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HomeMy WebLinkAbout5.1b PA - Hohenstein 3-24-23 clean1 PURCHASE AGREEMENT THIS PURCHASE AGREEMENT (this “Agreement”) is entered into as of __________________________________, 2023 (the “Effective Date”), by and between the Cottage Grove Economic Development Authority, a public body corporate and politic under the laws of Minnesota (“EDA” or “Seller”), and Hohenstein Real Estate LLC, a Minnesota limited liability company, or its assigns (“Hohenstein” or “Buyer”). RECITALS Recital No. 1.Glendenning Farms, L.P., WAG Farms, Inc. and Joan Glendenning Kennedy Family Limited Partnership (collectively, “Owner”) are the fee simple owners of approximately 19.17 acres of unimproved real property, located in Cottage Grove, Washington County, Minnesota, legally described on Exhibit A (the “Real Property”), attached hereto and incorporated herein by reference. Recital No. 2.EDA is the contract purchaser of the Real Property and shall purchase the Property from Owner and convey the Property, together with all rights, privileges, servitudes, easements and appurtenances thereunto belonging or appertaining (collectively, the “Property”), to Hohenstein on the terms and conditions of this Agreement. Recital No. 3.Hohenstein desires to purchase the Property from Seller on the terms and conditions of this Agreement. NOW, THEREFORE, Hohenstein and EDA agree as follows: 1.Sale. 1.1.Sale. The recitals above are matters of contract and are incorporated herein by this reference. Subject to the terms and provisions of this Agreement, EDA shall sell the Property to Hohenstein, and Hohenstein shall purchase the Property from EDA. 1.2.Purchase Price. The purchase price to be paid by Hohenstein to EDA for the Property shall be Three Dollars and 50/100 ($3.50) multiplied by 835,100 square feet as determined by the Survey (as defined below) (the “Purchase Price”). The Purchase Price of Two Million, Nine Hundred Twenty-Two Thousand, Eight Hundred Fifty and 00/100 Dollars ($2,922,850.00) shall be payable as follows: (a) Twenty-Five Thousand and No/100 Dollars ($25,000.00), as earnest money, to be paid within three (3) business days following the Effective Date to DCA Title – The Title Team (“Title”), to be held in escrow in an interest-bearing account by Title (“Original Earnest Money”); and (b) the balance of the Purchase Price on the Closing Date (as defined in Section 6) subject to those adjustments, prorations and credits described in this Agreement, in certified funds or by wire transfer pursuant to instructions from EDA. The Purchase Price includes the City of Cottage Grove (“City”) fees for area charges, including but not limited to storm, sanitary and water and the City’s connection fees for water and sewer. Hohenstein will not be 2 charged separately for these fees. The Earnest Money (as defined in Section 6) and any and all portions thereof will be applied to the Purchase Price at Closing and will otherwise be held and disbursed in accordance with the terms and conditions of this Agreement. Interest earned on the Earnest Money would accrue to the benefit of Buyer, in proportion to the amount of Earnest Money applied to the Purchase Price, or returned, released or disbursed by Title to Buyer in accordance with the terms and conditions of this Agreement. Interest earned on the Earnest Money would accrue to the benefit of Seller, in proportion to the amount of Earnest Money released or disbursed by Title to Seller in accordance with the terms and conditions of this Agreement. If Buyer is purchasing the Property as part of a qualifying Section 1031 exchange and Buyer provides additional proceeds from its exchange to replace the Earnest Money at the Closing, the Earnest Money shall be refunded to Buyer contemporaneously with the Closing and in such manner as is directed by Buyer. 2.Available Surveys, Tests, and Reports. Within ten (10) days following the Effective Date, EDA shall cause to be delivered to Hohenstein (a) copies of any surveys, soil tests, environmental reports, and any other studies and/or site analyses previously conducted on the Property and in the possession of EDA, (b) copies of existing title work for the Property, and (c) such other information as reasonably requested by Buyer to complete its due diligence examination of the Property, whether printed or in electronic format, to the extent the same are in Seller’s possession or which Seller can readily obtain access to (collectively, the “Due Diligence Materials”). Except as set forth in Section 9.1, EDA makes no representations or warranties regarding the accuracy of the Due Diligence Materials. If Buyer so requests, Seller shall request the preparers of any such surveys, soil tests, environmental reports, and any other studies and/or site analyses to re-issue or re-certify the same for the direct benefit of Buyer, at Buyer’s expense except as otherwise provided in this Agreement, so that Buyer may rely on such site analyses or surveys as if prepared for Buyer in the first instance, but Seller makes no representation as to whether any such reissuance or recertification will be available. 3.Hohenstein’s Investigations. For a period up to the Closing Date, EDA shall allow Hohenstein and Hohenstein’s agents, employees and consultants access to the Property without charge and at all times for the purpose of Hohenstein’s investigation and testing of the Property, including but not limited to surveying and testing of soil and groundwater (“Hohenstein’s Investigations”); provided, however, Hohenstein shall not perform any invasive testing unless (a) EDA gives its prior written approval of Hohenstein’s consultant that will perform the testing, which approval shall not be unreasonably withheld, conditioned or delayed, and (b) Hohenstein gives EDA reasonable prior notice of such testing. EDA shall have the right to accompany Hohenstein during any of Hohenstein’s Investigations of the Property. Upon Seller’s request, Hohenstein shall provide to EDA copies of all third-party, non-confidential written test results and reports conducted as part of Hohenstein’ Investigations, whether printed or in electronic format, to the extent the same are in Seller’s possession or which Seller can readily obtain access to. Except as otherwise provided herein, Hohenstein agrees to pay all of the costs and expenses for Hohenstein’s Investigations, to cause to be released any lien on the Property arising as a result of Hohenstein’s Investigations, and to repair and restore, at Hohenstein’ expense, any damage to the Property caused by Hohenstein’s Investigations to substantially the same condition, to the extent practicable, existing prior to the commencement of such activities which cause any such damage. Hohenstein shall indemnify and hold EDA and the Property harmless from all costs and liabilities, 3 including, but not limited to, reasonable attorneys’ fees, arising from Hohenstein’ Investigations; provided, however, such indemnity shall not include any expense, loss or damage to the extent arising from any act or omission of Seller or any unrelated third-party during any such inspection and any expense, loss or damage resulting from the discovery or release of any Hazardous Substances (as defined in Subsection 9.1.H.) at the Property. The indemnification obligations provided herein shall survive the termination or cancellation of this Agreement. If this Agreement is terminated based upon any environmental condition as herein provided, and EDA requests, Hohenstein shall give EDA copies of any and all AUAR, Phase I and/or Phase II reports obtained by Hohenstein, if any. 4.Insurance; Risk of Loss. EDA assumes all risk of destruction, loss or damage to the Property prior to the Closing Date. If, prior to the Closing Date, all or any portion of the Property or access thereto is condemned, taken by eminent domain, or damaged by cause of any nature, EDA shall immediately give Hohenstein written notice of such condemnation, taking or damage. After receipt of written notice of such condemnation, taking or damage (from EDA or otherwise), Hohenstein shall have the option (to be exercised in writing within sixty (60) days of receipt of such written notice from EDA) either (a) to require EDA to (i) convey the Property at Closing (as defined in Section 6) to Hohenstein in its damaged condition, upon and subject to all of the other terms and conditions of this Agreement without reduction of the Purchase Price, (ii) assign to Hohenstein at Closing all of EDA’s right, title and interest in and to any claims EDA may have to insurance proceeds, condemnation awards and/or any causes of action with respect to such condemnation or taking of or damage to the Property or access thereto, and (iii) pay to Hohenstein at Closing by certified or official bank check all payments made prior to the Closing Date under such insurance policies or by such condemning authorities, or (b) to terminate this Agreement by giving written notice of such termination to EDA, whereupon this Agreement shall be terminated, all of the Earnest Money shall be refunded to Hohenstein regardless of whether it is nonrefundable, and thereafter neither party shall have any further obligations or liabilities to the other, except for such obligations or liabilities set forth in this Agreement that are expressly provided to survive termination of this Agreement. This obligation to refund the Earnest Money shall survive any termination of this Agreement. If the right to terminate this Agreement is not exercised in writing within such sixty (60) day period, such right shall be deemed to have been waived. EDA shall not designate counsel, appear in, or otherwise act with respect to the condemnation proceedings without Hohenstein’ prior written consent, which consent shall not be unreasonably withheld. 5.Contingencies. 5.1.Hohenstein’s Contingencies. A. Unless waived by Hohenstein in writing signed by an authorized representative of Hohenstein, Hohenstein’s obligation to proceed to Closing shall be subject to (a) full performance by EDA of its obligations hereunder, (b) the continued accuracy of EDA’s representations and warranties provided in Section 9.1 as of the Closing, and (c) Hohenstein’s satisfaction, in Hohenstein’s sole discretion, as to the contingencies described in this Section 5.1 within the time periods set forth below: 4 (1) On or before the Closing Date, Hohenstein shall have determined, in its sole discretion, that the Property will be in such condition as approved by Hohenstein and that it is satisfied with (a) the results of and matters disclosed by Hohenstein’s Investigations, surveys, soil tests, engineering inspections, hazardous substance and environmental reviews of the Property, and (b) all other inspections and due diligence regarding the Property, including but not limited to any Due Diligence Materials. (2) On or before the Closing Date, Hohenstein shall have determined the acceptability of the zoning of the Property for its proposed use as a warehouse, ancillary office, parking lot, and other improvements and uses related thereto (collectively, the “Proposed Use”). All costs and expenses related to applying for and obtaining any governmental permits and approvals for the Property for the Proposed Use shall be the responsibility of Hohenstein. (3) On or before the Closing Date, Hohenstein shall have received from Title an irrevocable commitment to issue to Hohenstein (or its assignee pursuant to Section 15) an ALTA extended coverage owner’s policy of title insurance for the Property, with the so-called “standard exceptions” deleted and otherwise in form and substance satisfactory to Hohenstein in Hohenstein’s sole discretion, in the amount of the Purchase Price and not disclosing any encumbrance that is unacceptable to Hohenstein in Hohenstein’s sole discretion, and subject only to the title exceptions approved by Hohenstein and containing such endorsements as are requested by Hohenstein and approved by Title, dated the date and time of the recording of the Deed (the “Owner’s Policy”). (4) On or before the Closing Date, the lender providing the Financing (as defined in paragraph (7) below of this Subsection 5.1.A.) (the “Lender”) shall have received from Title an irrevocable commitment to issue to the Lender an ALTA extended coverage loan or lender’s policy of title insurance for the Property, with the so-called “standard exceptions” deleted and otherwise in form and substance satisfactory to the Lender in the Lender’s sole discretion, in the amount of the Financing and not disclosing any encumbrance that is unacceptable to the Lender in the Lender’s sole discretion, and subject only to the title exceptions approved by the Lender and containing such endorsements as are requested by the Lender and approved by Title, dated the date and time of the recording of the Lender’s mortgage (the “Lender’s Policy”). (5) On or before the Closing Date, EDA shall have obtained releases of the Property from any and all mortgages or other monetary liens affecting any of the Property. 5 (6) On or before the Closing Date, Hohenstein shall have determined, in its sole discretion, that it is satisfied with the books and records in EDA’s possession, if any, including but not limited to site plans, surveys, engineering or environmental reports associated with the Property. (7) On or before the Closing Date, Hohenstein shall have secured financing that is satisfactory to Hohenstein, in Hohenstein’s sole discretion, for the purpose of acquiring the Property, developing the Property, and constructing Hohenstein’s planned improvements on the Property required for the Proposed Use, all at project cost and financing amounts and terms that are acceptable to Buyer, in its sole discretion (the “Financing”). (8) On or before the Closing Date, Hohenstein shall have obtained a Survey for the Property, in form and substance satisfactory to Hohenstein, the Lender and Title, in the respective sole discretion of Hohenstein, the Lender and Title, certified to Hohenstein, the Lender and Title. (9) On or before the Closing Date, Hohenstein shall have obtained any necessary company approval of the transaction. (10) On or before the Closing Date, Hohenstein, in Hohenstein’s sole discretion, shall have approved the forms of all closing documents. (11) EDA shall have performed and satisfied all agreements, covenants and conditions required pursuant to this Agreement to be performed and satisfied by EDA prior to the Closing Date. (12) On or before the Closing Date, EDA shall have acquired the Real Property from Owner. (13) All representations and warranties of EDA contained in this Agreement shall be accurate as of the Closing Date. The foregoing contingencies are for Hohenstein’s sole and exclusive benefit and one (1) or more may waived by Hohenstein in writing signed by an authorized representative of Hohenstein in its sole discretion. EDA shall reasonably cooperate with Hohenstein’s efforts to satisfy such contingencies at or prior to Closing, but EDA shall not be obligated to incur out of pocket costs or assume any obligation or liability of Hohenstein except as otherwise provided herein. Except as otherwise provided herein, Hohenstein shall bear all cost and expense of satisfying Hohenstein’s contingencies. If any of the foregoing contingencies have not been satisfied on or before the applicable date, then this Agreement may be terminated, at Hohenstein’s option, by written notice from Hohenstein to EDA. If Hohenstein terminates this Agreement pursuant to this 6 Section, any refundable portion of the Earnest Money shall immediately be refunded to Hohenstein. This obligation to refund the Earnest Money shall survive any termination of this Agreement. Upon termination, neither party shall have any further rights or obligations against the other regarding this Agreement or the Property, except for such obligations set forth in this Agreement that are expressly provided to survive termination of this Agreement. B. Notwithstanding anything to the contrary in this Agreement, if Hohenstein elects not to exercise any of the contingencies set out herein, such election may not be construed as limiting any representations or obligations of EDA set out in this Agreement, including, without limitation, any indemnity or representations with respect to environmental matters. 5.2.EDA’s Contingencies. EDA’s obligation to proceed to Closing shall be subject to the satisfaction, on or prior to the Closing Date, of each of the following conditions: A. EDA shall have acquired the Real Property from Owner by the Closing Date, and the EDA agrees to use its best efforts to effectuate such transaction. B. Hohenstein shall have performed and satisfied all agreements, covenants and conditions required pursuant to this Agreement to be performed and satisfied by Hohenstein prior to the Closing Date. C. All representations and warranties of Hohenstein contained in this Agreement shall be accurate as of the Closing Date. D. There shall be no uncured default by Hohenstein of any of its obligations under this Agreement as of the Closing Date, not otherwise waived by EDA. If any contingency contained in this Section 5.2 has not been satisfied on or before the Closing Date, then this Agreement may be terminated by written notice from the EDA to Hohenstein. If termination occurs all documents deposited by Hohenstein shall be immediately returned to Hohenstein, and all documents deposited by the EDA shall be immediately returned to the EDA and neither party will have any further rights or obligations with respect to this Agreement or the Property, except for such obligations that survive termination of this Agreement. If the EDA terminates this Agreement pursuant to Subsection 5.2.A., all of the Earnest Money shall immediately be refunded to Hohenstein regardless of whether it is nonrefundable. If the EDA terminates this Agreement pursuant to Subsections 5.2.B., 5.2.C. or 5.2.D., any refundable portion of the Earnest Money shall immediately be refunded to Hohenstein. All of the foregoing obligations to refund the Earnest Money shall survive any termination of this Agreement. All the contingencies in this Section 5.2 are specifically for the benefit of the EDA, and the 7 EDA shall have the right to waive any contingency in this Section 5.2 by written notice to Hohenstein. 6.Closing. The closing of the purchase and sale contemplated by this Agreement (the “Closing”) shall occur on or before September 30, 2023 (as may be extended in accordance with the terms and conditions hereof, the “Closing Date”); provided, however, Hohenstein shall have the right and option to extend the Closing Date for up to three (3) periods of thirty (30) days each (“First Extension Option,” “Second Extension Option” and “Third Extension Option,” respectively). Hohenstein shall exercise its right and option to extend the Closing Date, if at all, by giving EDA notice of such election on or before the Closing Date, as the same may be extended. Upon the exercise of the First Extension Option, the Original Earnest Money will become nonrefundable. Upon exercise of the Second Extension Option, Hohenstein shall deposit an additional $10,000 as earnest money (“Additional Earnest Money”), to be held in escrow in an interest-bearing account by Title. Upon exercise of the Third Extension Option, the Additional Earnest Money shall become nonrefundable and Hohenstein shall deposit an additional $10,000 as earnest money (“Third Additional Earnest Money”), to be held in escrow in an interest- bearing account by Title. The Original Earnest Money, Additional Earnest Money and Third Additional Earnest Money shall be referred to collectively as the “Earnest Money.” If the parties proceed to Closing, the Earnest Money be applied to the Purchase Price. EDA agrees to deliver legal and actual possession of the Property to Hohenstein on the Closing Date, as the same may be extended. 6.1.EDA’s Closing Documents and Deliveries. On the Closing Date, EDA shall execute and/or deliver to Hohenstein or Title, as applicable, the following: A.Warranty Deed. A warranty deed conveying title to the Property to Hohenstein, free and clear of all encumbrances, except the Permitted Encumbrances (the “Deed”). B.Certification of Representations and Warranties. EDA shall provide Hohenstein with a certificate certifying that the representations and warranties set forth in Subsection 9.1 of this Agreement are true and correct as of the Closing Date. C.FIRPTA Affidavit. An affidavit of EDA certifying that EDA is not a “foreign person”, “foreign partnership”, foreign trust”, “foreign estate” or “disregarded entity” as those terms are defined in Section 1445 of the Internal Revenue Code of 1986, as amended. D.Title Documents. Seller shall deliver to Title only, such certificates, affidavits or other agreements of Seller in favor of Title in order to record the Deed and issue the Owner’s Policy and the Lender’s Policy. E.Transfer Tax Declarations. Information necessary for completion of any transfer tax declarations or certificates of value required in order to record the Deed. 8 F.Settlement Statement. A Closing Statement in form and substance reasonably acceptable to both Seller and Buyer and consistent with the terms of this Agreement, showing the Purchase Price and all prorations, adjustments, credits and debits this Agreement describes. G.Copies of Resolutions. EDA shall provide Hohenstein and Title with copies of the resolutions for the various EDA and/or City public meetings showing the EDA and/or various City commissions and/or councils have approved authorized this transaction and the Closing, Hohenstein’ CUP, Hohenstein’ site plan, zoning, and such other governmental approvals as may be required for Hohenstein’ Proposed Use. H.General Deliveries. All other documents determined by Title to be necessary to transfer the Property to Hohenstein and to evidence that EDA (a) has satisfied all monetary indebtedness with respect thereto, (b) has obtained such termination statements or releases from such secured creditors as may be necessary to ensure that the Property is subject to no monetary liens, (c) has obtained all consents from third parties necessary to effect EDA’s performance of the terms of this Agreement, including, without limitation, the consents of all parties holding an interest in the Property, (d) has provided such other documents as are determined by Title to be necessary to issue the Owner’s Policy and the Lender’s Policy, and (e) has duly authorized the transactions contemplated hereby. 6.2.Hohenstein Closing Documents and Deliveries. On the Closing Date, Hohenstein shall execute and/or deliver to EDA or Title the following: A.Payment of Purchase Price. The balance of the Purchase Price, in accordance with the terms of Section 1.2. B.Title Documents. Such transfer tax declarations or certificates of value or other documents as may be required by Title, to Title only, in order to record the Deed and issue the Owner’s Policy and the Lender’s Policy. C.Certification of Representations and Warranties. Hohenstein shall provide EDA with a certificate certifying that the representations and warranties set forth in Subsection 9.2 of this Agreement are true and correct as of the Closing Date. D.Settlement Statement. A Closing Statement in form and substance reasonably acceptable to both Seller and Buyer and consistent with the terms of this Agreement, showing the Purchase Price and all prorations, adjustments, credits and debits this Agreement describes. 9 E.Evidence of Authority. Hohenstein shall provide EDA with copies of the resolutions showing Hohenstein has met with necessary requirements to acquire the Property in accordance with this Agreement together with such proceedings, instruments and documents as may be reasonably required by Title as a condition precedent to issuing the Title Policy in Hohenstein’s name. F.General Deliveries. All other documents reasonably determined by Title to be necessary to evidence that Hohenstein has duly authorized the transactions contemplated hereby and evidence the authority of Hohenstein to enter into and perform this Agreement and the documents and instruments required to be executed and delivered by Hohenstein pursuant to this Agreement, or may be required of Hohenstein under applicable law, including any purchaser’s affidavits or revenue or tax certificates or statements. 7.Prorations. For purposes of calculating prorations, Buyer shall be deemed to be in title to the Property, and therefore entitled to the income therefrom and responsible for the expenses thereof, for the entire day upon which the Closing occurs. Except as specifically provided otherwise herein, items of income and expense for the period prior to the Closing Date will be for the account of the Seller and items of income and expense for the period on and after the Closing Date will be for the account of Buyer, all as determined by the accrual method of accounting. EDA and Hohenstein agree to the following prorations and allocation of costs regarding this Agreement: 7.1.Title Evidence and Closing Fee. EDA shall pay all costs of the Commitment with respect to the Property, including but not limited to all title examination and search fees of Title for the Commitment. Hohenstein will pay all costs of the premiums for any title insurance policy it desires with respect to the Property. Hohenstein and EDA shall each pay one half (1/2) of the closing fee or charge imposed by Title. 7.2.Transfer Taxes. EDA shall pay all state deed tax required to record the Deed. 7.3.Recording Costs. EDA shall pay the cost of recording all documents necessary to place record title to the Property in the EDA including, but not limited to, costs of recording any documents necessary to cure any Objections, as hereinafter defined. Hohenstein shall pay all recording costs with respect to the recording of the Deed and for the recording of any mortgage required by Hohenstein, and any mortgage registration tax on any such mortgage. 7.4.Real Estate Taxes and Special Assessments. General real estate taxes applicable to any of the Property (collectively, “Taxes”) payable in the calendar year of Closing shall be prorated between EDA and Hohenstein on a daily basis as of 12:00 a.m. CT on the Closing Date based upon a calendar fiscal year, with EDA paying, or causing to be paid, any Taxes payable in calendar year periods prior to the calendar year of the Closing Date, and with Hohenstein being responsible for Taxes payable in calendar year periods after the Closing Date. EDA shall pay in full all special assessments (and charges in the nature of or in lieu of such assessments) certified, levied, pending, postponed 10 or deferred, or constituting a lien against the Property with respect to any of the Property as of the Closing Date. Hohenstein shall be responsible for any special assessments that are levied or become pending against the Property after the Closing Date, including, without limitation, those related to Hohenstein’s development of the Property. 7.5.Utilities. All utility expenses, including but not limited to water, fuel, gas, electricity, sewer and other services furnished to or provided for the Property, if any, shall be prorated between EDA and Hohenstein on a daily basis as of the Closing Date, with EDA paying those allocable to the period prior to the Closing Date and Hohenstein being responsible for those allocable to the Closing Date and subsequent thereto. 7.6.Survey. Hohenstein shall obtain and pay for a Survey. 7.7.Attorneys’ Fees. EDA and Hohenstein shall each pay its own attorneys’ fees incurred in connection with this transaction, except as otherwise specifically set forth in this Agreement. 7.8.Survival. The obligations set forth in this Section 7 survive the Closing. 8.Title Examination. (i) Within seven (7) days following the Effective Date, EDA shall, at EDA’s sole expense, order a current and updated title commitment for an ALTA extended coverage owner’s policy of title insurance for the Property issued by Title, and copies of all instruments constituting exceptions described in the commitment (collectively, the “Commitment”); (ii) EDA shall cause Title to provide to Buyer supplements to the Commitment (together with copies of any instruments constituting exceptions which are identified therein) covering any additions or deletions from the date of the Commitment through the Closing Date (each, a “Supplement”); and, (iii) on or before September 30, 2023, Hohenstein shall obtain, at Hohenstein’s expense, an ALTA-certified survey (including a re-issued or re-certified ALTA- certified survey, pursuant to Section 2) bearing the legal description of the Property, and showing the area, dimensions and location of the Property and the matters shown in the Commitment (the “Survey” and, together with the Commitment and any Supplements, the “Title Evidence”). 8.1.Hohenstein’s Objections. Within thirty (30) days after Hohenstein’s receipt of the last of the Title Evidence, Hohenstein may make written objections (“Objections”) to the form or content of the Title Evidence, the content of the Due Diligence Materials, or the results or information obtained from Hohenstein’s Investigations. The Objections may include, without limitation, any easements, restrictions or other matters which may interfere with the Proposed Use of the Property or matters which may be revealed by the Survey. Any matters reflected on the Title Evidence which are not objected to by Hohenstein within such time period or waived by Hohenstein in accordance with Section 8.2(B) shall be deemed to be permitted encumbrances (“Permitted Encumbrances”). Hohenstein shall have the renewed right to object to the Title Evidence as the same may be revised or endorsed from time to time. 8.2.EDA’s Cure. EDA shall be allowed twenty (20) days after the receipt of Hohenstein’s Objections to cure the same but shall have no obligation to do so. If such cure 11 is not completed within said period, or if EDA elects not to cure such Objections, Hohenstein shall have the option to do any of the following: A. Terminate this Agreement with respect to all of the Property by giving written notice of such termination to EDA. B. Waive one or more of its objections and proceed to Closing. If Hohenstein so terminates this Agreement, neither EDA nor Hohenstein shall be liable to the other for any further obligations under this Agreement (except for such obligations set forth in this Agreement that are expressly provided to survive termination of this Agreement) and all of the Earnest Money shall be refunded to Hohenstein, regardless of whether it is nonrefundable. This obligation to refund the Earnest Money shall survive any termination of this Agreement. 9.Warranties and Representations. 9.1.By EDA. EDA warrants and represents the following to Hohenstein, and acknowledges that Hohenstein has relied on such representations and warranties in agreeing to enter into this Agreement: A. This Agreement has been duly executed and delivered and constitutes the legal, valid and binding obligation of EDA enforceable in accordance with its terms. EDA has been duly formed under the laws of the State of Minnesota and is in good standing under the laws of the jurisdiction in which the Property is located, is duly qualified to transact business in the jurisdiction in which the Property is located, and has the requisite power and authority to enter into and perform this Agreement and the documents and instruments required to be executed and delivered by EDA pursuant hereto. This Agreement and the documents and instruments required to be executed and delivered by EDA pursuant hereto have each been duly authorized by all necessary action on the part of EDA and such execution, delivery and performance does and will not conflict with or result in a violation of EDA’s organizational agreement or any judgment or order. B. The execution, delivery and performance by EDA of this Agreement will not (a) violate any provision of any law, statute, rule or regulation or any order, writ, judgment, injunction, decree, determination or award of any court, governmental agency or arbitrator presently in effect having applicability to EDA, or (b) result in a breach of or constitute a default under any indenture, loan or credit agreement or any other agreement, lease or instrument to which EDA is a party or by which it or any of its properties may be bound. C. To EDA’s knowledge, except as contemplated herein, no order, consent, approval, license, authorization or validation of, or filing, recording or registration with, or exemption by, any governmental or public body or authority, or any other entity, is required on the part of EDA to authorize, or is required in 12 connection with, the execution, delivery and performance of, or the legality, validity, binding effect or enforceability of, this Agreement. D. To EDA’s knowledge, there are no actions, suits or proceedings pending or threatened against or affecting EDA or any of its properties, before any court or arbitrator, or any governmental department, board, agency or other instrumentality which in any of the foregoing (a) challenges the legality, validity or enforceability of this Agreement, or (b) if determined adversely to EDA, would have a material adverse effect on the ability of EDA to perform its obligations under this Agreement or develop the Property for the Proposed Use. E. EDA has not received written notice, and has no knowledge, of (a) any pending or contemplated annexation or condemnation proceedings, or purchase in lieu of the same, affecting or which may affect all or any part of the Property, (b) any proposed or pending proceeding to change or redefine the zoning classification of all or any part of the Property, (c) any proposed changes in any road patterns or grades which would adversely and materially affect access to the roads providing a means of ingress or egress to or from all or any part of the Property, or (d) any uncured violation of any legal requirement, restriction, condition, covenant or agreement affecting all or any part of the Property or the use, operation, maintenance or management of all or any part of the Property. F. Seller does not know of any “well” (as defined in Minnesota Statutes § 103I.005, Subd. 21) located on the Property. To EDA’s knowledge, there has been no methamphetamine production on or about any portion of the Property. To EDA’s knowledge, the sewage generated by the Property, if any, goes to a facility permitted by the Minnesota Pollution Control Agency and there is no “individual sewage treatment system” (as defined in Minnesota Statutes § 115.55, Subd. 1(g)) located on the Property. Seller does not know of any “subsurface sewage treatment system” (as defined in Minnesota Statutes § 115.55, Subd. 1(h)) located on or serving the Property. To EDA’s knowledge, there are no underground or above ground storage tanks located on the Property or have been located on the Property and have been subsequently removed or filled. G. EDA is not a “foreign person,” “foreign corporation,” “foreign trust,” “foreign estate” or “disregarded entity” as those terms are defined in Section 1445 of the Internal Revenue Code. H. To EDA’s knowledge, except as may be disclosed as part of the Due Diligence Materials, (i) no condition exists on the Property that may support a claim or cause of action under any Environmental Law (as defined below) and there are no Hazardous Substances (as defined below) generated, treated, stored, transferred from, released or disposed of, or otherwise placed, deposited in or located on the Property in violation of any Environmental Law, (ii) there has been no release, spill, leak or other contamination or otherwise onto the Property, (iii) there are no restrictions, clean ups or remediation plans regarding the Property, and (iv) the 13 Property is in compliance with all applicable Environmental Laws. To EDA’s knowledge, except as may be disclosed as part of the Due Diligence Materials, there is no buried waste or debris on any portion of the Property. “Environmental Law” shall mean (a) the Comprehensive Environmental Response Compensation and Liability Act of 1980, 42 U.S.C. § 9601-9657, as amended, or any similar state law or local ordinance, (b) the Resource Conservation and Recovery Act of 1976, 42 U.S.C. § 6901, et seq., (c) the Federal Water Pollution Control Act, 33 U.S.C. § 1251 et seq., (d) the Clean Air Act, 42 U.S.C. § 7401, et seq., (e) the Toxic Substances Control Act, 15 U.S.C. § 2601 et seq., (f) the Safe Drinking Water Act, 42 U.S.C. § 300(f) et seq., (g) any law or regulation governing aboveground or underground storage tanks, (h) any other federal, state, county, municipal, local or other statute, law, ordinance or regulation, including, without limitation, the Minnesota Environmental Response and Liability Act, Minn. Stat. § 115B.01, et seq., (i) all rules or regulations promulgated under any of the foregoing, and (j) any amendments of the foregoing. “Hazardous Substances” shall mean polychlorinated biphenyls, petroleum, including, without limitation, crude oil or any fraction thereof, petroleum products, heating oil, natural gas, natural gas liquids, liquefied natural gas or synthetic gas usable for fuel, and shall include, without limitation, substances defined as “hazardous substances,” “toxic substances,” “hazardous waste,” “pollutants or contaminants” or similar substances under any Environmental Law. I. There are no leases or tenancies with respect to the Property that will not be terminated as of the Closing Date. There are no unrecorded agreements or other contracts of any nature or type relating to, affecting or serving the Property beyond the agreements to acquire the Property from Owner. J. EDA has the right to acquire the Property from Owner in sufficient time to perform its obligations under this Agreement in a timely manner. K. There will be no indebtedness or sums due attributable to the Property which will remain unpaid after the Closing Date. L. There is no option, right of first refusal, or similar right to purchase all or any portion of the Property, other than as set forth in this Agreement. As used in this Agreement, the term “to EDA’s knowledge” shall mean and refer to only the current actual knowledge of the designated representative of EDA and shall not be construed to refer to the knowledge of any other officer, manager, director, agent, authorized person, employee or representative of EDA, or any affiliate of EDA, or to impose upon such designated representative any duty to investigate the matter to which such actual knowledge or the absence thereof pertains, or to impose upon such designated representative any individual personal liability. As used herein, the term “designated representative” shall refer to Jennifer Levitt. EDA represents and warrants that the foregoing individual is the representative of EDA most knowledgeable regarding the Property. 14 The representations, warranties and other provisions of this Section 9.1 shall survive Closing; provided, however, EDA shall have no liability with respect to any breach of a particular representation or warranty if Hohenstein shall fail to notify EDA in writing of such breach within two (2) years after the Closing Date, and provided further that EDA shall have no liability with respect to a breach of the representations and warranties set forth in this Agreement if Hohenstein has actual knowledge of EDA’s breach thereof prior to Closing and Hohenstein consummates the acquisition of the Property as provided herein. Hohenstein acknowledges and agrees that, except as expressly set forth in this Agreement and/or in any documents executed and delivered by the EDA at Closing, EDA has not made, and EDA hereby specifically disclaims, any representation, warranty or covenant of any kind, oral or written, expressed or implied, or rising by operation of law, with respect to the Property, including, but not limited to, any warranties or representations as to the habitability, merchantability, fitness for a particular purpose, title, zoning, tax consequences, physical or environmental condition, utilities, valuation, governmental approvals, the compliance of the Property with governmental laws, or any other matter or item regarding the physical condition of the Property. Hohenstein agrees that except as expressly set forth in this Agreement and/or in any documents executed and delivered by the EDA at Closing, Hohenstein shall accept the Property and acknowledges that the sale of the Property as provided for herein is made by EDA on an “AS IS,” “WHERE IS,” and “WITH ALL FAULTS” basis. Hohenstein is an experienced purchaser of property such as the Property and Hohenstein has made or will make its own independent investigation of the Property. The limitations set forth in this paragraph shall survive the Closing and shall not merge in the deed. 9.2.By Hohenstein. Hohenstein warrants and represents the following to EDA, and acknowledges that EDA has relied on such representations and warranties in agreeing to enter into this Agreement: A. Hohenstein is a limited liability company, duly organized and in good standing under the laws of the state of Minnesota and is not in violation of any provisions of its company documents or its operating agreement. B. Hohenstein has all requisite authority to enter into this Agreement and to perform all of its obligations under this Agreement. C. The execution, delivery and performance by Hohenstein of this Agreement will not (a) violate any provision of any law, statute, rule or regulation or any order, writ, judgment, injunction, decree, determination or award of any court, governmental agency or arbitrator presently in effect having applicability to Hohenstein, (b) violate or contravene any provision of the articles of incorporation or bylaws of Hohenstein, or (c) result in a breach of or constitute a default under any indenture, loan or credit agreement or any other agreement, lease or instrument to which Hohenstein is a party or by which it or any of its properties may be bound. 15 The representations, warranties and other provisions of this Section 9.2 shall survive Closing; provided, however, Hohenstein shall have no liability with respect to any breach of a particular representation or warranty if EDA shall fail to notify Hohenstein in writing of such breach within two (2) years after the Closing Date. 10.Additional Obligations of EDA. 10.1.Licenses and Permits. EDA shall transfer to Hohenstein all transferable rights, if any, in any permits or licenses held by EDA with respect to the Property. Forty- five (45) days prior to the Closing Date, EDA shall provide a list to Buyer of all permits and/or licenses that will be transferred to Buyer at or before Closing. EDA shall execute all applicable transfer forms and applications to facilitate and effect any such transfer and to cooperate fully with Hohenstein in its efforts to obtain all of the necessary licenses and permits for the Proposed Use, but EDA shall not be obligated to incur out of pocket costs or assume any obligation or liability of Hohenstein except as otherwise provided herein. 10.2.Condition of the Property at Closing. Prior to Closing, the Property shall be operated, maintained and insured in the ordinary course consistent with previous practice. On the Closing Date, EDA shall deliver to Hohenstein exclusive vacant possession of the Property, free and clear of any personal property, surface waste and surface debris of any kind. On or before the Closing Date, EDA shall remove all trash and personal property from the Property. EDA agrees that Hohenstein may dispose of any trash or personal property remaining on the Property as of the Closing Date, in Hohenstein’ sole discretion, and EDA agrees to pay for all costs and expenses incurred by Hohenstein with respect to the transport and/or disposal of the personal property within ten (10) days after receipt of an invoice from Hohenstein. This obligation to pay for all such costs and expenses shall survive the Closing. From the Effective Date hereof until the Closing Date, EDA shall refrain from entering into any easements, leases, licenses, rental, occupancy agreements and/or other agreements, however captioned (each, a “Contract”), relating to or affecting the Property, and shall refrain from entering into or amending any Contracts or other instruments (other than contracts in the ordinary course of business, which are cancelable by the owner of the Property without penalty within thirty (30) days after giving notice thereof) without the prior written consent of Buyer, which consent shall not be unreasonably withheld, delayed or conditioned, prior to the Closing Date. 10.3.Further Assurances. From and after the Closing Date, EDA agrees to execute, acknowledge and deliver to Hohenstein such other documents or instruments of transfer or conveyance as may be reasonably required to carry out its obligations pursuant to this Agreement. 10.4.Non-Assumption of Contracts or Other Obligations. The parties understand and agree that Hohenstein is only acquiring certain of EDA’s real property assets and that this Agreement and any related agreements shall not be construed to be in any manner whatsoever an assumption by Hohenstein of any agreements, indebtedness, obligations or liabilities of EDA which are owing with respect to the Property as of or prior to the Closing Date. 16 10.5.Mortgages. On or before the Closing Date, EDA shall satisfy all mortgage and/or lien indebtedness with respect to all or any portion of the Property and shall obtain recordable releases of the Property from any and all such mortgages or other liens affecting all or any portion of the Property. 10.6.Approvals. Hohenstein may elect to seek certain approvals in order for Hohenstein to develop the Property for the Proposed Use, including but not limited to rezoning the Property or receipt of a conditional use permit (the “Approvals”). EDA will reasonably cooperate with Hohenstein’s efforts to obtain the Approvals at or prior to Closing, but EDA shall not be obligated to incur out of pocket costs or assume any obligation or liability of Hohenstein except as otherwise provided herein. EDA hereby grants Hohenstein the right to file and prosecute applications and petitions for the Approvals and any special use permits and variances desired by Hohenstein; provided, however, any special use permits or variances shall be contingent on the occurrence of the Closing and shall not be binding upon EDA or the Property unless and until the Closing occurs. EDA, agrees to cooperate with Hohenstein in the filing and prosecution of such applications and petitions, including but not limited to the filing of the same in EDA’s name, if required, at or prior to Closing, but EDA shall not be obligated to incur out of pocket costs or assume any obligation or liability of Hohenstein except as otherwise provided herein. 11.Commissions. Seller and Buyer each represent to the other party that in connection with the transaction contemplated hereby, no third party broker or finder has been engaged or consulted by Seller or Buyer or is entitled to compensation or commissions in connection herewith other than Forte Real Estate Partners LLC (the "Buyer’s Broker"), representing Buyer. Buyer represents and warrants to Seller that its Broker is Forte. Seller shall pay all commissions due to Buyer’s Broker’s (in an amount equal to 5% of the Purchase Price), if the transaction contemplated by this Agreement is consummated, at Closing. Seller shall defend, indemnify and hold harmless Buyer from and against any and all claims of brokers, finders or any like third party claiming any right to commissions or compensation by or through acts of Seller in connection herewith. The indemnity obligations hereunder shall include, without limitation, all damages, losses, risks, liabilities and expenses (including, without limitation, reasonable attorneys' fees and costs) arising from and related to matters being indemnified hereunder. This Section 11 shall survive the expiration or termination of this Agreement or the Closing. 12.Notice. Any notice to be given by one party hereto shall be personally delivered (including messenger delivery), by email at the address set forth below, or be sent by registered or certified mail, or by a nationally recognized overnight courier which issues a receipt, in each case postage prepaid, to the other party at the addresses in this Section (or to such other address as may be designated by notice given pursuant to this Section), and shall be deemed given upon personal delivery, three (3) days after the date postmarked, one (1) business day after delivery to such overnight courier, or immediately upon personal delivery or delivery by email. Attorneys for each party shall be authorized to give and receive notices for each such party. 17 If to EDA: Cottage Grove Economic Development Authority 12800 Ravine Parkway South Cottage Grove MN 55016 Attn: Jennifer Levitt, EDA Executive Director Email: jlevitt@cottagegrovemn.gov with a copy to: Korine L. Land LeVander, Gillen & Miller, P.A. 1035 Corporate Center Drive, Suite 300 Eagan, MN 55121 Email: kland@levander.com If to Hohenstein: Hohenstein Real Estate LLC Karl Hohenstein 2330 Ventura Drive Woodbury, MN 55125-3929 With a copy to: Dorsey & Whitney LLP 50 South 6th St., Ste. 1500 Minneapolis, MN 55402 Attn: Bradley F. Williams Email: williams.bradley@dorsey.com 13.Default; Remedies. In addition to the rights granted to the parties pursuant to Minn. Stat. Sec. 559.21, if either EDA or Hohenstein fails to perform any of its obligations under this Agreement in accordance with its terms, except for any failures that are by reason of the other party’s failure to perform or the failure of any condition precedent to such obligation(s) of such failing party, and such failing party does not cure such failure within five (5) days after written notice thereof from the other party, then any such failure shall constitute a default under this Agreement and the other party shall have the right to terminate this Agreement by giving the failing party written notice of such election. In the case of any default by Hohenstein, EDA’s sole and exclusive remedies shall be termination of this Agreement as provided above and, upon any such termination, the Earnest Money shall be forfeited to Seller as agreed and final liquidated damages. In the case of any default by EDA, Hohenstein’ sole and exclusive remedies shall be (i) specifically enforce this Agreement, or (ii) terminate this Agreement, in which case all the Earnest Money shall be promptly returned to Hohenstein regardless of whether it is nonrefundable. This obligation to return the Earnest Money shall survive any termination of this Agreement. Each party hereto acknowledges that actual damages suffered by the other party in such events of termination will be difficult or impossible to measure and that the amount of the Earnest Money represents a good-faith estimate thereof and does not constitute a penalty. EDA and Hohenstein agree that a material default by EDA would impair Hohenstein’s ability to acquire title to the Property pursuant to the terms of this Agreement, and in such event, Hohenstein would have no adequate remedy at law. In no event shall Hohenstein be entitled to record a notice of Lis Pendens against the Property, unless Hohenstein is pursuing specific performance of this Agreement. In any action or proceeding to enforce this Agreement or any term hereof, the prevailing party shall be entitled to recover its reasonable costs and attorneys’ fees. For purposes of this Agreement, “prevailing Party” means 18 the party that prevails (whether affirmatively or by means of a successful defense) with respect to claims having the greatest value or importance as adjudicated by a court of competent jurisdiction in a final non-appealable order or judgement. 14.Cumulative Rights. No right or remedy conferred or reserved to EDA or Hohenstein is intended to be exclusive of any other right or remedy herein or by law provided, but each shall be cumulative in and in addition to every other right or remedy existing at law, in equity or by statute, now or hereafter. 15.Assignment.Buyer may freely assign its rights and obligations under this Agreement to a single-purpose entity created by Buyer for the purpose of owning and developing the Property, without the consent of Seller, provided and on the condition that Buyer shall provide Seller written notice of the assignment and the identity of the assignee prior to the Closing Date and such assignee shall have assumed Buyer’s obligations hereunder by a written instrument of assumption. 16.Entire Agreement; Modification. This written Agreement constitutes the complete agreement between the parties with respect to this transaction and supersedes any prior oral or written agreements between the parties regarding this transaction. There are no verbal agreements that change this Agreement and no waiver of any of its terms will be effective unless in writing executed by the parties. 17.Binding Effect; Survival. This Agreement binds and benefits the parties and their respective successors and assigns. All representations and warranties, and indemnification obligations of the parties hereto shall survive the Closing. 18.Governing Law. The provisions of this Agreement shall be governed by and construed in accordance with the laws of the State of Minnesota. 19.Rules of Interpretation. The words “herein” and “hereof” and words of similar import, without reference to any particular section or subdivision, refer to this Agreement as a whole rather than any particular section or subdivision hereof. References herein to any particular section or subdivision hereof are to the section or subdivision of this Agreement as originally executed. 20.Titles of Sections. Any titles of the sections, or any subsections, of the Agreement are inserted for convenience of reference only and shall be disregarded in construing or interpreting any of its provisions. 21.Counterparts; Facsimiles. This Agreement may be executed in any number of counterparts, and all of the signatures to this Agreement taken together shall constitute one and the same agreement, and any of the parties hereto may execute such agreement by signing any such counterpart. Facsimile, scanned, “PDF” or emailed signatures on this Agreement shall be deemed to have the same full force and effect as original signatures. 22.Represented by Counsel. Each party has been represented and advised by counsel 19 in the transaction contemplated hereby. 23.Time of the Essence. Time is of the essence of this Agreement. 24.Section 1031 Exchange. Buyer (or its assignee, pursuant to Section 15) may assign this Agreement without the consent of Seller to a qualified intermediary for the express purpose of effecting a tax-deferred property exchange under Section 1031 of the Internal Revenue Code of 1986, as amended. Buyer expressly reserves the right to assign its rights, but not its obligations, hereunder to a qualified intermediary, as provided in IRC Reg. 1.1031(k)-(g)(4), in connection with such an exchange, and Seller shall execute an acknowledgement of such assignment, if requested. Such assignment shall not release Buyer (or its assignee, pursuant to Section 15) from its obligations under this Agreement. Seller shall otherwise cooperate as reasonably requested by Buyer to effectuate a Section 1031 exchange, provided that such cooperation is at no out-of-pocket cost to Seller. 25.IRS Reporting Requirements. Seller and Buyer acknowledge and agree that Section 6045(e) of the Internal Revenue Code of 1986 requires that notice of the sale and purchase of the Property described in this Agreement, be provided to the Internal Revenue Service (the “IRS”) by preparation of and filing with the IRS of one or more IRS Form 1099-B; and further, Seller and Buyer agree to furnish and provide Title any and all information and documentation, including without limitation the Designation Agreement, that Title may require in order for Title to (a) comply with all instructions to the IRS Forms 1099-B in the preparation thereof, and (b) prepare and timely file with the IRS said IRS Forms 1099-B with respect to this transaction. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] 20 IN AGREEMENT, the parties hereto have hereunto set their hands as of the Effective Date. SELLER: COTTAGE GROVE ECONOMIC DEVELOPMENT AUTHORITY By ________________________________ Myron Bailey Its President By ________________________________ Jennifer Levitt Its Executive Director A-1 EXHIBIT A Real property located in the County of Washington, State of Minnesota, legally described as follows: Lot 1, Block 1, Glengrove Industrial Park 9th Addition Abstract Property [Commitment legal description to govern]