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Moririson Bors. Community Economic Betterment Account Contract (CEBA) and EZ2007 TO: The Honorable Mayor and City Council Members FROM: Michael C. Van Milligen, City Manager SUBJECT: Community Economic Betterment Account (CEBA) and Enterprise Zone (EZ) Contract for Morrison Bros. Co. DATE: February 24, 2009 Economic Development Director Dave Heiar is recommending approval of a contract among the Iowa Department of Economic Development and Morrison Brothers for Community Economic Betterment Account Program and Enterprise Zone benefits for their expansion that will retain 97 jobs and create 10 new positions. concur with the recommendation and respectfully request Mayor and City Council approval. Michael C. Van Milligen MCVM/jh Attachment cc: Barry Lindahl, City Attorney Cindy Steinhauser, Assistant City Manager David Heiar, Economic Development Director THE CTTY OF ~~ ~..J E Masterpiece on the Mississippi DATE: February 16, 2009 TO: Michael Van Milligen, City Manager r FROM: David Heiar, Economic Development Director ~J Dubuque AN~Americal~ty 2007 SUBJECT: Community Economic Betterment Account (CEBA) and Enterprise Zone (EZ) contract for Morrison Bros. Co. INTRODUCTION This memorandum presents for City Council review and approval a contract among the Iowa Department of Economic Development (IDED) and Morrison Bros. Co. for Community Economic Betterment Account (CEBA) program and Enterprise Zone (EZ) benefits. The CEBA and EZ contracts are attached. BACKGROUND Morrison Bros. Co. intends to expand its operations in Dubuque. The Company will retain 97 jobs and create 10 new positions as a part of this expansion process. Morrison Bros. has over 1200 products used in the "petroleum marketing sector" including motor fueling, aviation, agriculture, bulk handling and transportation, backup power generation, and numerous industrial applications. Recent R&D focus has been on biofuels and related equipment for alternate energy. Morrison Bros. also makes products for fuel and water military applications, and ground water testing. Morrison Bros.'s project consolidates and expands Dubuque operations on one site at 7th Street. The first phase is for a new expanded warehouse and receiving docks attached to the current production facility. The next phase is for the main offices, including Engineering and R&D Tech Center relocated from 24th St. The result will be a new headquarters, R&D center, and a warehouse on campus with all Dubuque production and shipping. The CEBA application and EZ application was approved by the City Council on June 2, 2008 and the Enterprise Zone Commission on June 2, 2008. The City is also provided Tax Increment Financing for the project as local match. DISCUSSION Morrison Bros. will commit to employ 10 new employees averaging over $40,000/yr and insurance benefits. The Company will be investing approximately $3.8 million in construction, computer equipment, furniture and fixtures, machinery, and research and development. To assist this project, Morrison Bros. has requested a forgivable CEBA loan of $40,000. City assistance as public match for the CEBA application is required. A 10 year TIF rebate estimated at $480,000 will be provided as local match. The company is also requesting Enterprise Zone Benefits estimated to be: • Sales Tax Rebate $50,000 • Investment Tax Credit $290,000 • R&D Tax Credit $600,000 RECOMMENDATION I recommend that the City Council approve the CEBA and EZ contracts to assist Morrison Bros. Co. to expand their operations in the community. This project is consistent with the City's goals to help local businesses expand in the community, increase the number of good paying jobs and further diversify our economic base. ACTION STEP The action step for the City Council is to adopt the attached resolution. attachments F:\USERSWdejong\CEBAWIorrison Bros\CEBA and EZ contract approval memo.doc RESOLUTION NO. 81-09 A RESOLUTION APPROVING A CONTRACT WITH THE IOWA DEPARTMENT OF ECONOMIC DEVELOPMENT AND MORRISON BROS. CO. FOR COMMUNITY ECONOMIC BETTERMENT ACCOUNT (CEBA) AND ENTERPRISE ZONE (EZ) BENEFITS ON BEHALF OF MORRISON BROS. CO. Whereas, Morrison Bros. Co. has proposed the expansion of its operations in Dubuque, Iowa; and Whereas, the City Council of Dubuque, Iowa has considered said proposal and has determined that the proposed project will contribute to the local economy through the creation of 10 new jobs for area residents; and Whereas, the Iowa Department of Economic Development's Community Economic Betterment Account (CEBA) was designed to assist in the economic development efforts of local jurisdictions; and Whereas, the Iowa Department of Economic Development's Enterprise Zone (EZ) program encourages investment in distressed census tracts in the community. NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF DUBUQUE, IOWA: Section 1. That a contract for Community Economic Betterment Account and Enterprise Zone benefits for Morrison Bros. Co. is hereby approved. Section 2. That the Mayor is hereby authorized to execute the contract and deliver to the Iowa Department of Economic Development together with such documents as may be required. Passed, approved and adopted this 2nd day of Marchn, 2009. Roy D. Buol, Mayor Attest: Jeanne F. Schneider, City Clerk r MASTER CONTRACT BY AND BETWEEN Morrison Brothers Company AND THE IOWA DEPARTMENT OF ECONOMIC DEVELOPMENT CONTRACT NUMBER: P0806M01734 TABLE OF CONTENTS ARTICLE 1. MASTER CONTRACT DURATION; FUNDING AGREEMENT DURATION ARTICLE 2. FUNDING Article 2.1 Funding Sources Article 2.2 Reduction, Discontinuance or Alteration of Funding ARTICLE 3. CONTRACT STRUCTURE AND DEFINITIONS; DOCUMENTS INCORPORATED BY REFERENCE; ORDER OF PRIORITY Article 3.1 Contract Structure and Definitions Article 3.2 Documents Incorporated by Reference Article 3.3 Business's Financial Assistance Application on File Article 3.4 Order of Priority ARTICLE 4. AWARD Article 4.1 Description of the Project and Award Budget Article 4.2 Job Obligations Article 4.3 Repayment Obligation ARTICLE 5. CONDITIONS TO DISBURSEMENT OF FUNDS; DISBURSEMENT TERMS Article S.1 Documents Submitted Article 5.2 Prior Costs Article 5.3 Cost Variation Article 5.4 Suspension of Disbursement Article S.S Investment ofAward Proceeds ARTICLE 6. SECURITY; CROSS-COLLATERALIZATION Article 6.1 Secured Property Article 6.2 Value of Collateral Article 6.3 Additional or Substitute Collateral ARTICLE 7. REPRESENTATIONS AND WARRANTIES Article 7.1 Organization and Qualifications Article 7.2 Authority and Validity of Obligations Article 7.3 Use of Proceeds Article 7.4 Subsidiaries Article 7.5 Financial Reports Article 7.6 No Material Adverse Change Article 7.7 Full Disclosure; Business's Financial Assistance Application Article 7.8 Trademarks, Franchises and Licenses Article 7.9 Governmental Authority and Licensing Article 7.10 Litigation and Other Controversies Article 7.11 Good Title Article 7.12 Taxes Article 7.13 Other Contracts Article 7.14 No Default Article 7.1 S Compliance with Laws Article 7.16 Effective Date of Representations and Warranties Contract #P0806M01734 - 2 - Masrer ~pdared e~o~ f ARTICLE 8. COVENANTS Article 8.1 Article 8.2 Article 8.3 Article 8.4 Article 8.5 Article 8.6 Article 8.7 Article 8.8 Article 8.9 Article 8.10 Article 8.11 Article 8.12 Article 8.13 Article 8.14 Article 8.1 S Article 8.16 Article 8.17 Maintain Existence in Iowa Job Obligations; Benefits Requirements Performance Obligations Maintenance of Properties Taxes and Assessments Insurance Required Reports Inspection and Audit Compliance with Laws Use of Award Proceeds Changes in Business Ownership, Structure or Control Notice of Meetings Notice of Proceedings Accounting Records Restrictions No Changes in Business Operations Indemnification ARTICLE 9. EVENTS OF DEFAULT AND REMEDIES Article 9.1 Events of Default Article 9.2 Default Remedies Article 9.3 Default Interest Rate Article 9.4 Expenses Article 9.5 Notice of Default and Opportunity to Cure ARTICLE I0. MISCELLANEOUS Article 10.1 Timely Performance Article 10.2 State of Iowa Recognition Article 10.3 Choice of Law and Forum Article 10.4 Governing Law Article 10. S Master Contract/Funding Agreement Amendments Article 10.6 Notices Article 10.7 Headings Article 10.8 Final Authority Article 10.9 Waivers Article 10.10 Counterparts Article 10.11 Survival of Representations Article 10.12 Severability of Provisions Article 10.13 Successors and Assigns Article 10.14 Termination Article 10.1 S Integration Contract #P0806M01734 - 3 - Master updated 8/07 ,~ MASTER CONTRACT BUSINESS: Morrison Brothers Company MASTER CONTRACT NUMBER: P0806M01734 AWARD DATE: June 19, 2008 This FINANCIAL ASSISTANCE CONTRACT (the "Master Contract") is made as of the CONTRACT EFFECTIVE DATE by and between the Iowa Department of Economic Development ("IDED"), 200 East Grand Avenue, Des Moines, IA 50309 and Morrison Brothers Company an Iowa S-Corporation ("Business"), 325 East 24`h Street, Dubuque, Iowa 52004-0238. WHEREAS, the Business submitted an application to IDED requesting financial assistance in the financing of its Project as more fully described in Exhibit C, Description of the Project and Award Budget, (the "Project"); and WHEREAS, the IDED found the Project to meet the requirements established to receive financial assistance; and WHEREAS, the IDED and/or the Iowa Department of Economic Development Board ("IDED Board") have awarded the Business financial assistance from one or more IDED-administered programs for the Project, all of which are subject to the terms and conditions set forth herein and collectively referred to as the "Award"; and NOW THEREFORE, in consideration of the mutual promises contained herein and intending to be legally bound, the Business and IDED agree to the following terms: ARTICLE 1 MASTER CONTRACT DURATION; FUNDING AGREEMENTS DURATION This Master Contract shall be in effect until all of Business's obligations and liabilities under this Master Contract and all of the Funding Agreements executed in connection with this Master Contract have been satisfied, IDED conducts a site visit and issues a formal closeout letter. The duration of each Funding Agreement will be as described in the Funding Agreement. ARTICLE 2 FUNDING 2.1 Funding Sources. The sources of funding for this Award are appropriations to IDED for financial assistance programs administered by the IDED and tax credit programs that IDED is authorized to administer. 2.2 Reduction, Discontinuance or Alteration of Fundin Any termination, reduction, or delay of funds available due, in whole or in part, to (i) lack of, reduction in, or a deappropriation of revenues previously appropriated by the legislature for this Award, or (ii) any other reason beyond the IDED's control may, in the IDED's discretion, result in the termination, reduction or delay of funds to the Business. Contract #P0806M01734 _4 _ Master updated 8/07 ARTICLE 3 CONTRACT STRUCTURE AND DEFINITIONS; DOCUMENTS INCORPORATED BY REFERENCE; AND ORDER OF PRIORITY 3.1 Contract Structure and Definitions. (a) This Award shall be governed by this Master Agreement and the individual funding agreements (the "Funding Agreements") for each source of program assistance for this Award. This Award has been provided to the Business to fund the Project described in Exhibit C, Description of the Project and Award Budget. The Articles of this Master Contract apply to each Funding Agreement unless a Funding Agreement specifically states otherwise. (b) The following terms apply to this Master Contract and each of the Funding Agreements, unless otherwise specified in a Funding Agreement: "Award Date" means the date first stated in this Master Contract and is the date the IDED and/or the IDED Board approved the awarding of financial assistance to the Business for the Project. "Benefits Requirements"means the benefits requirements established by the Department pursuant to statute or rule for each program that is providing financial assistance or tax credit benefits for this Project. See IDED Rule 261IAC174.6(15) for detailed description of benefit requirements. "Business's Employment Base" means the number of jobs as stated in Exhibit D, Job Obligations that the Business and IDED have established as the job base for this Project. The number of jobs the Business has pledged to create shall be in addition to the Business's Employment Base. "Created Jobs" means the number of new FTE Jobs the Business will add over and above the Business's Employment Base. "Community" means City of Dubuque. "Eligible Benefits" means all of the following: medical and dental insurance plans, pension and profit-sharing plans, child care services, life insurance coverage, vision insurance plan, and disability coverage. "Forgivable Loan"means a form of an award made by the IDED to the Business under a Funding Agreement(s) for which repayment is eliminated in part or entirely if the Business satisfies the terms of this Contract and the Funding Agreement(s). "Full-time Equivalent (FTE) Job" means the employment of one person: (a) For 8 hours per day fora 5-day, 40-hour workweek for 52 weeks per year, including paid holidays, vacations and other paid leave, or (b) For the number of hours or days per week, including paid holidays, vacations and other paid leave, currently established by schedule, custom, or otherwise, as constituting a week of full-time work for the kind of service an individual performs for an employing unit. "Job Maintenance Period" means the date two (2) years from the Project Completion Date as stated in Exhibit D, Job Obligations. The Business shall maintain the Project, and the createdlretained jobs through the Job Maintenance Period. Contract #P0806M01734 - 5 - Master updated 8/07 "Job Obligations"means the Business's Employment Base number and the new jobs to be created that pay the required wages and benefits, all as outlined in Exhibit D, Job Obligations. "Loan"means form of an award made by the IDED to the Business under a Funding Agreement(s) for which full repayment is expected. "Project" means the description of the work and activities to be completed by the Business as outlined in Exhibit C, Description of the Project and Award Budget, Exhibit D, Job Obligations, and Exhibit A, Business's Financial Assistance Application. "Project Completion Date" means the date three (3) years from the Award Date as stated in Exhibit D, Job Obligations. The Project Completion Date is the date by which all Project activities shall be satisfactorily completed. "Qualifying jobs" are those created or retained jobs that meet or exceed the Qualifying Wage Threshold Requirement established for the programs providing assistance to this Project qualify for program funding. "Qualifying Wage Threshold Requirement" means the wage threshold requirement (e.g. 90%, 100%, 130% , 160% of the average county or regional wage rate) established by the Department pursuant to statute or rule for each program that is providing financial assistance or tax credit benefits for this Project. The Qualifying Wage Threshold Requirement for each funding source providing assistance to this Project is outlined in Exhibit D, Job Obligations. "Retained Job" means an existing job that meets the Qualifying Wage Threshold Requirements and would be eliminated or moved to another state if the Project did not proceed in Iowa. 3.2 Documents Incorporated by Reference. The following documents are incorporated by reference and considered an integral part of this Master Contract: Exhibit A - Business's Financial Assistance Application, Application #08-CEBA-051 and #08-EZ-036 Exhibit B - Funding Agreements: B1-CEBA Funding Agreement B4- EZ Funding Agreement Exhibit C - Description of the Project and Award Budget Exhibit D - Job Obligations Exhibit E - "Development Agreement By and Between the City of Dubuque, Iowa and Morrison Brothers Company" dated October 6, 2008. 3.3 Business's Financial Assistance Application on File. Due to its size, Exhibit A will not be attached to this Master Contract, but will be kept on file at the Iowa Department of Economic Development. It shall, nevertheless, be considered an incorporated element of this Master Contract and the Funding Agreements. 3.4 Order of Priority. In the case of any inconsistency or conflict between the specific provisions of this document and the exhibits, the following order of priority shall control: (a) Master Contract, Articles 1-10 (b) Exhibit B -Funding Agreements (c) Exhibit C -Description of the Project and Award Budget (d) Exhibit D -Job Obligations Contract #P0806M01734 - 6 - Master updated sio~ (e) Exhibit A -Business's Financial Assistance Application (fj Exhibit E - "Development Agreement By and Between the City of Dubuque, Iowa and Morrison Brothers Company" dated October 6, 2008. ARTICLE 4 AWARD 4.1 Description of the Project and Award Budget The IDED and/or the IDED Board have approved an Award to the Business from the programs and in the amounts identified in Exhibit C, Description of the Project and Award Budget. The Project Budget for this Award is as detailed in Exhibit C. 4.2 Job Obli ations. The IDED and/or the IDED Board have approved an Award to the Business and the Business' Job Obligations are outlined in Exhibit D, Job Obligations. 4.3 Repayment Obli ation. The obligation to repay the direct financial assistance components of this Award shall be evidenced by Promissory Notes executed in connection with the Funding Agreements. ARTICLE 5 CONDITIONS TO DISBURSEMENT OF FUNDS; DISBURSEMENT TERMS The obligation of IDED to make, continue or disburse funds under this Master Contract and the Funding Agreements shall be subject to the following conditions precedent: 5.1 Documents Submitted. IDED shall have received each of the following documents, properly executed and completed, and approved by IDED as to form and substance: (a) Master Contract. Fully executed Master Contract. (b) Fundin~A~reements. Fully executed Funding Agreements. (c) Promissory Notes. The Promissory Notes required by the Funding Agreements. (d) Articles o Incorporation. Copies of the articles of incorporation of the Business, certified in each instance by its secretary or assistant secretary. (e) Certificate of Corporate Existence A certificate of existence for the Business from the Office of the Secretary of State of Iowa. (f) Results ofLien and Tax Search Financing statement, tax and judgment lien search results, in the Business's state of incorporation organization, against the Business and Secured Property. (g) Security Documents. The fully executed Security Documents required in Article 6.0. (h) Other Required Documents IDED shall have received such other contracts, instruments, documents, certificates and opinions as the IDED may reasonably request. (i) Hazardous Waste Audit. To comply with Iowa Code section 15A.1(3)"b," if the Business generates solid or hazardous waste, it must either: a) submit a copy of the Business's existing in-house plan to Contract #P0806M01734 - 7 - MasreruPdared 8/07 reduce the amount of waste and safely dispose of the waste based on an in-house audit conducted within the past 3 years; or b) submit an outline of a plan to be developed in-house, or 3) submit documentation that the Business has authorized the Iowa Department of Natural Resources or Iowa Waste Reduction Center to conduct the audit. (j) Release Form - Confidential Tar In ormation A signed Authorization for Release of Confidential State Tax Information form to permit IDED to receive the Business's state tax information directly from the Iowa Department of Revenue for purposes of annually updating the Iowa Public Return on Investment Analysis. (k) Satis actorv Credit History. Documentation of satisfactory credit history of the Business and guarantors, as applicable, with no judgments or unsatisfied liens or similar adverse credit actions. (1) Project Financial Commitments The Business shall have submitted documentation acceptable to IDED from the funding sources identified in Exhibit C committing to the specified financial involvement in the Project and received the IDED's approval of the documentation. The documentation shall include the amount, terms and conditions of the financial commitment, as well as any applicable schedules. (m) Re uests for Disbursement. All disbursements of Award proceeds shall be subject to receipt by the IDED of requests for disbursement, in form and content acceptable to IDED, submitted by the Business. All requests shall include documentation of costs that have been paid or costs to be paid immediately upon receipt of Award proceeds. (n) Funding Agreements Disbursement Requirements Satisfaction of all disbursement requirements outlined in the specific program Funding Agreements. 5.2 Prior Costs. No expenditures made prior to the Award Date may be included as Project costs. This restriction applies to the direct financial assistance portions of this Award, not the tax credit benefits included in this Award. 5.3 Cost Variation. In the event that the total Project cost is less than the amount specified in the Exhibit C, the Funding Agreements shall be reduced at the same ratio to the total Project cost reduction as the ratio of the Funding Agreement amount to the total amount of funds provided by the Business and all funding sources requiring a proportional reduction of their financial contribution to the Project. Any disbursed excess above the reduced IDED participation amount shall be returned immediately to IDED. 5.4 Suspension of Disbursement. Upon the occurrence of an Event of Default (as defined in this Master Contract or any of the Funding Agreements) by the Business, the IDED may suspend payments and tax credit program benefits to the Business until such time as the default has been cured to IDED's satisfaction. Notwithstanding anything to the contrary in this Master Contract or the Funding Agreements, upon a termination of this Master Contract on account of an Event of Default by the Business, Business will no longer have the right to receive any disbursements or any tax credit program benefits after the effective date of default. All Award funds may also be suspended, in IDED's sole discretion, in the event the Business experiences a layoff within the state of Iowa or closes any of its Iowa facilities. 5.5 Investment of Award Proceeds. (a) In the event that the Award proceeds are not immediately utilized, temporarily idle Award proceeds held by the Business may be invested provided such investments shall be in accordance with State law, including but not limited to the provisions of Iowa Code chapter 12C concerning the deposit of Contract #P0806M01734 - 8 - Master updated e/o7 public funds. Interest accrued on temporarily idle Award proceeds held by the Business shall be credited to and expended on the Project prior to the expenditure of other Award proceeds. (b) All proceeds remaining, including accrued interest, after all allowable Project costs have been paid or obligated shall be returned to the IDED within thirty (30) days after the Project Completion Date. Within ten (10) days of receipt of a written request from IDED, Business shall inform the IDED in writing of the amount of unexpended Award funds in the Business's possession or under the Business's control, whether in the form of cash on hand, investments, or otherwise. ARTICLE 6 SECURITY; CROSS-COLLATERALIZATION The Business shall execute in favor of the IDED all security agreements, financing statements, mortgages, personal and/or corporate guarantees (the "Security Documents") as required by the IDED. 6.1 Securi .This Award shall be secured by: Dedicated Certificate of Deposit equal to $40,000 (the "Secured Property "). 6.2 Value of Collateral. The value, as reasonably determined by IDED, of the Secured Property shall meet or exceed the amount of Award funds disbursed. 6.3 Additional or Substitute Collateral. In case of a decline in the market value of the Secured Property, or any part thereof, IDED may require that additional or substitute collateral of quality and value satisfactory to IDED be pledged as Secured Property for this Award. The Business shall provide such additional or substitute collateral Secured Property within 20 days of the date of the request for additional or substitute collateral to secure this Award in an amount equal to or greater than the amount of outstanding Award funds. ARTICLE 7 REPRESENTATIONS AND WARRANTIES The Business represents and warrants to IDED as follows: 7.1 Organization and Qualifications. The Business is duly organized, validly existing and in good standing as a corporation under the state of its incorporation. The Business has full and adequate power to own its property and conduct its business as now conducted, and is duly licensed or qualified and in good standing in each jurisdiction in which the nature of the business conducted by it or the nature of the property owned or leased by it requires such licensing or qualifying, except where the failure to so qualify would not have a material adverse effect on the Business's ability to perform its obligations hereunder. 7.2 Authority and Validity of Obli ations. The Business has full right and authority to enter into this Master Contract and the Funding Agreements and to make the borrowings herein provided for. The person signing this Master Contract and the Funding Agreements has full authority to: a) sign this Master Contract and the Funding Agreements, and b) issue Promissory Notes on behalf of the Business, and c) secure Business's obligations under this Master Contract and the Funding Agreements, and d) perform each and all of the obligations under the Master Contract and its Funding Agreements. Contract #P0806M01734 - 9 - Master updated sio~ The Master Contract and Funding Agreement documents delivered by the Business have been duly authorized, executed and delivered by the Business and constitute the valid and binding obligations of the Business and enforceable against it in accordance with their terms. This Master Contract, the Funding Agreements and related documents do not contravene any provision of law or any judgment, injunction, order or decree binding upon the Business or any provision of the articles of organization or operating agreement of the Business, contravene or constitute a default under any covenant, indenture or contract of or effecting the Business or any of its properties. 7.3 Use of Proceeds. The Business hereby agrees to use Award proceeds only for the Project and for the activities described in Exhibit C, Description of the Project and Award Budget, this Master Contract and the Funding Agreements. Use of Award proceeds shall conform to the Budget for the Project as detailed in Exhibit C. The Business represents that there are legally enforceable commitments in place from the funding sources identified for the Project in Exhibit C. 7.4 Subsidiaries. The Business has no Subsidiaries on the Contract Effective Date. 7.5 Financial Reports. The balance sheet of the Business furnished to IDED as of the Contract Effective Date, fairly presents its financial condition as at said date in conformity with GAAP applied on a consistent basis. The Business has no contingent liabilities which are material to it, other than as indicated on such financial statements or, with respect to future periods, on the financial statements furnished to IDED. 7.6 No Material Adverse Change. Since the Award Date, there has been no change in the condition (financial or otherwise) or business prospects of the Business, except those occurring in the ordinary course of business, none of which individually or in the aggregate have been materially adverse. To the knowledge of the Business, there has been no material adverse change in the condition of the Business (financial or otherwise) or the business prospects of the Business 7.7 Full Disclosure; Business's Financial Assistance Application. The statements and other information furnished to the IDED by Business in its Financial Assistance Application and in connection with the negotiation of this Master Contract and the Funding Agreements do not contain any untrue statements of a material fact or omit a material fact necessary to make the material statements contained herein or therein not misleading. The IDED acknowledges that as to any projections furnished to the IDED, the Business only represents that the same were prepared on the basis of information and estimates it believed to be reasonable. 7.8 Trademarks, Franchises and Licenses. The Business owns, possesses, or has the right to use all necessary patents, licenses, franchises, trademarks, trade names, trade styles, copyrights, trade secrets, know how and confidential commercial and proprietary information to conduct its businesses as now conducted, without known conflict with any patent, license, franchise, trademark, trade name, trade style, copyright or other proprietary right of any other Person. As used in this Master Contract, "Person " means an individual, partnership, corporation, association, trust, unincorporated organization or any other entity or organization, including a government or agency or political subdivision thereof. 7.9 Governmental Authority and Licensing. The Business has received all licenses, permits, and approvals of all Federal, state, local, and foreign governmental authorities, if any, necessary to conduct its businesses, in each case where the failure to obtain or maintain the same could reasonably be expected to have a material adverse effect. No investigation or proceeding which, if adversely determined, could reasonably be expected to result in revocation or denial of any material license, permit, or approval is pending or, to the knowledge of the Business threatened. Contract #P0806M01734 - 10 - Master updated s~o~ 7.10 Litigation and Other Controversies. There is no litigation or governmental proceeding pending, nor to the knowledge of the Business threatened, against the Business which if adversely determined would result in any material adverse change in the financial condition, Properties, business or operations of the Business, nor is the Business aware of any existing basis for any such litigation or governmental proceeding. 7.11 Good Title. The Business has good and defensible title (or valid leasehold interests) to all of its Property (including, without limitation, the Secured Property) reflected on the most recent balance sheets furnished to the IDED (except for sales of assets in the ordinary course business). 7.12 Taxes. All tax returns required to be filed by the Business in any jurisdiction have, in fact, been filed, and all taxes, assessments, fees and other governmental charges upon the Business or upon any of its property, income or franchises, which are shown to be due and payable in such returns, have been paid, except such taxes, assessments, fees and governmental charges, if any, as are being contested in good faith and by appropriate proceedings which prevent enforcement of the matter under contest and as to which adequate reserves established in accordance with GAAP have been provided. The Business knows of no proposed additional tax assessment against it for which adequate provisions in accordance with GAAP have not been made on its accounts. Adequate provisions in accordance with GAAP for taxes on the books of the Business have been made for all open years, and for their current fiscal period. 7.13 Other Contracts. The Business is not in default under the terms or any covenant, indenture or contract of or affecting either the Business or any of its properties, which default, if uncured, would have a material adverse effect on its financial condition, properties, business or operations. 7.14 No Default. No Default or Event of Default has occurred or is continuing. 7.15 Compliance with Laws. The Business is in compliance with the requirements of all federal, state and local laws, rules and regulations applicable to or pertaining to the business operations of the Business and laws and regulations establishing quality criteria and standards for air, water, land and toxic or hazardous wastes or substances, non-compliance with which could have a material adverse effect on the financial condition, properties, business or operations of the Business. The Business has not received notice to the effect that its operations are not in compliance with any of the requirements of applicable federal, state or local environmental or health and safety statutes and regulations or are the subject of any governmental investigation evaluating whether any remedial action is needed to respond to a release of any toxic or hazardous waste or substance into the environment, which non-compliance or remedial action could have a material adverse effect on the financial condition, properties, business or operations of the Business. 7.16 Effective Date of Representations and Warranties. The warranties and representations of this Article are made as of the Contract Effective Date and shall be deemed to be renewed and restated by the Business at the time each request for disbursement of funds is submitted to the IDED. ARTICLE 8 COVENANTS 8.1 Maintain Existence in Iowa. The Business shall at all times preserve and maintain its existence as a corporation in good standing and maintain the Project in Iowa. The Business will preserve and keep in force and affect all licenses, permits, franchises, approvals, patents, Contract#P0806M01734 - 11 - nrasrer~pdareda~o~ trademarks, trade names, trade styles, copyrights and other proprietary rights necessary to the proper conduct of its respective business. 8.2 Job Obligations; Benefits Requirements. (a) Jobs and Wages. By the Project Completion Date, the Business shall create/retain the number of FTE Created Jobs and Retained Jobs above the Business's Employment Base and maintain the jobs through the Job Maintenance Period, all as detailed in Exhibit D. The Business shall pay the wage rates identified in Exhibit D. (b) Benefits. The Business shall provide and pay for the eligible benefits described in Exhibit A, Business's Financial Assistance Application, with an Average Benefit Value calculated by IDED and shown in Exhibit D. During the Contract period the Business may adjust the benefit package provided the Average Benefit Value does not fall below the minimum benefit threshold requirement (e.g., 80% of medical and dental insurance) for the funding source that is assisting the Project and provided the benefit package includes eligible benefits. 8.3 Performance Obli atg ions. By the Project Completion Date, Business shall complete the Project, make the total investment pledged for the Project and in accordance with the Award Budget as detailed in Exhibit C and comply with all other performance requirements described in this Master Contract and the Funding Agreements. The Business shall promptly provide IDED with written notice of any major changes that would impact the success of the Project. 8.4 Maintenance of Properties. The Business shall maintain, preserve and keep its properties in good repair, working order and condition (ordinary wear and tear excepted) and will from time to time make all needful and proper repairs, renewals, replacements, additions and betterments thereto so that at all time the efficiency thereof shall be fully preserved and maintained in accordance with prudent business practices. 8.5 Taxes and Assessments. The Business shall duly pay and discharge all taxes, rates, assessments, fees and governmental charges upon or against it against its properties, in each case before the same become delinquent and before penalties accrue thereon, unless and to the extent that the same are being contested in good faith and by appropriate proceedings and adequate reserves are provided therefore. 8.6 Insurance. The Business shall insure and keep insured in good and responsible insurance companies, all insurable property owned by it which is of a character usually insured by Persons similarly situated and operating like properties against loss or damage from such hazards or risks as are insured by Persons similarly situated and operating like properties; and the Business shall insure such other hazards and risks (including employers' and public liability risks) in good and responsible insurance companies as and to the extent usually insured by Persons similarly situated and conducting similar businesses. The Business will upon request of the IDED furnish a certificate setting forth in summary form the nature and extent of the insurance maintained pursuant to this Article. 8.7 Required Reports. (a) Review of Disbursement Requests and Reports. The Business shall prepare, sign and submit disbursement requests and reports as specified in this Master Contract in the form and content required by IDED. The Business shall review all reimbursement requests and verify that claimed expenditures are allowable costs. The Business shall maintain documentation adequate to support the claimed costs. Contract #P0806M01734 - 12 - Master updated8/07 (b) Reports. The Business shall prepare, sign and submit the following reports to the IDED throughout the Contract period: Report Due Date Annual Proiect Status Report The Annual Project Status Report will collect July 31S` for the period ending June 30th information from the Business about the status of the project. This report will collect data such as current employment levels, number of jobs that meet or exceed the Qualifying Wage Threshold Requirements (with and without benefits), project expenditures, including amount spent on research and development, any changes to the Business's benefits, ownership, structure, or control of the Business and any other information required by IDED. End of Project Report The End of Project Report will collect Within 30 days of Project Completion Date information from the Business about the completed project such as final employment levels, number of jobs that meet or exceed the Qualifying Wage Threshold Requirements (with and without benefits), project expenditures and changes to the Business's benefits, ownership, structure, or control of the Business and any other information required by IDED. End of Job Maintenance Period Report The End of Job Maintenance Period Report will Within 30 days of the end of the Job collect information from the Business's Maintenance Period continued maintenance of employment levels and Qualifying Wage Threshold Requirements (with and without benefits) that were verified at the Project Completion Date, and changes to the Business's benefits, ownership, structure, or control of the Business and any other information required by IDED. (c) Additional Reports, Financials as Requested by IDED. The IDED reserves the right to require more frequent submission of any of the above reports if, in the opinion of the IDED, more frequent submissions would help improve the Business's Project performance, or if necessary in order to meet requests from the Iowa General Assembly, the Department of Management or the Governor's office. At the request of IDED, Business shall submit its annual financial statements completed by an independent CPA, or other financial statements including, but not limited to, income, expense, and retained earnings statements. Contract #P0806M01734 - 13 - Master updated 8/07 8.8 erection and Audit. The Business will permit the IDED and its duly authorized representatives to visit and inspect any of the Business's properties, corporate books and financial records of the Business related to the Project, to examine and make copies of the books of accounts and other financial records of the Business, and to discuss the affairs, finances and accounts of the Business with, and to be advised as to the same by, its officers, and independent public accountants (and by this provision the Business authorizes such accountants to discuss with the IDED and the IDED's duly authorized representatives the finances and affairs of the Business) at such reasonable time and reasonable intervals as the IDED may designate, but at least annually. 8.9 Compliance with Laws. (a) The Business will comply in all material respects with the requirements of all federal, state and local laws, rules, regulations and orders applicable to or pertaining to its properties or business operations including, but not limited to, all applicable environmental, hazardous waste or substance, toxic substance and underground storage laws and regulations, and the Business will obtain any permits, licenses, buildings, improvements, fixtures, equipment or its property required by reason of any applicable environmental, hazardous waste or substance, toxic substance or underground storage laws or regulations. (b) The Business shall comply in all material respects with all applicable federal, state, and local laws, rules, ordinances, regulations and orders applicable to the prevention of discrimination in employment, including the administrative rules of the Iowa Department of Management and the Iowa Civil Rights Commission which pertain to equal employment opportunity and affirmative action. (c) The Business shall comply in all material respects with all applicable federal, state and local laws, rules, ordinances, regulations and orders applicable to worker rights and worker safety. (d) The Business shall comply with IDED's administrative rules for each program funding source, as identified in the Funding Agreements. 8.10 Use of Award Proceeds. The Business will use the Award proceeds extended under this Master Contract and the Funding Agreements solely for the purposes set forth in Exhibit C. 8.11 Changes in Business Ownership Structure and Control The Business shall not materially change the ownership, structure, or control of the Business if it would adversely affect the Project. This includes, but is not limited to, entering into any merger or consolidation with any person, firm or corporation or permitting substantial distribution, liquidation or other disposal of Business assets directly associated with the Project. Business shall provide IDED with advance notice of any proposed changes in ownership, structure or control. The materiality of the change and whether or not the change affects the Project shall be as reasonably determined by IDED. 8.12 Notice of Meetings_The Business shall notify IDED at least two (2) working days in advance of all meetings of the board of directors at which the board is expected to take action that would materially or adversely affect this Master Contract, or Funding Agreements. In such an event, the Business shall provide IDED with copies of that portion of the agenda that discuss the expected action and IDED may, upon advance notice to Business, have a representative attend that portion of such meeting. IDED may also receive a copy of the minutes of that portion of such meeting. 8.13 Notice of Proceedings. The Business shall promptly notify IDED of the initiation of any claims, lawsuits, bankruptcy proceedings or other proceedings brought against the Business which would materially and adversely impact the Project. Contract #P0806M01734 - 14 - Master updated aio~ 8.14 Accounting Records. The Business is required to maintain its books, records and all other evidence pertaining to this Master Contract and it Funding Agreements in accordance with generally accepted accounting principles and such other procedures specified by IDED. These records shall be available to IDED, its internal or external auditors, the Auditor of the State of Iowa, the Attorney General of the State of Iowa and the Iowa Division of Criminal Investigations at all times during the Master Contract's and the Funding Agreements' duration and any extensions thereof, and for three (3) full years from the Agreement Expiration Date. 8.15 Restrictions. The Business shall not, without prior written disclosure to IDED and prior written consent of IDED, which shall not be unreasonably withheld, directly or indirectly: (a) Assign, waive or transfer any of Business's rights, powers, duties or obligations under this Master Contract or the Funding Agreements. (b) Sell, transfer, convey, assign, encumber or otherwise dispose of any of the Secured Property or the Project. (c) Place or permit any restrictions, covenants or any similar limitations on the Secured Property or the Project. (d) Remove from the Project site or the State all or substantially all of the Secured Property. (e) Create, incur or permit to exist any Lien of any kind on the Secured Properly. 8.16 No Changes in Business Operations The Business shall not materially change the Project or the nature of the Business and activities being conducted, or proposed to be conducted by Business, as described in the Business's approved application for funding, Exhibit A of this Master Contract, unless approved in writing by IDED prior to the change. 8.17 Indemnification. The Business shall indemnify, defend and hold harmless the IDED, the State of Iowa, its departments, divisions, agencies, sections, commissions, officers, employees and agents from and against all losses, liabilities, penalties, fines, damages and claims (including taxes), and all related costs and expenses (including reasonable attorneys' fees and disbursements and costs of investigation, litigation, settlement, judgments, interest and penalties), arising from or in connection with any of the following: a) Any claim, demand, action, citation or legal proceeding arising out of or resulting from the Project; b) Any claim, demand, action, citation or legal proceeding arising out of or resulting from a breach by the Business of any representation or warranty made by the Business in this Master Contract or the Funding Agreements; c) Any claim, demand, action, citation or legal proceeding arising out of or related to occurrences that the Business is required to insure against as provided for in this Master Contract or the Funding Agreements; and d) Any claim, demand, action, citation or legal proceeding which results from an act or omission of the Business or any of their agents in its or their capacity as an employer of a person. ARTICLE 9 EVENTS OF DEFAULT AND REMEDIES 9.1 Events of Default. Any one or more of the following shall constitute an "Event of Default" hereunder: Contract #P0806M01734 - 15 - Master updated s/o7 (a) Nonpayment. In the event of a missed payment under a Loan or in the event a Forgivable Loan is not forgiven and all or a portion of the Forgivable Loan must be repaid by the Business, a default in the payment when due (whether by lapse of time, acceleration or otherwise) of any principal on the Promissory Note(s), or default in payment for more than ten (10) Business Days of the due date thereof of any interest on the Promissory Note(s) or any fee or other obligation payable by the Business shall be an Event of Default; or (b) Noncompliance with Covenants. Default in the observance or performance of any covenant set forth in Article 8, for more than five (5) Business Days; or (c) Noncompliance with Security Documents. Default in the observance or performance of any term of any Security Documents beyond any applicable grace period set forth therein; or (d) Noncompliance with Master Contract. Default in the observance or performance of any other provision of this Master Contract; or (e) Noncompliance with Funding Agreements: Cross-De ault. Default in the observance or performance of any other provision of any of the Funding Agreements, including Events of Default identified in any of the Funding Agreements; IDED may elect to declare the Business in default of this Master Contract and any or all of the Funding Agreements if there is a default under any one of the Funding Agreements; or (f) Material Misrepresentation. Any representation or warranty made by the Business in this Master Contract or the Funding Agreements or in any statement or certificate furnished by it pursuant to this Master Contract or the Funding Agreements, or made in its Financial Assistance Application, or in connection with any of the above, proves untrue in any material respect as of the date of the issuance or making thereof; or (g) Lien Deficiencies. Any of the Security Documents shall for any reason fail to create a valid and perfected priority Lien in favor of the IDED in any Secured Property pledged by Business; or (h) Judgment Over $100,000. Any uninsured judgment or judgments, writ or writs or warrant or warrants of attachment, or any similar process or processes in an aggregate amount in excess of $100,000 shall be entered or filed against the Business or against any of its property and remains unvacated, unbonded or unstayed for a period of 30 days; or (i) Adverse Change in Financial Condition. Any change shall occur in the financial condition of the Business which would have a material adverse effect on the ability of the Business to perform under this Master Contract or the Funding Agreements; or (j) Bankruptcy or Similar Proceedings Initiated. Either the Business shall (1) have entered involuntarily against it an order for relief under the United States Bankruptcy Code, as amended, (2) not pay, or admit in writing its inability to pay, its debts generally as they become due, (3) make an assignment for the benefit of creditors, (4) apply for, seek, consent to, or acquiesce in, the appointment of a receiver, custodian, trustee, examiner, liquidator or similar official for it or any substantial part of its Property, (5) institute any proceeding seeking to have entered against it an order for relief under the United States Bankruptcy Code as amended, to adjudicate it insolvent, or seeking dissolution, winding up, liquidation, reorganization, arrangement, adjustment or composition of it or its debts under any law relating to bankruptcy, insolvency or reorganization or relief of debtors or fail to file an answer or other pleading denying the material allegations of any such proceeding filed against it, or (6) fail to contest in good faith any appointments or proceeding described in Article 9.1(k) below; or Contract #P0806M01734 - 16 - Master updated 8/07 (k) ~~ointment of Of rcials. A custodian, receiver, trustee, examiner, liquidator or similar official shall be appointed for either the Business or any substantial part of any of its respective property, or a proceeding described in Article 9.1(j) shall be instituted against either the Business and such appointment continues undischarged or such proceeding continues undismissed or unstayed for a period of sixty (60) days; or (1) Insecurity. IDED shall in good faith deem itself insecure and reasonably believes, after consideration of all the facts and circumstances then existing, that the prospect of payment and satisfaction of the obligations under this Master Contract and/or the Funding Agreements, or the performance of or observance of the covenants in this Master Contract and/or the Funding Agreements, is or will be materially impaired. (m) Failure to Submit Required Reports. The Business fails to submit complete reports by the required due dates as outlined in Article 8.7. (n) Layoffs, Relocation, or Closure. The Business experiences a layoff within the state or closes any of its facilities within the state during the term of this Contract. IDED may declare the Business in default due to a layoff, relocation or closure. Factors IDED considers when determining whether to exercise its discretion under this paragraph include, but are not limited to the percentage of the Business's workforce affected; the total number of employees involved; whether the action is seasonal, temporary or permanent; whether employees are relocated to other Iowa facilities; the reasons causing the layoff, relocation or closure; and the impact on the Project; and the Community; and the impact on the State. 9.2 Default Remedies. When an Event of Default has occurred and is continuing, the IDED may, by written notice to the Business: (a) terminate this Master Contract, the Funding Agreements and all of the obligations of IDED under this Master Contract and the Funding Agreements on the date stated in such notice, and (b) declare the principal and any accrued interest on the outstanding Promissory Notes to be forthwith due and payable, including both principal and interest and all fees, charges and other amounts payable under this Master Contract and the Funding Agreements, shall be and become immediately due and payable without further demand, presentment, protest or notice of any kind. 9.3 Default Interest Rate. If an Event of Default occurs and remains uncured, a default rate of 6% shall apply to repayment of amounts due under this Master Contract and the Funding Agreements. The default interest rate shall accrue from the first date Award funds are disbursed. 9.4 Expenses. The Business agrees to pay to the IDED all expenses reasonably incurred or paid by IDED including reasonable attorneys' fees and court costs, in connection with any Default or Event of Default by the Business or in connection with the enforcement of any of the terms of this Master Contract and the Funding Agreements. 9.5 Notice of Default and Opportunity to Cure. If IDED has reasonable cause to believe that an Event of Default has occurred under this Master Contract and/or the Funding Agreements, IDED shall issue a written Notice of Default to the Business, setting forth the nature of the alleged default in reasonable specificity, and providing therein a reasonable period time, which shall not be fewer than thirty (30) days from the date of the Notice of Default, in which the Business shall have an opportunity to cure, provided that cure is possible and feasible. Contract #P0806M01734 - 17 - Master updated sio~ ARTICLE 10 MISCELLANEOUS. 10.1 Timelv Performance. The parties agree that the dates and time periods specified in this Master Contract and the Funding Agreements, including the timelines established for the Project and more fully described in Exhibit C, are of the essence to the satisfactory performance of this Master Contract and the Funding Agreements. 10.2 State of Iowa Reco ition. If the Project involves construction and there is signage recognizing the financial contributions made to the Project the Business agrees to include the Iowa Department of Economic Development on the list of entities providing assistance.. For example, a sign or plaque indicating that the Project was funded in part by an Award from the State of Iowa, Iowa Department of Economic Development. 10.3 Choice of Law and Forum. (a) In the event any proceeding of a quasi judicial or judicial nature is commenced in connection with this Master Contract or the Funding Agreements, the proceeding shall be brought in Des Moines, Iowa, in Polk County District Court for the State of Iowa, if such court has jurisdiction. If however, such court lacks jurisdiction and jurisdiction lies only in a United States District Court, the matter shall be commenced in the United States District Court for the Southern District of Iowa, Central Division. (b) This provision shall not be construed as waiving any immunity to suit or liability, in state or federal court, which may be available to the IDED, the State of Iowa or its members, officers, employees or agents. 10.4 Governing Law. This Master Contract and the Funding Agreements and the rights and duties of the parties hereto shall be governed by, and construed in accordance with the internal laws of the State of Iowa without regard to principles of conflicts of laws. 10.5 Master Contract/Funding_Agreement Amendments. Neither this Master Contract nor any documents incorporated by reference in connection with this Master Contract, including the Funding Agreements, may be changed, waived, discharged or terminated orally, but only as provided below: (a) Writing required. The Master Contract and the Funding Agreements may only be amended if done so in writing and signed by the Business and IDED; and for those Funding Agreements in which the Community is a signatory, by the Community, the Business and IDED. Examples of situations requiring an amendment include, but are not limited to, time extensions, budget revisions, and significant alterations of existing activities or beneficiaries. No amendment will be valid until approved in writing by IDED. (b) IDED review. IDED will consider whether an amendment request is so substantial as to necessitate reevaluating the IDED's or IDED Board's original funding decision. An amendment may be denied by IDED if it substantially alters the circumstances under which the Project funding was originally approved. 10.6 Notices. Except as otherwise specified herein, all notices hereunder shall be in writing (including, without limitation by fax) and shall be given to the relevant party at its address, a-mail address, or fax number set forth below, or such other address, a-mail address, or fax number as such party may hereafter specify by notice to the other given by United States mail, by fax or by other telecommunication device capable of creating a written record of such notice and its receipt. Notices hereunder shall be addressed: Contract #P0806M01734 - 18 - neaster updated s/o7 To the Business: Morrison Brothers Company Charlie Glab, President 325 East 24"' Street Dubuque, IA 52004-0238 E-mail: cglab@mchsi.com Telephone: 563-5 83 -5701 Facsimile: 563-583-5028 To the IDED at: Iowa Department of Economic Development Legal and Compliance 200 East Grand Avenue Des Moines, Iowa 50309 Attention: Peggy Russell, Senior Project Manager E-mail: peggy.russell@iowalifechanging.com Telephone: 515-242-4848 Facsimile: 515-242-4832 Each such notice, request or other communication shall be effective (i) if given by facsimile, when such facsimile is transmitted to the facsimile number specified in this Article and a confirmation of such facsimile has been received by the sender, (ii) if given by e-mail, when such e-mail is transmitted to the e-mail address specified in this Article and a confirmation of such e-mail has been received by the sender, (iii) if given by mail, five (5) days after such communication is deposited in the mail, certified or registered with return receipt requested, addressed as aforesaid or (iv) if given by any other means, when delivered at the addresses specified in this Article. 10.7 Headings. Article headings used in this Master Contract and the Funding Agreements are for convenience of reference only and are not a part of this Master Contract or the Funding Agreements for any other purpose. 10.8 Final Authority. The IDED shall have the authority to reasonably assess whether the Business has complied with the terms of this Master Contract and the Funding Agreements. Any IDED determinations with respect to compliance with the provisions of this Master Contract and the Funding Agreements shall be deemed to be final determinations pursuant to Section 17A of the Code of Iowa (2007). 10.9 Waivers. No waiver by IDED of any default hereunder shall operate as a waiver of any other default or of the same default on any future occasion. No delay on the part of the IDED in exercising any right or remedy hereunder or under the Funding Agreements shall operate as a waiver thereof. No single or partial exercise of any right or remedy by IDED shall preclude future exercise thereof or the exercise of any other right or remedy. 10.10 Counterparts. This Master Contract may be executed in any number of counterparts, each of which shall be deemed to be an original, but all of which together shall constitute but one and the same instrument. 10.11 Survival of Representations. All representations and warranties made herein or in any other Master Contract/Funding Agreement document or in certificates given pursuant hereto or thereto shall survive the execution and delivery of this Master Contract and the Funding Agreements and the other Master Contract/Funding Agreement documents and shall continue in full force and effect with respect to Contract #P0806M01734 - 19 - Master updated tvo~ the date as of which they were made until all of Business's obligations or liabilities under this Master Contract and the Funding Agreements have been satisfied. 10.12 Severability of Provisions. Any provision of this Master Contract or the Funding Agreements, which is unenforceable in any jurisdiction, shall, as to such jurisdiction, be ineffective to the extent of such unenforceability without invalidating the remaining provisions hereof or affecting the validity or enforceability of such provision in any other jurisdiction. All rights, remedies and powers provided in this Master Contract and or the Funding Agreements or any other Master Contract document may be exercised only to the extent that the exercise thereof does not violate any applicable mandatory provisions of law, and all the provisions of this Master Contract and the Funding Agreements and any other Master Contract document are intended to be subject to all applicable mandatory provisions of law which may be controlling and to be limited to the extent necessary so that they will not render this Master Contract or the Funding Agreements or any other Master Contract document invalid or unenforceable. 10.13 Successors and Assigns. This Master Contract and the Funding Agreements shall be binding upon the Business and its respective successors and assigns, and shall inure to the benefit of the IDED and the benefit of their respective successors and assigns. The Business may not assign its rights hereunder or under any of the Funding Agreements without the written consent of the IDED, which consent will not be unreasonably withheld. 10.14 Termination. This Master Contract and any of the Funding Agreements can be terminated upon mutual, written agreement of the Business and IDED and, for Funding Agreements to which the Community is a signatory, upon mutual written agreement of the Business, IDED and the Community. 10.15 Integration. This Master Contract and the Funding Agreements contains the entire understanding between the Business and IDED relating to the Project and any representations that may have been made before or after the signing of this Master Contract and the Funding Agreements, which are not contained herein, are nonbinding, void and of no effect. None of the Parties have relied on any such prior representation in entering into this Master Contract and its Funding Agreement. IN WITNESS WHEREOF in consideration of the mutual covenants set forth above and for other good and valuable consideration, the receipt, adequacy and legal sufficiency of which are hereby aclrnowledged, the parties have entered into this Master Contract and have caused their duly authorized representatives to execute this Master Contract, effective as of the latest date stated below (the "Contract Effective Date"). FOR THE IOWA DEPARTMENT OF ECONOMIC DEVELOPMENT: BY: Michael L. Tramontina, Director Date FOR THE B I S: BY: Signature ~~/f}RL ES G~G.~1B ~igfS~DE~vT Typed Name and Title ?/~/o~ Date Contract #P0806M01734 - 20 - Master updated 8/07 LIST OF EXHIBITS Exhibit A - Business's Financial Assistance Application (on file with IDED), Application #08-CEBA-051 and #08-EZ-036 Exhibit B - Funding Agreements B1-CEBA Funding Agreement B4-EZ Funding Agreement Exhibit C - Description of the Project and Award Budget Exhibit D - Job Obligations Exhibit E - "Development Agreement By and Between the City of Dubuque, Iowa and Morrison Brothers Company" dated October 6, 2008. Contract #P0806M01734 - 21 - Master updated 8/07 . r, EXHIBIT B - 1 CEBA FUNDING AGREEMENT BUSINESS: COMMUNITY: MASTER CONTRACT NUMBER: FUNDING AGREEMENT NUMBER: AWARD TYPE: AMOUNT: Morrison Brothers Company City of Dubuaue P0806M01734 08-CEBA-051 Loan/Forgivable Loan $40,000 THIS CEBA FUNDING AGREEMENT is made by and among the IOWA DEPARTMENT OF ECONOMIC DEVELOPMENT, 200 East Grand Avenue, Des Moines, Iowa 50309 ("IDED"), the business identified above ("Business"), and the community identified above, ("Community"), effective as of the Contract Effective Date stated in the Master Contract identified above. WHEREAS, the Business has executed the Master Contract described above with the IDED pursuant to an Award on the Award Date stated in the Master Contract to the Business for the Project; and WHEREAS, the Master Contract specifies that for each program funding source the IDED and the Business shall enter into a Funding Agreement; and WHEREAS, the Iowa Code provisions applicable to the CEBA Program require the Community to submit an application on behalf of the Business in order to apply for and receive CEBA funds; and WHEREAS, this CEBA Funding Agreement contains additional terms and conditions for the award of CEBA funds and NOW, THEREFORE, the Business and Community accept the terms and conditions set forth in this Funding Agreement and the Master Contract for the funding of the Project. In consideration of the mutual promises contained in the Master Contract and this CEBA Funding Agreement and other good and valuable consideration, it is agreed as follows: 1.0 Master Contract. Unless otherwise specified in this CEBA Funding Agreement, the definitions, terms, conditions, and provisions contained in the Master Contract are applicable to this CEBA Funding Agreement. 2.0 Definitions. As used in this CEBA Funding Agreement, the following terms shall apply: 2.1 Agreement Expiration Date. Expiration of this CEBA Funding Agreement occurs upon the happening of one of the following events, whichever occurs first: (a) IDED's determination that the Business and Community have fully met the requirements of this CEBA Funding Agreement, including repayment of all amounts due hereunder, and IDED closes out this CEBA Funding Agreement. (b) An Event of Default occurs that is not remedied within the time period allowed under the Master Contract. (c) If no disbursement of CEBA funds has occurred within twenty-four (24) months Revised 8/07 of the Award Date (as defined in the Master Contract). (d) This CEBA Funding Agreement is terminated upon mutual, written agreement of the Business, the Community and IDED. 2.2 CEBA. "CEBA" means the Community Economic Betterment Program (established in Iowa Code sections 15.315-15.325). The source of funding for this CEBA Funding Agreement is an appropriation by the State legislature to IDED. 2.3 CEBA Award. "CEBA Award" means the financial assistance provided to the Business in the form of a Loan and/or Forgivable Loan, as more fully defined in Articles 3 and 4 of this CEBA Funding Agreement. 3.0 Terms of CEBA Award -Loan. CEBA funds have been awarded to the Community on behalf of the Business to assist the Business with the Project. The terms of the Loan are as follows: 3.1 $20,000 3.2 60 months duration 3.3 0% interest rate 3.4 Promissory notes. The obligation of the Business and Community to repay the Loan shall be evidenced by Promissory Notes executed by the Business and the Community. 4.0 Terms of CEBA Award -Forgivable Loan. CEBA funds have been awarded to the Community on behalf of the Business to assist the Business with the Project. The terms of the Forgivable Loan are as follows: 4.1 $20,000 4.2 60 months duration 4.3 Terms of Forgiveness. IDED will, in its sole discretion, determine if the Business has satisfied the terms of this CEBA Funding Agreement, including fulfillment of the Job Obligations by the Project Completion Date as shown in Master Contract Exhibit D. If IDED determines that the Business has satisfied said terms and has continued to satisfy said terms through the Job Maintenance Period, and issues a formal closeout letter, then barring any other default, repayment of principal and interest which would otherwise have accrued for the time period beginning with the Award Date and ending with the Project Completion Date shall be permanently waived. If IDED does not waive repayment, the Forgivable Loan shall be repaid as described in Article 11.2(b) of this CEBA Funding Agreement. 4.4 Promissory notes. The obligation of the Business and Community to repay the Forgivable Loan shall be evidenced by a Promissory Notes executed by the Business and Community. 5.0 Maximum CEBA funds available for Project. It is expressly understood and agreed that the maximum amounts to be paid to the Business by IDED for this CEBA Funding Agreement shall not exceed the amount stated on page one of this CEBA Funding Agreement. Master Contract #P0806M01734 Funding Agreement #08-CEBA-051 - 2 - Revised sio~ 6.0 Business' Job Obligations. The Business' Job Obligations are as described in Master Contract Exhibit D. 7.0 Conditions to Disbursement. In addition to the conditions to disbursement described in the Master Contract, the Business shall meet the following conditions before IDED will release CEBA funds: 7.1 State Building Code Bureau Approval. Bidding for construction shall not be conducted prior to the written approval of the final plans by the State Building Code Bureau of the Iowa Department of Public Safety, and only if either of the following applies: (a) The building or structure is located in a governmental subdivision which has not adopted a local building code, or (b) The building or structure is located in a governmental subdivision which has adopted a building code, but the building code is not enforced. 8.0 Affirmative Covenants of Community. The Community covenants with IDED that: 8.1 Proiect Work and Services. The Community shall perform work and services detailed in the Business's CEBA application by the Project Completion Date. 8.2 Filin Unless otherwise agreed, IDED shall file the Security Documents required under this CEBA Funding Agreement. The Community shall, if requested by IDED, file in a proper and timely manner any and all Security Documents required in connection with the CEBA Award, naming the IDED as co-security holder and promptly providing the IDED with date-stamped copies of said Security Documents. The Community shall, at the IDED's request, obtain and provide to the IDED lien searches or attorney's title opinions. 8.3 Indemnification. The Community shall indemnify and hold harmless the IDED, its officers and employees to the extent allowed under the Iowa Constitution and Iowa Code on the same basis as the Business is obligated to indemnify the IDED under the Master Contract. 8.4 Requests for CEBA Award Funds. The Community shall review the Business' requests for CEBA Award funds to ensure that the requests are in compliance with the IDED's requisition procedures and shall execute and forward the requests to the IDED for processing. 8.5 Unused CEBA Award Proceeds. The Community shall return all unused CEBA Award proceeds, including accrued interest, to the IDED within thirty (30) days after the Project Completion Date. 8.6 Notice of Meetings. The Community shall notify the IDED at least two (2) days in advance of all public or closed meetings at which the subject matter of this CEBA Award and/or the Project is proposed to be discussed. The Community shall provide the IDED with copies of the agenda and minutes of such meetings and expressly agrees that a representative of the IDED has the right to attend any such meetings for the purposes of the discussion of the Project and/or the CEBA Award. 8.7 Local Commitment. The Community shall provide the local financial assistance for the Project as described in Master Contract Exhibit C, Project Description and Award Budget, Master Contract #P0806M01734 Funding Agreement #08-CEBA-051 - 3 - Revrsed aio~ and in the form and annual amounts described in Exhibit E - "Development Agreement By and Between the City of Dubuque, Iowa and Morrison Brothers Company" dated October 6, 2008. 8.8 Notice to IDED. In the event the Community becomes aware of any material alteration in the Project, initiation of any investigation or proceeding involving the Project or CEBA Award, change in the Business' ownership, structure or operation, or any other similar occurrence, the Community shall promptly notify the IDED. 8.9 Responsibility Upon Default. If the Business fails to perform under the terms of the Master Contract and/or this CEBA Funding Agreement and the IDED declares the Business in default, the IDED shall take the lead on recovery of CEBA Award proceeds, as well as penalties, interest, costs and foreclosure on collateral, provided the Community assigns its security interest and CEBA contract documents to IDED for collection purposes. 9.0 Negative Covenants of Community. The Community shall not, without written consent of IDED: (a) Acceptance of CEBA Award Repayments. Accept any CEBA Award repayments and/or settlements on Community funds considered local effort for this CEBA Funding Agreement. (b) Assignment. Assign its rights and responsibilities under this CEBA Funding Agreement. (c) Alter Financial Commitments. Alter, accelerate or otherwise change the terms of the Community's financial commitment to the Business for this CEBA Funding Agreement. (d) Administration. Discontinue administration or loan servicing activities under this CEBA Funding Agreement. 10.0 Community Liability. 10.1 Good Faith Enforcement. The Community's liability under this CEBA Funding Agreement due to the Business's failure to perform is limited to those amounts which the Community recovers from the Business in unused CEBA Award proceeds, enforcement of judgments against the Business and through its good faith enforcement of the Security Documents executed by the Business. Nothing in this paragraph shall limit the recovery of principal and interest by IDED in the event of Community's fraud, negligence, or gross mismanagement in the application for, or use of, sums provided under this CEBA Funding Agreement. 10.2 Failure to Provide Local Funding. In the event the Community fails to provide the required local assistance pledged, the Community is liable to IDED for the full amount of the local financial assistance pledged for the Project as described in Master Contract Exhibit C, Project Description and Award Budget, and in the form and annual amounts described in Exhibit E - "Development Agreement By and Between the City of Dubuque, Iowa and Morrison Brothers Company" dated October 6, 2008. 11.0 Default; Remedies upon Default. 11.1 The terms of Article 9.0 (Events of Default and Remedies) of the Master Contract govern this CEBA Funding Agreement. The following are additional Events of Default for this CEBA Funding Agreement: Master Contract #P0806M01734 Funding Agreement #08-CEBA-051 - 4 - Revised eio~ a. The Community's failure to provide the annual local financial assistance pledged for the Project as described in Master Contract Exhibit C, Project Description, and in the form and annual amounts described in Exhibit E - "Development Agreement By and Between the City of Dubuque, Iowa and Morrison Brothers Company" dated October 6, 2008. 11.2 The following are Default Remedies available to IDED in addition to those specified in Article 9.2 of the Master Contract: (a) Repayment of Loan -Failure to Meet Job Obligations. If the Business meets less than 100% of its Job Obligations, the IDED may require full repayment of the Loan, as permitted under the Master Contract. IDED may also elect to allow repayment on a pro rata basis as described below: If the Business received a Loan at a rate below 6% (the annual interest rate for default set by the IDED Board), the unpaid principal amount of the Loan may be prorated between the percentage of FTE Jobs created/retained and the percentage of the shortfall. The shortfall principal portion may be amortized over the remaining term of the Loan, beginning at the Project Completion Date, at a default rate of 6% (the annual interest rate set by the IDED Board). Interest will be charged beginning from the date Loan proceeds were disbursed to the Community for the Business; interest accrued from this date will be due immediately. The pro rata portion of the Loan associated with the percentage of FTE Jobs created will be amortized at the original Loan rate and term. (b) Repayment of Forgivable Loan -Failure to Meet Job Obligations. If the Business has fulfilled 50% or more of its Job Obligations, a pro rata percentage will be forgiven for each new FTE job created/retained at the time the repayment amount is calculated (e.g. at the Project Completion Date or the date an Event of Default occurred) Any balance (shortfall) will be amortized over a two (2) year period (beginning at the at the time the repayment amount is calculated (e.g. at the Project Completion Date or the date an Event of Default occurred) at six (6%) percent interest per annum with equal monthly payments, and, interest will be charged at six (6%) percent per annum from the date of the first CEBA disbursement on the shortfall amount with that amount accrued as of the Project Completion Date being due and payable immediately. (c) Repayment -Time Allowed. If the IDED has allowed repayment of the Forgivable Loan on a pro rata basis as described in paragraph "b" above, that amount is immediately due and payable. If the Business has a current Loan balance, the amount owed on the Forgivable Loan may be combined with the amount owed on the Loan to reflect a single monthly payment. This combined loan shall be repaid over the time period remaining (d) Example. CEBA Funding Agreement Exhibit B is an example of how these repayment calculations will be applied. (e) Community Default. If the Community fails to provide the pledged financial assistance for this Project, IDED will issue a written Notice of Default to the Community setting forth the nature of the alleged Event of Default in reasonable specificity, and providing therein a reasonable period time, which shall not be fewer than thirty (30) days from the date of the Notice of Default, in which the Community shall have an opportunity to cure, provided that cure Master Contract #P0806M01734 Funding Agreement #08-CEBA-051 - 5 - Revrsed sio~ is possible and feasible. If an Event of Default is not cured within the time allowed, IDED's remedies include but are not limited to legal action against the Community for payment of the amount of local financial assistance pledged but not provided by the Community plus 6% default interest calculated from the first date Award funds were disbursed by IDED. 12.0 Incorporated documents. The following documents are hereby incorporated by this reference: 1. The Master Contract and its Exhibits 2. CEBA Promissory Notes: CEBA Funding Agreement Exhibit A1 - Community, and CEBA Funding Agreement Exhibit A2- Business 3. CEBA Funding Agreement Exhibit B - Example: Business Job Shortfall Calculation. IN WITNESS WHEREOF, the parties have executed this CEBA Funding Agreement: FOR THE BUSINESS: BY: Signature Typed Name and Title Date FOR THE IOWA DEPARTMENT OF ECONOMIC DEVELOPMENT: BY: Michael L. Tramontina, Director Date FOR THE COMMUNTY BY: Signature Typed Name and Title Date CEBA Funding Agreement Exhibit A1-Community's Promissory Note (Forgivable Loan) PROMISSORY NOTE FOR VALUE RECENED, the undersigned promises, in the event this Forgivable Loan is not forgiven, to pay to the order of the IOWA DEPARTMENT OF ECONOMIC DEVELOPMENT, at its office at 200 East Grand, Des Moines, Iowa 50309, the sum of Twenty Thousand Dollars 020,000) with interest at a rate of 0 unless an Event of Default occurs, in which case interest shall be at the default rate set forth in Contract number P0806M01734 ("Contract"). The terms and conditions by which forgiveness of this Loan may occur are as specified in the Contract. Interest shall first be deducted from the payment and any balance shall be applied on principal. Upon default in payment of any interest, or any installment of principal, the whole amount then unpaid shall become immediately due and payable at the option of the holder. The undersigned, incase of suit on this note, agrees to pay on demand all costs of collection, maintenance of collateral, legal expenses, and attorneys' fees incurred or paid by the holder in collecting and/or enforcing this Note on default. This note shall be secured by the Security specified in the Contract. Makers, endorsers and sureties waive demand of payment, notice ofnon-payment, protest and notice. Sureties, endorsers and guarantors agree to all of the provisions of this note, and consent that the time or times of payment of all or any part hereof maybe extended after maturity, from time to time, without notice. ADDRESS: 50 West 13th Street Dubuque, IA 52001 City of Dubuque BY: Roy D. Buol, Mayor ATTEST: (Signature) Date CEBA Funding Agreement Exhibit A1-Community's Promissory Note (Loan) PROMISSORY NOTE FOR VALUE RECEIVED, the undersigned promises to pay to the order of the IOWA DEPARTMENT OF ECONOMIC DEVELOPMENT, at its office at 200 East Grand, Des Moines, Iowa 50309, the sum of Twenty Thousand Dollars ($20,000) with interest thereon at Zero Percent (0%) to be paid as follows: Sixty (60) monthly payments of $333.33 beginning on the first day of the fourth month from the date Award funds are disbursed. Final payment may vary depending upon dates payments are received. Interest shall first be deducted from the payment and any balance shall be applied on principal. Upon default in payment of any interest, or any installment of principal, the whole amount then unpaid shall become immediately due and payable at the option of the holder. The undersigned, in case of suit on this note, agrees to pay on demand all costs of collection, maintenance of collateral, legal expenses, and attorneys' fees incurred or paid by the holder in collecting and/or enforcing this Note on default. This note shall be secured by the Security specified in the Contract. Makers, endorsers and sureties waive demand of payment, notice ofnon-payment, protest and notice. Sureties, endorsers and guarantors agree to all of the provisions of this note, and consent that the time or times of payment of all or any part hereof maybe extended after maturity, from time to time, without notice. ADDRESS: City of Dubuque 50 West 13th Street Dubuque, UA 52001 City of Dubuque BY: Roy D. Buol, Mayor ATTEST: Date CEBA Funding Agreement Exhibit A2- Business's Promissory Note (Forgivable Loan) PROMISSORY NOTE FOR VALUE RECEIVED, the undersigned promises, in the event this Forgivable Loan is not forgiven, to pay to the order of the IOWA DEPARTMENT OF ECONOMIC DEVELOPMENT, at its office at 200 East Grand, Des Moines, Iowa 50309, the sum of Twenty Thousand Dollars ($20,000) with interest at a rate of 0 unless an Event of Default occurs, in which case interest shall be at the default rate set forth in Contract number P0806M01734 ("Contract"). The terms and conditions by which forgiveness of this Loan may occur are as specified in the Contract. Interest shall first be deducted from the payment and any balance shall be applied on principal. Upon default in payment of any interest, or any installment of principal, the whole amount then unpaid shall become immediately due and payable at the option of the holder. The undersigned, in case of suit on this note, agrees to pay on demand all costs of collection, maintenance of collateral, legal expenses, and attorneys' fees incurred or paid by the holder in collecting and/or enforcing this Note on default. This note shall be secured by the Security specified in the Contract. Makers, endorsers and sureties waive demand of payment, notice ofnon-payment, protest and notice. Sureties, endorsers and guarantors agree to all of the provisions of this note, and consent that the time or times of payment of all or any part hereof maybe extended after maturity, from time to time, without notice. Morrison Brothers Company By: Gh`~g~s ~~ , p,4~sio~vr Print or Type Name, Title Address: 325 East 24`h Street Dubuque, IA 52004-0238 Date 2 °> D . . CEBA Funding Agreement Exhibit A2- Business's Promissory Note Loan) PROMISSORY NOTE FOR VALUE RECEIVED, the undersigned promises to pay to the order of the IOWA DEPARTMENT OF ECONOMIC DEVELOPMENT, at its office at 200 East Grand, Des Moines, Iowa 50309, the sum of Twenty Thousand Dollars ($20,000) with interest thereon at Zero Percent (0%) to be paid as follows: Sixty (60) monthly payments of $333.33 beginning on the first day of the fourth month from the date Award funds are disbursed. Final payment may vary depending upon dates payments are received. Interest shall first be deducted from the payment and any balance shall be applied on principal. Upon default in payment of any interest, or any installment of principal, the whole amount then unpaid shall become immediately due and payable at the option of the holder. The undersigned, in case of suit on this note, agrees to pay on demand all costs of collection, maintenance of collateral, legal expenses, and attorneys' fees incurred or paid by the holder in collecting and/or enforcing this Note on default. This note shall be secured by the Security specified in the Contract. Makers, endorsers and sureties waive demand of payment, notice ofnon-payment, protest and notice. Sureties, endorsers and guarantors agree to all of the provisions of this note, and consent that the time or times of payment of all or any part hereof maybe extended after maturity, from time to time, without notice. Morrison Brothers Company i By: G/~ig1~Lfd~ G~8 , ~Rf~/~fvl' Print or Type Name, Title Address: 325 East 24th Street Dubuque, IA 52004-0238 Date 2 ~ d °.~ c EXAMPLE: (CEBA) Funding Business Job Agreement Exhibit B Shortfall Calculation CEBA City ofDubuque/ Morrison Brothers Com,~any FUNDING AGREEMENT #08-CEBA-051 X40,000 L/FL /Award Date: June 19 2008 ($20,000 0% Loan, $20,000 Forgivable Loan) A. FORGIVABLE LOAN -JOB SHORTFALL CALCULATION 50 jobs pledged, 42 jobs attained; 84% of pledged jobs attained, 16 % shortfall $75,000 (forgivable loan amount) x 16% _ $12,000 Forgivable Loan Job Shortfall Balance due = $12,000 B. FORGNABLE LOAN -INTEREST PENALTY CALCULATION CEBA funds disbursed on 11-1-00. Project Completion Date was 6-30-03. Interest penalty =job shortfall balance x 6% x number of years from disbursement of funds to Project Completion Date ($12,000 x 6% x 2.67 years) _ $1,922.40 Forgivable Loan Net Interest Penalty due = $1,922.40 C. LOAN BALANCE -INTEREST PENALTY CALCULATIONS Loan balance as of 7-21-OS = $15,797.58 84% of remaining loan balance stays at 0% interest = ($15,797.58 x .84) _ $13,269.97 16% of remaining loan balance changes to 6% interest = ($15,797.58 x .16) _ $2,527.61 Interest penalty = 16% of remaining loan balance x 6% x 2.67 years ($2,527.61 x 6% x 2.67 years) _ $404.92 Loan Net Interest Penalty due = $404.92 D. REPAYMENT TERMS & SCHEDULE 1. Total Net Interest Penalty due is $2,327.32 ($1,922.40 + $404.92). 2. Total Forgivable Loan amount due is $12,000. 3. Remaining Loan Balance as of 7-21-OS will be $15,797.58 and will be re-amortized to convert 16% of that balance to 6% interest over remaining term of loan. Master FA Exhibit B updated 12-30-OS ,,~ EXHIBIT B - 4 EZ FUNDING AGREEMENT BUSINESS: COMMUNITY: Morrison Brothers Company City of Dubuque MASTER CONTRACT NUMBER: P0806M01734 FUNDING AGREEMENT NUMBER: 08-EZ-036 ENTERPRISE ZONE NAME: Dubuque EZ-1A ZONE CERTIFICATION DATE: November 20, 1997 ZONE EXP/RAT10N DATE: November 20, 2017 (Extended THIS ENTERPRISE ZONE (EZ) FUNDING AGREEMENT is made by and among the IOWA DEPARTMENT OF ECONOMIC DEVELOPMENT, 200 East Grand Avenue, Des Moines, Iowa 50309 ("IDED"), the business identified above ("Business"), and the community identified above ("Community"), effective as of the Contract Effective Date stated in the Master Contract identified above. WHEREAS, the purpose of the EZ Program is to promote new economic development in economically distressed areas; and WHEREAS, the Community has designated and IDED has certified the Enterprise Zone identified above; and WHEREAS, eligible businesses locating or located in an Enterprise Zone are authorized under this program to receive certain tax incentives and assistance and the Business has located, or will locate, within the certified Enterprise Zone; and WHEREAS, the Enterprise Zone Commission responsible for the above-identified Zone has recommended approval and IDED has found the Business' application to be consistent with the EZ Program's eligibility requirements; and WHEREAS, the Business has executed the Master Contract described above with the IDED pursuant to an Award on the Award Date stated in the Master Contract to the Business for the Project; and WHEREAS, the Master Contract specifies that for each program funding source the IDED and the Business shall enter into a Funding Agreement; and WHEREAS, this EZ Funding Agreement contains additional terms and conditions for the award of EZ benefits and NOW, THEREFORE, the Business and Community accept the terms and conditions set forth in this EZ Funding Agreement and the Master Contract for the funding of the Project. In consideration of the mutual promises contained in the Master Contract and this EZ Funding Agreement and other good and valuable consideration, it is agreed as follows: ,~ 1.0 Master Contract. Unless otherwise specified in this EZ Funding Agreement, the definitions, terms, conditions, and provisions contained in the Master Contract are applicable to this EZ Funding Agreement. The following provisions in the Master Contract do not apply to this EZ Funding Agreement: Article 3.1(b) -Definition of "Project Completion Date" and "Job Maintenance Period." [The EZ program has different time periods for these activities.] Article 4.3 -Repayment obligation. [No promissory note required for tax credits.] Article 5.1(c) -Promissory Notes. [Execution of note is not a condition precedent to receipt of tax credit benefits] Article 5.1(g) -Security Documents. [Execution of Security Documents is not a condition precedent to receipt of tax credit benefits]. Article 5.1(m) -Requests for disbursement. [Not required for tax credit program benefits.] Article 5.2 -Prior costs. [Not applicable to tax credit program benefits.] Article 5.3 -Cost variation. [Not applicable to tax credit program benefits.] Article 5.5 -Investment of Award Proceeds. [No proceeds in tax credit programs.] Article 6 -Security, Cross-collateralization.. [Not applicable to tax credit program benefits.] Article 9.1(a) -Nonpayment as an Event of Default. [Not applicable because there are no loan payments in tax credit programs]. Article 9.1(c) -Noncompliance with Security Documents as an Event of Default. [Not applicable because there are no Security Documents required in tax credit programs]. Article 9.1(g) -Lien Deficiencies as an Event of Default. [Not applicable because there are no Security Documents required in tax credit programs.] 2.0 Definitions. As used in this EZ Funding Agreement, the following terms shall apply: 2.1 Agreement Expiration Date Expiration of this EZ Funding Agreement occurs upon the happening of one of the following events, whichever occurs first: (a) IDED's determination that the Business has fully met the requirements of the EZ Funding Agreement, including meeting its Job Obligations, and IDED closes out this EZ Funding Agreement. (b) An Event of Default occurs that is not remedied within the time period allowed under Article 5.0 of this EZ Funding Agreement. (c) This EZ Funding Agreement is terminated upon mutual, written agreement of the Business, the Community and IDED. 2.2 EZ Program. "EZ Program" means the Enterprise Zone Program. The EZ Program is authorized by Iowa Code (2007) sections 15E.191 through 15E.196. Master Contract #P0806M01734 Funding Agreement #08-EZ-036 - 2 - Revised sio~ 2.3 EZ Award. "EZ Award" means IDED's approval of the Business's Financial Assistance Application for the Project. This EZ Award authorizes the Business to receive EZ Program benefits. 2.4 "Annual Base Rent". "Annual Base Rent" means the Business' annual lease payment minus taxes, insurance, and operating or maintenance expenses. 2.5 "Commission" or "Enterprise Zone Commission" or "Enterprise Zone Commission" means the Enterprise Zone commission established by the Community responsible for the certified Enterprise Zone. 2.6 "Enterprise Zone." "Enterprise Zone" means the site within the Community certified by the IDED Board for the purpose of attracting private investment. 2.7 Project Completion Date. "Project Completion Date", for purposes of reporting to the Iowa Department of Revenue that the Project has been completed, means: (1) the first date upon which the average annualized production of finished product for the preceding ninety-day period at the manufacturing facility operated by the Business within the Enterprise Zone is at least fifty percent of the initial design capacity of the facility; or (2) for existing or non- manufacturing facilities, the date of completion of all improvements included in the Project. 3.0 Enterprise Zone Benefits. 3.1 Benefits Available. The following Enterprise Zone benefits are available to the Business under this EZ Funding Agreement: (a) Supplemental New Jobs Credit. As provided in Iowa Code section 15.331, the Business is eligible to claim a supplemental new jobs credit from withholding in an amount equal to 1% percent of the gross wages paid by the Business. The supplemental new jobs credit available under this program is in addition to and not in lieu of the program and withholding credit of 1% percent authorized under Iowa Code chapter 260E. Additional new jobs created by the project, beyond those that were agreed to in Article 4 of this Agreement, are eligible for the additional 1 %2 percent withholding credit as long as those additional jobs meet the local Enterprise Zone wage eligibility criteria and are an integral part or a continuation of the Project. Approval and administration of the supplemental new jobs credit shall follow existing procedures established under Iowa Code chapter 260E. (b) Investment Tax Credit. (i) The Business may claim an investment tax credit as provided in Iowa Code section 15.333. An investment tax credit may be claimed of up to a maximum of ten percent (10%) of the new investment which is directly related to the Project Jobs created by the location or expansion of the Business in the Enterprise Zone. The Business may not claim an investment tax credit for capital expenditures above the amount stated in Article 4.2 of this EZ Funding Agreement. The credit is to be taken in the year the qualifying asset is placed in service. Any credit in excess of the tax liability for the tax year may be credited to the tax liability for the following seven Master Contract #P0806M01734 Funding Agreement #08-EZ-036 - 3 - Revrsed s~o7 . y years or until depleted, whichever occurs earlier. (ii) The tax credit shall be amortized equally over afive-year period which the department will, in consultation with the eligible business, define. The five- yearamortization period is specified below: Amortization Schedule Jul 1, 2007 -June 30, 2008 $51,500 Jul 1, 2008 -June 30, 2009 $51,500 Jul 1, 2009 -June 30, 2010 $51,500 Jul 1, 2010 -June 30, 2011 $51,500 Jul 1, 2011 -June 30, 2012 $51,500 (iii) EZ Funding Agreement Exhibit C, "Investment Tax Credit Amortization Schedule Examples," illustrates how the 5-year amortization requirement will be applied. (iv) The capital expenditures eligible for the investment tax credit are: 1. The purchase price of real property and any existing buildings and structures located on the real property. 2. The cost of improvements made to real property which is used in operation of the Business. 3. The costs of manufacturing machinery and equipment and computers, as defined in Iowa Code section 427A.1(1) "e" and "j," which are purchased for use in the operation of the Business and which the purchase price have been depreciated in accordance with generally accepted accounting principles. 4. Ten (10) years of Annual Base Rent payments provided the cumulative cost of these payments does not exceed the cost of the land and the third-party developer's costs to build or renovate the building. Annual base rent shall only be considered when the project includes the construction of a new building or the major renovation of an existing building. (c) Additional Research Activities Credit. The Business is eligible to claim an additional research activities credit as provided in Iowa Code section 15.335. This benefit is a tax credit for increasing research activities in this state during the period the Business is participating in the program. For purposes of claiming this credit, a business is considered to be "participating in the program" for a period of ten (10) years from the Award Date. The credit may equal up to six and one-half percent (6.5%) of the State's apportioned share of the qualifying expenditures for increasing research activities and is in addition to the credit authorized in Iowa Code sections 422.10 and 422.33(5). Any tax credit in excess of the tax liability may be refunded to the Business with interest or, at its election, credited to its tax liability the following year. "Research activities" includes the development and deployment of innovative renewable energy generation components manufactured or assembled in Iowa. A renewable energy generation component will no longer be considered innovative when more than 200 megawatts of installed effective nameplate capacity has been achieved. Research activities credits Master Contract #P0806M01734 Funding Agreement #08-EZ-036 - 4 - Revrsed aio~ ,~ (a) The Business pays 80 percent of both of the following: (i) the cost of a standard medical insurance plan, and (ii) the cost of a standard dental insurance plan or an equivalent plan; (b) The Business provides the employee with a monetarily equivalent plan to the plan provided in "a." 4.4 Business Retention. The Business shall have and maintain Project operations contemplated by this Agreement within the Community at least through the Agreement Expiration Date. 4.5 Local Commitment. The Community shall provide the local financial assistance for the Project as described in Exhibit C, Project Description, and in the form and annual amounts described in Exhibit E - "Development Agreement By and Between the City of Dubuque, Iowa and Morrison Brothers Company" dated October 6, 2008. 5.0 Events of Default by the Business; Notice of Default; Repayment Provisions. 5.1 Events of Default. The terms of Article 9.0 (Events of Default) of the Master Contract govern this EZ Funding Agreement, except as noted in Article 5.2 and 5.3 below. 5.2 Notice of Default. The following Notice of Default provisions supersede the Notice of Default and repayment provisions specified Article 9.2(Notice of Default and Opportunity to Cure) in the Master Contract: (a) From Department. If, through the Annual Project Status Report , or other means, the IDED has reason to believe the Business is in default of the terms of this Agreement, the IDED will issue a written Notice of Default to the Business, setting forth the nature of the default in reasonable specificity, and providing therein a reasonable period of time, which shall not be less than 30 days from the date of the Notice of Default, in which the Business shall have an opportunity to cure, provided that cure is possible and feasible. A copy of any Notice of Default will also be provided to the Community and Department of Revenue. (b) From Community. If, through monitoring, auditing or other means, the Community has reason to believe the Business is in default of the terms of this Agreement, the Community will issue a written Notice of Default to the Business, setting forth the nature of the default in reasonable specificity, and providing therein a reasonable period of time, which shall not be less than 30 days from the date of the Notice of Default, in which the Business shall have an opportunity to cure, provided that cure is possible and feasible. A copy of any Notice of Default will also be provided to the IDED and Department of Revenue. 5.3 Repayment Provisions. The following provisions supersede the provisions of Article 9.2 (Default Remedies) of the Master Contract. If the Business has received incentives or assistance under the EZ Program and fails to meet and maintain any one of the requirements of the EZ Program (as stated in Iowa Code section 15E.193 to be an eligible business), or fails to comply with the EZ Program Administrative Rules (261 IAC chapter 59) or fails to meet any term of this EZ Funding Agreement, the Business is subject to repayment of all or a portion of the incentives and assistance that it has received, as detailed below: Master Contract #P0806M01734 Funding Agreement #08-EZ-036 - 6 - Revised sio~ (a) Job Obligations at Proiect Completion Date and Job Maintenance Period. If the Business does not meet its Job Obligations by the Project Completion Date or fails to maintain its Job Obligations through the Job Maintenance Period, both as defined in Master Contract Exhibit D, the Business shall repay a percentage of tax incentives and assistance it has received. Repayment shall be calculated as follows: (i) If the Business has met 50 percent or less of the requirement, the Business shall repay the same percentage in benefits as the Business failed to create in jobs. (ii) If the Business has met more than 50 percent but not more than 75 percent of the requirement, the Business shall repay one-half of the percentage in benefits as the Business failed to create in jobs. (iii) If the Business has met more than 75 percent but not more than 90 percent of the requirement, the Business shall repay one-quarter of the percentage in benefits as the Business failed to create in jobs. (iv) If the Business has not met the minimum job creation requirement of ten (10) new full-time jobs, the Business shall repay all of the incentives and assistance that it has received. (b) Wages and benefits. If the Business fails to comply with the wage or benefit requirements, the Business shall not receive Enterprise Zone benefits for each year during which the Business is not in compliance. (c) Capital Investment. If the Business does not meet the capital investment requirement described in 4.2, repayment shall be calculated as follows: (i) If the Business has met 50 percent or less of the requirement, the Business shall repay the same percentage in benefits as the Business failed to invest. (ii) If the Business has met more than 50 percent but not more than 75 percent of the requirement, the Business shall repay one-half of the percentage in benefits as the Business failed to invest. (iii) If the Business has met more than 75 percent but not more than 90 percent of the requirement, the Business shall repay one-quarter of the percentage in benefits as the Business failed to invest. (iv) If the Business has not met the minimum investment requirement of $500,000, the Business shall repay all of the incentives and assistance that it has received. (d) Department of Revenue; Community Recovery. Once it has been established, through the Business' annual certification, monitoring, audit or otherwise, that the Business is required to repay all or a portion of the incentives received, the Department of Revenue and the Community shall collect the amount owed. The Community has the authority, pursuant to the EZ Program, to take action to recover the value of taxes not collected as a result of the exemption provided by the Community to the Business. Department of Revenue has the authority, pursuant to the EZ Program, to recover the value of state taxes or incentives provided under the EZ Program. The value of state incentives provided under the EZ Program includes applicable interest and penalties. Master Contract #P0806M01734 Funding Agreement #08-EZ-036 - 7 - Revrsed aio~ (e) Layoffs or closures. If the Business experiences a layoff within the state or closes any of its facilities within the state prior to receiving the tax incentives and assistance, the Department may reduce or eliminate all or a portion of the tax incentives and assistance. If an approved Business experiences a layoff within the state or closes any of its facilities within the state after receiving tax incentives and assistance, the Business may be subject to repayment of all or a portion of the tax incentives and assistance that it has received. IDED may declare the Business in default due to a layoff, relocation or closure. Factors IDED considers when determining whether to exercise its discretion under this paragraph include, but are not limited to the percentage of the Business's workforce affected; the total number of employees involved; whether the action is seasonal, temporary or permanent; whether employees are relocated to other Iowa facilities; the reasons causing the layoff, relocation or closure; and the impact on the Project; and the Community; and the impact on the State. 6.0 Event of Default by Community. 6.1 Event of Default. The Community's failure to provide the local financial assistance pledged for the Project as described in Master Contract Exhibit C, Project Description and Award Budget, and in the form and annual amounts described in Exhibit E - "Development Agreement By and Between the City of Dubuque, Iowa and Morrison Brothers Company" dated October 6, 2008. 6.2 Notice of Default and Opportunity to Cure. If the IDED has reason to believe the Community is in default of the terms of this Agreement, the IDED will issue a written notice of default to the Community setting forth the nature of the default in reasonable specificity, and providing therein a reasonable period of time, which shall not be less than 30 days from the date of the Notice of Default, in which the Community shall have an opportunity to cure, provided that cure is possible and feasible. A copy of any Notice of Default will also be provided to the Business and Department of Revenue. 6.3. Repayment by Community. If an Event of Default is not cured within the time allowed, IDED's remedies include but are not limited to legal action against the Community for payment of the amount of local financial assistance pledged but not provided by the Community plus 6% default interest calculated from the Award Date. 7.0 Incorporated documents. The following documents are hereby incorporated by this reference: 1. The Master Contract and its Exhibits. 2. EZ Funding Agreement Exhibit A, "Enterprise Zone Commission Resolution Approving the Business's Enterprise Zone Application." 3. EZ Funding Agreement Exhibit C, "Investment Tax Credit Amortization Schedule Examples." Master Contract #P0806M01734 Funding Agreement #08-EZ-036 - 8 - Revrsed aio~ IN WITNESS WHEREOF, the parties have executed this EZ Funding Agreement: FOR THE BUSINESS: BY: Signature Typed Name and Title Date FOR THE IOWA DEPARTMENT OF ECONOMIC DEVELOPMENT: BY: Michael L. Tramonthina, Director Date FOR THE COMMUNITY: BY: Signature Typed Name and Title Date EZ Fundin~A~reement Exhibit A Enterprise Zone Commission Resolution Approving the Business's Enterprise Zone Application CITY OF DUBUQUE, IOWA ENTERPRISE ZONE COMMISSION RESOLUTION 3-2008 A RESOLUTION APPROVING THE FILING OF AN APPLICATION WITH THE IOWA DEPARTMENT OF ECONOMIC DEVELOPMENT REQUESTING ENTERPRISE ZONE BENEFITS ON BEHALF OF MORRISON BROTHERS CO. Whereas, the State of Iowa Department of Economic Development (IDED) is accepting applications from eligible businesses pursuant to the authority of House File 724, Enterprise Zone Legislation; and Whereas, the City of Dubuque, Iowa has two certified Enterprise Zones; and Whereas, the City's Enterprise Zone Commission has been created by City Ordinance to review applications for tax incentives and assistance based on criteria specified by law and to transmit its recommendation to the IDED; and Whereas, the City's Enterprise Zone Commission has reviewed an application from Morrison Brothers Co. and has found the proposed project eligible to apply for Enterprise Zone benefits. NOW, THEREFORE, BE IT RESOLVED BY THE ENTERPRISE ZONE COMMISSION OF THE CITY OF DUBUQUE, IOWA: Section 1. That the Morrison Brothers Co. application for Enterprise Zone benefits is approved. Section 2. That Morrison Brothers Co. will create ten (10) new jobs at their East 7th Street facility. Section 3. That Dubuque Morrison Brothers Co. will invest approximately $3,800,000 in Enterprise Zone 1 as part of the expansion project. Section 3. That the Chairperson is hereby authorized and directed to execute, on behalf of the Enterprise Zone Commission, the joint application for Enterprise Zone benefits. Passed,. approved and adopted this 2nd day of June, 2008. Rick Stein Chair F:\USERSWdejong\Enterprise ZoneVUlorrison BrosWlorrison EZ resolution.doc EZ Fundin~A~reement Exhibit C Investment Tax Credit Amortization Schedule Examples EZ Funding Agreement Exhibit C Investment Tax Credit Amortization Schedule Examples Background Information: Effective July 1, 2005, Investment Tax Credits (or Insurance Premium Tax Credits) awarded to a Business by the Iowa Department of Economic Development must be amortized equally over a 5-year period. The Department will determine the amortization schedule and include it in the Business' funding agreement. Please note Investment Tax Credits (or Insurance Premium Tax Credits) are earned when the corresponding asset (e.g. the building, a piece of machinery & equipment, etc.) is placed in service. "Placed in service" typically corresponds with the point in time when the Business can start depreciating the asset for tax purposes. Earned Investment Tax Credits (or Insurance Premium Tax Credits) which cannot be used because of the amortization schedule or because the credits exceed the Business' tax liability for that tax year may be carried forward for up to seven additional tax years. Example #1 In this example, the Business is eligible to receive an Investment Tax Credit (ITC) in the amount of $100,000. The ITC is earned on December 15, 2005 and maybe carried forward until the tax year in which December 15, 2012 falls. The Business' ITC amortization schedule follows: Fiscal Year 2007 -July 1, 2006 -June 30, 2007 $20,000 Fiscal Year 2008 -July 1, 2007 -June 30, 2008 $20,000 Fiscal Year 2009 -July 1, 2008 -June 30, 2009 $20,000 Fiscal Year 2010 -July 1, 2009 -June 30, 2010 $20,000 Fiscal Year 2011 -July 1, 2010 -June 30, 2011 $20,000 As the ITC was earned in the first year, the Business may claim up to $20,000 on its tax return for that tax year. The Business' tax liability for that tax year is $15,000 therefore; the Business will carry forward $5,000 of unused credits. ITC Earned -Total $100,000 ITC Available to be Taken based on the Amortization Schedule $20,000 (FY 2006) Less ITC Claimed on Current Year's Tax Retum $15 000 ITC to be Carried Forward into Future Tax Year $ 5,000 The following year the Business may claim up to $25,000 in ITCs on its tax return; $5,000 being carried forward from last year plus another $20,000 based on the amortization schedule. The Business' tax liability for the current tax year is $25,000. ITC Earned -Total $100,000 Less ITC Claimed to Date $ 15 000 ITC Remaining -Total $ 85,000 ITC Available to be Taken based on the Amortization Schedule $20,000 (FY 2007) Plus ITC Carried Forward from Previous Year $ 5,000 Less ITC Claimed on Current Year's Tax Return $25 000 ITC to be Carried Forward into Future Tax Year $ p September 14, 2005 The Business would be able to continue to take tax credits based on the amortization schedule and its tax liability each year. If this example were to continue, the tax credits could continue to be claimed until they are exhausted or until the carry forward period expires in the tax year in which December 15, 2012 falls. Example #2 In this example, the Business is eligible to receive an Investment Tax Credit (ITC) in the amount of $500,000. The ITC is earned on February 15, 2008 and may be carried forward until the tax year in which February 15, 2015 falls. The Business' ITC amortization schedule follows: Fiscal Year 2007 -July 1, 2006 -June 30, 2007 $100,000 Fiscal Year 2008 -July 1, 2007 -June 30, 2008 $100,000 Fiscal Year 2009 -July 1, 2008 -June 30, 2009 $100,000 Fiscal Year 2010 -July 1, 2009 -June 30, 2010 $100,000 Fiscal Year 2011 -July 1, 2010 -June 30, 2011 $100,000 As the ITC was earned in the third year of the amortization schedule, the Business may claim up to $300,000 on its tax return for that tax year ($100,000 per year for 3 years). The Business' tax liability for that tax year is $50,000 therefore; the Business will carry forward $250,000 of unused credits. ITC Earned -Total $500,000 ITC Available to be Taken based on the Amortization Schedule $300,000 (FY 2006 - FY 2008) Less ITC Claimed on Current Year's Tax Return $ 50 000 ITC to be Carried Forward into Future Tax Year $250,000 The following year the Business may claim up to $350,000 in ITCs on its tax return; $250,000 being carried forward from last year plus another $100,000 based on the amortization schedule. The Business' tax liability for the current tax year is $60,000. ITC Earned -Total $500,000 Less ITC Claimed to Date $ 50 000 ITC Remaining -Total $450 000 ITC Available to be Taken based on the Amortization Schedule $100,000 (FY 2009) Plus ITC Carried Forward from Previous Year $250,000 Less ITC Claimed on Current Year's Tax Return $ 60 000 ITC to be Carried Forward into Future Tax Year $290,000 The following year the Business may claim up to $390,000 in ITCs on its tax return; $290,000 being carried forward from last year plus another $100,000 based on the amortization schedule. The Business' tax liability for the current tax year is $50,000. ITC Earned -Total $500,000 Less ITC Claimed to Date $110 000 ITC Remaining -Total $390,000 ITC Available to be Taken based on the Amortization Schedule $100,000 (FY 2010) Plus ITC Carried Forward from Previous Year $290,000 Less ITC Claimed on Current Year's Tax Return $ 50 000 ITC to be Carried Forward into Future Tax Year $340,000 After FY 2010, the Business is no longer subject to the amortization schedule and therefore, it would be able to continue to take tax credits based on its tax liability each year. If this example were to continue, the tax credits could continue to be claimed until they are exhausted or until the carry forward period expires in the tax year in which February 15, 2015 falls. September 14, 2005 DESCRIPTION OF THE PROJECT AND AWARD BUDGET (EXHIBIT C) Name of Business: Morrison Brothers Company Contract Number: P0806M01734 Morrison Brothers Company plans to consolidate two current locations into one expanded business .location. Project costs include site prep, building construction & remodeling, machinery & equipment, racking & shelving, computer hard/software, furniture & fixtures, and research & development. PROJECT DESCRIPTION AWARD BUDGET SOURCE OF FUNDS USE OF FUNDS IDED Programs Amount *Land Acquisitlor Cost CEBA $20,000 - ~rgivable Loan *Site Preparatio $500,000 CEBA $20,000 i.can *Building Acqu s r:; Enterprise Zone Benefits ee Note *Building Construction $1,300,000 *Building Remodeling $150,000 Business $3,335,000 Cash *Mfg Machinery and Ec..:;; ~~. $500,000 Other Machinery and F~,:. ;~-~e~~~~~ Racking, Shelving. etc $50,000 ,. *Computer Hardw~ ~: $125,000 ' Computer Softwarf $40,000 Furniture and Fixtu ~ ° $230,000 Working Capital Research and Develo{; Job Training $480,000 C)thar FxnancaS - salaria~ SUB TOTAL $0 TOTAL ALL FUNDS $3,375,000 included as capital investment if awarded tax credit program SUB TOTAL $3,375,000 $0 $3,375,000 Source of F TIF Rebate Tax Abatement 260E Job Training In-Kind Contributions RISE RED Other (describe) ~ation Used as Match years Yes $50,000.00 No Total Other Funding $530,000.00 Uptlateed 9/07 EXHIBIT D -JOB OBLIGATIONS Morrison Brothers Company #08-CEBA-051 and #08-EZ-036 This Project has been awarded benefits from the Community Economic Betterment Account (CEBA) and Enterprise Zone (EZ) programs. The charts below outline the contractual job obligations related to this Project. Data in the "Employment Base" column has been verified by the Department and reflects the employment characteristics of the facility receiving funding before this award was made. Jobs to be retained as a part of this Project must be included in these calculations. Data in the "Jobs To Be Created" column outlines the new full-time jobs (including their wage characteristics) that must be added to the employment base and, if applicable, statewide employment base as a result of this award. At the Project Completion Date and through the Project Maintenance Date, the Business must achieve (at a minimum) the numbers found in the "Total Job Obligations" column. CEBA JOB OBLIGATIONS Employment Jobs T t l Project Completion Date: June 30, 2011 Base To Be Created o a Job Project Maintenance Date: June 30, 2013 Obligations Total employment at project location 10 91 Average Wage of total employment at project location Qualifying wage threshold requirement (per hr) Benefit value (per hr) N/A Number of jobs at or above qualifying wage g Average Wage of jobs at or above qualifying wage Number of jobs at or above qualifying wage w/benefits N/A N/A N!A Average wage of jobs at or above qualifying wage N/A w/benefits Notes re: Oualifying Wages L If the Benefit Value was added to the base wage to meet program wage threshold eligibility requirements, then any reduction in the Benefit Value during the life of the Contract must be compensated for with salary to ensure that the Qualifying Wage rates are met. 2. Bonus or commission payments are not included when calculating the Qualifying Wage rate. Revised 8/07 Exhibit E "Development Agreement By and Between the City of Dubuque, Iowa and Morrison Brothers Company" dated October 6, 2008. September 14, 2005 DEVELOPMENT AGREEMENT BETWEEN THE CITY OF DUBUQUE, IOWA, AND MORRISON BROS. COMPANY This Agreement, dated for reference purposes the 6 to day of October , 2008 (Effective Date), by and between the City of Dubuque, Iowa, a municipality (City), established pursuant to the Iowa Code and acting under authorization of Iowa Code Chapter 403, as amended (the Urban Renewal Act), and Morrison Bros. Company, an Iowa corporation with its principal place of business in Dubuque, Iowa (Developer). WITNESSETH: WHEREAS, in furtherance of the objectives of the Urban Renewal Act, City has undertaken an Urban Renewal project (the Project) to advance the community's ongoing economic development efforts; and WHEREAS, Developer is the owner of the property at 570 East 7~' Street (the Property) and the Project is located within the East 7th Street Economic Development District (the Project Area); and WHEREAS, as of the date of this Agreement there has been prepared and approved by City the Urban Renewal Plan for the Project Area consisting of the Urban Renewal Plan for the East 7~' Street Economic Development District, approved by the City Council of City by Resolution 144-97 on April 7, 1997, and is on ~le at the office of the Economic Development Department, City Hall, 13"' and Central Avenue, Dubuque, Iowa; and WHEREAS, a copy of the Urban Renewal Plan, as amended, is attached hereto as Exhibit C and has been filed of record with the Dubuque County Recorder on July 25, 1997, 2008, as instrument No. 8350-97. WHEREAS, Developer has decided to expand its operations in the Project Area; and WHEREAS, City believes that the development of the Property pursuant to this Agreement, and the fulfillment generally of this Agreement, are in the vital and best interests of City and in accord with the public purposes and provisions of the applicable federal, state and local laws and the requirements under which the Project has been undertaken and is being assisted. NOW THEREFORE, in consideration of the .premises and the mutual obligations of the parties hereto, each of them does hereby covenant and agree as follows: 100308ba1Fina1 SECTION 1. DEVELOPMENT ACTIVITIES 2.1 Required Minimum Improvements. City acknowledges that Developer is expanding its manufacturing facility on the Property, specifically for, warehouse, office, Engineering, and Research and Development facilities, without limitation, and all interior improvements (the Minimum Improvements). Minimum Improvements shall include an expanded manufacturing facility including warehouse, office, and Engineering and Research and Development Tech Center along with necessary site work and equipment as contemplated in this Agreement, at an estimated cost of approximately $3,825,000. 2.2 Plans for Construction of Minimum Improvements. Plans and specifications with respect to the development of Property and the construction of the Minimum Improvements thereon (the Construction Plans) shall be in conformity with the Urban Renewal Plan, this Agreement, and all applicable state and local laws and regulations, including but not limited to any covenants, conditions, restrictions, reservations, easements, liens and charges, applicable to the Property, all recorded with the Dubuque County Recorder's office. Developer shall submit to City, for approval by City, plans, drawings, specifications, and related documents with respect to the improvements to be constructed by Developer on the Property. All work with respect to the Minimum Improvements shall be in substantial conformity with the Construction Plans approved by City. 2.3 Timing of Improvements. Developer hereby agrees that construction of the Minimum Improvements on the Property shall be commenced within three (3) months after the Closing Date, and shall be substantially completed by December 31, 2009. For purposes of this section, "substantial completion" shall mean completion of the site work and completion of the core and shell of the building, but shall not include fixtures and equipment, and does not contemplate receipt of a certificate of occupancy. The time frames for the performance of these obligations shall be suspended due to unavoidable delays, meaning delays, outside the control of the party claiming its occurrence in good faith, which are the direct result of strikes, other labor troubles, unusual shortages of materials or labor, unusually severe or prolonged bad weather, acts of God, fire or other casualty to the Minimum Improvements, litigation commenced by third parties which, by injunction or other similar judicial action or by the exercise of reasonable discretion directly results in delays, or acts of any federal, state or local government which directly result in delays. The time for performance of such obligations shall be extended only for the period of such delay. 2.4 Certificate of Completion. Promptly following the request of Developer upon completion of the Minimum Improvements, City shall furnish Developer with an appropriate instrument so certifying. Such certification (the Certificate of Completion) shall be in recordable form and shall be a conclusive determination of 100308ba1Fina1 2 the satisfaction and termination of the agreements and covenants in this Agreement with respect to the obligations of Developer to construct Minimum Improvements. SECTION 3. CITY PARTICIPATION 3.1 Economic Development Grant. (1) For and in consideration of Developer's obligations hereunder, and in furtherance of the goals and objectives of the Urban Renewal Plan for the Project Area and the Urban Renewal Law, City agrees, subject to Developer being in compliance with the terms of this Agreement, to make sixteen (16) consecutive semi-annual payments (such payments being referred to collectively as the Economic Development Grants) to Developer if Developer owns or leases the Property and/or the Minimum Improvements thereon during the period such tax increment revenues accrue, as follows: November 1, 2010 May 1, 2011 November 1, 2011 ~ May 1, 2012 November 1, 2012 May 1, 2013 November 1, 2013 May 1, 2014 November 1, 2014 May 1, 2015 November 1, 2015 May 1, 2016 November 1, 2016 May 1, 2017 November 1, 2017 May 1, 2018 pursuant to Iowa Code Section 403.9 of the Urban Renewal Law, in amounts equal to the portion of the tax increment revenues collected by City,described below under Iowa Code Section 403.19 (without regard to any averaging that may otherwise be utilized under Iowa Code Section 403.19 and excluding any interest that may accrue thereon prior to payment to Developer) during the preceding six-month period in respect of the Minimum Improvements constructed by Developer (the Developer Tax Increments). For purposes of calculating the amount of the Economic Development Grants provided in this Section, the Developer Tax Increments shall be only those tax increment revenues collected by the City in respect of the increase in the assessed value of the Property above the assessment of January 1, 2008 ($1,824,400). The Developer Tax Increments shall not include (i) any property taxes collected for the payment of bonds and interest of each taxing district, (ii) any taxes for the regular and voter-approved physical plant and equipment levy, (iii) the remaining actual amount of tax increment revenues collected by the City in respect of the valuations of the Property prior to January 1, 2009 and (iv) any other portion required to be excluded by Iowa law, and thus such incremental taxes will not include all amounts paid by Developer as regular properly taxes. 3 (2) To fund the Economic Development Grants, City shall certify to the County prior to December 1 of each year, commencing December 1, 2009, its request for the available Developer Tax Increments resulting from the assessments imposed by the County as of January 1 of that year, to be collected by City as taxes are paid during the following fiscal year and which shall thereafter be disbursed to Developer if Developer (or a subsequent owner reasonably approved by City) owns or leases the Property and/or Improvements thereon during the period such tax increment revenues accrue, on November 1 and May 1 of that fiscal year. (Example: if City so certifies by December, 2009, the Economic Development Grants in respect thereof would be paid to Developer on November 1, 2010, and May 1, 2011.) (3) The Economic Development Grants shall be payable from and secured solely by the Developer Tax Increments paid to City that, upon receipt, shall be deposited and held in a special account created for such purpose and designated as the "Morrison Bros. II TIF Account" of City. City hereby covenants and agrees to maintain its TIF ordinance in force during the term and to apply the incremental taxes collected in respect of the Property and Minimum Improvements and allocated to the Morrison Bros. II TIF Account to pay the Economic Development Grants, as and to the extent set forth in Section 3.2(1) hereof. The Economic Development Grants shall not be payable in any manner by other tax increments revenues or by general taxation or from any other City funds. City makes no representation with respect to the amounts that may be paid to Developer as the Economic Development Grants in any one year and under no circumstances shall City in any manner be liable to Developer so long as City timely applies the Developer Tax Increments actually collected to the Morrison Bros. II TIF Account (regardless of the amounts thereof) for the payment of the Economic Development Grants to Developer as and to the extent described in this Section. (4) City shall be free to use any and all tax increment revenues collected in respect of other properties within the Project Area, or any available Developer Tax Increments resulting from the termination of the annual Economic Development Grants under Section 3.1 hereof, for any purpose for which such tax increment revenues may lawfully be used pursuant to the provisions of the Urban Renewal Law, and City shall have no obligations to Developer with respect to the use thereof. SECTION 4. COVENANTS OF DEVELOPER 4.1 Job Creation. Developer shall create ten (10) full-time equivalent jobs in Dubuque, Iowa prior to June 1, 2011, and shall maintain those jobs during the term of this Agreement. It is agreed by the parties that Developer has eighty-eight (88) full-time equivalent positions in Dubuque, Iowa as of June 1, 2008. In the event that any certificate provided to City under Section 4.2 hereof discloses that Developer 4 does not as of that date have at least 98 employees as provided hereinabove, the semi-annual Economic Development Grants for such year under Section 3.2 shall be reduced by the percentage that the number of such positions bears to the total number of positions required to be created and maintained (98 jobs) by this Section 4.1. (For example, if Developer has 90 jobs, the semi-annual Economic Development Grants would be 91.83% (90/98 employees) of the available Developer Tax Increment received by City). The reduction of the semi-annual Economic Development Grants shall be City's sole remedy for the failure of Developer to meet the job creation requirements of this subsection 4.1. 4.2 Certification. To assist City in monitoring the performance of Developer hereunder, Developer shall certify as of June 1, 2012, and June 1 of each year thereafter during the term of this Agreement, by a duly authorized officer of Developer to City in a form acceptable to City (a) the number of full-time equivalent jobs maintained by Developer during the prior year in Dubuque, Iowa, and (b) to the effect that such officer has re-examined the terms and provisions of this Agreement and that at the date of such certificate, and during the preceding twelve (12) months, Developer is not or was not in default in the fulfillment of any of the material terms and conditions of this Agreement and that no Event of Default (or event which, with the lapse of time or the giving of notice, or both, would become an Event of Default) is occurring or has occurred as of the date of such certificate or during such period, or if the signer is aware of any such default, event or Event of Default, said officer shall disclose in such statement the nature thereof, its period of existence and what action, if any, has been taken or is proposed to be taken with respect thereto. Such certificate shall be~ provided not later than July 1, 2012, and by July 1 of each year thereafter during the term of this Agreement. 4.3 Books and Records. During the term of this Agreement, Developer shall keep at all times and make available to City upon reasonable request proper books of record and account in which full, true and correct entries will be made of all dealings and transactions of or in relation to the business and affairs of Developer related to the Project in accordance with generally accepted accounting principles consistently applied throughout the period involved, and Developer shall provide reasonable protection against loss or damage to such books of record and account. City's agreement to Developer's reasonable confidentiality requirements (including, without limitation, the execution of a commercially reasonable confidentiality agreement) is a condition precedent to City's review and inspection rights under this Section 4.3. 4.4 Real Property Taxes. From and after the Closing Date, Developer shall pay or cause to be paid, when due, all real property taxes and assessments payable with respect to all and any parts of the Property unless Developer's obligations have been assumed by another person or entity pursuant to the provisions of this Agreement. 5 4.5 No Exemptions. During the term of this Agreement, and except as otherwise permitted by this Agreement, Developer agrees not to apply for any state or local property tax exemptions which are available with respect to the Development Property or the Minimum Improvements located thereon that may now be, or hereafter become, available under state law or city ordinance during the term of this Agreement, including those that arise under Iowa Code Chapters 404 and 427, as amended. 4.6 Insurance Requirements. (1) Developer shall provide and maintain or cause to be maintained at all times during the process of constructing the Minimum Improvements (and, from time to time at the request of City, furnish City with proof of insurance in the form of a certificate of insurance for each insurance policy): All risk builder's risk insurance, written on a Completed Value Form in an amount equal to one hundred percent (100%) of the replacement value when construction is completed; (2) Upon completion of construction of the Minimum Improvements and up to the Termination Date, Developer shall maintain, or cause to be maintained, at its cost and expense (and from time to time at the request of City shall fumish proof of insurance in the form of a certificate of insurance) insurance as follows: All risk property insurance against loss and/or damage to Minimum Improvements under an insurance policy written in an amount not less than the full insurable replacement value of Minimum Improvements. The term "replacement value" shall mean the actual replacement cost of the Minimum Improvements (excluding foundation and excavation costs and costs of underground flues, pipes, drains and other uninsurable items) and equipment, and shall be evaluated for reasonable replacement value from time to time at the request of City, but not more frequently than once every three (3) years. (3) Developer shall notify City immediately in the -case of damage exceeding $500,000.00 in amount to, or destruction of, the Minimum Improvements or any portion thereof resulting from fire or other casualty. Net proceeds of any such insurance (Net Proceeds), shall be paid directly to Developer as its interests may appear, and Developer shall forthwith repair, reconstruct and restore the Minimum Improvements to substantially the same or an improved condition or value as they existed prior to the event causing such damage and, to the extent necessary to accomplish such repair, reconstruction and restoration, Developer shall apply the Net Proceeds of any insurance relating to such damage received by Developer to the payment or reimbursement of the costs thereof, subject, however, to the terms of any mortgage encumbering title to the Property (as its interests may appear). Developer shall complete the repair, reconstruction and restoration 6 of Minimum Improvements whether or not the Net Proceeds of insurance received by Developer for such Purposes are sufficient. 4.7 Preservation of Property. During the term of this Agreement, Developer shall maintain, preserve and keep, or cause others to maintain, preserve and keep, the Minimum Improvements in good repair and working order, ordinary wear and tear excepted, and from time to time shall make all necessary repairs, replacements, renewals and additions. Nothing in this Agreement, however, shall be deemed to alter any agreements between Developer or any other party including, without limitation, any agreements between the parties regarding the care and maintenance of the Property. 4.8 Non-Discrimination. In canying out the project, Developer shall not discriminate against any employee or applicant for employment because of race, religion, color, sex, sexual orientation, national origin, age or disability. 4.9 Conflict of Interest. Developer agrees that no member, officer or employee of City, or its designees or agents, nor any consultant or member of the governing body of City, and no other public official of City who exercises or has exercised any functions or responsibilities with respect to the project during his or her tenure, or who is in a position to participate in adecision-making process or gain insider information with regard to the project, shall have any interest, direct or indirect, in any contract or subcontract, or the proceeds thereof, for work to be performed in connection with the project, or in any activity, or benefit therefrom, which is part of this project at any time during such person's tenure. In connection with this obligation, Developer shall have the right to rely upon the representations of any party with whom it does business and shall not be obligated to perform any further examination into such party's background. 4.10 Non-Transferability. (1) Until such time as the Minimum Improvements are complete (as certified by City under Section 2.4), and except as permitted by Section 4.10(2), this Agreement may not be assigned by Developer nor may the Property be transferred by Developer to another party without the prior written consent of City, which shall not be unreasonably withheld. Thereafter, Developer shall have the right to assign this Agreement (including, specifically, the Economic Development Grant rights contained in Section 3), and upon assumption of the Agreement by the assignee, Developer shall no longer be responsible for its obligations under this Agreement. (2) Upon notice to, but without the consent of, City, Developer may assign this Agreement to any entity controlling, controlled by, or under common control with Developer. 7 (3) Notwithstanding the foregoing, Developer may desire to exchange other property of like kind and qualifying use within the meaning of Section 1031 of the Internal Revenue Code for fee title in the Property. Developer expressly reserves the right to assign its rights, but not its obligations, hereunder to a Qualified Intermediary as provided in I.R.C. Regulation 1.1031(k)-1(g)(4) either before or after the Closing Date, subject to the approval of City, which approval will not be unreasonable withheld. 4.11 Restrictions on Use. Developer agrees for itself, and its successors and assigns, and every successor in interest to the Property or any part thereof that they, and their respective successors and assigns, shall: (1) Devote the Property to, and only to and in accordance with, the uses specified in the Urban Renewal Plan and City represents and agrees that use of the Property as a manufacturing facility as defined in section 2.1 is in full compliance with the Urban Renewal Plan) (however, Developer shall not have any liability to City to the extent that a successor in interest shall breach this covenant and City shall seek enforcement of this covenant directly against the party in breach of same); and (2) Not discriminate upon the basis of race, religion, color, sex, sexual orientation, national origin, age or disability in the sale, lease, rental, use or occupancy of the Property or any improvements erected or to be erected thereon, or any part thereof (however, Developer shall not have any liability to City to the extent that a successor in interest shall breach this covenant and City shall seek enforcement of this covenant directly against the party in breach of same). 4.12 Release and Indemnification Covenants. (1) Developer releases City and the governing body members, officers, agents, servants and employees thereof (hereinafter, for purposes of this Section, the Indemnified Parties) from, covenants and agrees that the Indemnified Parties shall not be liable for, and agree to indemnify, defend and hold harmless the Indemnified Parties against, any loss or damage to property or any injury to or death of any person occurring at or about or resulting from any defect in the Minimum Improvements. (2) Except for any gross negligence, willful misrepresentation or any willful or wanton misconduct or any unlawful act of the Indemnified Parties, Developer agrees to protect and defend the Indemnified Parties, now or forever, and further agrees to hold the Indemnified Parties harmless, from any claim, demand, suit, action or other proceedings whatsoever by any person or entity whatsoever arising or purportedly arising from (1) any violation of any agreement or condition of this Agreement (except with respect to any suit, action, demand or other proceeding brought by 8 Developer against City based on an alleged breach of any representation, warranty or covenant of City under this Agreement and/or to enforce its rights under this Agreement); or (2) the acquisition, construction, installation, ownership, and operation of the Minimum Improvements; or (3) the condition of the Property and any hazardous substance or environmental contamination located in or on the Property, caused and occurring after Developer takes possession of the Property. (3) The Indemnified Parties shall not be liable to Developer for any damage or injury to the persons or property of Developer or its officers, agents, servants or employees or any other person who may be on, in or about the Minimum Improvements due to any act of negligence of any person, other than any act of negligence on the part of any such Indemnified Party or its officers, agents, servants or employees. (4} All covenants, stipulations, promises, agreements and obligations of City contained herein shall be deemed to be the covenants, stipulations, promises, agreements and obligations of City, and not of any governing body member, officer, agent, servant or employee of City in their individual capacity thereof. (5) The provisions of this Section shall survive the termination of this Agreement. 4.13 Compliance with Laws. Developer shall comply with all laws, rules and regulations relating to its businesses, other than laws, rules and regulations for which the failure to comply with or the sanctions and penalties resulting therefrom, would not have a material adverse effect on the business, property, operations, financial or otherwise, of Developer. SECTION 5. EVENTS OF DEFAULT AND REMEDIES 5.1 Events of Default Defined. The following shall be Events of Default under this Agreement and the term Event of Default shall mean, whenever it is used in this Agreement, any one or more of the following events: (1) Failure by Developer to pay or cause to be paid, before delinquency, all real property taxes assessed with respect to the Minimum Improvements and the Property. (2) Failure by Developer to cause the construction of the Minimum Improvements to be commenced and completed pursuant to the terms, conditions and limitations of this Agreement. 9 (3) Transfer of any interest by Developer of the Minimum Improvements in violation of the provisions of this Agreement prior to the issuance of the final Certificate of Completion. (4) Failure by Developer or City to substantially observe or pertorm any other material covenant, condition, obligation or agreement on its part to be observed or performed under this Agreement. 5.2. Remedies on Default by Developer. Whenever any Event of Default referred to in Section 5.1 of this Agreement occurs and is continuing, City, as specified below, may take any one or more of the following actions after the giving of written notice by City to Developer (and the holder of any mortgage encumbering any interest in the Property of which City has been notified of in writing) of the Event of Default, but only if the Event of Default has not been cured within sixty (60) days following such notice, or if the Event of Default cannot be cured within sixty (60) days and Developer does not provide assurances to City that the Event of Default will be cured as soon as reasonably possible thereafter: (1) City may suspend its performance under this Agreement until it receives assurances from the defaulting party deemed adequate by City, that the defaulting party will cure its default and continue its performance under this Agreement; (2) Until the Closing Date, City may cancel and rescind this Agreement; (3) City may withhold the Certificate of Completion; or (4) City may take any action, including legal, equitable or administrative action, which may appear necessary or desirable to collect any payments due under this Agreement or to enforce performance and observance of any obligation, agreement, or covenant under this Agreement. 5.3 No Reined Exclusive. No remedy herein conferred upon or reserved to City is intended to be exclusive of any other available remedy or remedies, but each and every such remedy shall be cumulative and shall be in addition to every other remedy given under this Agreement or now or hereafter existing at law or in equity or by statute. No delay or omission to exercise any right or power accruing upon any default shall impair any such right or power or shall be construed to be a waiver thereof, but any such right and power may be exercised from time to time and as often as may be deemed expedient. 5.4 No Implied Waiver. In the event any agreement contained in this Agreement should be breached by any party and thereafter waived by any other party, such waiver shall be limited to the particular breach so waived and shall not be deemed to waive any other concurrent, previous or subsequent breach hereunder. 10 5.5 Agreement to Pay Attorneys' Fees and Expenses. If any action at law or in equity, including an action for declaratory relief or arbitration, is brought to enforce or interpret the provisions of this Agreement, the prevailing party shall be entitled to recover reasonable attorneys' fees and costs of litigation from the other party. Such fees and costs of litigation may be set by the court in the trial of such action or by the arbitrator, as the case may be, or may be enforced in a separate action brought for that purpose. Such fees and costs of litigation shall be in addition to any other relief that may be awarded. 5.6 Remedies on Default by City. If City defaults in the performance of this Agreement, Developed may take any action, including legal, equitable or administrative action that may appear necessary or desirable to collect any payments due under this Agreement, to recover expenses of Developer, or to enforce performance and observance of any obligation, agreement, or covenant of City under this Agreement. Developer may suspend their performance under this Agreement until they receive assurances from City, deemed adequate by Developer, that City will cure its default and continue its performance under this Agreement. SECTION 6. GENERAL TERMS AND PROVISIONS 6.1 Notices and Demands. Whenever this Agreement requires or permits any notice or written request by one party to another, it shall be deemed to have been properly given if and when delivered in person or three (3) business days after having been deposited in any U.S. Postal Service and sent by registered or certified mail, postage prepaid, or one (1) business day after deposit with a nationally recognized overnight courier, addressed as follows: If to Developer: Morrison Bros. Company 325 E. 24~' St. Dubuque, IA 52004-0238 Attention: Charlie D. Glab Phone: (563) 583-5701 Fax: (563) 583-5028 With copy to: John C. O'Connor, Attorney 700 Locust Street Suite 200Address Dubuque, Iowa 52001 City, state zip Phone: 563-557-8400 Fax: 563-556-1867 e-mail: joconnor@octhomaslaw.com If to City: City Manager 50 W . 13th Street Dubuque, Iowa 52001 Phone: (563) 589-4110 11 Fax: (563) 589-4149 With copy to: City Attorney City Hall 50 W. 13~' Street Dubuque, IA 52001 or at such other address with respect to any party as that party may, from time to time designate in writing and forward to the other as provided in this Section. 6.2 Binding Effect. This Agreement shall be binding upon and shall inure to the benefit of City, Developer and their respective successors and assigns. 6.3 Termination Date. This Agreement and the rights and obligations of the parties hereunder shall terminate on May 1, 2018 (the Termination Date). 6.4. Execution By Facsimile. The parties agree that this Agreement may be transmitted between them by facsimile. The parties intend that the faxed signatures constitute original signatures and that a faxed Agreement containing the signatures (original or faxed) of all the parties is binding on the parties. 6.5 Memorandum of Development Agreement. City shall promptly record a Memorandum of Development Agreement in the form attached hereto as Exhibit D in the office of the Recorder of Dubuque County, Iowa. Developer shall pay the costs for so recording. CITY OF DUBUQUE, IOWA By: By: Roy C~JBuol, Mayor nne F. Schneider, City Clerk MORRISON BROS. COMPANY By: arlie D. lab, President 12 List of Exhibits Exhibit A No Exhibit A Exhibit B City Attorney Certificate Exhibit C Urban Renewal Plan Exhibit D Memorandum of Development Agreement Exhibit E City Certificate Exhibit F Opinion of Counsel to Developer 13 EXHIBIT B CITY ATTORNEY'S CERTIFICATE 14 BARRY A. LINDAHL, ESQ. CITY ATTORNEY (DATE) RE: Dear 7118 Cl1Y OF DuB ~~~ I have acted as counsel for the City of Dubuque, Iowa, in connection with the execution and delivery of a certain Development Agreement between (Developer) and the City of Dubuque, Iowa (City) dated for reference purposes the day of , 20 The City has duty obtained all necessary approvals and consents for its execution, delivery and performance of this Agreement and has full power and authority to execute, deliver and perform its obligations under this Agreement, and to the best of my knowledge, the representations of the City Manager in his letter dated the day of , 20_, are correct. Very sincerely, Barry A. Lindahl, Esq. City Attorney BAL:tIs 15 EXHIBIT C URBAN RENEWAL PLAN 16 URBAN RENEWAL PLAN East 7th Street Economic Development District City of Dubuque, Iowa A. INTRODUCTION This URBAN RENEWAL PLAN (the "Plan") has been prepazed pursuant to Resolution 144-97 of the City Council of the City of Dubuque as adopted on April 7, 1997. Its intent is to stimulate economic development activities within the EAST 7TH STREET ECONOMIC DEVELOPMENT DISTRICT (the "District") through the commitment of public actions as specified herein. To achieve this objective, the City of Dubuque shall undertake the urban renewal actions specified in this Plan, pursuant to the powers granted to it under Chapter 403 of the Iowa Code, Urban Renewal Law. B. OBJECTIVES OF THE PLAN The primary objectives of the Plan aze the development and redevelopment of the District for economic development activities, through: Provision of public infrastructure improvements supportive of full development of the District; Creation of financial incentives necessary to encourage new and existing businesses to invest in the District; and Expansion of the property tax base of the District. C. DISTRICT BOUNDARIES The District is located within the City of Dubuque, County of Dubuque, State of Iowa. The District shall consist of the real property legally described as follows: Block 13 Lot 1 of Lot 4, Lot 1 of Lot 5, Lot 1 of Lot 6, and Lots 7, 8, 9, 10, 11, 12, 13 and 14; Block 16 Lots 1, 2, 3, 4 and 5; and Block 17 Lots A, B, C, D, E, F, Lots 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, and 15, Lot 1 of Lot 16, Lot 1 of Lot 1 of Lot 17, Lot 2 of Lot 1 of Lot 18, Lot 2 of Lot 20, Lot 2 of Lot 21, Lot 2 of Lot 22, Lot 2 of Lot 23, Lot 2 of Lot 24, Lot 2 of Lot 25, Lot 2 of Lot 26, Lot 2 of Lot 27, Lot 3 of Lot 28, Lot 3 of Lot 29,Lot 3 of Lot 30, Lot 3 of Lot 31, Lot 3 of Lot 32 all in the Dubuque Harbor Improvement Co.'s Addition, Township 89 North, Range- 3 East of the 5th P.M., Dubuque County, Iowa and any adjoining public right-of--way. The boundaries of the District aze delineated on the URBAN RENEWAL DISTRICT map (Attachment A). The City of Dubuque reserves the right to modify the boundaries of the District at some future date. Any amendments to the Plan will be completed in accordance with Chapter 403 of the Iowa Code, Urban Renewal Law. D. PUBLIC PURPOSE ACTIVITIES To meet the OBJECTIVES of this Plan, the City of Dubuque is prepazed to initiate and support development and redevelopment of the District through, among other things, the following PUBLIC PURPOSE ACTM'I'lES: Improvement, installation, construction and reconstruction of streets, utilities and other 17 improvements and rights-of--ways; Use of tax increment financing, loans, grants and other appropriate financial tools in support of eligible public and private development and redevelopment efforts; and Enforcement of applicable local, state and federal laws, codes and regulations. Public purpose activities aze limited to those azeas delineated on the PUBLIC PURPOSE ACTIVITY AREA map (Attachment B). All public purpose activities shall be conditioned upon and shall meet the restrictions and liautations placed upon the District by the Plan. E. DEVELOPMENT AND REDEVELOPMENT REQUIREMENTS The LAND USE and PLANI~iING AND DESIGN CRITERIA set forth herein shall apply to any and all District properties the development and/or the redevelopment of which is assisted by the City through any of the PUBLIC PURPOSE AC'I'IVTTIES listed above. Land Use The intent of this Plan is to promote the development of industrial land uses within the District. All uses shall be regulated by the zoning district established for the property. LAND USE maps (Attachments C1 and C2) identify the existing and the proposed land uses within the District. 2. Plannine and Desi¢n Criteria The planning criteria to be used to guide the physical development of the District are those standards and guidelines contained within the City of Dubuque's Zoning Ordinance and other applicable local, state and federal codes and ordinances. F. LAND ACQUISITION 1. Land Acquisition The City does not intend to acquire any property within the District. However, the City reserves the right to acquire, by negotiation or eminent domain, property rights required for the construction or reconstruction of streets and public utilities, or any other public facility or improvement. G. FINANCING ACTIVITIES To meet the OBJECTIVES of this Plan and to encourage the development of the District and private investment therein, the City of Dubuque is prepazed to provide financial assistance to qualified industries and businesses through the making of loans or grants under Chapter 15A of the Iowa Code and through the use of tax increment financing under Chapter 403 of the Iowa Code. 1. Chanter 15A Loan or Grant The City of Dubuque has determined that the making of loans or grants of public funds to qualified industries and businesses is necessary to aid in the planning, undertaking and completion of urban renewal projects authorized under this Plan within the meaning of Section 384.24(3)(q) of the Iowa Code. Accordingly, in furtherance of the objectives of this Plan, the City of Dubuque may determine to issue bonds or loan agreements, in reliance upon the authority of Section 384.24A, Section 18 384.24(3)(q), Section 403.12 (general obligation bonds) or Section 403.9 (tax increment bonds), for the purpose of making loans or grants of public funds to qualified businesses. Alternatively, the City may determine to use available funds for the making of such loans or grants. In determ;n;ng qualifications of recipients and whether to make any such individual loans or grants, the City of Dubuque shall consider one or more of the factors set forth in Section 15A.1 of the Iowa Code on a case-by-case basis. 2. Tag Increment Financing The City of Dubuque is prepared to utilize tax increment financing as a means of financing eligible costs incurred to implement the Public Purpose Activities identified in Part D of this Plan. Bonds or loan agreements maybe issued by the City under the authority of Section 403.9 of the Iowa Code (tax increment bonds) or Section 384.24A, Section 384.24(3)(q) and Section 403.12 (general obligation bonds). The City acknowledges that the use of tax increment revenues delays the ability of other local taxing bodies to realize immediately the direct tax benefits of new development in the District. The City believes, however, that the use of tax increment revenues to finance new development in the District is necessary in the public interest to achieve the OBJECTIVES of this Plan. Without the use of this special financing tool, new investment may not otherwise occur or may occur within another jurisdiction. If new development does not take place in Dubuque, property values could stagnate and the City, County and School District may receive less taxes during the-duration of this Plan than they would have if this Plan were not implemented. Tax increment financing will provide along-term payback in overall increased tax base for the City, County and School District. The initial public investment required to generate new private investment will ultimately increase the taxable value of the District well beyond its existing base value. Tax increment reimbursement may be sought for, among other things, the following costs to the extent they are incurred by the City: a. Planning and administration of the Plan; b. Construction of public infrastructure improvements and facilities within the District; c. Acquisition, installation, maintenance and replacement of public investments throughout the District; d. Loans or grants to qualified businesses under Chapter 15A of the Iowa Code, including debt service payments on any bonds issued to finance such loans or grants, for purposes of expanding the business or activity, or other qualifying loan programs established in support of the Plan; and e. Providing the matching share for a variety of local, state and federal grants and loans. Prouosed Amount of Indebtedness At this time, the extent of improvements and new development within the District is only generally known. As such, the amount and duration for use of the tax increment revenues for public improvements and/or private development can only be estimated; however, the actual use and amount of tax increment revenues to be used by the City for District activities will be determined at the time specific development is proposed It is anticipated that the maximum amount of indebtedness which will qualify for tax increment revenue reimbursement during the duration of this Plan, including public improvements and private development assistance, will not exceed $650,000. 19 At the time of adoption of this Plan, the City of Dubuque's current general obligation debt is $11,755,000 (a list of obligations is found as Attachment D) and the applicable constitutional debt limit is $91,286,810. H. STATE AND LOCAL REQUIREMENTS All provisions necessary to conform with state and local laws have been complied with by the City of Dubuque in the implementation of this Plan and its supporting documents. I. DURATION OF APPROVED URBAN RENEWAL PLAN This Plan shall continue in effect until terminated by the City Council; provided, however, that the collection of tax increment revenues from properties located in the District shall be limited to twenty (20) yeazs from the calendaz yeaz following the calendaz yeaz in which the City first certifies to the County Auditor the amount of any loans, advances, indebtedness or bonds which qualify for payment from the division of tax increment revenue provided for in Section 403.19 (tax increment financing) of the Iowa Code. The DEVELOPMENT AND REDEVELOPMENT REQUIREMENTS established, or as amended from time to time by the City of Dubuque Zoning Ordinange, shall remain in effect in perpetuity. J. SEVERABILITY In the event one or more provisions contained in this Plan shall be held for any reason to be invalid, illegal, unauthorized or unenforceable in any respect, such invalidity, illegality, unauthorization or unenforceability shall not affect any other provision of this Plan and this Urban Renewal Plan shall be construed and implemented as if such provision had never been contained herein. K. AMENDMENT OF APPROVED URBAN RENEWAL PLAN This Plan may be amended from time to time to respond to development opportunities. Any such amendment shall conform to the requirements of Chapter 403 of the Iowa Code. Any change effecting any property or contractual right can be effectuated only in accordance with applicable state and local law. L. ATTACHMENTS A Urban Renewal District Map B Public Purpose Activity Area Map C Existing and Proposed Land Use Maps D List of General Obligations 20 EXHIBIT D MEMORANDUM OF DEVELOPMENT AGREEMENT 21 Prepared by: Barry A. Lindahl 300 Main Street Suite 330 Dubuque IA 52001 563 583-4113 Return to: Barry A. Lindahl 300 Main Street Suite 330 Dubuque IA 52001 563 583-4113 MEMORANDUM OF DEVELOPMENT AGREEMENT A Development Agreement by and among the City of Dubuque, Iowa, an Iowa municipal corporation, of Dubuque, Iowa, and was made regarding the following described premises: The Development Agreement is dated for reference purposes the day of 20_, and contains covenants, conditions, and restrictions concerning the sale and use of said premises. This Memorandum of Development Agreement is recorded for the purpose of constructive notice. In the event of any conflict between the provisions of this Memorandum and the Development Agreement itself, executed by the parties, the terms and provisions of the Development Agreement shall prevail. A complete counterpart of the Development Agreement, together with any amendments thereto, is in the possession of the City of Dubuque and may be examined at its offices as above provided. Dated this day of , 20 CITY OF DUBUQUE, IOWA By: Roy D. Buol, Mayor 22 By: Jeanne F. Schneider, City Clerk STATE OF IOWA DUBUQUE COUNTY ss: On this day of , 20 ,before me, a Notary Public in and for the State of Iowa, in and for said county, personally appeared Roy D. Buol and Jeanne F. Schneider, to me personally known, who being by me duly sworn did say that they are the Mayor and City Clerk, respectively of the City of Dubuque, a Municipal Corporation, created and existing under the laws of the State of Iowa, and that the seal affixed to said instrument is the seal of said Municipal Corporation and that said instrument was signed and sealed on behalf of said Municipal corporation by authority and resolution of its City Council and said Mayor and City Clerk acknowledged said instrument to be the free act and deed of said Municipal Corporation by it voluntarily executed. Notary Public, State of Iowa STATE OF IOWA DUBUQUE COUNTY ss: On this day of , 20 ,before me, a Notary Public in and for the State of Iowa, in and for said county, personally appeared to me personally known, who being by me duly sworn did say that they are the and that said instrument was signed on behalf of said company by authority of its members and that they acknowledged the execution of this instrument to be the voluntary act and deed of said company by it voluntarily executed. Notary Public, State of Iowa 23 EXHIBIT E CITY CERTIFICATE 24 (DATE) Dear I am the City Manager of the City of Dubuque, Iowa and have acted in that capacity in connection with the execution and delivery of a certain Development Agreement between (Developer) and the City of Dubuque, Iowa (City) dated for reference purposes the day of , 20 On behalf of the City of Dubuque, I hereby represent and warrant to Developer that: (1) There is no action, suit or proceeding pending, or to the best of City's knowledge, threatened against City which might result in any adverse change in the Property being conveyed or the possession, use or enjoyment thereof by Developer, including, but not limited to, any action in condemnation, eminent domain or public taking. (2) No ordinance or hearing is now or before any local governmental body that either contemplates or authorizes any public improvements or special tax levies, the cost of which may be assessed against the Property. To the best of City's knowledge, there are no plans or efforts by any government agency to widen, modify, or re-align any street or highway providing access to the Property and there are no pending or intended public improvements or special assessments affecting the Property which will result in any charge or lien be levied or assessed against the Property. (3) All leases, contracts, licenses, and permits between City and third parties in connection with the maintenance, use, and operation of the Property have been provided to Developer and City has provided true and correct copies of all such documents to Developer, and there are no defaults thereunder, nor any event that, with either or both the giving of notice or passage of time, would become a default thereunder. (4) City has good and marketable fee simple title interest in the Property. (5) The Property has a permanent right of ingress or egress to a public roadway for the use and enjoyment of the Property. (6) There are no notices, orders, suits, judgments or other proceedings relating to fire, building, zoning, air pollution, health violations or other matters that have not been corrected. City has notified Developer in writing of any past notices, orders, suits, judgments or other proceedings relating to 25 fire, building, zoning, air pollution or health violations as they relate to the Property of which it has actual notice. The Property is in material compliance with all applicable zoning, fire, building, and health statutes, ordinances, and regulations. The Property is currently zoned PUD and Developer's intended use of the Property as a manufacturing facility is a permitted use in such zoning classification. (7) Payment has been made for all labor or materials that have been furnished to the Property or will be made prior to the Closing Date so that no lien for labor performed or materials fumished can be asserted against the Property. (8) The Property will, as of the Closing Date, be free and clear of all liens, security interests, and encumbrances objected to by Developer in accordance with the terms of this Agreement. (9) The execution, delivery and performance of this Agreement and the consummation of the transactions contemplated by this Agreement do not and shall not result in any material breach of any terms or conditions of any mortgage, bond, indenture, agreement, contract, license, or other instrument or obligation to which City is a party or by which either the City or the Property being conveyed are bound, nor shall the execution, delivery and performance of this Agreement violate any statute, regulation, judgment, writ, injunction or decree of any court threatened or entered in a proceeding or action in which City may be bound or to which either City or the Property being conveyed may be subject. (10) City has duly obtained all necessary approvals and consents for its execution, delivery and performance of this Agreement, and has full power and authority to execute, deliver and perform its obligations under this Agreement. City's attorney shall issue a legal opinion to Developer at time of Closing confirming the representation contained herein, in the form attached hereto as Exhibit C. (11) The Property is free and clear of any occupants, and no party has a lease to or other occupancy or contract right in the Property that shall in any way be binding upon the Property, Developer. (12) City represents and warrants that any fees or other compensation which may be owed to a broker engaged directly or indirectly by City in connection with the purchase and sale contemplated in this Agreement are the sole responsibility and obligation of City and that City will indemnify Developer and hold Developer harmless from any and all claims asserted by any broker engaged directly or indirectly by City for any fees or other compensation related to the subject matter of this Agreement. 26 (13) City shall exercise its best efforts to assist with Developer in the development process. (14) City shall exercise its best efforts to resolve any disputes arising during the development process in a reasonable and prompt fashion. (15) With respect to the period during which City has owned or occupied the Property, and to City's knowledge after reasonable investigation with respect to the time before City owned or occupied the Property, no person or entity has caused or permitted materials to be stored, deposited, treated, recycled, or disposed of on, under or at the Property, which materials, if known to be present, would require cleanup, removal or some other remedial action under environmental laws. (16) All city utilities necessary for the development and use of the Property as a manufacturing facility adjoin the Property and Developer shall have the right to connect to said utilities, subject to City's connection fees. (17) The representations and warranties contained in this letter are correct in all respects on and as of the date hereof. Sincerely, Michael C. Van Milligen City Manager MCVM:jh 27 EXHIBIT F OPINION OF COUNSEL TO DEVELOPER 28 -. Mayor and City Councilmembers Cit~ Hall 13 and Central Avenue Dubuque IA 52001 Re: Development Agreement between the City of Dubuque, Iowa and Dear Mayor and City Councilmembers: We have acted as counsel for (Developer) in connection with the execution and delivery of a certain Development Agreement (Development Agreement) between Developer and the City of Dubuque, Iowa ("City") dated for reference purposes the day of , 20_. We have examined the original certified copy, or copies otherwise identified to our satisfaction as being true copies, of the Development Agreement and such other documents and records as we have deemed relevant and necessary as a basis for the opinions set forth herein. Based on the pertinent law, the foregoing examination and such other inquiries as we have deemed appropriate, we are of the opinion that: 1. Developer is a corporation organized and existing under the laws of the State of Iowa and has full power and authority to execute, deliver and perform in full Development Agreement. The Development Agreement has been duly and validly authorized, executed and delivered by Developer and, assuming due authorization, execution and delivery by City, is in full force and effect and is valid and legally binding instrument of Developer enforceable in accordance with its terms, except as the same may be limited by bankruptcy, insolvency, reorganization or other laws relating to or affecting creditors' rights generally. 2. The execution, delivery and performance by Developer of the Development Agreement and the carrying out of the terms thereof, will not result in violation of any provision of, or in default under, the articles of incorporation and bylaws of Developer, any indenture, mortgage, deed of trust, indebtedness, agreement, judgment, decree, order, statute, rule, regulation or restriction to which Developer is a party or by which Developer's property is bound or subject. 3. To our actual knowledge, there are no actions, suits or proceedings pending or threatened against or affecting Developer in any court or before any arbitrator or before or by any governmental body in which there is a reasonable possibility of an adverse decision which could materially adversely affect the business (present or prospective), financial position or results of operations of Developer or which in any manner raises any questions affecting the validity of the Agreement or the Developer's ability to perform Developer's obligations thereunder. 29 ', Very truly yours, 30 y ~~ w ..~- RESOLUTION NO. 357-os A RESOLUTION APPROVING A DEVELOPMENT AGREEMENT FOR THE EXPANSION OF MORRISON BROS. COMPANY AT THE EAST SEVENTH STREET FACILITY. Whereas, it is the determination of this Council that approval of the Development Agreement for the expansion of Morrison Bros. Company's operations in Dubuque according to the terms and conditions set out in the Development Agreement is in the public interest of the City of Dubuque. NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF DUBUQUE, IOWA: Section 1. That the Development Agreement with Morrison Bros. Company is hereby accepted and approved. Section 2. That the Mayor is hereby authorized to execute, on behalf of the City Council of the City of Dubuque, Iowa, the attached Development Agreement with Morrison Bros. Company. Passed, approved and adopted this 6~' day of October, 2008. Attest: eanne F. Schneider, City Clerk U[ Roy D. Buol, Mayor F:\USERS1DHeiarlMorrison Bros120081006 DA Resolution.doc "~ .. CERTIFICATE OF CITY CLERK STATE OF IOWA COUNTY OF DUBUQUE I, Jeanne F. Schneider, do hereby certify that I am the duly appointed, qualified, and acting Clerk of the City of Dubuque, Iowa in the County aforesaid, and as such Clerk I have in my possession or have access to the records of the proceedings of the City Council. I do further state that the hereto attached Resolution No. 357-08 is a correct copy of the original Resolution No. 357-08 approved and adopted by the City Council of the City of Dubuque, Iowa, at a session held by said Council on the 6th day of October, 2008. In Testimony Whereof, I hereunto set my hand and official seal of the City of Dubuque, Iowa. Dated at Dubuque, Iowa on this 7th day of October, 2008. eanne F. Schneider, CMC City Clerk (SEAL)