursement,s of Loan proceeds are made by the Title Company, the date of each disbursement, and the amount of each disbursement, which records may be inspected by the Borrower and Lender. 9. Improper Documentation. If the Title Company shall determine, in its reasonable judgment, that proper documentation to support a given disbursement, as required by this Agreement, has not been furnished (or there is an error, inconsistency or contradiction in the documentation), the Title Company shall withhold payment of all or such portion of such disbursement as shall not be so supported by proper documentation, and shall promptly notify Borrower and Lender of the discrepancy in or omission of such documentation. Until such time as such discrepancy or omission is corrected to the satisfaction of the Title Company, it shall withhold such amount. 10. Inspection of Proiect. Borrower shall be responsible for making inspections of the Improvements during the course of construction, and shall determine to its own satisfaction that the work done or material supplied by the General Contractor and Subcontractors to whom disbursements are to be made out of each Advance has been properly done or supplied in accordance with applicable contracts with the General Contractor and such Subcontractors. The Title Company and the Lender shall not be required to conduct any inspection of the Improvements on behalf of the Borrower. 11. Title Charges. All title and construction escrow charges incurred in connection with this Agreement shall be the responsibility of the Borrower. 12. Loan Balance. If at any time during the course of construction, the total of the unpaid Project Costs as indicated by the column totals on the Total Project Cost Statement or the General Contractor's Sworn Construction Statement exceeds the aggregate sum of the undisbursed Loan proceeds, the Title Company shall notify Lender and shall not make any further disbursements under the terms of this Agreement until the Borrower has deposited with the Title Company an amount equal to such excess, or unless specifically directed to do so by the - 5 - Lender. Borrower represents to Lender and Title Company that at the date of this Agreement, the aggregate funds available for construction payments are sufficient to complete the Project. 13. Lender's and Title Companv's Liabilitv. It is expressly understood and agreed that neither the Title Company nor the Lender assumes any liability or responsibility for the satisfactory completion of the Improvements, for the adequacy of funds advanced or disbursed by either of them pursuant hereto and to the Loan Agreement to complete the Project, for inspections during construction, or for any acts on the part of Borrower or the General Contractor or the Subcontractors to be performed in the construction ofthe Improvements. 14. Notices. Any notice required or permitted to be given by any party hereto to any other party hereto under the terms of this Agreement shall be deemed to have been given on the date the same is deposited in the United States mail, registered or certified, return receipt requested, postage prepaid, addressed to the party to which the notice is to be given at the address set forth above, or to any other address specified in a notice given by such party to the other parties not less than ten (10) days prior to the effective date of the address change. 15. Approval of Documents. All documents required to be delivered by Borrower to Lender or the Title Company pursuant to this Agreement shall be in form and content acceptable to Lender or the Title Company, as the case may be. 16. Compliance with Internal Revenue Code. Title Company agrees that it is the "closer" for the transaction described in this Agreement, and that it will disburse all payments to the General Contractor, Subcontractors, and others required by this Agreement, and that for the purposes of the information reporting requirements by the Internal Revenue Service, shall file any informational returns and any other documentation required by the Internal Revenue Service, and any state information returns required by the applicable state revenue agency relating to the closing of transactions and disbursing of closing and construction funds. The Title Company agrees to provide copies of such documentation to Lender and other records relating to the disclosure requirements of this Section upon written request of Lender. The Title Company agrees to save, indemnify, defend, and hold Lender and the Borrower harmless from any losses, claims, damages or costs of any kind or nature relating to the Title Company's failure to comply with the requirements of this Section. This indemnity shall be effective notwithstanding any other indemnification provision or exculpation provision of this Agreement releasing the Title Company from responsibilities for actions or omissions of the Title Company in connection with this Agreement. 17. No Third Party Beneficiary. The undersigned agree that is Agreement is not intended by any of the undersigned to give any benefits, rights, privileges, actions or remedies to any person, partnership, firm or corporation other than Borrower, Lender, Title Company and City as a third party beneficiary or otherwise under any theory oflaw. 18. Construction Loan Agreement. It is expressly understood and agreed to by the Borrower and Lender that the terms and provisions of this Agreement do not change, amend, modify or in any way supersede the terms and provisions of the Loan Agreement. -6- 19. Counterpart Signatures. This Agreement may be executed by each party in one or more counterparts, each of which shall be deemed an original and all of which taken together shall constitute one binding document. IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written. BORROWER: LENDER: <VERMILLION RIVER CROSSINC><IAND>, LLC, < >DOUGHERTY FUNDING LLC, a a Minnesota limited liability company Delaware limited liability company By<-><__~ By < El:IgeT-le Pedersen> < Its Treasurer>< Its Its > > TITLE COMPANY: CITY: COMMERCIAL PARTNERS TITLE, LLC, as Agent for TICOR TITLE INSURANCE COMPANY CITY OF FARMINGTON By<~ >< > Its~ >< By<->< Its<->< > > > - 7 - IMPROVEMENTS TO PROJECT EXHIBIT A GradinglErosion Control Sanitary Sewer Water Main Storm Sewer Street Construction $ 800,438 $ 171,843 $ 319,642 $ 317,910 $ 636,296 Monuments St. Lights/Signs Landscaping Site Amenities Two Years Principal and Interest on Assessments $ 25,748 $ 1,250 $ 206,250 $ 176,250 $ 375,000 EXHIBIT B LEGAL DESCRIPTION <The Smith One Half of the Northeast Quarter (S 1/2 of NE 1/1) of Section 36, Township 111, Range 20, Dakota County, Minnesota, EXCEPTING therefrom the West Ten (W.IO) acres thereof, AND EXCEPTING as follo'.\'s: Commencing at the Northeast (NE) comer of the Southeast Ql:larter of the Northeast Quarter (SE 1/1 of NE 1/1) of said Section 36; thence South (asslimed bearing) along the East line thereof a distance of 315.0 feet; theRce SOlith 89 degrees 38 miRlites 06 secoRds West parallel with the centerliRe of MiRResota Hwy. No. 50 a distaRce of 111.0 feet to its intersection with a liRe 50.0 feet Easterly of the centerliRe of CS/.H No. 31; thence North 05 degrees 30 minutes West parallel with said ceRterliRe a distaHce of 9.11 feet to the beginning of a tangent curve to the right, radius of 1859.86 feet; thence Northerly along curve 'Nhich is concave to the East, central angle of 06 degrees 10 miRlites, 50 f-eet Easterly of and parallel with said centerline, a distaHce of 200.17 feet to the point of taHgency; thenee North 00 degrees 10 minutes East along taHgent to said curve a distance of 105.51 feet, more or less, to its iRtersection with the North line of said SOlitHeast Quarter of the NortHeast Quarter (SE 1/1 of NE 1/1), thence Easterly aloRg said North line to the point of begiRRing; i\ND EXCEPTING a 100 foot wide tract oflaHd in the Southeast Quarter oftbe Northeast Quarter (SE 1/1 ofNE 1/1) of said SectioR 36, the centerline of said tract of laRd Being described as follows: CommeRcing at a point 319.92 feet West aHd 312.75 feet North (assuming the East line of said SE ] /1 bears North) of the SOHtheast comer of said SE 1/1; theRce North 38 degrees 30 minutes East for a distance of 11.29 feet; theRce Easterly a distance of 200.70 feet along a taRgential CHrie CORcave to the SOHtH haying a radilis of 250.0 feet and a centra] aflg]e of 16 degrees 00 miRlites; theRce North 81 degrees 30 minutes East for a distance of 65.0 feet; thence SOlitheasterly a distaHce of approximately 71.0 feet along a tangeRtia] curve conca','e to the SOHtb having a radius of ] 50.0 feet and a central angle of 50 degrees 00 minutes to the East line of said SE 1/1, and said centerline there terminating. The side lines of said 100 foot wide tract of land are shortened or exteRded to intersect the East line of said SOl:ltheast QHarter (SE 1/1) of the Northeast Ql:larter (NE ]/1), all according to the government SHrvey thereof.> <,'\bstract Property.> < > <EXHIBIT g 1> <LECAL DESCRIPTION> Lot 1, Block <~><L> Lot <~><L> Block <~><2. Lot 1. Block 3. Lot 2. Block 3,> Lot 1, Block 4<~> and Outlots A, B, C, <.g,>E, F, G, H, I and J, Vermillion River Crossings, according to the recorded plat thereof, Dakota County, Minnesota, together with Declaration of Protective Covenants and Easements dated <_>, filed , as Document <->. < EXHIBIT B 2> <LECAL DESCRIPTION> <Lot I, Block 2; Lot I, Block 3; Vermillion River CrossiHgs, according to tRe recorded plat tHereof, Dakota CmlHty, Minnesota, together ,tYith Dec1aratiofl of Protective Covenants and EasemeHts dated filed , as DocumeHt .> <2111890.1> 3400422vl 10269-18 Document comparison by Workshare Professional on Thursday, September 13, 2007 2:40:48 PM Document 1 ID Description Document 2 ID Description Renderin set interwovenSite://WIDMS/lMANAGE/2441890/4 #2441890v4<IMANAGE> - Disbursing Agreement (8 Loan interwovenSite://WIDMS/IMANAGE/3398465/1 #3398465v1<IMANAGE> - Disbursing Agreement IAND/Cit Improvements (Ie al added WWDefault <Insertion> <Deletion> <Moved from> <Moved to > Style change Format change Moved de*,#eR Inserted cell Deleted cell Moved cell Split/Mer ed cell Paddin cell Insertions Deletions Moved from Moved to Style change Format chan ed Total chan es 3400422-1/10269-18 Count 33 47 o o o o 80 CONSENT TO ASSIGNMENT AND AGREEMENT THIS CONSENT TO ASSIGNMENT AND AGREEMENT ("Agreement") is made as of the _ day of September, 2007, by and among lAND, LLC, a Minnesota limited liability company, as successor and assign of Vermillion River Crossing, LLC, a Minnesota limited liability company (the "Developer"), DOUGHERTY FUNDING LLC, a Delaware limited liability company (together with its successors and assigns, the "Lender"), and the CITY OF FARMINGTON, a Minnesota municipal corporation (the "City"). WITNESSETH: WHEREAS, the Developer and the City have entered into that certain development contract dated as of August 1,2005, amended by the First Amendment to Development Contract dated < ><Mav 15. 2006> and the Second Amendment to Development Contract dated , <aR4-->the Abatement Agreement between the Developer and the City dated <. and the Develooment Agreement dated Mav 15. 2006> (the "Contracts"), with respect to the property more particularly described on Exhibit A hereto; and WHEREAS, Lender has agreed to make a loan of up to Five Million Six Hundred Thousand and No/lOO Dollars ($5,600,000.00) to the Developer (the "Loan") for the purpose of financing the Project described in the Contracts (the "Project"), and is the holder of (i) an Amended and Restated Construction Mortgage, Security Agreement, Assignment of Rents and Leases and Fixture Filing which encumbers the Property (the "Mortgage"), and (ii) a Collateral Assignment of Development Contract pursuant to which the Developer will assign the Contracts to the Lender for collateral purposes (the "Assignment"); WHEREAS, the Contracts specify, among other things, that the City must approve of any assignment of the Contracts by the Developer; WHEREAS, the Lender would be unwilling to make the Loan without the assurances provided in this Agreement; and WHEREAS, capitalized terms used herein that are not otherwise defined herein shall have the meanings attributed to them in the Contracts. NOW, THEREFORE, in consideration of the premises and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows: 1. Consent to Assignment. The City acknowledges that the Developer's interest under the Contracts as to the Property shall be assigned to the Lender, and the City hereby gives its consent to such assignment. Such assignment shall not constitute a default under the Contracts nor in any way alter or affect the Developer's rights and obligations under the Contracts. 2. Representations Regarding the Contracts. The City hereby represents, warrants and certifies to Lender that as of the date hereof: (a) the Contracts are attached hereto as Exhibit B and have not been modified, supplemented or amended in any way, except as attached; (b) the Contracts are in full force and effect and constitute a legal, valid and binding obligation of the City; and (c) neither the City nor the Developer is in default under any of the terms, covenants or provisions of the Contracts and no notice of default under the Contracts has been served by or upon the City, and the City, to the best of its knowledge, knows of no event which, but for the passage of time or the giving of notice, or both, would constitute an event of default by the City or the Developer under the Contracts. 3. Recognition of Successor Developer. The City shall, upon receipt of written notice from Lender stating that it is exercising its right under the Assignment to assume the Developer's position under the Contracts recognize Lender as the Developer under the Contracts without further consent from the Developer or court order. The City agrees that, if the interest of the Developer in the Contracts shall be assHmed by Lender, or in the event of a forec1osHre sale of the Property to ailY other person or entity, then tRe City sRa]] recognize Lender or sHeh purchaser, grantor, or other successor to the Developer's interest e"SHccessor Developer") as the Developer under the Contracts upon such SHccessor Developer's request afld Lender sha]] not be ea) liable for any accnled obligation of tRe De','e1oper or for any act or omissioR of the Developer, whether prior to or after sHch foreclosure or sale, or (b) subject to any offsets or counterclaims or similar claims which sRa]] have aeemed to the City against the Developer prior to the date upon v,'hicR Lender or other SHecessor Developer shall become the owner of the Property. Successor Developer's liability under the Contracts sha]] be limited to the extent of the interest of the Successor Developer in the Property afld in no event sha]] Successor Developer be persona]]y liable under the CORtracts. 4. Further Amendments of the Contracts. The Developer and the City shall not, without obtaining the prior written consent of Lender, (a) enter into any agreement which terminates the Contracts or amends or modifies the Contracts, (b) terminate the Contracts without cause, or (c) assign the Contracts or any part thereof relating to the Property; and any such amendment, modification, termination, prepayment, voluntary surrender, assignment or subletting, without Lender's prior consent, shall not be binding upon Lender. 5. Copies ofNoticeslLender's Opportunity to Cure. The City will promptly furnish Lender at the address set forth beneath its signature below with a copy of all notices given by the City to the Developer under the provisions of the Contracts. In addition, the City agrees that no notice or demand with respect to a default or breach of the Contracts by the Developer shall be effective unless Lender has been given notice of such default and has failed to cure such default or breach (however, Lender shall not be obligated to cure any such default or breach) within whichever period of time is longer (a) thirty (30) days after receipt of such notice or (b) such period of time following such notice as the Developer has to cure the default which gives rise to such alleged right of cancellation, reduction or abatement. - 2- 6. Notices Generallv. Any notice or election to be given hereunder shall be in writing, addressed to the party at the address stated below that party's signature on this Agreement and shall be (a) delivered in person to the receiving party by the other party, his agent or a professional courier service, (b) sent United States certified or registered mail, postage prepaid, return receipt requested, or (c) sent by telecopy to the receiving party at the telecopy phone number stated below the receiving party's signature on this Agreement. Any such notice or election shall be deemed effective upon the earlier of the actual receipt of the notice or election or (i) if delivered in person, then when such notice or election is delivered to an individual at the receiving party's address who is apparently authorized to accept deliveries, (ii) if sent by United States certified or registered mail, then one day after such notice or election is deposited with the United States Postal Service, or (iii) if sent by telecopy, then at the time sent and confirmed by the sender's transmitted copy of such notice or election. 7. Parties Bound. This Agreement shall bind and inure to the benefit of the successors and assigns of the parties hereto; provided that the Developer shall not assign its rights and obligations hereunder without the consent of the City and the Lender. 8. Onlv Written Amendments. This Agreement may not be modified in any manner or terminated except by an instrument in writing executed by the parties hereto. 9. Governing Law. This Agreement shall be governed by and construed under the laws of the State of Minnesota. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] - 3 - IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the month, day and year first written above. lAND, LLC, a Minnesota limited liability company By Its Address: 25929 Ipava Avenue Lakeville, Minnesota 55044 Attention: Facsimile Number: (952) DOUGHERTY FUNDING LLC, a Delaware limited liability company By Gregory A. Bolin, Its Senior Vice President Address: 90 South Seventh Street, Suite 4300 Minneapolis, Minnesota 55402 Facsimile Number: (612) 317-2045 CITY OF FARMINGTON, a Minnesota a limited liability company By Kevin A. Soderberg, Mayor By Peter Herlofsky, Jr., Its City Administrator Address: Peter Herlofsky, Jr., City Administrator 325 Oak Street Farmington, Minnesota 55024 Facsimile Number: (952) 463-2591 -4- STATE OF MINNESOTA ) ) ss. COUNTY OF ) The foregoing instrument was acknowledged before me this _ day of September, 2007, by , the of lAND, LLC, a Minnesota limited liability company, on behalf of such limited liability company. Notary Public STATE OF MINNESOTA ) ) ss. COUNTY OF ) The foregoing instrument was acknowledged before me this _ day of September, 2007 by Gregory A. Bolin, the Senior Vice President of Dougherty Funding LLC, a Delaware limited liability company, on behalf of such limited liability company. Notary Public STATE OF MINNESOTA ) ) ss. COUNTY OF ) The foregoing instrument was acknowledged before me this _ day of September, 2007, by Kevan A. Soderberg and Peter Herlofsky, Jr., the Mayor and the City Administrator, respectively, of the City of Farmington, Minnesota, on behalf of the City of Farmington, Minnesota. Notary Public - 5 - EXffiBIT A LEGAL DESCRIPTION Lot 1, Block 1, Lot 1, Block 2, Lot 1, Block 3, Lot 2, Block 3, Lot 1, Block 4 and Outlots A, B, C, E, F, G, H, I and J, Vermillion River Crossings, according to the recorded plat thereof, Dakota County, Minnesota, together with Declaration of Protective Covenants and Easements dated , filed , as Document - 6- EXHIBIT B [Copy of the Contracts to be attached] 3403917vl 10269-18 - 7 - Document comparison by Workshare Professional on Monday, September 17, 2007 11 :30:19 AM Description Document 2 10 <Insertion> <Deletion> <Moved from> <Moved to> Style change Format change Mo\cd delction Inserted cell Deleted cell Moved cell Split/Mer ed cell Paddin cell Count 3 3 o o o o 6 3403917-1/10269-18