H.

REQUEST FOR COUNCIL ACTION

THIRD STREET RAMP RETAIL SPACE PURCHASE
AGREEMENT

MEETING DATE: ORIGINATING DEPT:

July 19, 2021 City Administration

AGENDA SECTION: PREPARED BY:

Reports and Recommendations Kelly Geistler

COUNCIL ACTION REQUESTED:

Adopting a Resolution authorizing a purchase agreement with Powers Ventures for $1.4M to
purchase the Third Street Ramp Retail Space.

COUNCIL PRIORITIES:
Economic Vibrancy and Growth Management

POLICY CONSIDERATIONS:
Does the City Council want to sell the Third Street Ramp Condo Space to facilitate the
activation of a restaurant concept in the space?

REPORT NARRATIVE:
The City constructed the 3rd Street Ramp Retail Space in conjunction with the ramp and the
Bio Business Center. It is currently a condominium space within the overall space and
structurally integral to the ramp. We had previously solicited requests for proposals to lease
the space and received no interest in leasing the space. Subsequently, we have had
conversations with Power Ventures representing a partnership interested in acquiring the
condominium space for a contemporary restaurant concept. We believe that the concept would
be additive and further enhance the vibrancy of Downtown.

Below is a summary of key terms of the purchase agreement:

1. Purchase Price of $1.4M for 7,449 Square Feet. Staff estimates that a conventional sale would
be approximately $2-2.5M. However, there are some mitigating impacts to valuation including
the fact that the property is integral to the ramp, it is a condo space, we need to contemplate
future demolition, we are requesting use restrictions and are interested in encouraging the
activation of the space and returning it to a tax generating use that is current on payment. A
recent RFP for lease of the space resulted in virtually no viable interest, and discussion with
one inquiring party centered on city incentive (payment) for significant tenant improvements.
2. A Right of First Refusal and Right of First Offer are integrated into draft purchase agreement
providing the opportunity to repurchase in the event that the building is sold.
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3. In the event of ramp demolition could repurchase for the sale price plus 1% compounded
annually. In the event we advance redevelopment, the Buyer has the option of repurchase
mentioned in the last sentence or can receive 7% of net proceeds.
4. As mentioned above, use restrictions are incorporated into the purchase agreement. Examples
include tobacco shops, adult entertainment, etc., and are more fully articulated in Exhibit B in
the agreement.
5. There is no broker commission to be paid with this transaction as it was not listed.
6. The buyer agrees to assume the existing lease and all obligations and indemnifies
the city from any claims.

COMMUNITY ENGAGEMENT:
An RFP was issued for leasing the space that yielded no responses.

ALTERNATIVE ACTION(S):
Do not sell and relist the property for lease. This would likely involve broker’s commissions,
upfront investment in tenant improvement, and the need to provide ongoing management of
the space. List the property for sell. This may yield different net proceeds and it is uncertain
that the current Buyer would participate in that process.

PRIOR CITY COUNCIL AND COMMISSION ACTIONS:

Various actions related to the construction of the space and previous lease approvals. Nothing specific
to this purchase request.

FISCAL AND RESOURCE IMPACT:

The net proceeds would be allocated to the existing debt associated with the Bio Business Center.

ATTACHMENTS:
Resolution - Purchase Agreement for City owned Property DRAFT
Purchase Agreement Third Street Ramp Retail Space

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RESOLUTION

Approving a Purchase Agreement for the Sale of City-Owned Property Located at

255 1st Ave SW.

WHEREAS, the City of Rochester (the “City”) is the owner of property located at 255 1st
Avenue SW, Rochester, MN, legally described as follows:

Unit 1, COMMON INTEREST COMMUNITY NUMBER 340, A

CONDOMINIUM, 255 FIRST AVENUE SW CONDOMINIUM, Rochester,
Minnesota (the “Property”); and

WHEREAS, the City received an offer from Powers Ventures, Inc., a Minnesota
corporation (the “Buyer”) to purchase the Property for $1,400,000; and

WHEREAS, the City and the Buyer desire to enter into a purchase agreement, pursuant
to which the City will convey the Property to the Buyer; and

NOW, THERFORE, BE IT RESOLVED by the Common Council (the “Council”) of the

City of Rochester, Minnesota, that the Council hereby approves the Purchase
Agreement in substantially the form presented to the Council, subject to modifications
and addenda that do not alter the substance of the transaction and that are approved by
the Mayor and City Administrator; and

BE IT FURTHER RESOLVED that City officials, staff, and consultants are authorized to
take all actions necessary to perform the City’s obligations under the Purchase
Agreement as a whole, including without limitation, execution of any documents to
which the City is a party referenced in or attached to the Purchase Agreement, and any
other documents necessary for the Property to be conveyed by City to the Buyer, all as
described in the Purchase Agreement.

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PASSED AND ADOPTED BY THE COMMON COUNCIL OF THE CITY OF

ROCHESTER, MINNESOTA, THIS __________ DAY OF _______________, 2021.

___________________________________
PRESIDENT OF SAID COMMON COUNCIL

ATTEST: __________________________
CITY CLERK

APPROVED THIS _____ DAY OF ______________________, 2021.

___________________________________
MAYOR OF SAID CITY

(Seal of the City of

Rochester, Minnesota)

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PURCHASE AGREEMENT

THIS PURCHASE AGREEMENT (this “Agreement”) is made as of the date of the latter of the parties
to execute and deliver this Agreement (the “Effective Date”), between the City of Rochester, a Minnesota
municipal corporation (“Seller”), and Powers Ventures, Inc., a Minnesota corporation, or its assigns
(“Buyer”).

RECITALS

WHEREAS, Seller is the fee owner of a condominium unit (the “Unit”) located at 255 1st Avenue
SW, Rochester, MN, and legally described as follows:

Unit 1, COMMON INTEREST COMMUNITY NUMBER 340,

A CONDOMINIUM, 255 FIRST AVENUE SW CONDOMINIUM, Rochester, Minnesota,

WHEREAS, Buyer desires to purchase the Unit together with (1) all personal property and
improvements constructed or located in the Unit, including all fixtures and equipment located therein, and
(ii) all easements and rights benefiting or appurtenant to the Unit, from Seller, and Seller is willing to sell
the Property (hereinafter defined) to Buyer, upon the terms and conditions set forth herein;

NOW THEREFORE, in consideration of the mutual covenants and promises herein contained the receipt
and sufficiency of which is hereby acknowledged, the parties hereto agree as follows:

I. SALE OF PROPERTY

Seller agrees to sell to Buyer, and Buyer agrees to buy from Seller, the following property (collectively, the
“Property”):

A. Unit. The Unit as described above in the Recitals. It is presumed by Seller and Buyer that
the area currently being leased by “Dooley’s” encompasses the entire Unit. Should it be determined that
the space being leased by “Dooley’s” only encompasses a portion of the Unit, the Seller and Buyer agree
that they will amend the description of the term “Unit” in this Agreement so that it only describes the portion
of the Unit that is currently being leased by “Dooley’s.”

B. Personal Property. All of the personal property situated in or about the Unit owned by
Seller (the “Personal Property”).

C. Lease. Seller’s right and interest in the Lease of the Unit to the prior occupant that operated
the Unit as “Dooley’s” (the “Lease”).

D. Warranties. Seller’s interests in all warranties and guaranties given to, assigned to, or
benefiting Seller or the Property or the Personal Property regarding the acquisition, construction, design,
use, operation, management or maintenance of the Property and the Personal Property (the “Warranties”).

E. Plans. All originals and copies of the as-built blueprints, plans and specifications regarding
the Property and the Personal Property, if any, (the “Plans”).

F. Records. All records of Seller regarding the Property, including all records regarding the
Lease, management and leasing, real estate taxes and assessments, insurance, tenants, maintenance, repairs,
capital improvements and services, but excluding tax returns and such other records as are normally viewed

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as confidential, provided that such other records are not necessary, in Buyer’s reasonable judgment, to the
continued operation, management and leasing of the Property and the Personal Property (the “Records”).

II. CONSIDERATION

In consideration of Seller conveying fee title to the Property to Buyer at Closing, Buyer agrees to (i) pay
Seller the sum of $1,400,000 (the “Purchase Price”), and (ii) indemnify Seller from all obligations under
the Lease. The Purchase Price shall be payable as follows:

A. One Hundred Thousand and no/100 dollars ($100,000) as earnest money (the “Earnest
Money”), which Earnest Money shall be paid to Seller within five (5) business days of the Effective Date.
Such Earnest Money shall be fully refunded to Buyer if Buyer elects to terminate this Agreement in
accordance with a right to terminate reserved to Buyer herein.

B. The balance of the Purchase Price in cash or by wire transfer on the Closing Date.

III. CONTINGENCIES

The obligations of Buyer under this Agreement are contingent upon each of the following:

A. Representations and Warranties. The representations and warranties of Seller contained

in this Agreement must be true now and on the Closing Date as if made on the Closing Date and Seller shall
have delivered to Buyer at closing a certificate dated the Closing Date, signed by an authorized
representative of Seller, certifying that such representations and warranties are true as of the Closing Date
(the “Bring-down Certificate”).

B. Title. Title shall have been found acceptable, or been made acceptable, in accordance with
the requirements below. In the event Buyer disputes title, Seller will have the option of withdrawing from
this Agreement.

C. Performance of Seller’s Obligations. Seller shall have performed all of the obligations
required to be performed by Seller under this Agreement, as and when required by this Agreement.
Included within the obligations of Seller under this Agreement shall be the following:

1. Seller shall allow Buyer, and Buyer’s agents, access to the Property without charge
and at all reasonable times for the purpose of Buyer’s investigation and testing the same. Buyer
shall pay all costs and expenses of such investigation and testing and shall hold Seller and the
Property harmless from all costs and liabilities relating to the Buyer’s activities. Buyer shall further
repair and restore any damage to the Property caused by or occurring during Buyer’s testing and
return the Property and/or Personal Property to substantially the same condition as existed prior to
such entry. Buyer shall provide Seller with copies of any reports or test results that are obtained
by Buyer in its investigation of the Property.

2. Within ten (10) days of the Effective Date, Seller shall deliver to Buyer true and
correct copies of the Lease, Warranties, Plans, and Records (collectively, the “Documents”) for
Buyer’s review and analysis.

3. Within ten (10) days of the Effective Date, Seller shall deliver to Buyer copies of:
all governmental notices regarding assessments, corrective actions, or proposed actions affecting
the Property, if any; existing easements appurtenant to or encumbering the Property, restrictions,
covenants and conditions, or other encumbrances affecting the Property; the current title policy or

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other title evidence in Seller’s possession or readily available to Seller; copies of all test and
inspection reports, including environmental reports, relating to the Property in Seller’s possession
or readily available to Seller; and a copy of any survey of the Property in Seller’s possession or
readily available to Seller.

D. Testing. Buyer shall have determined, on or before the Contingency Date, that it is
satisfied with the results of any matters disclosed by its inspection of the Property, all such inspections to
be obtained at Buyer’s sole cost and expense.

E. Document Review. Buyer shall have determined, on or before the Contingency Date, that
it is satisfied with its review and analysis of the Documents.

F. Outdoor Dining Area. At no additional cost to Buyer, at Closing, Seller shall provide
Buyer (or Buyer’s tenant) with a permit (the “Permit”) for Buyer’s (or Buyer’s tenant’s) exclusive use of
the outdoor dining area depicted in the yellow on the attached Exhibit A (the “Outdoor Area”). The Permit
shall not be cancellable except for cause (i.e., violation of applicable laws) or in conjunction with the City’s
redevelopment of the Outdoor Area by the City (with at least 60 days’ prior written notice). “For cause”
shall also include necessary closure for street or sidewalk reconstruction.

G. Prohibited Uses. At Closing, the parties shall enter into an agreement in recordable form
that shall prohibit the Unit from being used for any of the purposes set forth on identified on Exhibit B.

H. Right of First Refusal; Right of First Offer. At Closing the parties shall enter into an
agreement in recordable form that shall provide Seller with a right of first offer, as described in this Section
(the “ROFO Agreement”).

The ROFO Agreement shall provide that if the Buyer desires to offer the Property for sale to a bona fide
third party or receives an offer to sell the Property which Buyer is willing to accept, prior to entering into a
binding agreement for a sale or offering the Property for sale, Buyer shall give Seller written notice (each,
a “Buyer’s Offer Notice”) describing the material terms (including the amount of the proposed purchase
price) upon which Buyer would be willing to consummate such transaction. Upon receipt of a Buyer’s
Offer Notice, Seller shall exercise, if at all, its first offer right/right of first refusal by giving Buyer, within
forty-five (45) days after delivery of the Buyer’s Offer Notice, written notice of its intention to consummate
the transaction on the terms set forth in the Buyer’s Offer Notice (“Seller’s Acceptance Notice”).

If Seller so exercises its first offer right/right of first refusal, closing will occur on a mutually agreed upon
date, which closing date will be no later than one hundred and twenty (120) days after the date of the Seller’s
Acceptance Notice.

In the event that Seller does not give the Seller’s Acceptance Notice within said forty-five (45) day period
described above, Seller shall be deemed to have declined to purchase the Property and Buyer shall be
relieved of Buyer’s obligation to sell the Property to Seller for a period of one (1) year following the
expiration of said 45-day period, except for the following “revival” events: (1) should Buyer desire to sell
the Property either (i) at a price that is more than five percent (5%) less than the price contained in the most
recent Buyer’s Offer Notice, or (ii) on such terms that are materially more favorable to a third-party than
the terms contained in the most recent Buyer’s Offer Notice, or (2) such sale is not closed within said one
(1) year period, then, in any such instance, Buyer shall first give Seller a new Buyer’s Offer Notice, and all
the provisions and procedures of this Section shall apply to such Buyer’s Offer Notice.

The Seller’s First Offer Right shall not apply to (i) any transaction between Buyer and a party that is an
affiliate of Buyer, (ii) the granting by Buyer of a mortgage, or (iii) any foreclosure by (or conveyance in

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lieu of foreclosure to) a mortgagee (collectively defined as an “Exempt Transaction”), but Seller’s first
offer right/right of first refusal will continue to apply to any transaction following an Exempt Transaction.

I. Closure for Ramp Repairs; Repurchase Option. At Closing the parties shall enter into
an agreement (the “Ramp Agreement”) in recordable form that shall provide Seller with (i) the right,
beginning 15 years after Closing (and repeating every 15 years thereafter,) to order closure of the business
at the Property for up to one (1) year without having to compensate Buyer if closure is needed for
renovations to the ramp extending above the Unit (the “Ramp”), and (ii) upon Seller’s determination that
the Ramp and the Unit have reached the end of their useful life, the right of Seller to repurchase the Unit
from Buyer (the “Repurchase Right”) at a price equal to the Appreciated Value (hereinafter defined). The
Repurchase Right is solely for the benefit of Seller and may not be assigned by Seller. Notwithstanding
the foregoing, if Seller is exercising the Repurchase Right in connection with a sale of the Ramp and the
Unit and/or the ground upon which such structures exist (in any such event, the “Site”), or as part of plan
of sale of said properties, in lieu of the Appreciated Value, Buyer may elect to receive its Pro Rata Share
of Net Proceeds as part of said sale.

Seller shall have sole discretion to determine when the Unit and the Ramp have reached the end of their
useful life. In the event Seller makes such a determination, Seller shall notify Buyer of the same, including
a timeframe for any existing business closure and demolition.

The “Appreciated Value” shall be an amount equal to the Purchase Price plus interest thereon compounding
annually from the Closing Date at a rate of 1.0% per annum.

The “Pro Rata Share of Net Proceeds” shall be an amount equal to 7% of the all cash consideration and the
fair market value of other consideration (at the time such consideration is received) received by Seller in
connection with a sale of the Site, and shall also include the value of any long-term liabilities (including
any and all debt obligations) of Seller, indirectly or directly assumed by the buyer or successor entity, as
applicable.

J. Update of Condominium Declaration. Prior to Closing, Buyer and Seller shall review
and update the condominium declaration that is recorded against the Property to the extent that it needs to
be updated in order to reflect the terms of the sale of the Property as set forth in this Agreement. The
amended and restated condominium declaration shall be recorded at Closing. Buyer and Seller shall split
the recording costs.

The “Contingency Date” shall be thirty (30) days following the Effective Date. If any such contingency
has not been satisfied on or before the stated date, then this Agreement may be terminated, at Buyer’s
option, by written notice from Buyer to Seller. Such notice of termination may be given at any time on or
before the Closing Date. Upon such termination, the Earnest Money shall be released to Buyer and upon
such return neither party will have any further rights or obligations regarding this Agreement or the
Property. The Earnest Money will become nonrefundable (except for a Seller default) in the event Buyer
does not terminate this Agreement by the Contingency Date. All of the contingencies set forth in this
Agreement are specifically stated and agreed to be for the sole and exclusive benefit of Buyer, and Buyer
shall have the right to unilaterally waive any contingency by written notice to Seller.

IV. CLOSING

The closing of the purchase and sale contemplated by this Agreement (the “Closing”) shall occur on that
date which is thirty (30) days after the earlier of the Contingency Date or the date when Buyer shall give
notice to Seller that the contingencies which are to have been satisfied on the Contingency Date have been

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waived or satisfied (the “Closing Date”). The Closing shall take place at such place as may be agreed to.
Seller agrees to deliver possession of the Property to Buyer on the Closing Date.

A. Seller’s Closing Documents. On the Closing Date, Seller shall execute and/or deliver to
Buyer the following (collectively, “Seller’s Closing Documents”):

1. Deed. A Quit Claim Deed, in form reasonably satisfactory to Buyer, conveying

the Property to Buyer, free and clear of all encumbrances, except the Permitted Encumbrances
hereafter defined.

2. Bill of Sale. A Bill of Sale, in form reasonably satisfactory to Buyer, conveying

the Personal Property to Buyer, free and clear of all encumbrances.

3. Assignment of Lease. An Assignment of Lease, in form reasonably satisfactory to

Buyer and Seller, pursuant to which Buyer assumes all obligations of Seller under the Lease and
indemnifies Seller from any claims from the tenant (or any guarantor) thereunder.

4. Assignment of Warranties. An Assignment of Warranties, in form reasonably

satisfactory to Buyer, conveying the Warranties to Buyer, free and clear of all encumbrances,
together with the consent of all Parties having a right to consent to such Assignment.

5. CIC Resale Certificate. A Resale Disclosure Certificate for the Unit meeting the
requirements for Minn. Stat. §515B.4-107.

6. Title Policy. The Title Policy, or suitably marked up Title Commitment for Title
Insurance initialed by the Title Company, in the form required by this Agreement.

7. Bring-down Certificate. The Bring-down Certificate.

8. Seller’s Affidavit. An Affidavit of Title by Seller indicating that on the Closing

Date there are no outstanding, unsatisfied judgments, tax liens or bankruptcies against or involving
Seller or the Property; that there has been no skill, labor or material furnished to the Property for
which payment has not been made or for which mechanics’ liens could be filed; and that there are
no other unrecorded interests in the Property, together with whatever standard owner’s affidavit
and/or indemnity (ALTA Form) which may be required by the Title Company to issue an Owner’s
Policy of Title Insurance with the standard exceptions waived.

9. Original Documents. Original copies of the Documents.

10. FIRPTA Affidavit. A non-foreign affidavit, properly executed and in recordable

form, containing such information as is required by IRC Section 1445(b)(2) and its regulations.

11. IRS Reporting Form. The appropriate Federal Income Tax reporting form if any
is required.

12. Permit. The original Permit.

13. ROFO Agreement. An original counterpart of the ROFO Agreement in recordable

form.

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14. Ramp Agreement. An original counterpart of the Ramp Agreement in recordable

form.

15. Condominium Declaration. An amended and restated condominium declaration

in recordable form.

16. Other Documents. All other documents reasonably determined by Buyer or the
Title Company (hereinafter defined) to be necessary to transfer the Property to Buyer free and clear
of all encumbrances.

B. Buyer’s Closing Documents. On the Closing Date, Buyer will execute and/or deliver to
Seller the following (collectively, “Buyer’s Closing Documents”):

1. An original counterpart of the ROFO Agreement in recordable form.

2. An original counterpart of the Ramp Agreement in recordable form.

3. Such affidavits or documents as may be reasonably required by the Title Company

in order to record the Seller’s Closing Documents and issue the Title Insurance Policy required by
this Agreement.

V. PRORATIONS

Seller and Buyer agree to the following prorations and allocation of costs regarding this Agreement:

A. Title Insurance and Closing Fee. Seller will pay all costs of the Title Evidence
(hereinafter defined) and the fees charged by the Title Company for any escrow required regarding Buyer’s
Objections. Buyer will pay all premiums for any Owner’s or mortgagee’s Title Insurance Policy required
by Buyer and the cost of any endorsements. Seller and Buyer will each pay one-half of any reasonable and
customary closing fee or charge imposed by any closing agent designated by the Title Company.

B. Deed Tax. Seller and Buyer shall split in equal shares all state deed tax regarding the
Warranty Deed to be delivered by Seller under this Agreement. Buyer shall pay all Mortgage Registry Tax
regarding the recording of the Purchase Mortgage, if any.

C. Sales Tax. Seller and Buyer shall split in equal shares all sales tax due regarding the
transaction contemplated by this Agreement.

D. Real Estate Taxes and Special Assessments. Seller will pay, on or before the Closing
Date, all special assessments levied, pending, or constituting a lien against the Property as of the Closing
Date, including, without limitation, any installments of special assessments including interest payable with
the general real estate taxes payable in the year of Closing and all prior years. General real estate taxes
payable in the year prior to Closing and all prior years will be paid by Seller. General real estate payable
in the year of Closing shall be prorated by Seller and Buyer as of the Closing Date based upon a calendar
fiscal year. If the amount of such general real estate taxes cannot be determined on the Closing Date, Seller
will deposit with the Title Company an amount equal to 110 percent of the most current estimate of such
taxes and special assessment installments, assuming for estimating purposes that the Property will be fully
assessed. Such deposit will be held in escrow and all interest earnings on such deposit will be paid to Seller.
The Title Company will retain such deposit to pay Seller’s share of the actual general real estate taxes
payable in the year of Closing, paying any excess over to Seller. Seller will pay any deficiency when such
general real estate taxes are known.

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E. Recording Costs. Seller will pay the cost of recording all documents necessary to place
record title in the condition warranted and requested by Seller in this Agreement. Buyer will pay the cost
of recording all other documents. Buyer and Seller shall split the cost of recording the amended and restated
condominium declaration.

F. Other Costs. All other operating costs of the Property will be allocated between Seller
and Buyer as of the Closing Date, so that Seller pays that part of such other operating costs payable before
the Closing Date, and Buyer pays that part of such operating costs payable from and after the Closing Date.

G. Attorney’s Fees. Each of the parties will pay its own attorney’s fees.

VI. TITLE EXAMINATION

A. Seller’s Title Evidence. Seller shall, within fifteen (15) days after the date of this
Agreement, furnish the following (collectively, “Title Evidence”) to Buyer:

1. Title Insurance Commitment. A commitment (“Title Commitment”) for an

Owner’s Title Insurance Policy insuring title to the Unit, deleting standard exceptions and including
affirmative insurance regarding zoning, contiguity, appurtenant easements, and such other matters
as may be identified by Buyer, in the amount of the Land Value, issued by Title Services, Inc., as
agent for Old Republic Title Insurance Company (the “Title Company”). The Title Commitment
will commit the Title Company to insure title to the Unit subject only to the Permitted
Encumbrances (hereinafter defined). If the Property is abstract property, Seller shall also deliver
to the Title Company an Abstract of Title to the Unit certified to a current date to include all
appropriate judgment and bankruptcy searches.

2. UCC Searches. A report of UCC Searches made of the Uniform Commercial Code
records of the Secretary of State of Minnesota, made by the Secretary of State, or by a search firm
acceptable to Buyer, showing no UCC filings regarding any of the Personal Property.

B. Buyer’s Objections. Within fifteen (15) days after receiving the last of the Title Evidence,
Buyer will make written objections (“Objections”) to the form and/or contents of the Title Evidence.
Buyer’s failure to make Objections within such time period will constitute waiver of Objections. Any
matter shown on such Title Evidence and not objected to by Buyer shall be a “Permitted Encumbrance”
hereunder. Seller will have thirty (30) days after receipt of the Objections to either withdraw from the
Agreement or cure the Objections, during which period the Closing will be postponed as necessary. If not
sooner satisfied, Seller shall cause the Property to be released from any mortgages or other liens against the
Property at Closing. If the Objections are not cured within such 30-day period, Buyer will have the option
to do any of the following:

1. Terminate this Agreement and receive a refund of the Earnest Money; or

2. Waive the objections and proceed to close.

C. Title Policy. Seller will furnish to Buyer at closing the title policy (the “Title Policy”)
issued by the Title Company pursuant to the Title Commitment, or a suitably marked up Title Commitment
initialed by the Title Company undertaking to issue a Title Policy in the form required by the Title
Commitment as approved by Buyer.

VII. OPERATION PRIOR TO CLOSING; EARLY ACCESS

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During the period from the date of Seller's acceptance of this Agreement to the Closing Date (the
“Executory Period”), Seller shall operate and maintain the Property in the ordinary course of business in
accordance with prudent, reasonable business standards, including the maintenance of adequate liability
insurance and insurance against loss by fire, windstorm, and other hazards, casualties, and contingencies,
including vandalism and malicious mischief. However, Seller shall execute no contracts, leases or other
agreements regarding the Property during the Executory Period that are not terminable on or before the
Closing Date, without the written consent of Buyer, which consent may be withheld by Buyer at its sole
discretion. In addition, Seller and Buyer shall cooperate in providing Buyer early access to the Property
for the period from and after the Effective Date and prior to the Closing Date, to permit Buyer to (i)
familiarize itself with, and prepare for full occupancy of, the Property, and (ii) perform Pre-Closing Work.
“Pre-Closing Work” shall be such activities and work at the Property that are reasonably consented to by
Seller prior to commencing the same.

VIII. REPRESENTATIONS AND WARRANTIES BY SELLER

Seller represents and warrants to Buyer as follows:

A. Minnesota Municipal Corporation; Authority. Seller is duly organized and is in good

standing under the laws of the State of Minnesota; Seller is duly qualified to transact business in the State
of Minnesota; Seller has the requisite power and authority to enter into and perform this Agreement and
those Seller’s Closing Documents signed by it; such documents have been duly authorized by all necessary
action on the part of Seller and have been duly executed and delivered; such execution, delivery and
performance by Seller of such documents does not conflict with or result in a violation of Seller’s
organizational documents, or any judgment, order, or decree of any court or arbiter to which Seller is a
party; such documents are valid and binding obligations of Seller, and are enforceable in accordance with
their terms.

B. Title to Property. Seller owns the Property, free and clear of all encumbrances (other than
the Lease).

C. Title to Personal Property. Seller owns the Personal Property, free and clear of all
encumbrances.

D. Leases. Except for the Lease, there are no other leases or possessory rights of others
regarding the Property.

E. Utilities. Seller has received no notice of actual or threatened reduction or curtailment of

any utility service now supplied to the Property.

F. Assessments. Seller has received no notice of actual or threatened special assessments or

reassessments of the Property.

G. Environmental Laws. To the best knowledge of Seller, no toxic or hazardous substances

or wastes, pollutants or contaminants (including without limitation, asbestos, urea formaldehyde, the group
of organic compounds known as polychlorinated biphenyls, petroleum products including gasoline, fuel
oil, crude oil and various constituents of such products, and any hazardous substance as defined in the
Comprehensive Environmental Response, Compensation and Liability Act of 1980 (“CERCLA”),
42 U.S.C. § 9601-9657, as amended) have been generated, treated, stored, released or disposed of, or
otherwise placed, deposited in or located on the Property during the time that Seller has owned the Property,
nor has any activity been undertaken on the Property by Seller that would cause or contribute to (i) the

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Property to become a treatment, storage or disposal facility with the meaning of, or otherwise bring the
Property within the ambit of, the Resource Conservation and Recovery Act of 1976 (“RCRA”), 42 U.S.C.
§ 6901 et seq., or any similar state law or local ordinance, (ii) a release or threatened release of toxic or
hazardous wastes or substances, pollutants or contaminants, from the Property within the meaning of, or
otherwise bring the Property within the ambit of, CERCLA, or any similar state law or local ordinance, or
(iii) the discharge of pollutants or effluents into any water source or system, the dredging or filling of any
waters or the discharge into the air of any emissions, that would require a permit under the Federal Water
Pollution Control Act, 33 U.S.C. § 1251 et seq., or the Clean Air Act, 42 U.S.C. § 7401 et seq., or any
similar state law of local ordinance. To the best knowledge of Seller, there are no substances or conditions
in or on the Property that may support a claim or cause of action under RCRA, CERCLA or any other
federal, state, or local environmental statutes, regulations, ordinances, or other environmental regulatory
requirements, including without limitation, the Minnesota Environmental Response and Liability Act,
Minn. Stat. 115B (“MERLA”) and the Minnesota Petroleum Tank Release Cleanup Act, Minn. Stat. 115C.
To the best knowledge of Seller, no above ground or underground tanks, are located in or about the Property,
or have been located under, in or about the Property and have subsequently been removed or filled. To the
extent storage tanks exist on or under the Property, such storage tanks have been duly registered with all
appropriate regulatory and governmental bodies and others are in compliance with applicable federal, state
and local statutes, regulations, ordinances and other regulatory requirements.

H. Rights of Others to Purchase Property. Seller has not entered into any other contracts
for the sale of the Property, nor are there any rights of first refusal or options to purchase the Property or
any other rights of others that might prevent the consummation of this Agreement.

I. Seller’s Defaults. To the best knowledge of Seller, Seller is not in default concerning any
of its obligations or liabilities regarding the Property.

J. Use of Property. To the best knowledge of Seller, the Property is usable for its current
uses without violating any federal, state, local or other governmental building, zoning, health, safety,
platting, subdivision or other law, ordinance or regulation, or any applicable private restriction, and such
use is a legal conforming use.

K. Proceedings. There is no action, litigation, investigation, condemnation or proceeding of

any kind pending or to the best knowledge of Seller threatened against Seller with respect to the Property
or any portion of the Property.

L. Agents and Employees. No management agents or other personnel employed in

connection with the operation of the Property have the right to continue such employment after the Closing
Date. There are no claims for brokerage commission or other payments with respect to the existing
Property, including leases which will survive and remain unpaid after the Closing Date.

Seller will indemnify Buyer, its successors and assigns, against, and will hold Buyer, its successors
and assigns, harmless from, any expenses or damages, including reasonable attorney’s fees, that Buyer
incurs because of the breach of any of the representations and warranties referenced in this section, whether
such breach is discovered before or after closing. Each of the representations and warranties herein
contained shall survive the Closing for a period of one year. After one year, said representations and
warranties shall terminate and Seller’s obligation to indemnify Buyer and its successors and assigns with
respect to said warranties shall terminate. Wherever herein a representation is made “to the best knowledge
of Seller”, such representation is limited to the actual knowledge of Seller. Except as herein expressly
stated, Buyer is purchasing the Property based upon its own investigation and inquiry and is not relying on
any representation of Seller or other person and is agreeing to accept and purchase the Property “as is,
where is” subject to the conditions of examination herein set forth and the express warranties herein

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contained. Consummation of this Agreement by Buyer with knowledge of any such breach by Seller will
not constitute a waiver or release by Buyer of any claims due to such breach.

IX. DAMAGE

If, prior to the Closing Date, all or any part of the Property is substantially damaged by fire casualty, the
elements or any other cause, Seller shall immediately give notice to Buyer of such fact and at Buyer’s option
(to be exercised within thirty days after Seller’s notice), this Agreement shall terminate, in which event
neither party will have any further obligations under this Agreement and the Earnest Money shall be
refunded to Buyer. If Buyer fails to elect to terminate despite such damage, or if the Property is damaged
but not substantially, Seller shall promptly commence to repair such damage or destruction and return the
property to its condition prior to such damage. If such damage shall be completely repaired prior to the
Closing Date, then there shall be no reduction in the Land Value and Seller shall retain the proceeds of all
insurance related to such damage. If such damage shall not be completely repaired prior to the Closing
Date but Seller is diligently proceeding to repair, then Seller shall complete the repair after the Closing Date
and shall be entitled to receive the proceeds of all insurance related to such damage after repair is completed;
provided, however, Buyer shall have the right to delay the Closing Date until repair is completed. If Seller
shall fail to diligently proceed to repair such damage, then Buyer shall have the right to require a closing to
occur and the Land Value shall be reduced by the cost of such repair, or at Buyer’s option, the Seller shall
assign to Buyer all right to receive the proceeds of all insurance related to such damage and the Property
shall remain the same. For purposes of this Article, the words “substantially damaged” mean damage that
would cost $25,000.00 or more to repair.

X. MUTUAL INDEMNIFICATION

Seller and Buyer agree to indemnify each other against, and hold each other harmless from, all liabilities
(including reasonable attorney’s fees in defending against claims) arising out of the ownership, operation,
or maintenance of the Property for their respective periods of ownership. Such rights to indemnification
will not arise to the extent that (a) the party seeking indemnification actually receives insurance proceeds
or other cash payments directly attributable to the liability in question (net of the cost of collection,
including reasonable attorney’s fees) or (b) the claim for indemnification arises out of the act or neglect or
the party seeking indemnification. If and to the extent that the indemnified party has insurance coverage,
or the right to make claim against any third party for any amount to be indemnified against as set forth
above, the indemnified party will, upon full performance by the indemnifying party of its indemnification
obligations, assign such rights to the indemnifying party or, if such rights are not assignable, the indemnified
party will diligently pursue such rights by appropriate legal action or proceeding and assign the recovery
and/or right of recovery to the indemnifying party to the extent of the indemnification payment made by
such party.

XI. SURVIVAL

All of the terms of this Agreement will survive and be enforceable after the Closing.

XII. NOTICES

Any notice required or permitted to be given by any party upon the other is given in accordance with this
Agreement if it is directed to Seller by delivering it personally to an officer of Seller, or if it is directed to
Buyer, by delivering it personally to an officer of Buyer, or if mailed in a sealed wrapper by United States
registered or certified mail, return receipt requested, postage prepaid, or if deposited cost paid with a
nationally recognized, reputable overnight courier, or if emailed, properly addressed as follows:

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If to Buyer: Powers Ventures, Inc.

Attn: Nick Powers
1203 2nd Street SW
Rochester, MN 55902
nickp@powersventuresmn.com

David M. Pederson, Esq.

With copy to: Dunlap & Seeger, P.A.
30 Third Street SE, Suite 400
Rochester, MN 55904
dmp@dunlaplaw.com

If to Seller: City of Rochester

Rochester City Hall
Alison Zelms, City Administrator
201 4th Street SE
Rochester, MN 55904-3708
azelms@rochestermn.gov

Notices shall be deemed effective on the earlier of the date of receipt or the date of deposit as aforesaid;
provided, however, if notice is given by deposit, the time for response to any notice by the other party shall
commence to run one business day after any such deposit. If notice is given by email, it shall be deemed
given on the date sent by e-mail of a PDF document if sent during normal business hours of the recipient,
and on the next business day if sent after normal business hours of the recipient. Any party may change its
address for the service of notice by giving written notice of such change to the other party, in any manner
above specified, ten (10) days prior to the effective date of such change.

XIII. ENTIRE AGREEMENT, MODIFICATION

This written Agreement constitutes the complete agreement between the parties and supersedes any prior
oral or written agreements between the parties regarding the Property. There are no verbal agreements that
change this Agreement and no waiver of any of its terms will be effective unless in a writing executed by
the parties.

XIV. BINDING EFFECT

This Agreement binds and benefits the parties and their successors and assigns.

XV. GOVERNING LAW

This Agreement has been made under the laws of the State of Minnesota, and such laws will control its
interpretation.

XVI. REMEDIES

If Buyer defaults under this Agreement, Seller shall have the right to terminate this Agreement by giving
written notice to Buyer. If Buyer fails to cure such default within fifteen (15) days of the date of such
notice, this Agreement will terminate, and upon such termination Seller will retain the Earnest Money as
liquidated damages, time being of the essence of this Agreement. The termination of this Agreement and
retention of the Earnest Money will be the sole remedy available to Seller for such default by Buyer, and

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Buyer will not be liable for damages or specific performance. If Seller defaults under this Agreement, this
provision does not preclude Buyer from seeking and recovering from Seller damages for nonperformance
or specific performance of this Agreement.

XVII. COUNTERPARTS; EXPIRATION

This Agreement may be executed in one or more counterparts, each of which shall be deemed an original
but all of which shall constitute one and the same agreement and shall become effective when counterparts
have been signed by each party and delivered to the other party. This Agreement, once executed by a party,
may be delivered to the other party hereto by electronic transmission of a copy of this Agreement bearing
the signature of the party so delivering this Agreement.

XVIII. OFFER EXPIRATION

Buyer has presented its offer to purchase the Property by presenting its counterpart of this Agreement on
the date specified below. Buyer’s offer to purchase expires at 5:00 p.m. CST on July 20, 2021, unless
accepted prior to such time by the Seller executes and delivers its counterpart of this Agreement to Buyer.

XIX ASSIGNMENT

Neither party shall assign its rights under this Agreement without the written consent of the other party.
Buyer may assign its interest in this Agreement without Seller’s consent to a subsidiary or affiliate
established by Buyer that Buyer or Joe Powers hold a controlling interest in upon written notice to Seller
and the assignee shall become the Buyer upon such notice.

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IN WITNESS WHEREOF, Seller and Buyer have executed this Purchase Agreement as of the
Effective Date.

SELLER:

CITY OF ROCHESTER,
a Minnesota municipal corporation

By:
Its: Mayor

By:
Its: City Clerk

Execution Date: _____________, 2021

BUYER:

POWERS VENTURES, INC.,

a Minnesota corporation

By:
Nick Powers, President

Execution Date: _____________, 2021

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EXHIBIT A

OUTDOOR AREA

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EXHIBIT B

PROHIBITED USES

No portion of the Unit shall be used in whole or in part for any of the following purposes:

(A) Any “second hand” store, “surplus” store, or pawn shop.

(B) Any establishment selling or exhibiting “obscene” material.

(C) Any establishment selling or exhibiting drug-related paraphernalia, or which exhibits either live or
by other means to any degree, nude or partially clothed dancers or wait staff.

(D) Any establishment related to the sale or use of any tobacco or vaping products.

(E) Any establishment for the sale or use of firearms.

(F) Any establishment in the business of providing same day or payday loans.

(G) Any establishment with a primary focus of business to be gambling entertainment.

(H) A mortuary.

(I) A tattoo parlor or similar body art activity, including a body piercing studio.

(J) Any use of the Unit that would render the Unit exempt from property taxes.

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