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1664674v2 DEVELOPMENT AGREEMENT THIS AGREEMENT, made as of ___________, 2004, by and between the Economic Development Authority of the City of Mounds View, Minnesota, a body corporate and politic (the "Authority") and Velmeir Co., L.L.C., a Michigan limited liability company (the "Developer"), WITNESSETH: WHEREAS, pursuant to Minnesota Statutes, Sections 469.001 through 469.047, the City has formed Redevelopment Project Area No. ___ (the "Redevelopment Area") and has adopted a redevelopment plan therefor (the "Redevelopment Plan"); and WHEREAS, the Authority has assumed jurisdiction over the Redevelopment Area and the Redevelopment Plan; and WHEREAS, pursuant to the provisions of Minnesota Statutes, Section 469.174 through 469.1799, as amended (hereinafter, the "Tax Increment Act"), the City and the Authority have created, within the Redevelopment Area, Tax Increment Financing District No. 2 (the "Tax Increment District"), and have adopted a tax increment financing plan, therefor (the "Tax Increment Plan") which provides for the use of tax increment financing in connection with development within the Redevelopment Area; and WHEREAS, in order to achieve the objectives of the Redevelopment Area and particularly to make the land in the Redevelopment Area available for development by private enterprise in conformance with the Redevelopment Plan, the Authority has determined to assist the Developer with the financing of certain costs of a Project (as hereinafter defined) to be constructed within the Redevelopment Area as more particularly set forth in this Agreement; and WHEREAS, the Authority believes that the development and construction of the Project, and fulfillment of this Agreement are vital and are in the best interests of the City, the health, safety, morals and welfare of residents of the City, and in accordance with the public purpose and provisions of the applicable state and local laws and requirements under which the Project has been undertaken and is being assisted; and WHEREAS, the requirements of the Business Subsidy Law, Minnesota Statutes, Section 116J.993 through 116J.995, do not apply to this Agreement because the Developer's investment in the purchase of the site and in site preparation is at least 70 percent of the assessor's current year's estimated market value; and NOW, THEREFORE, in consideration of the premises and the mutual obligations of the parties hereto, each of them does hereby covenant and agree with the other as follows: