6.6. EDSR 01-20-2015
Request for Action
To Item Number
Economic Development Authority 6.6
Agenda Section Meeting Date Prepared by
General BusinessJanuary 20, 2015Jeremy Barnhart, Deputy Director, CODD
Item Description Reviewed by
Stonesthrow Properties, LLC (Coin-Tainer) Jobs Cal Portner, City Administrator
Incentives Microloan review
Reviewed by
Action Requested
By resolution, approve a $200,000 Jobs Incentive Microloan for Coin-Tainer/ Stonesthrow and authorize
the EDA Chairman and City Attorney to finalize and sign the loan closing documents.
Background/Discussion
Stonesthrow proposes to use the $200,000 Jobs Incentive Microloan to assist with the contract for deed
financing of the building at 17834 Industrial Circle. A major tenant of the building is Coin-Tainer, who
shares a common owner with Stonesthrow Companies, Dave Walters.
The goal of the Jobs Incentive Microloan program is to encourage the growth of new jobs and the
retention of existing jobs. The $200,000 loan will support the long-term investment in the building,
ultimately retaining the 26 jobs on site, and adding 10 more jobs in the next two years.
In December, the Finance Committee supported the application, but wanted to ensure that five issues
were addressed in the final agreements:
That both Coin-Tainer and Stonesthrow maintain responsibility for the loan repayment and job
creation.
There must be lease continuity.
City must maintain a subordinate position with the option to take over the Contract for Deed at
its discretion in the event of default.
Repayment maintains a 20-year amortization with 5-year balloon payment.
The city must be provided a 6-month notice in the event of a default.
Documents to address these issues were developed and are currently being reviewed by Coin-Tainer.
Assuming changes requested by Coin-Tainer are non-substantive and agreeable to the City Attorney, staff
seeks approval to close without further review by the EDA. We are still waiting on the Contract for
Deed document and the Purchase Agreement, to assist with the final development of the documents.
A public hearing was held on December 15, 2014, to receive testimony regarding the business subsidy in
the form of job incentive microloan. The City Council also held a public hearing on that date. No
comments have been received in support or opposition to the request. The EDA directed staff to
continue with the preparation of the loan documents, in anticipation of a timely closing in January.
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Attachments
EDA Packet dated December 15, 2014
Resolution
Closing documents:
Loan Agreement
Entity guaranty
Collateral assignment of life insurance
Mortgage
Notice and Cure Agreement
Personal guaranty
Promissory Note
Security Agreement
N:\Departments\Community Development\Economic Development\EDA\Administrative\Agenda\EDA Agenda Packets\2015\1-20-2015\6.6 sr
Cointainer microloan application 1-20-15.docx
Request for Action
To Item Number
Economic Development Authority 5.1
Agenda Section Meeting Date Prepared by
Public HearingDecember 15, 2014Jeremy Barnhart, Deputy Director, CODD
Item Description Reviewed by
Stonesthrow Properties, LLC (Coin-tainer) Tax .
Abatement and Microloan review
Reviewed by
Action Requested
Consider Stonesthrow, LLC (Coin-Tainer) Microloan application.
Background/Discussion
A public hearing was continued from November 17, 2014, pending Finance Committee review of
additional information requested at the November Finance Committee meeting. The Finance Committee
has completed review of Stonesthrow application for the Jobs Incentive Microloan. Stonesthrow
proposes to use the $200,000 microloan to assist with the financing of the purchase of the building at
17834 Industrial Circle through a contract for deed. A major tenant of the building is Coin-Tainer. Coin-
Tainer and Stonesthrow Companies share a common owner, Dave Walters.
The Finance Committee supported the application, but wanted to ensure that 5 issues were addressed in
the final agreements:
That both Coin-Tainer and Stonesthrow maintain responsibility for the loan repayment and job
creation.
There must be lease continuity.
City must maintain a subordinate position with the option to take over the Contract for Deed at
its discretion in the event of default.
Repayment maintain a 20 year amortization with 5 year balloon payment.
The City must be provided 6 month notice in the event of a default.
Based on these issues, the EDA attorney has begun the development of the agreements. The EDA will
see these agreements for approval in January, unless they wish to delegate approval authority to the EDA
attorney.
The goal of the Jobs Incentive microloan program is to encourage the growth of new jobs and the
retention of existing jobs. The $200,000 requested will support the long term investment in the building,
ultimately retaining the 26 jobs on site, and adding 10 more jobs in the near term future.
Attachments
Springsted Analysis
Finance Committee Packet
Springsted Incorporated
380 Jackson Street, Suite 300
Saint Paul, MN 55101-2887
Tel: 651-223-3000
Fax: 651-223-3002
www.springsted.com
MEMORANDUM
TO: Members of the EDA
Members of the City Council
Jeremy Barnhart, Community Operations and Development-Deputy Director
FROM: Mikaela Huot, Vice President/Consultant
Julian Bradshaw, Analyst
DATE: December 15, 2014
SUBJECT: Stonesthrow Companies, LLC and Coin-Tainer Co., LLC. – Microloan Fund Application Review
Summary
The City of Elk River initially received a request for assistance in the form of a loan from the City’s Economic
Development Microloan Fund from Stonesthrow Companies, LLC and Coin-Tainer Co., LLC for the anticipated
acquisition of an existing building. At the request of the City of Elk River, Springsted has undertaken a review of the
company’s application and request. The purpose of this review is to understand (based upon the provided information)
if the applicant meets the guidelines set forth by the City of Elk River’s Economic Development Microloan Fund policy.
Stonesthrow Companies, LLC will be the entity acquiring the building through a contract for deed and therefore the
applicant for the Microloan. The Contract for Deed terms, as illustrated in the supplements to the developer’s
application, will be for a term of five years (amortized over 25) at an interest rate of 5.5%. The agreement is contingent
upon the receipt of a microloan from the City of Elk River.
Coin-Tainer Co., LLC is a coin, currency, and raffle ticket roll manufacturer and wholesale/retail distributor and will
occupy a portion of the existing building. The remaining space will remain leased to existing tenants. As a part of the
project, Coin-Tainer Co., LLC proposes to finish installing new equipment to restore production capability lost due to
damage caused by a fire in another community. In order to aid in achieving the proposed redevelopment and
permanent relocation in the City, the company has requested a microloan in the amount of $200,000 through the Jobs
Incentive Program of the City of Elk River’s Economic Development Microloan Fund program.
Springsted has reviewed the following materials with regard to the above referenced project:
Coin-Tainer Co., LLC Microloan application, submitted to the City on August, 28 2014
Balance sheets & profit and loss statements from 2012 through October 2014
City of Elk River, Minnesota
Stonesthrow Companies, LLC and Coin-Tainer Co., LLC Microloan Fund Application Review
December 15, 2014
Page 2
Background
The City of Elk River’s Economic Development Microloan Fund Policy & Guidelines and Application was initially
established to stimulate private sector investment into manufacturing and certain commercial facilities and equipment
in order to create new jobs, boost productivity and retain existing jobs for local residents. The program was amended
several times since implementation with the most recent approved amendment on November 17, 2014. The purpose
of the recent amendment was to incorporate a 4 microloan fund program named Jobs Incentive Program. The
th
purpose of the 4 program was to assist existing businesses with expansion and attract new businesses to the City to
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encourage the creation of high paying and qualify jobs to the city. The loan amount is up to $200,000 with a fixed
interest rate of 2%. Funds may be used for those described in the Microloan Fund Policy including building
construction, land acquisition, machinery, furniture, fixtures and equipment, renovation and modernization of buildings,
exterior renovation of industrial buildings, public infrastructure and investment real estate. Funds may not be used for
restaurants, retail businesses, casinos, or sports facilities.
The applicant has indicated the Microloan Fund would be used to assist with acquisition of a commercial-industrial
building in the City in which a large portion is currently leased to existing tenants. The applicant has requested the
maximum amount available of $200,000 to assist with the acquisition.
Approach
Stonesthrow Companies, LLC has provided Springsted, through the City, with its microloan application and related
materials. The goals of the City’s Economic Development Microloan Fund program, as stated in the policy guidelines,
is to provide low interest, long-term (i.e. greater than one year) loans as incentives for new industrial and commercial
development within the City of Elk River and to encourage commercial and retail business owners in the Downtown
District to rehabilitate their existing buildings. The following review will outline the loan eligibility criteria as presented in
the Economic Development Microloan Fund Policy and identify if the applicant meets those guidelines. Springsted’s
initial determination that the applicant has fulfilled the necessary criterion is based upon the available information
(application information and related materials provided by the applicant and the City) and the City’s current policy
guidelines. We have focused specifically on the project eligibility, loan security and guarantee requirements, eligible
activities, business eligibility, and financial feasibility requirements as stated in the guidelines. The review is meant to
provide a snap shot of the above referenced information and should be used as a tool to enable the City to form an
opinion as to the applicant’s suitability for the microloan program and ability to proceed with the project and honor any
commitment made to the City of Elk River.
Project Eligibility Requirements under Jobs Incentive Program
For a project to qualify under the Jobs Incentive Program of the City of Elk River Economic Development Microloan
Fund policy an applicant must meet certain criteria:
Must create one new full-time job for each $20,000 loaned, retain one new full-time job for each $10,000
loaned, or combination of retainage and creation to meet the req According to the applicant,
Stonesthrow Companies, LLC,Coin-Tainer Co., LLC plans to create 10 new jobs and retain 26 c
City of Elk River, Minnesota
Stonesthrow Companies, LLC and Coin-Tainer Co., LLC Microloan Fund Application Review
December 15, 2014
Page 3
All new jobs must be created within 2 years and retained for the period of the loan: According to the applicant,
the project would result in the creation of 10 new jobs.
Created and retained jobs must pay greater than $15.00 per hour or 150% of State or Federal minimum wages
(whichever is greater): According to the applicant, the project plans to create 10 new j
Any loans shall meet the City of Elk River Business Subsidy Policy for the creation of new jobs as well as a 5
year location requirement: The minimum wage for a job to be considered a new or retained
of $15.00 per hour or 150% of state or federal minimum wage, whichever is greater, exclusive of benefits required by
.
law. According to the applicant, the project would result in th
Eligible costs must be used for costs related to job creation an Funds will be used to acquire the
building on a contract for deed which will facilitate the creation of new jobs and retainage of existing jobs in the
community.
3. Permitted Fund Uses of Microloan (Page 6 of Policy)
To qualify for receipt of a microloan, the applicant must utilize the funds for the specific purposes outlined in the City’s
Economic Development Microloan policy. Funds may be used by the borrower for costs related to job creation and
retention as a result of the project. According to the policy, loans may be used for the following activities:
1.Building construction
2.Land acquisition
3.Machinery
4.Furniture, fixtures, and equipment (FF&E)
5.Renovation and modernization of buildings
6.Exterior renovation of retail, commercial and industrial buildings
7.Public infrastructure needed for economic development expansions
8. Investment real estate with a minimum of 50% of the space pre-leased
According to the applicant, the microloan funds would be used to
on a contract for deed basis and therefore would meet the eligib
4. Business Eligibility (Page 7 of Policy)
In addition to having an eligible project a business must also meet certain criteria before it is deemed eligible to
receive forgivable loan funds. According to theEconomic Development Microloan Fund Policy, to be eligible for a
microloan a business must meet the following
Business must be a for-profit corporation, partnership or sole proprietorship: The applicant is a for-profit
corporation.
City of Elk River, Minnesota
Stonesthrow Companies, LLC and Coin-Tainer Co., LLC Microloan Fund Application Review
December 15, 2014
Page 4
Business must be a small business as defined by the small busine The applicant meets the
definition of a small business, as defined by the small business
Business must have a positive net worth: The most recent full years financial statements provided by the
company are for the year ending December 31, 2013 with partial y
such this determination is being made based upon the available i
information submitted by the company, the applicant had a positive net worth in December of 2012, a negative net
worth as of December 31, 2013, and a positive net worth as of Oc
Business must be an industrial, manufacturing, or technology-based industry: A review of the application
materials confirms that the company fits into the description of
industry.
Religious, political, casino, sports facilities and pornographic enterprises are not eligible to use the Economic
Development Forgivable Loan Program: The applicant is not a religious, political, casino, sports facilities or
pornographic enterprise.
5. Microloan Fund Terms & Conditions (Page 7 of Policy)
To be determined if loan terms approved by the EDA.
6. Regulation for New Construction and Improvements (Page 7 of
To be regulated if funding is approved and determined to be used
7. Loan Security and Guarantee Requirements (Page 8 of Policy)
The City’s Economic Development Microloan Fund policy states that prior to the City granting a loan to a proposed
business, that the proposed project must meet certain loan security requirements. These requirements are:
Applicant must be able to secure the loan by providing the EDA with a minimum of a subordinate mortgage
upon the building and/or assets or other approved collateral:According to the applicant, the EDA is welcome to
a second mortgage after the building is purchased by Stonesthrow
microloan funds are being used as a down payment to begin the co
Applicant must demonstrate the financial means to repay the loans, as determined by the Economic
Development Authority: The property cash flows as is, fully rented, and the applicant a
remain fully leased providing sufficient cash flow to repay the
City of Elk River, Minnesota
Stonesthrow Companies, LLC and Coin-Tainer Co., LLC Microloan Fund Application Review
December 15, 2014
Page 5
Whenever possible, personal guarantees will be made part of any loan agreement: The applicant agrees to
provide a personal guarantee, if requested.
Key person life insurance may be required as determined by the EDA Finance Committee based on loan
amount and company ownership partners: The applicant does not plan to add additional life insurance, bu
has $3.5 million dollar policy and would add the EDA as a beneficiary ahead of his wife, if requested.
8. Timing of Project Expenses (Page 8 of Policy)
To be regulated if funding is approved and determined to be used
9. Procedural Guidelines for Application and Approval (Page 8 of Policy)
To be regulated if funding is approved and determined to be used
The EDA Finance Committee is asked to evaluate the project application based on the
following criteria
a.Project design: evaluation of project design will include review of proposed activities, time lines and a
capacity to implement
b.Financial feasibility: availability of funds, private involvement, financial packaging and cost effectiveness
Appropriate ratio of private funds to microloan funds:Stonesthrow Companies, LLC is intending to
acquire the existing building that Coin-Tainer Co., LLC is curre
facility to Coin-Tainer Co., LLC and the other existing tenants. Acquisition of the building is estimated to
be $2.6M and Stonesthrow Companies, LLC is planning to finance t
deed with the microloan funds of $200,000 used to assist with th
private funds to finance of $2.4M and microloan funds of $200,00
that meets the minimum criterion (50%) of the Citys policy.
Sufficient cash flow to cover proposed debt service as demonstrated by financial statements and
projections: Stonesthrow Companies, LLC has requested assistance from the City of Elk River to
assist with acquisition of the facility and reduce the amount of
the contract for deed. The contract for deed is amortized at a h
therefore the microloan provides a lower interest alternative for a portion of the acquisition costs.
Reducing the annual debt payments through the lower-interest loa
cover debt service over the first 5 years. The applicant anticipates refinancing and/or selling the building
at the time the obligations are due to provide sufficient capita
Ability to demonstrate positive net worth:As stated previously, the applicant has positive net worth
as of October 2014 and has indicated relocation of business oper
certain operations following the fire in Milaca will result in l
City of Elk River, Minnesota
Stonesthrow Companies, LLC and Coin-Tainer Co., LLC Microloan Fund Application Review
December 15, 2014
Page 6
Letter of commitment from applicant pledging to complete the project during proposed project
duration:The applicant has provided a letter of commitment stating that r
will secure the ability to acquire the facility and locate in the City of Elk River.
Letter of commitment from other financing sources stating terms and conditions of their
participation: The applicant has proposed acquisition of the building through
means of project financing. The microloan funding provides addi
Sufficient collateral:The applicant has stated it has sufficient collateral.
c.All other information as required in the application and/or additional information as may be requested by the
Economic Development Authority
d.Project compliance with all city codes and policies
e.Program Objectives: In addition to quality job and wage creation/retention requirements, the applicant must
meet all Microloan Fund criteria and demonstrate how the proposed activities will meet at least one of the
following objectives:
The project contributes to the fulfillment of the city’s approved and adopted economic development
and/or redevelopment plans
The project prevents or eliminates slums and blight
The project increases the local tax base
The project brings a structure into compliance with an existing building code violation
If the project for which loan funds have been requested is compl
would retain 26 and create 10 new jobs in the City. The project
vacant building and value of the property has been estimated to
should result in fulfillment of the citys economic development
increase in the local tax base resulting from the market value g
Conclusion
After examining the micro loan application materials submitted by Stonesthrow Companies, LLC and Coin-Tainer Co.,
LLC and reviewing in conjunction with the Economic Development Micro Loan Program guidelines, Springsted
concludes that the applicant and project appear to be in compliance with the program eligibility requirements (for
which information was provided) as outlined in this memo and at the time of review. We note, however, that the
information we were provided represents a snapshot in time, and therefore subject to change if unknown or
unanticipated events may occur.
LOAN AGREEMENT
[A1]
(Microloan)
THIS LOAN AGREEMENT (“Agreement”) is made effective as of _______________,
2015, by and between STONESTHROW PROPERTIES, LLC, a Minnesota limited liability
company (“Borrower”), and the ECONOMIC DEVELOPMENT AUTHORITY OF THE CITY
OF ELK RIVER, a public body corporate and politic of the State of Minnesota (“Lender”).
RECITALS
A.Borrower has applied to Lender for a Microloan Program loan on the Loan
Property (as hereinafter defined) in the principal amount of $200,000.00.
B.Lender is willing to make such mortgage loan to Borrower in the principal
amount of $200,000.00 (the “Loan”), subject to all of the terms and conditions of this
Agreement.
C.Contemporaneously with the execution hereof, Borrower is delivering to Lender
the following security documents:
(i)A Promissory Note (“Note”) effective as of the date herewith made by
Borrower and payable to the order of Lender, in the original principal amount of
$200,000.00.
(ii)A Security Agreement securing the Note (“Security Agreement”). The
Security Agreement is of even date herewith, is executed by Coin-Tainer Co, LLC, as the
entity guarantor, in favor of Lender, as secured party, and provides a security interest in
certain existing equipment currently owned by Coin-Tainer Co., LLC (the “Equipment”);
(iii)The personal guaranties of David M. Walters, Chief Executive
Manager/President of Borrower and Barbara J. Walters, Vice President/Secretary of
Borrower (collectively, the “Personal Guaranties”);
(iv)An entity guaranty (the “Entity Guaranty”) of Coin-Tainer Co., LLC (the
“Entity Guarantor”);
(v)An Assignment of Life Insurance Policy as Collateral assigning a life
insurance policy on of David M. Walters (“Life Insurance Security Agreement”). The
Life Insurance Security Agreement is of even date herewith, is executed by the Borrower
in favor of Lender, as secured party and provides a security interest in a certain life
insurance policy held by the Borrower on the life of David M. Walters (the “Life
[A2]
Insurance Policy”); and
(vi)A Mortgage and Assignment of Rents and Security Agreement and Fixture
Financing Statement (“Mortgage”). The Mortgage is of even date herewith, is executed
by Borrower, as mortgagor, in favor of Lender, as mortgagee, and covers property situated
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454752v2 EL185-29
in Sherburne County, Minnesota legally described as Lot 2, Block 1, Elk River Business
Park, according to the plat thereof on file and of record in Sherburne County, State of
Minnesota (the “Loan Property”) as well as a security interest in certain other property
described therein.
D.Contemporaneously with the execution hereof, Borrower is entering into a
contract for deed with Elk River Business Park, LLC to purchase the Loan Property.
NOW, THEREFORE, in consideration of the mutual covenants hereinafter contained, it is
hereby agreed as follows:
1.Amount and Purpose of Loan. Borrower agrees to take and Lender agrees to
make a mortgage loan in the principal amount of Two Hundred Thousand and No/100s Dollars
($200,000.00) (the “Loan”) to be advanced in a single disbursement as hereinafter provided, the
Loan to be evidenced by the Note and secured by the Security Agreement, the Personal
Guaranties, the Entity Guaranty, the Life Insurance Security Agreement, the Mortgage and any
other security document required under this Agreement. The Loan proceeds will be used only
towards a down payment on Borrower’s purchase of the Loan Property.
2.Equipment and Security Interest. The Entity Guarantor has provided Lender a
preliminary list of the Equipment that shall be subject to the Equipment Security Interest, which
is attached as Exhibit A. The Security Agreement will provide Lender with a first priority
security interest in the Equipment.
3.Title Insurance. Sherburne County Abstract and Title Company (“Title”) is
[A3]
designated as the title insurer with respect to this Agreement. Title will insure Lender against
loss or damage on account of mechanic’s liens upon or unmarketability of the title to the Loan
Property, and will ensure that the Mortgage constitutes a first priority lien upon Borrower’s
interest in the Loan Property as contemplated by this Agreement, subject only to the Contract
for Deed entered into by Borrower to purchase the Loan Property from Elk River Business Park,
LLC that is dated ______________, 2015 (the “Contract for Deed”). Borrower agrees to
[A4]
promptly and fully observe and comply with the reasonable requirements of Title and Lender
with respect to the title, the Mortgage, disbursements of funds and such other reasonable
requirements as Title may make.
4.Documents to be Delivered. Borrower covenants and agrees to immediately
cause the compliance with the following conditions:
(a)Note. Deliver to Lender the Note.
(b)Security Agreement. Deliver to Lender the Security Agreement, together
with evidence that a UCC-1 Financing Statement has been or will be duly filed for
record.
(c)Personal Guaranties. Deliver to Lender the Personal Guaranties.
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(d)Entity Guaranty. Deliver to Lender the Entity Guaranty.
(e)Life Insurance Security Agreement. Deliver to Lender the Life Insurance
Security Agreement.
(f)Mortgage. Deliver to Lender the Mortgage, together with evidence that
the Mortgage has been or will be duly filed for record.
(g)Notice and Cure Agreement. Deliver to Lender the Notice and Cure
Agreement, with respect to the Contract for Deed.
(h)Title Insurance Policy. Deliver to Lender a Mortgagee’s title insurance
policy (“Title Policy”), from Title issued to Lender in the amount of $200,000.00 with
respect to the Mortgage and insuring that the Mortgage is a first lien on the Loan Property
free and clear of mechanic’s liens, materialmen’s liens, taxes, special assessments, rights
of parties in possession, other than: (i) the Contract for Deed; and (ii) the rights of tenants
as tenants only under existing leases, and questions of title and survey approved in
writing by Lender.
(i)Organizational Documents and Resolutions. Deliver to Lender copies of
the (i) articles of organization for Borrower certified by the Minnesota Secretary of State,
(ii) certificate of good standing for Borrower issued by the Minnesota Secretary of State;
(iii) copies of Borrower’s member control agreement and bylaws; and (iv) certified
copies of resolutions of Borrower authorizing the execution and delivery of this
Agreement, the Note, the Mortgage and any other document to be executed by Borrower
pursuant to this Agreement.
(j)Organizational Documents and Resolutions. Deliver to Lender copies of
the (i) articles of organization for Entity Guarantor certified by the Minnesota Secretary
of State, (ii) a certificate of good standing for Entity Guarantor issued by the Minnesota
Secretary of State; (iii) a copy of Entity Guarantor’s member control agreement and
bylaws; and (iv) a certified copy of resolutions of Entity Guarantor authorizing the
execution and delivery of the Entity Guaranty, the Security Agreement and any other
document to be executed by Entity Guarantor pursuant to this Agreement.
(k)Insurance. Deliver to Lender: (i) a certificate or policy for all insurance
required, under the terms hereof to be maintained by Borrower; and (ii) evidence that no
part of the Loan Property is located in an area designated as being a flood plain or flood
hazard area as defined by the Flood Hazard Boundary Map published by the Federal
Insurance Administration.
(l)Compliance with Laws, Etc. Deliver to Lender such evidence as Lender
may require as to the compliance of the Loan Property with: (i) all applicable laws,
codes, rules, regulations and ordinances, including, without limitation, those relative to
environmental protection, protection of wetlands, building and zoning matters and the
Americans with Disabilities Act; and (ii) the requirements of any restrictive covenants,
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conditions and restrictions; conditional use permit or planned unit development
applicable to the Loan Property.
(m)Hazardous Substances. Deliver to Lender evidence acceptable to Lender,
that: (i) the Loan Property has not been used as a hazardous waste storage facility or
burial site; (ii) the soil is free from hazardous waste, hazardous substances, pollutants and
contaminants; and (iii) no hazardous waste, hazardous substance, pollutant or
contaminant has been used in the construction or use of any building or other
improvement on the Loan Property. For purposes of this subparagraph, the terms
“hazardous waste,” “hazardous substances,” “pollutants” and “contaminants” shall
include, but not be limited to, polychlorinated biphenyls (PCBs), asbestos, petroleum
products and any other chemical or substance determined to be a hazard to human health
or the environment.
(n)Indemnity. Deliver to Title any indemnity agreement in favor of Title in
the form required by Title in order for Title to issue the title insurance policies referred to
above.
(o)Contract for Deed Documents. Deliver to Lender copies of all of the
documents relating to the Contract for Deed (the “Contract for Deed Documents”).
(p)Lease. Deliver to Lender a copy of the lease agreement for the use of the
Loan Property, executed no later than the date of this Agreement, by and between
Borrower, as landlord, and Entity Guarantor, as tenant (the “Lease”).
(q)Program Fee. The Lender acknowledges Borrower has previousluy paid
program fees of $______. Lender may waive any of the above requirements in its sole
discretion.
6.Disbursement of Loan. Upon receipt by Lender of all of the items required
pursuant to Section 5 above in the form and condition required therein and confirmation from
Title that Title is prepared to issue the mortgagee’s title insurance policy as required herein,
Lender agrees to disburse the Loan proceeds to Borrower.
7.Access to Loan Property. Lender and its respective representatives shall have at
all reasonable times the right to enter and have free access to the Loan Property and the right to
inspect the Loan Property.
8.Books and Records. Borrower agrees to maintain accurate and complete books,
accounts and records in regard to the Loan Property in a manner reasonably acceptable to
Lender. Lender and its representatives shall have the right to inspect, examine and copy all such
books and records of Borrower and Borrower shall, at Lender’s request, furnish such information
as Lender may reasonably demand. Borrower shall also ensure that Entity Guarantor maintains
accurate and complete books, accounts and records in regard to the Equipment in a manner
reasonably acceptable to Lender. Lender and its representatives shall have the right to inspect,
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examine and copy all such books and records of Entity Guarantor and Entity Guarantor shall, at
Lender’s request, furnish such information as Lender may reasonably demand.
9.Encumbrances and Transfer. Other than the Lease to the Entity Guarantor,
Borrower agrees not to sell, transfer, lease or convey the Loan Property or any part of it, or any
interest therein, or encumber the Loan Property or any part of it, in any manner, without written
consent of Lender which consent may be granted or withheld in the sole discretion of Lender.
This requirement shall apply to each and every sale, transfer, lease or conveyance, whether
voluntary or involuntary and whether or not Lender has consented to any such prior sale, transfer
lease or conveyance. The Entity Guarantor has agreed, pursuant to the Security Agreement, not
to sell, transfer, lease or convey the Equipment or any part of it, or any interest therein, or
encumber the Equipment or any part of it, in any manner, without the written consent of Lender
which consent may be granted or withheld in the sole discretion of Lender. This requirement
shall apply to each and every sale, transfer, lease or conveyance, whether voluntary or
involuntary and whether or not Lender has consented to any such prior sale, transfer lease or
conveyance.
10.Time of Essence. Time is of the essence in the performance of this
Agreement.
11.Assignability. Borrower shall not assign this Agreement without written consent
of Lender, which consent may be withheld, conditioned or delayed in Lender’s sole discretion.
Lender may freely assign or otherwise transfer (including by participation) all or any part of its
interest in the Loan or any or all of the Loan documents, in Lender’s sole discretion.
12.Miscellaneous Covenants of Borrower. Borrower covenants and agrees with
Lender that, without cost to Lender, Borrower will or will cause Entity Guarantor to:
(a)Performance of Conditions. Promptly keep, perform and comply with all
of the terms, covenants and conditions to be kept and performed by Borrower and/or
Entity Guarantor, as required by the City of Elk River (the “City”) and any other
governmental body having jurisdiction over the Loan Property; keep unimpaired the
rights of Borrower and/or Entity Guarantor under any permit or agreement issued or
made by the City or other governmental body having jurisdiction over the Loan Property;
and to enforce the prompt performance of all of the terms, covenants and conditions to be
kept and performed by the City or other governmental body having jurisdiction over the
Loan Property, respectively, under any permits or agreements issued or made by the City
or such other governmental bodies, and any contractors under all contracts obtained or
held by Borrower and/or Entity Guarantor in connection with construction or operation of
the Borrower or Entity Guarantor’s businesses.
(b)Amendment, Etc. of Documents. Not amend, cancel, terminate,
supplement or waive any of the material terms, covenants and conditions of any permit or
agreement issued or made by the City or any other governmental body having jurisdiction
over the Loan Property, or any other contracts obtained or held by Borrower and/or
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454752v2 EL185-29
Entity Guarantor in connection with any contracts, documents or agreements referred to
herein without the prior written approval of Lender.
(c)Performance of Note, Security Agreement, etc. Without limiting the
foregoing, keep and perform all of the terms, covenants, conditions and requirements of
the Note, the Security Agreement, the Life Insurance Security Agreement, the Mortgage,
this Agreement and the Contract for Deed Documents.
(d)Insurance. During the term of this Agreement, Borrower shall procure and
maintain or cause to be procured and maintained at its sole expense, casualty insurance,
public liability insurance and such other types of insurance as are reasonably required by
Lender from time to time, including, without limitation, the coverages expressly required
of Entity Guarantor by the Mortgage, insuring Lender and Borrower with coverages, in
amounts and with companies satisfactory to Lender. The policy or policies or duly
executed certificate or certificates for such insurance and renewals or replacements
thereof shall be deposited with Lender.
(e)Pay Charges. Immediately pay all loan charges including, but not limited
to: (i) Lender’s attorneys’ fees; (ii) title insurance fees, costs and premiums; (iii)
mortgage registration taxes and filing fees of the Mortgage and any other instruments
required under this Agreement.
(f)Default Notices. Provide Lender with a copy of any default notice
received pursuant to the Contract for Deed Documents (to the extent that such notice is
sent by a party other than Lender) or any governmental authority, promptly after receipt
of the same.
(g)Continual Operation. At all times while any portion of the Loan remains
outstanding, Borrower will: (i) maintain its status as a for profit entity; (ii) maintain a
positive net worth; and (iii) will operate its business from the Loan Property in a first
class manner.
(h)Title to Equipment. Borrower represents that Entity Guarantor owns or
will own all of the Equipment “free and clear,” that Lender will have a “first priority”
lien in the Equipment pursuant to the Security Agreement and that no other party has any
right, title or interest in the Equipment.
13.Warranties. Borrower represents and warrants to Lender the following:
(a)The Borrower is limited liability company duly formed, validly existing
and in good standing under the laws of the State of Minnesota.
(b)The making and performance of this Agreement and the execution and
delivery of the Note, the Mortgage, the Life Insurance Security Agreement, the Security
Agreement and any other instrument required hereunder are within the powers of the
Borrower and the Entity Guarantor and have been duly authorized by all necessary
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454752v2 EL185-29
company action on the part of the Borrower and the Entity Guarantor. This Agreement
and the Note, Mortgage, Security Agreement and any other instruments required
hereunder have been duly executed and delivered and are the legal, valid and binding
obligations of the Borrower and Entity Guarantor enforceable in accordance with their
respective terms.
(c)No litigation, tax claims or governmental proceedings are pending or
threatened against the Borrower, the Entity Guarantor or the Loan Property, and no
judgment or order of any court or administrative agency is outstanding against the
Borrower, the Entity Guarantor or the Loan Property which would have a material
adverse effect on Borrower, the Entity Guarantor or the Loan Property.
(d)Borrower and the Entity Guarantor have filed all tax returns (federal and
state) required to be filed for all prior years and paid all taxes shown thereon to be due,
including interest and penalties. Borrower and the Entity Guarantor will file all such
returns and pay all such taxes for the current and future years.
(e)All information, financial or other, which has been submitted by Borrower
the personal guarantors and the Entity Guarantor in connection with the Loan is true,
accurate and complete in all material respects.
(f)Entity Guarantor is under common ownership.
14.Indemnification. Borrower agrees to indemnify Lender and save it harmless
against all loss, liability, expense, or damages including but not limited to attorneys’ fees, which
may arise by reason of the assertion of any lien against the Loan Property or the Equipment.
Borrower will indemnify and hold Lender harmless from any damages Lender may suffer or
incur from Borrower’s breach of its covenant in Section 12(j).
15.Defaults. Each of the following shall constitute an Event of Default:
(a)If Borrower or Entity Guarantor abandons the Loan Property.
(b)Bankruptcy, reorganization, assignment, insolvency or liquidation
proceedings, or other proceedings for relief under any applicable bankruptcy law or other
law for relief of debtors are instituted by or against Borrower and, if such proceedings are
instituted against Borrower, an order, judgment or decree, without the consent of
Borrower appointing a trustee or receiver for Borrower or any part of its property or
approving a petition under the bankruptcy laws of the United States or any similar laws
of any state or other competent jurisdiction, shall have remained in force undischarged or
unstayed for a period of thirty (30) days.
(c)Any judgment, attachment, garnishment or other similar process is entered
against Borrower or against any property or assets of Borrower and is not released,
satisfied or discharged or bonded to Lender’s satisfaction within thirty (30) days of entry.
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(d)Any of the terms, covenants or conditions of any permit or other
agreement issued or made by the City or other governmental body having jurisdiction
over the Loan Property are not complied with within the time required thereby or are
terminated or modified by the City or such other governmental body and Borrower has
not taken or has not caused Entity Guarantor to take the necessary steps to correct or cure
the same within thirty (30) days after written notice is given by Lender.
(e)Any mechanic’s or material supplier’s lien is filed, against the Loan
Property and is not released, satisfied or discharged or bonded to Lender’s satisfaction,
subject, however, to Borrower’s right to contest the same in accordance with the
provisions of the Security Agreement.
(f)A transfer which violates by Paragraph 9 hereof, Encumbrances and
Transfer, occurs.
(g)Borrower: (i) fails to pay any amount due under this Agreement, the Note,
the Mortgage or the Contract for Deed Documents when due; (ii) fails to perform any
other obligation to be performed under this Agreement, the Note, the Mortgage, the
Contract for Deed Documents or any other document executed by Borrower pursuant to
this Agreement; or (iii) fails to pay any amount or perform any obligation under any other
note, mortgage or other agreement now or hereafter made by Borrower in favor of or with
Lender or otherwise now or hereafter held by Lender or Bank, and such failure continues
beyond any applicable cure period.
(h)Entity Guarantor fails to timely provide Lender any information necessary
for Lender to perfect its security interest in the Equipment.
(i)Any representation or warranty by Borrower contained herein or in the
Note, the Security Agreement, the Contract for Deed Documents or any other instrument
required hereunder is false or untrue in any material respect when made.
(j)A default under the Lease, the Entity Guaranty, the Personal Guaranties,
the Security Agreement, or the Life Insurance Security Agreement beyond any applicable
notice and cure period.
(k)Borrower fails to pay any amount due or fails to perform any obligation to
be performed under the Contract for Deed.
Upon the occurrence of an Event of Default, Lender, at its option, shall, in addition to any other
remedies which it might be entitled to by law, have the right to:
(a) To enter into possession of the Loan Property;
(b) To perform such other acts or deeds which reasonably may be necessary to
cure any default existing under this Agreement, and to this end, it is hereby agreed as
follows:
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All sums expended by Lender in effectuating its rights under
(i)
paragraphs (ii) and (iii) of this paragraph shall be deemed to have
been advanced under this Agreement and to be secured by the
Security Agreement and any other security document required under
this Agreement as security for the Loan.
Borrower hereby constitutes and appoints Lender its true and lawful
(ii)
attorney-in-fact with full power of substitution either in the name of
Lender or in the name of Borrower or in the name of both, for the
following purposes: (a) to prosecute and defend all actions or
proceedings in connection with the Loan Property or the Equipment
and do any and every act which Borrower might do in its own
behalf; (b) to perform each of the terms, covenants and conditions to
be kept and performed by Borrower under any contracts and/or
leases obtained or held by Borrower in connection with the operation
of the Loan Property and any other contracts; (c) without limiting
the foregoing, to perform each of the terms, covenants and
conditions to be kept or performed by Borrower under this
Agreement, the Security Agreement and any other instrument
required under this Agreement or the Contract for Deed Documents;
and (d) to do all things that Lender reasonably deems necessary or
advisable for the purpose of carrying out the powers enumerated in
(a), (b), (c) and (d) of this Subparagraph (ii);
(iii)The powers herein granted Lender shall be deemed to be powers
coupled with an interest and the same are irrevocable;
(c)cancel this Agreement;
(d)bring appropriate action to enforce such performance and the correction of
such Event of Default;
(e)declare the entire unpaid principal of the Note and all accrued interest
thereon immediately due and payable without notice;
(f)exercise any remedies under the Entity Guaranty, the Personal Guaranties,
the Security Agreement, or the Life Insurance Security Agreement, foreclose the
Mortgage and any other security instrument referred to in this Agreement and/or exercise
any other rights or remedies it may have under the Entity Guaranty, the Personal
Guaranties, the Security Agreement, the Life Insurance Security Agreement, the
Mortgage and any other security instruments.
16.Default under Note and Security Agreement. The failure by Borrower to keep or
perform any of the terms, covenants and conditions to be kept or performed by it under this
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454752v2 EL185-29
Agreement shall constitute a default under the Note, the Security Agreement and any other
security instrument held by Lender in connection with the Loan.
17.Notices. Any notices given hereunder shall be in writing and shall be deemed to
have been given when delivered personally or three (3) days after deposited in the United States
mail, registered, postage prepaid, addressed as follows:
If to Borrower:
Stonesthrow Properties, LLC
13001 Twilight Road
Onamia, MN 56359
[A5]
Attention: Chief Executive Manager/President
If to Lender:
Economic Development Authority of the City of Elk River
13065 Orono Parkway
Elk River, Minnesota 55330
Attn: Director of Economic Development
or addressed to any such party at such other address as such party shall hereafter furnish by
notice to the other party. Any notice delivered personally to Borrower shall be delivered to an
officer of Borrower, and any notice delivered personally to Lender shall be delivered to an
officer of Lender at the address for Lender for the mailing of notices. Either party may change its
address for the giving of notices by giving the other party at least ten (10) days’ notice in the
manner provided above.
18.Headings. The headings used in this Agreement are for convenience only and do
not define, limit or construe the contents of this Agreement.
19.Bindings on Successors and Assigns. Subject to the limitations on transfer
contained in this Agreement, this Agreement shall be binding upon and inure to the benefit of the
successors and assigns of the parties hereto.
20.Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of Minnesota, without giving effect to any choice or conflict of law
provision or rule.
21.Counterparts. This Agreement may be executed in two (2) or more counterparts,
each of which shall be an original and all of which shall constitute the same agreement.
22.Entire Agreement. This Agreement, the Note, the Security Agreement and the
other documents executed by Borrower and/or Lender pursuant to this Agreement contain the
entire agreement between the parties with respect to the subject matter hereof and supersede all
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454752v2 EL185-29
prior understandings and agreements, both oral and written. This Agreement may be amended
only in a writing signed by the parties hereto.
23.Fees and Expenses. Borrower agrees to pay to Lender immediately upon demand
all costs and expenses, including, without limitation, all attorneys’ fees, incurred by Lender in
connection with the enforcement of the Lender’s rights and/or the collection of any amounts
which become due to Lender under this Agreement, the Note, the Security Agreement or the
other documents executed in connection herewith; and the prosecution or defense of any action
in any way related to this Agreement, the Note, the Security Agreement or the other documents
executed in connection herewith.
24.Business Subsidies Act.
(a)In order to satisfy the provisions of Minnesota Statutes, Sections 116J.993
to 116J.995 (the “Business Subsidies Act”), the Borrower acknowledges and agrees that
the amount of the “Business Subsidy” granted to the Borrower under this Agreement is
the amount of the loan, which is $200,000, and that the Business Subsidy is needed
because the project is not sufficiently feasible for the Borrower to undertake without the
Business Subsidy. The public purpose of the Business Subsidy is to develop
manufacturing facilities, increase the tax base in the City and stimulate the creation and
retention of jobs. In consideration of the Business Subsidy provided for the Borrower’s
acquisition of the Loan Property, the Borrower represents that pursuant to the terms of
the Lease, it will cause the Entity Guarantor to meet the following goals (the “Goals”):
the Entity Guarantor shall retain its existing 26 jobs in Minnesota and create at least 10
additional full-time equivalent jobs at the Loan Property at an hourly wage equal to the
greater of $15.00 per hour or 150% of the state or federal minimum wage, whichever is
greater, by the two (2) year anniversary of the date of closing on the Loan.
(b)If none of the Goals are met, the Borrower agree to repay all of the
Business Subsidy to the City, plus interest (“Interest”) set at the greater of 4% per annum
or the implicit price deflator defined in Minnesota Statutes Section 275.70, subdivision 3,
accruing from and after the date of closing on the Loan, compounded semiannually. If
the Goals are met in part, the Borrower agrees to repay a portion of the Business Subsidy
(plus Interest) determined by multiplying the Business Subsidy by a fraction, the
numerator of which is the number of jobs in the Goals which were not created at the
wage level set forth above and the denominator of which is 10 (i.e. number of jobs set
forth in the Goals).
(c)The Borrower agrees to: (i) report its progress on achieving the Goals to
the City until the later of the date the Goals are met or two years from the Benefit Date,
or, if the Goals are not met, until the date the Business Subsidy is repaid, (ii) include in
the report the information required in Section 116J.994, subdivision 7 of the Business
Subsidies Act on forms developed by the Minnesota Department of Employment and
Economic Development, and (iii) send completed reports to the City. The Borrower
agrees to file these reports no later than March 1 of each year commencing March 1,
2015, and within 30 days after the deadline for meeting the Goals. The City agrees that if
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it does not receive the reports, it will mail the Entity Guarantor and the Borrower a
warning within one week of the required filing date. If within 14 days of the post marked
date of the warning the reports are not made, the Borrower agrees to pay to the City a
penalty of $100 for each subsequent day until the report is filed up to a maximum of
$1,000.
(d)The Borrower agrees that, pursuant to the terms of the Lease, it will cause
the Entity Guarantor to continue operations in the City for at least five years after the date
of closing on the Loan.
(e)Other than the loan provided pursuant to this Agreement, there are no
other state or local government agencies providing financial assistance for the project.
(f)There is no parent corporation of the Entity Guarantor or the Borrower.
[Signature Pages follow]
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Signature Page to Loan Agreement
IN TESTIMONY WHEREOF, each of the parties hereto has caused these presents to be
effective as of the day and year first above written.
STONESTHROW PROPERTIES, LLC
By:
Name: David M. Walters
Its: Chief Executive Manager/President
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454752v2 EL185-29
Signature Page to Loan Agreement
IN TESTIMONY WHEREOF, each of the parties hereto has caused these presents to be
effective as of the day and year first above written.
ECONOMIC DEVELOPMENT AUTHORITY
OF THE CITY OF ELK RIVER
By:
Name:
Its:
By:
Name:
Its:
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EXHIBIT A
Equipment List
[to be added
454752v2 EL185-29
ENTITY GUARANTY
(Microloan)
Elk River, Minnesota
_________, 2015
FOR VALUABLE CONSIDERATION, the receipt and sufficiency of which is hereby
acknowledged, and in consideration of and to induce financial accommodations of any kind, with
or without security, given or to be given or continued at any time and from time to time by the
ECONOMIC DEVELOPMENT AUTHORITY OF THE CITY OF ELK RIVER (the “Lender”)
to or for the account of STONESTHROW PROPERTIES, LLC (the “Borrower”), the
undersigned absolutely and unconditionally guarantees to the Lender the full and prompt
payment when due, whether at maturity or earlier by reason of acceleration or otherwise, of any
and all indebtedness, obligations and liabilities of the Borrower (and any and all successors of
the Borrower) to the Lender, now or hereafter existing, absolute or contingent, independent,
joint, several or joint and several, secured or unsecured, due or to become due, contractual or
tortious, liquidated or unliquidated, arising by assignment or otherwise, including without
limitation all indebtedness, obligations and liabilities owed by the Borrower (and any and all
successors of the Borrower) as a member of any partnership, syndicate, association or other
group, and whether incurred by the Borrower (or any successor of the Borrower) as principal,
surety, endorser, guarantor, accommodation party or otherwise (collectively, the
“Indebtedness”); and the undersigned agrees to pay on demand all of the Lender’s fees, costs,
expenses and reasonable attorneys’ fees in connection with the Indebtedness, any security
therefor, and this guaranty, plus interest on such amounts at the highest rate then applicable to
any of the Indebtedness.
The Lender may at any time and from time to time, without consent of or notice to the
undersigned, without incurring responsibility to the undersigned, without releasing, impairing or
affecting the liability of the undersigned hereunder, upon or without any terms or conditions, and
in whole or in part: (1) sell, pledge, surrender, compromise, settle, release, renew, subordinate,
extend, alter, substitute, exchange, change, modify or otherwise dispose of or deal with in any
manner and in any order any Indebtedness, any evidence thereof, or any security or other
guaranty therefor; (2) accept any security for, or other guarantors of, any Indebtedness; (3) fail,
neglect or omit to obtain, realize upon or protect any Indebtedness or any security therefor, to
exercise any lien upon or right to any money, credit or property toward the liquidation of the
Indebtedness, or to exercise any other right against the Borrower, the undersigned, any other
guarantor or any other person; and (4) apply any payments and credits to the Indebtedness in any
manner and in any order. No act, omission or thing, except full payment and discharge of the
Indebtedness, which but for this provision could act as a release or impairment of the liability of
the undersigned hereunder, shall in any way release, impair or otherwise affect the liability of the
undersigned hereunder, and the undersigned waives any and all defenses of the Borrower
pertaining to the Indebtedness, any evidence thereof, and any security therefor, except the
defense of discharge by payment. The failure of any person or persons to sign this or any other
guaranty shall not release, impair or affect the liability of the undersigned hereunder. This
guaranty is a primary obligation of the undersigned and the Lender shall not be required to first
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454908v2 EL185-29
resort for payment of the Indebtedness to the Borrower or any other person, their properties or
estates, or any security or other rights or remedies whatsoever. The undersigned shall be and
remain liable for any deficiency remaining after foreclosure of any mortgage or security interest
securing the Indebtedness, whether or not the liability of the Borrower or any other person for
such deficiency is discharged pursuant to statute, judicial decision or otherwise.
The liability of the undersigned under this guaranty is in addition to and shall be
cumulative with all other liabilities of the undersigned to the Lender, as guarantor or otherwise,
without any limitation as to amount, unless the writing evidencing or creating such other liability
specifically provides to the contrary. If any payment applied by the Lender to the Indebtedness
is thereafter set aside, recovered, rescinded or required to be returned for any reason (including
without limitation the bankruptcy, insolvency or reorganization of the Borrower or any other
person), the Indebtedness to which such payment was applied shall for the purposes of this
guaranty be deemed to have continued in existence, notwithstanding such application, and this
guaranty shall be enforceable as to such Indebtedness as fully as if such application had never
been made.
The undersigned waives: (1) notice of acceptance of this guaranty and of the creation and
existence of the Indebtedness; (2) presentment, demand for payment, notice of dishonor, notice
of nonpayment, and protest of any instrument evidencing the Indebtedness; and (3) all other
demands and notices to the undersigned or any other person and all other actions to establish the
liability of the undersigned hereunder. The undersigned consents to the personal jurisdiction of
the state and federal courts located in the State of Minnesota in connection with any controversy
related to this guaranty, waives any argument that venue in such forums is not convenient, and
agrees that any litigation initiated by the undersigned against the Lender in connection with this
guaranty shall be venued in either the District Court of Sherburne County, Minnesota, or the
United States District Court, District of Minnesota.
All property of the undersigned, now or hereafter in the possession, control or custody of
or in transit to the Lender for any purpose, including without limitation the balance of every
account of the undersigned with and each claim of the undersigned against the Lender, shall be
subject to a lien and security interest in favor of the Lender, as security for all liabilities of the
undersigned to the Lender, and shall be subject to be set off against any and all such liabilities,
and the Lender may at any time and from time to time at its option and without notice
appropriate and apply any such property toward the payment of any and all such liabilities. The
undersigned agrees to promptly provide the Lender from time to time with financial statements
of the undersigned, in form and substance acceptable to the Lender, at least once every 12
months and as otherwise requested by the Lender. The undersigned agrees to promptly provide
the Lender from time to time with such other information respecting the condition (financial and
otherwise), business and property of the undersigned as the Lender may request, in form and
substance acceptable to the Lender.
The undersigned waives all claims, rights and remedies which the undersigned may now
have or hereafter acquire against any person at any time now or hereafter liable to payment of
any of the Indebtedness and as to any collateral security, including but not limited to all claims,
rights and remedies of contribution, indemnification, exoneration, reimbursement, recourse and
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454908v2 EL185-29
subrogation, whether or not such claim, right or remedy arises in equity, under contract, by
statute, under common law or otherwise, whether or not the Indebtedness has been fully paid,
and all payments and recoveries under this guaranty shall be considered equity investments by
the undersigned in the Borrower; provided, nothing contained in this guaranty shall deprive the
undersigned of any claim, right or remedy, after the Indebtedness has been fully paid, against any
person other than the Borrower. No delay or failure by the Lender in exercising any right, and
no partial or single exercise thereof shall constitute a waiver thereof. No waiver of any rights
hereunder, and no modification or amendment of this guaranty shall be effective unless the same
is in writing duly executed by the Lender, and each such waiver, if any, shall apply only with
respect to the specific instance involved and shall not impair or affect the rights of the Lender or
the provisions of this guaranty in any other respect at any other time. This guaranty shall
continue until written notice of revocation of this guaranty, executed by the undersigned, has
been received by the Lender; provided, no revocation of this guaranty shall affect in any manner
any liability of the undersigned under this guaranty with respect to Indebtedness arising before
the Lender receives such written notice of revocation, and the sole effect of revocation of this
guaranty shall be to exclude from this guaranty Indebtedness thereafter arising which is
unconnected with Indebtedness theretofore arising or transactions theretofore entered into.
Any invalidity or unenforceability of any provision or application of this guaranty shall
not affect other lawful provisions and applications hereof and to this end the provisions of this
guaranty are declared to be severable. This guaranty shall bind the undersigned and the
representatives, successors and assigns of the undersigned, and of each of them respectively, and
shall benefit the Lender, its successors and assigns. This guaranty shall be governed by and
construed in accordance with the laws of the State of Minnesota.
The undersigned is the occupant of the real property legally described as Lot 2, Block 1,
Elk River Business Park, Sherburne County, Minnesota (the “Property”). Borrower is acquiring
the Property and will be leasing it to the undersigned pursuant to a certain lease agreement (the
“Lease”). Borrower and the undersigned are under common ownership. The undersigned
acknowledges and agrees that the Indebtedness is being utilized by Borrower to purchase the
Property, and such purchase will support the undersigned’s ability to fulfill its obligations under
the Lease and, therefore, the undersigned’s obligations under this Guaranty are proper, valid and
enforceable. This Guaranty has been approved by unanimous consent of the board of governors
of the undersigned.
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THE UNDERSIGNED REPRESENTS, CERTIFIES, WARRANTS AND AGREES
THAT THE UNDERSIGNED HAS READ ALL OF THIS GUARANTY AND
UNDERSTANDS ALL OF THE PROVISIONS OF THIS GUARANTY. THE
UNDERSIGNED ALSO AGREES THAT COMPLIANCE BY THE LENDER WITH THE
EXPRESS PROVISIONS OF THIS GUARANTY SHALL CONSTITUTE GOOD FAITH AND
SHALL BE CONSIDERED REASONABLE FOR ALL PURPOSES.
COIN-TAINER CO., LLC,
a Minnesota limited liability company
By:
David M. Walters, President
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454908v2 EL185-29
ASSIGNMENT OF LIFE INSURANCE POLICY AS COLLATERAL
A. For Value Received the undersigned hereby assigns, transfers and sets over to:
Economic Development Authority of the City of Elk River, 13065 Orono Parkway, Elk River, MN 55330
its successors and assigns, (herein called the “Assignee”) Policy No. ____________________________
issued by the ____________________________________________________________________________
(herein called the “Insurer”) and any supplementary contracts issued in connection therewith (said policy
and contracts being herein called the “Policy”), upon the life of
David Walters of ________________, Minnesota
and all claims, options, privileges, rights, title and interest therein and thereunder (except as provided in
Paragraph C hereof), subject to all the terms and conditions of the Policy and to all superior liens, if any,
which the Insurer may have against the Policy. The undersigned by this instrument agrees and the
Assignee by the acceptance of this assignment agrees to the conditions and provisions herein set forth.
B. It is expressly agreed that, without detracting from the generality of the foregoing, the following specific
rights are included in this assignment and pass by virtue hereof:
1. The sole right to collect from the Insurer the net proceeds of the Policy when it becomes a claim by
death or maturity;
2. The sole right to surrender the Policy and receive the surrender value thereof at any time provided by
the terms of the Policy and at such other times as the Insurer may allow;
3. The sole right to obtain one or more loans or advances on the Policy, either from the Insurer or, at any
time, from other persons, and to pledge or assign the Policy as security for such loans or advances;
4. The sole right to collect and receive all distributions or shares of surplus, dividend deposits or
additions to the Policy now or hereafter made or apportioned thereto, and to exercise any and all
options contained in the Policy with respect thereto; provided, that unless and until the Assignee shall
notify the Insurer in writing to the contrary, the distributions or shares of surplus, dividend deposits
and additions shall continue on the plan in force at the time of this assignment; and
5. The sole right to exercise all nonforfeiture rights permitted by the terms of the Policy or allowed by the
Insurer and to receive all benefits and advantages derived therefrom.
C. It is expressly agreed that the following specific rights, so long as the Policy has not been surrendered, are
reserved and excluded from this assignment and do not pass by virtue hereof:
1. The right to collect from the Insurer any disability benefit payable in cash that does not reduce the
amount of insurance;
2. The right to designate and change the beneficiary;
3. The right to elect any optional mode of settlement permitted by the Policy or allowed by the Insurer; but
the reservation of these rights shall in no way impair the right of the Assignee to surrender the Policy
completely with all its incidents or impair any other right of the Assignee hereunder, and any
designation or change of beneficiary or election of a mode of settlement shall be made subject to this
assignment and to the rights of the Assignee hereunder.
D. This assignment is made and the Policy is to be held as collateral security for any and all liabilities of the
undersigned, David Walters (the “Personal Guarantor”), and Coin-Tainer Co., LLC (the “Entity Guarantor”)
to the Assignee, either now existing or that may hereafter arise in the ordinary course of business between
any of the undersigned, the Personal Guarantor, or the Entity Guarantor and the Assignee (all of which
liabilities secured or to become secured are herein called “Liabilities”).
E. The Assignee covenants and agrees with the undersigned as follows:
1. That any balance of sums received hereunder from the Insurer remaining after payment of the then
existing Liabilities, matured or unmatured, shall be paid by the Assignee to the persons entitled thereto
under the terms of the Policy had this assignment not been executed;
2. That the Assignee will not exercise either the right to surrender the Policy or (except for the purpose of
paying premiums) the right to obtain policy loans from the Insurer, until there has been default in any
one of the Liabilities or a failure to pay any premium when due, nor until twenty days after the Assignee
shall have mailed, by first class mail, to the undersigned at the address last supplied in writing to the
Assignee specifically referring to this assignment, notice of intention to exercise such right; and
3. That the Assignee will upon request forward without unreasonable delay to the Insurer the Policy for
endorsement of any designation or change of beneficiary or any election of an optional mode of
settlement.
Page 1 of 3
455000v1 JSB EL185-29
ASSIGNMENT OF LIFE INSURANCE POLICY AS COLLATERAL
F. The Insurer is hereby authorized to recognize the Assignee’s claims to rights hereunder without
investigating the reason for any action taken by the Assignee, or the validity of the amount of the Liabilities
or the existence of any default therein, or the giving of any notice under Paragraph E.2. above or otherwise,
or the application to be made by the Assignee of any amounts to be paid to the Assignee. The sole
authorized signature of the Assignee shall be sufficient for the exercise of any rights under the Policy
assigned hereby and the sole receipt of the Assignee for any sums received shall be a full discharge and
release therefor to the Insurer. Checks for all or any part of the sums payable under the Policy and
assigned herein, shall be drawn to the exclusive order of the Assignee if, when, and in such amounts as
may be, requested by the Assignee.
G. The Assignee shall be under no obligation to pay any premiums or the principal of or interest on any loans
or advances on the Policy whether or not obtained by the Assignee, or any other charges on the Policy, but
any such amounts so paid by the Assignee from its own funds shall become a part of the Liabilities hereby
secured, shall be due immediately, and shall draw interest at a rate fixed by the Assignee from time to time
not exceeding 6% per annum.
H. The exercise of any right, option, privilege or power given herein to the Assignee shall be at the option of
the Assignee, but (except as restricted by Paragraph E.2. above) the Assignee may exercise any such right,
option, privilege or power without notice to, or assent by, or affecting the liability of, or releasing any
interest hereby assigned by the undersigned.
I. The Assignee may take or release other security, may release any party primarily or, secondarily liable for
any of the Liabilities, may grant extensions, renewals or indulgences with respect to the Liabilities, or may
apply to the Liabilities in such order as the Assignee shall determine, the proceeds of the Policy hereby
assigned or any amount received on account of the Policy by the exercise of any right permitted under this
assignment, without resorting or regard to other security.
J. In the event of any conflict between the provisions of this assignment and provisions of the note or other
evidence of any Liability, with respect to the Policy or rights of collateral security therein, the provisions of
this assignment shall prevail.
K. The undersigned declares that no proceedings in bankruptcy are pending against it and that its property is
not subject to any assignment for the benefit of creditors.
Signed and sealed this ______ day of _________, 2015.
STONESTHROW PROPERTIES, LLC
Witness Legal Signature of Insured or Owner
13001 Twilight Road, Onamia, MN 56359
Address
ECONOMIC DEVELOPMENT AUTHORITY OF THE CITY OF ELK
RIVER
Witness Legal Signature of Beneficiary
Legal Signature of Beneficiary
13065 Orono Parkway, Elk River, MN 55330
Address
Form No. 10 Life Insurance Assignment American Bankers Association/Bank Management Commission
Page 2 of 3
455000v1 JSB EL185-29
ASSIGNMENT OF LIFE INSURANCE POLICY AS COLLATERAL
CORPORATE ACKNOWLEDGMENT
STATE OF MINNESOTA }
COUNTY OF ___________ } ss:
On the ___________day of ________, 2015, before me personally came _________________________
_____________________________________, who being by me duly sworn, did depose and say that ___he resides
in ______________________________; that __he is the ____________________ of Stonesthrow Properties, LLC
the corporation described in and which executed the assignment on page two (2) hereof; that ___he knows
the seal of said corporation, and that ___he signed h____ name thereto by like order.
My commission expires _______________________ _____________________________________________
Notary Public
Duplicate received and filed at the home office of the Insurer in ____________________________ this ______ day
of __________________, __________.
By __________________________________________
Authorized Officer
NOTE: When executed by a corporation, the corporate seal should be affixed and there should be attached to the assignment a certified copy
of the resolution of the Board of Directors authorizing the signing officer to execute and deliver the assignment in the name and behalf of the
corporation.
Page 3 of 3
455000v1 JSB EL185-29
MORTGAGE
AND
ASSIGNMENT OF RENTS
AND
SECURITY AGREEMENT
AND
FIXTURE FINANCING STATEMENT
(Microloan)
This Mortgage and Assignment of Rents and Security Agreement and Fixture Financing
Statement (“Mortgage”) is made as of ______________________, 2015, by STONESTHROW
PROPERTIES, LLC, a Minnesota limited liability company (“Mortgagor”), in favor of the
ECONOMIC DEVELOPMENT AUTHORITY OF THE CITY OF ELK RIVER, a public body
corporate and politic of the State of Minnesota (“Mortgagee”).
THE MAXIMUM AMOUNT SECURED BY THIS MORTGAGE IS $200,000.00 OF
PRINCIPAL INDEBTEDNESS, TOGETHER WITH ALL INTEREST ACCRUING
THEREON AND ANY AMOUNTS WHICH MAY BE ADVANCED BY MORTGAGEE IN
PROTECTION OF THE MORTGAGED PREMISES OR THE LIEN OF THIS MORTGAGE.
RECITALS
A. Mortgagor has executed and delivered to Mortgagee a Promissory Note effective
as of the date hereof in the principal amount of $200,000.00 and bearing interest at the rate set
forth therein, with principal being due and payable as set forth therein and with all principal and
interest, if not sooner paid, being due and payable on _____________, 2020 (the Promissory
Note as the same may be renewed, extended, replaced, modified or amended is herein called the
“Note”). The proceeds of the Note are being utilized as a down payment to allow the Mortgagor
to purchase the Mortgaged Property (as defined below).
B. Contemporaneous herewith, Mortgagor has entered into that certain loan
agreement (the “Loan Agreement”) setting forth the terms and conditions of Mortgagor and
Lender’s obligations with relation to this loan facility.
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454916v2 EL185-29
C. Mortgagor is the purchaser of the Mortgaged Property from Elk River Business
Park, LLC, as vendor pursuant to a Contract for Deed dated ________________ (the “Contract
for Deed”) and is the landlord under that certain unrecorded lease dated _______, 2015, with
Coin-Tainer Co., LLC (“Coin-Tainer”), as tenant, leasing a portion of the Mortgaged Property to
Coin-Tainer.
D. As a condition of providing the loan pursuant to the Loan Agreement, Lender
required that Mortgagor’s obligations under the Loan Agreement be secured by this Mortgage.
NOW THEREFORE, in consideration of the Recitals and for the purpose of securing the
payment and performance of all of Mortgagor’s obligations under the Loan Agreement
(collectively “Obligations”); and to secure the performance of all covenants, conditions and
agreements herein and in the Loan Agreement, Mortgagor does hereby mortgage, grant, bargain,
sell, release and convey unto Mortgagee, with power of sale, forever all of Mortgagor’s right,
title and interest in all the tracts or parcels of land lying and being in Sherburne County,
Minnesota, legally described in Exhibit A hereto, (hereinafter the “Land”), whether now owned
or hereafter acquired, together with: (i) all building materials, supplies and equipment now or
hereafter located on the Land and suitable or intended to be incorporated in any building,
structure, or other improvement located or to be erected on the Land; and (ii) all of the buildings,
structures and other improvements now standing or at any time hereafter constructed or placed
upon the Land; and (iii) all heating, plumbing and lighting apparatus, motors, engines, and
machinery, electrical equipment, incinerator apparatus, air conditioning equipment, water and
gas apparatus, pipes, faucets, and all other fixtures of every description which are now or may
hereafter be placed or used upon the Land or in any building or improvement now or hereafter
located thereon; and (iv) all additions, accessions, increases, parts, fittings, accessories,
replacements, substitutions, betterments, repairs and proceeds to any and all of the foregoing;
and (v) all hereditaments, easements, appurtenances, estates, rents, issues, profits, condemnation
awards, proceeds of policies of insurance and other rights and interests now or hereafter
belonging or in any way pertaining to the Land or to any building or improvement now or
hereafter located thereon; and (vi) all leases or other occupancy agreements now or hereafter in
effect in any way appertaining to the Land or to any building or improvement now or hereafter
located thereon, including, without limitation, all cash and security deposits, advance rentals and
deposits or payments of a similar nature (“Leases”), and all Rents (as herein defined) (all of the
foregoing, together with the Land, hereinafter being referred to as the “Property” or “Mortgaged
Property”),
TO HAVE AND TO HOLD the Mortgaged Property unto Mortgagee forever;
PROVIDED, NEVERTHELESS, that this Mortgage is given upon the express condition
that if Mortgagor shall cause to be paid and performed all of the Obligations, and shall also keep
and perform all and singular the covenants herein contained on the part of Mortgagor to be kept
and performed, then the Mortgage and the estate hereby granted shall cease and be and become
void and shall be released of record at the expense of Mortgagor; otherwise this Mortgage shall
be and remain in full force and effect.
MORTGAGOR REPRESENTS, WARRANTS AND COVENANTS to and with
Mortgagee that Mortgagor has good right and full power and authority to execute this Mortgage
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454916v2 EL185-29
and to mortgage the Mortgaged Property; that the Mortgaged Property is free from all liens and
encumbrances except the contract for deed and other permitted encumbrances identified in
Exhibit B hereto (the “Permitted Encumbrances”); that Mortgagee shall quietly enjoy and
possess the Mortgaged Property; that Mortgagor will warrant and defend the title to the
Mortgaged Property against all claims, whether now existing or hereafter arising. The covenants
and warranties of this paragraph shall survive foreclosure of this Mortgage and shall run with the
Land.
AND IT IS FURTHER COVENANTED AND AGREED AS FOLLOWS:
ARTICLE ONE
GENERAL COVENANTS, AGREEMENTS, WARRANTIES
1.1.Payment of Obligations; Observance of Covenants. Mortgagor will duly pay and
perform its Obligations and will perform all other agreements and covenants by Mortgagor to be
performed hereunder.
1.2.Payment of Impositions. Mortgagor agrees to pay, before a penalty might attach
for nonpayment thereof, all taxes, assessments, water and sewer charges, and other fees, taxes
and charges of whatsoever nature levied upon or assessed or placed against the Mortgaged
Property (collectively “Impositions”). Mortgagor will likewise pay all taxes, assessments and
other charges, levied upon or assessed, placed or made against, or measured by, this Mortgage,
or the recordation hereof, or the Obligations, provided that Mortgagor shall not be obliged to pay
such tax, assessment or charge if such payment would be contrary to law or would result in the
payment of an usurious rate of interest on the Obligations. Mortgagor shall promptly furnish to
Mortgagee all notices received by Mortgagor of amounts due under this Section and upon
Mortgagee’s request, shall deliver proper receipts evidencing the payment of such amounts. In
the event of a judicial decree or legislative enactment after the date of this Mortgage, providing
that any such imposition may not be lawfully paid by Mortgagor, or in the event that the payment
of any such imposition by Mortgagor would result in the payment of a usurious rate of interest
on the Obligations, the Obligations, together with interest, shall become immediately due and
payable, or, at Mortgagee’s option, Mortgagee may pay any amount or portion of such
Imposition as renders the Obligations unlawful or usurious, in which event Mortgagor shall
concurrently therewith pay the remaining lawful and non-usurious portion or balance of said
Imposition.
1.3.Payment of Operating Costs; Prior Mortgages and Liens. Mortgagor agrees that it
will pay, or cause to be paid, all operating costs and expenses of the Mortgaged Property; keep
the Mortgaged Property free from mechanics’ and material suppliers’ and other liens, subject to
Mortgagor’s right to contest in good faith as set forth in Section 1.4 hereof; will keep the
Mortgaged Property free from levy, execution or attachment and will immediately pay when due
all indebtedness which may be secured by mortgage, lien or charge on the Mortgaged Property
and upon request will exhibit to Mortgagee satisfactory evidence of such payment and discharge.
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454916v2 EL185-29
1.4.Contest of Impositions, Liens and Levies. Mortgagor shall not be required to pay,
discharge or remove any Imposition, lien or levy so long as Mortgagor shall in good faith contest
the same or the validity thereof by appropriate legal proceedings which shall operate to prevent
the collection of the levy, lien or Imposition so contested and the sale of the Mortgaged Property,
or any part thereof to satisfy the same; provided, however, that Mortgagor, prior to the date such
levy, lien or Imposition is due and payable or, in the case of a mechanic’s lien or other
involuntary lien within (30) days after the same shall have been filed, shall have given such
reasonable security as may be demanded by Mortgagee to ensure such payments and any
penalties and interest that may accrue thereon and prevent any sale or forfeiture of the
Mortgaged Property by reason of such nonpayment. Any such contest shall be prosecuted with
due diligence and Mortgagor shall promptly after final determination thereof pay the amount of
any such levy, lien or Imposition so determined, together with all interest and penalties, which
may be payable in connection therewith. Notwithstanding the provisions of this Section,
Mortgagor shall, and Mortgagee may (but shall have no obligation to), pay any such levy, lien or
Imposition notwithstanding such contest if in the reasonable opinion of Mortgagee, the
Mortgaged Property is in jeopardy or in danger of being forfeited or foreclosed.
1.5.Maintenance and Repairs; Inventory. Mortgagor agrees that it will keep and
maintain (or cause to be kept and maintained) the Mortgaged Property in good condition and
repair, free from any waste or misuse, and will comply with all requirements of law, municipal
ordinances and regulations, restrictions and covenants affecting the Mortgaged Property and its
use, and will promptly repair or restore any buildings, improvements or structures now or
hereafter on the Mortgaged Property which may become damaged or destroyed. Mortgagor
further agrees that without the prior consent of Mortgagee it will not remove from the Mortgaged
Property any fixtures or any personal property that is included in the Mortgaged Property unless
the same is immediately replaced with like fixtures or personal property of at least equal value,
or is otherwise removable under Section 6.1 hereof; or expand any improvements on the
Mortgaged Property, erect any new improvements or make any material alterations in any
improvements which will materially alter the basic structure, materially and adversely affect the
market value or materially change the existing architectural character of the Mortgaged Property.
Mortgagor agrees that it will complete within a reasonable time any buildings now or at any time
in the process of erection on the Mortgaged Property. Mortgagor agrees not to acquiesce in any
rezoning classification, modification or restriction affecting the Mortgaged Property without
Mortgagee’s prior written consent. Mortgagor agrees that it will not abandon the Mortgaged
Property. Upon request of Mortgagee, Mortgagor shall deliver to Mortgagee an inventory in
detail reasonably acceptable to Mortgagee of any personal property owned by Mortgagor that is
included in the Mortgaged Property pursuant to the terms hereof together with a certification by
Mortgagor that said inventory is a true and complete schedule of the personal property to be
included in the Mortgaged Property pursuant to the terms hereof. Such inventory shall list any
conditional sales contracts and other title retention arrangements to which such personal property
may be subject.
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454916v2 EL185-29
1.6.Insurance.
(a) So long as the Obligations remain unpaid, Mortgagor shall, at its own cost,
maintain or cause to be maintained with insurers of recognized responsibility acceptable
to Mortgagee the following insurance:
hazard and fire insurance on the improvements now existing or
(i)
hereafter constructed on the Land insuring against loss by fire, hazards included
in the term “extended coverage,” loss by vandalism or malicious mischief, and
such other hazards, casualties and contingencies as may be required by
Mortgagee, on the basis of replacement cost without a coinsurance clause, in an
amount equal to the full replacement cost thereof (without deduction for
depreciation) or such additional amounts and for such periods as may be required
by Mortgagee;
comprehensive general public liability insurance covering the
(ii)
liability of Mortgagor against claims for bodily injury, death or property damage
occurring on or about the Mortgaged Property in such minimum amounts and
limits as Mortgagee may require but in no event, less than $2,000,000.00
combined single limit per occurrence and naming Mortgagee as an additional
insured;
insurance covering the Mortgaged Property against loss or damage
(iii)
by explosion, rupture or bursting of steam boilers, steam pipes, steam turbines,
steam engines or pressure vessels or fly wheels located on or a part of the
Mortgaged Property and providing for full repair and full replacement cost
coverage; and
such other forms of insurance in such minimum amounts as
(iv)
Mortgagee may reasonably require or as may be required by law.
Mortgagor shall pay or cause to be paid all premiums on insurance required
hereunder by making payment directly to the insurer. Mortgagee shall have the
right to hold the policies and renewals thereof, and Mortgagor shall promptly
furnish to Mortgagee all such policies, renewals thereof, renewal notices and all
paid-premium receipts received by it. All policies of insurance and any and all
refunds of unearned premiums are hereby assigned to Mortgagee as additional
security for the payment of the Obligations secured hereby. In the event of
foreclosure of this Mortgage, all right, title and interest of Mortgagor in and to
any insurance policies then in force shall pass to the purchaser at the foreclosure
sale.
The policies of all such insurance shall have mortgagee and loss payable
(b)
provisions in favor of Mortgagee. All such insurance shall be in form acceptable to
Mortgagee, shall provide for at least thirty (30) days’ prior written notice of cancellation,
termination or modification thereof to Mortgagee, shall permit Mortgagee to make
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454916v2 EL185-29
premium payments to prevent cancellation, and shall provide that no act or negligence of
Mortgagor or of any occupant of the Mortgaged Property, and no occupancy or use of the
Mortgaged Property for purposes more hazardous than permitted by the terms of the
policy, will affect the validity or enforceability of such insurance as against Mortgagee.
In the event of loss under such insurance Mortgagor shall give prompt notice to the
insurance carrier and Mortgagee; Mortgagor shall duly make proof of loss, and shall
immediately furnish to Mortgagee a copy of such proof of loss.
Subject to the rights of the vendor of the Contract for Deed which has
(c)
priority over this Mortgage, Mortgagee is authorized and empowered to settle, collect and
receive all fire and hazard insurance proceeds, to apply such proceeds to all expenses
(including reasonable attorneys’ fees) reasonably incurred by Mortgagee in collecting the
same and, at Mortgagee’s option and in its sole discretion, apply the balance of said
proceeds (“Net Proceeds”) to payment of the Obligations or make the Net Proceeds
available for the repair and restoration of the Mortgaged Property; provided, however,
Mortgagor may settle claims without Mortgagee’s consent if the loss is less than
$5,000.00 and no Event of Default exists at the time of settlement. Mortgagor shall apply
any such proceeds to the repair and restoration of the Mortgaged Property. So long as no
Event of Default exists, any settlement of a fire and hazard insurance claim of more than
$5,000.00 shall require the consent of Mortgagor, which consent will not be unreasonably
withheld.
If Mortgagee elects to apply the Net Proceeds to repair and restoration of
(d)
the Mortgaged Property (i) the Net Proceeds shall be held by Mortgagee and at
Mortgagee’s election may be disbursed either by Mortgagee or a disbursing agent
selected by Mortgagee and paid by Mortgagor, (ii) upon Mortgagee’s request prior to
disbursement of any Net Proceeds or thereafter, from time to time, Mortgagor will
deposit with Mortgagee such amounts in excess of remaining Net Proceeds as Mortgagee
reasonably determines is required to complete the repair and restoration, (iii) the Net
Proceeds and any funds deposited by Mortgagor shall be held and disbursed in
accordance with sound construction loan disbursement practices, including, but not
limited to, approval of the plans and specifications, appraisal, its other conditions for
disbursement of draw requests and inspection of the work, and such other reasonable
conditions as Mortgagee may impose and (iv) any Net Proceeds not so applied to repair
and restoration shall be applied to the payment of the Obligations. If an Event of Default
occurs prior to full disbursement, any undisbursed portion of the Net Proceeds and any
funds deposited by Mortgagor with Mortgagee may at Mortgagee’s option be applied to
the Obligations.
1.7.Inspection. Mortgagee, or its agents, shall have the right to enter upon the
Mortgaged Property during ordinary business hours for the purposes of inspecting the Mortgaged
Property or any part thereof. Mortgagee shall have no duty, however, to make such inspection.
Mortgagee, or its agents, shall also have the right during ordinary business hours to examine the
books and records of Mortgagor pertaining to the Mortgaged Property and to make extracts
therefrom and copies thereof. The parties agree that Mortgagee’s right to inspect the books and
records of Mortgagor, as described in this provision, relates solely to the Mortgaged Property.
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454916v2 EL185-29
1.8.Protection of Mortgagee’s Security. If Mortgagor fails to perform any of the
covenants and agreements contained in this Mortgage and such failure shall continue beyond any
applicable notice and cure period contained in Article Two hereof or if any action or proceeding
is commenced which does or may adversely affect the Mortgaged Property or the interest of
Mortgagor or Mortgagee therein, or the title of Mortgagor thereto, then Mortgagee, at
Mortgagee’s option, may perform such covenants and agreements, defend against such action or
proceeding, or otherwise act as Mortgagee deems necessary to protect its interest. In the event
that, after damage to or destruction of the Mortgaged Property or condemnation of a portion of
the Mortgaged Property or a sale under threat thereof, the proceeds are used to restore the
Mortgaged Property, and the insurance, sale or condemnation proceeds which are paid to
Mortgagee are not sufficient to pay for such restoration, Mortgagee may nevertheless effect the
restoration. Any amounts disbursed or costs incurred by Mortgagee pursuant to this Section,
including interest and reasonable attorney’s fees, shall become additional Obligations of
Mortgagor secured by this Mortgage. All amounts disbursed or costs incurred by Mortgagee
pursuant to this paragraph shall be payable upon demand, and shall bear interest from the date of
disbursement or incurrence at the rate set forth in the Note unless payment of interest at such rate
would be contrary to law, in which event such amounts shall bear interest at the highest rate
permitted by law. Mortgagee shall, at its option, be subrogated to any encumbrance, lien, claim
or demand, and to all the rights and securities for the payment thereof, paid or discharged with
the principal sum secured hereby or by Mortgagee under the provisions hereof, and any such
subrogation rights shall be additional and cumulative security for this Mortgage. Nothing
contained in this Section shall require Mortgagee to incur any expense or do any act hereunder,
and Mortgagee shall not be liable to Mortgagor for any damages or claims arising out of action
taken by Mortgagee pursuant to this paragraph.
1.9.Hazardous Materials. Mortgagor hereby represents and warrants to Mortgagee
that the Mortgaged Property has not at any time been used for storage, transfer, transportation or
disposal of hazardous substances, hazardous wastes, pollutants, contaminants or similar
substances (collectively “Hazardous Substances”), or for the discharge of the same into the
environment in violation of any law, regulation, or judicial or administrative order or judgment;
and the Mortgaged Property is not contaminated by, and does not contain, any Hazardous
Substances. Mortgagor will not use or permit the use of the Mortgaged Property for such
purposes. Mortgagor will fully indemnify Mortgagee and defend Mortgagee against any claims,
losses, damages, actions, costs and expenses of any kind, including without limitation, court
costs and reasonable attorneys’ fees, in connection with any Hazardous Substances now or
hereafter located on the Mortgaged Property or any other violation of any federal, state or local
environmental statute, ordinance, rule or regulation (“Environmental Laws”). This indemnity
shall not apply to the extent that the willful act or omission of the Mortgagee contributes to the
actual or threatened discharge, dispersal, release, storage, treatment, generation, disposal or
escape of the Hazardous Substances. The indemnity provisions of this Section shall survive the
foreclosure or other termination of this Mortgage.
Without limiting the generality of the foregoing, Mortgagor agrees that upon the discovery
of a release or threatened release of Hazardous Substances on or from the Mortgaged Property, it
will promptly, diligently and without cost to Mortgagee, proceed to remediate all contamination
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454916v2 EL185-29
in accordance with all applicable laws, ordinances, rules and regulations, and the requirements of
all governmental authorities having jurisdiction, and otherwise to the satisfaction of Mortgagee.
A failure to do so shall constitute a default by Mortgagor under this Mortgage.
1.10.Escrows. Upon the request of Mortgagee after the occurrence of an Event of
Default (whether or not such Event of Default is subsequently cured), Mortgagor shall deposit
with Mortgagee, on the first day of each and every month, commencing with the date the first
payment shall be due on the Note which is after the date of such request, a deposit to pay the
Impositions and insurance premiums (collectively “Charges”) in an amount equal to:
One-twelfth (1/12) of the Impositions next to become due upon the
(a)
Mortgaged Property; provided, however, that, in the case of the first such deposit, there
shall be deposited in addition an amount as estimated by Mortgagee which, when added
to monthly deposits to be made thereafter as provided for herein, shall assure that there
will be sufficient funds on deposit to pay the Impositions as they come due; plus
One-twelfth (1/12) of the annual premiums on each policy of insurance
(b)
required to be maintained hereunder; provided that with the first such deposit there shall
be deposited, in addition, an amount equal to one-twelfth (1/12) of such annual insurance
premiums multiplied by the number of months elapsed between the date premiums on
each policy are last paid to and including the date of deposit.
The amount of such deposits shall be based upon Mortgagee’s reasonable estimate as to the
amount of Impositions and premiums of insurance next to be payable. Mortgagee will, upon
timely presentation to Mortgagee by Mortgagor of the bills therefor, pay the Charges from such
deposits. In the event the deposits on hand shall not be sufficient to pay all of the Charges when
the same shall become due from time to time, or the prior deposits shall be less than the currently
estimated monthly amounts, then Mortgagor shall pay to Mortgagee on demand any amount
necessary to make up the deficiency. The excess of any such deposits shall be returned to
Mortgagor or credited towards subsequent Charges, at the discretion of Mortgagee. If an Event
of Default shall occur under the terms of this Mortgage, Mortgagee may, at its option, without
being required so to do, apply any deposits on hand to the Obligations, in such order and manner
as Mortgagee may elect. When the Obligations have been fully paid, any remaining deposits
shall be returned to Mortgagor as its interest may appear. All deposits are hereby pledged as
additional security for the Obligations, shall be held for the purposes for which made as herein
provided, may be held by Mortgagee and may be commingled with other funds of Mortgagee,
shall be held without any allowance of interest thereon, and shall not be subject to the decision or
control of Mortgagor. Mortgagee shall not be liable for any act or omission made or taken in
good faith. In making any payments, Mortgagee may rely on any statement, bill or estimate
procured from or issued by the payee without inquiry into the validity or accuracy of the same.
If the taxes shown in the tax statement shall be levied on property more extensive than the
Mortgaged Property, Mortgagee shall be under no duty to seek a tax division or apportionment of
the tax bill, and any payment of taxes based on a larger parcel shall be paid by Mortgagor, and
Mortgagor shall expeditiously cause a tax subdivision to be made.
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454916v2 EL185-29
1.11.Compliance with Code. Mortgagor covenants that when completed the
Improvements shall comply with all applicable restrictions, conditions, codes, ordinances,
regulations and laws of the City of Elk River (the “City”) and other governmental bodies having
jurisdiction over the Mortgaged Property, including, without limitation, the Americans with
Disabilities Act and those related to environmental protection. Mortgagor has NOT commenced
construction of the Improvements.
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454916v2 EL185-29
ARTICLE TWO
EVENTS OF DEFAULT
Each of the following occurrences shall constitute an Event of Default hereunder:
2.1.Failure to pay. Mortgagor’s failure to pay any amount due under the Loan
Agreement or any other amount required to be paid by Mortgagor hereunder when due.
2.2.Other Performance Failure. The Mortgagor’s or Coin-Tainer’s failure to duly
observe or perform any of the other terms, conditions, covenants or agreements required to be
observed or performed by Mortgagor hereunder or by Coin-Tainer in the Entity Guaranty and the
continuation of such failure for a period of thirty (30) days after Mortgagee gives Mortgagor
written notice of such failure.
2.3.Breach of Warranty of Title. Subject to Mortgagor’s right to contest in good faith
as set forth in Section 1.4 hereof, the breach of any warranty of title or any other warranty made
by Mortgagor hereunder.
2.4.Misrepresentation. The making of any material misstatement in any financial
statement or report submitted to Mortgagee by or on behalf of Mortgagor.
2.5.Foreclosure. The institution of a foreclosure or other enforcement proceedings by
the holder of any other lien on the Mortgaged Property (without hereby implying Mortgagee’s
consent to any mortgage or other lien).
2.6.Sale of Property. The sale, assignment, conveyance, mortgage, encumbrance,
lease or transfer of: (i) Mortgagor’s interest in the Mortgaged Property or any part thereof, or any
interest therein; or (ii) any transfer in ownership or control of Mortgagor, without the prior
written consent of Mortgagee, which consent may be granted or withheld by Mortgagee at its
sole discretion.
2.7.Breach of Other Agreements, etc. Any default or breach under the Contract for
Deed, any other note, mortgage or other obligation of Mortgagor or Borrower now held or
hereafter acquired by Mortgagee or City, or any other failure to comply with the terms and
conditions thereof and the continuance thereof beyond any applicable notice and/or cure period
contained therein.
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ARTICLE THREE
ACCELERATION AND FORECLOSURE; OTHER REMEDIES
Upon any Event of Default, Mortgagee may, at its option, exercise one or more of the
following rights and remedies (and any other rights and remedies available to it):
3.1.Acceleration. Mortgagee may declare immediately due and payable all
unmatured Obligations secured by this Mortgage, and the same shall thereupon be immediately
due and payable, without notice or demand.
3.2.UCC Remedies. Mortgagee shall have and may exercise with respect to all
fixtures and any personal property included in the Mortgaged Property, all the rights and
remedies accorded upon default to a secured party under the Uniform Commercial Code, as in
effect in the State of Minnesota.
3.3.Foreclosure; Action or Advertisement. Mortgagee may (and is hereby authorized
and empowered to) foreclose this Mortgage by action or advertisement, pursuant to the statutes
of the State of Minnesota in such case made and provided, power being expressly granted to sell
the Mortgaged Property at public auction and convey the same to the purchaser to the full extent
of Mortgagor’s interest and, out of the proceeds arising from such sale, to pay all Obligations
secured hereby with interest, and all legal costs and charges of such foreclosure and the
maximum attorneys’ fees permitted by law, which costs, charges and fees Mortgagor agrees to
pay. Any real estate or interest or estate sold hereunder may be sold in one parcel, as an entirety,
or in such parcels and in such manner or order as Mortgagee, in its sole discretion, may elect. In
case of any sale of the Mortgaged Property pursuant to any judgment or decree of any court or at
public auction or otherwise in connection with the enforcement of any of the terms of this
Mortgage, Mortgagee, its successors and assigns, may become the purchaser, and for the purpose
of making settlement for or payment of the purchase price, shall be entitled to deliver over and
use any sum then due under the Entity Guaranty and any claims for interest accrued and unpaid
thereon, together with all other sums, with interest, advanced and unpaid hereunder, and all
statutory charges for such foreclosure including maximum attorney’s fees allowed by law in
order that there may be credited as paid on the purchase price the sum then due under the Note
and all other sums, with interest, advanced and unpaid hereunder, and all charges and expenses
of such foreclosure including maximum attorneys’ fees allowed by law.
3.4.Receiver. Mortgagee shall be entitled as a matter of right without notice and
without giving bond and without regard to the solvency or insolvency of Mortgagor, or waste of
the Mortgaged Property or adequacy of the security of the Mortgaged Property, to apply for the
appointment of a receiver, in accordance with the statutes and law made and provided. The
receiver shall collect the rents, and all other income of any kind; manage the Mortgaged Property
so to prevent waste; execute leases within or beyond the period of receivership, pay all expenses
for normal maintenance of the Mortgaged Property and perform the terms of this Mortgage and
apply the rents, issues and profits as permitted by Minnesota Statutes, Section 576.25 in the
following order to (i) payment of the reasonable fees of said receiver, (ii) application of tenant
security deposits as required by Minnesota Statutes Section 504B.178, (iii) payment when due of
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454916v2 EL185-29
prior or current real estate taxes or special assessments with respect to the Mortgaged Property
or, if this Mortgage so requires, to the periodic escrow for the payment thereof, (iv) the payment
when due of premiums for insurance of the type required by this Mortgage or, if this Mortgage
so requires, to the periodic escrow for the payment thereof; and (v) as further provided in any
Assignment of Rents executed by Mortgagor as further security for the Obligations (whether
included in this Mortgage or separate instrument), including but not limited to applying the same
to the costs and expenses of the receivership, including reasonable attorneys’ fees, to the
repayment of the Obligations and to the operation, maintenance, upkeep and repair of the
Mortgaged Property, including payment of taxes and payments of premiums of insurance.
Mortgagor does hereby irrevocably consent to such appointment.
3.5.Specific Performance. Mortgagee may bring suit for specific performance of any
covenant or warranty hereunder.
3.6.Forbearance and Other Rights of Mortgagee. Any delay by Mortgagee in
exercising any right or remedy hereunder, or otherwise afforded by law or equity, shall not be a
waiver of or preclude the exercise of such right or remedy or any other right or remedy
hereunder or at law or in equity. The failure of Mortgagee to exercise any option to accelerate
maturity of the Obligations secured by the Mortgage, the forbearance by Mortgagee before or
after the exercise of such option, or the withdrawal or abandonment of proceedings provided for
by this Mortgage shall not be a waiver of the right to exercise such option or to accelerate the
maturity of such Obligations by reason of any past, present or future event which would permit
acceleration. The procurement of insurance or the payment of taxes or other liens or charges by
Mortgagee shall not be a waiver of Mortgagee’s right to accelerate the maturity of the
Obligations. Mortgagee’s receipt of any awards, proceeds or damages shall not operate to cure
or waive default by Mortgagor. Mortgagee may at any time, without notice, release any person
liable for payment of any Obligations, extend the time or agree to alter the terms of payment of
any of the Obligations, accept additional security of any kind, release any plat or map of the
Mortgaged Property or the creation of any easement thereon or any covenants restricting use or
occupancy thereof, or agree to alter or amend the terms of this Mortgage in any way. No such
release, modification, addition or change shall affect the liability of any person other than the
person so released, for payment of any Obligations, nor affect the priority and first lien status of
this Mortgage upon any property not so released.
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ARTICLE FOUR
ASSIGNMENT OF RENTS
4.1.Assignment. As security in addition to the lien of this Mortgage upon the
Property, Mortgagor hereby grants, transfers and assigns to Mortgagee all of the right, title and
interest of Mortgagor in and to all Leases and all rents, income, profits, revenues, royalties,
bonuses, rights, accounts, contract rights, general intangibles and benefits (all of which are
sometimes hereinafter referred to as “Rents”), now or hereafter accruing or owing by reason of a
Lease of any or all of the Property.
4.2.Covenants of Performance. To protect the security of this Assignment,
Mortgagor warrants, covenants and agrees:
(a)to faithfully abide by, perform and discharge each and every obligation,
covenant and agreement under any Leases to be performed by Mortgagor thereunder; to
give prompt written notice to Mortgagee of any notice of default on the part of Mortgagor
with respect to any Lease received from a tenant thereunder; to enforce or secure short of
termination of any Lease the performance of each and every obligation, covenant,
condition and agreement of the Leases by the tenants thereunder to be performed; not to
borrow against, pledge or assign any of the Rents, or anticipate the Rents; not to waive,
excuse, condone or in any manner release or discharge any tenant thereunder of or from
the obligations, covenants, conditions and agreements to be performed under the Lease or
to permit the tenant to assign its interest in the Lease unless required to do so by the terms
of the Lease; not to terminate the Leases or accept a surrender thereof or a discharge of
the tenant unless required to do so by the terms of the Lease; not to consent to a
subordination of the interest of the tenant thereunder to any party other than Mortgagee
and then only if specifically required to do so by Mortgagee;
(b)at Mortgagor’s sole cost and expense, to appear in and defend any action
or proceeding arising under, growing out of or in any manner connected with the Leases
or the obligations, duties or liabilities of Mortgagor and tenants thereunder, and to pay all
costs and expenses of Mortgagee, including attorneys’ fees in a reasonable sum, in any
such action or proceeding in which Mortgagee may appear or with respect to which it
may incur costs;
(c)that Mortgagor has the full right and title to assign the Rents; that at the
date of this Mortgage there exist no Leases which now or in the future affect the
Mortgaged Property which have not been disclosed to Mortgagee in writing; and that
there is no outstanding assignment or pledge of the Leases or Rents; and
(d)to furnish to Mortgagee, at Mortgagee’s written request, a complete list of
all Leases and security deposits made thereunder as to any part of the Mortgaged
Property, showing the type of lease, the name of the tenant, the monthly rental, the date to
which paid, the term of the Lease, the date of occupancy, and the date of expiration and
any and every special premium, concession or inducement granted to the tenant.
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4.3.Assignment Absolute. This Assignment is absolute and is effective immediately.
Notwithstanding the foregoing, until an Event of Default, as defined in ARTICLE TWO above,
has occurred, Mortgagor may receive, collect and enjoy the Rents. Upon or at any time after an
Event of Default has occurred, Mortgagee may at its option, without notice:
(a)in the name, place and stead of Mortgagor (i) enter upon, manage and
operate the Mortgaged Property, or retain the services of an independent contractor to
manage and operate the same, (ii) make, enforce, modify and accept surrender of the
Leases, (iii) obtain or evict tenants, demand, collect, sue for, receive and give
acquittances for, fix or modify Rents and enforce all rights of Mortgagor under the
Leases, and (iv) perform any and all other acts that may be necessary or proper to protect
the security of this Assignment; provided always, however, that until the end of any
redemption period available to Mortgagor after any foreclosure of this Mortgage
Mortgagee shall continue to deal with the Leases on the Property in a reasonable
businesslike manner, recognizing and protecting Mortgagor’s continuing rights during
such period to retake possession and control of the Mortgaged Property upon paying the
appropriate redemption price, and to resume the management of such Leases;
(b)give or require Mortgagor to give notice to any and all tenants under the
Leases authorizing and directing the tenants to pay all Rents due under the Leases
directly to Mortgagee; and
(c)apply for, and Mortgagor hereby consents to, the appointment of a
receiver of the Mortgaged Property.
4.4.Application of Rents.
(a)All Rents collected by Mortgagee, or by a receiver, shall be held and
applied by Mortgagee in its reasonable discretion, in accordance with applicable law,
including, without limitation to: (i) payment of all reasonable fees of the receiver, if any,
approved by the court; (ii) the repayment when due of all tenant security deposits
pursuant to the provisions of Minnesota Statutes Section 504B.178; (iii) payment of all
delinquent or current real estate taxes and special assessments payable with respect to the
Property or, if this Mortgage so requires, to the periodic escrow for the payment thereof;
(iv) payment of all premiums then due for the insurance required by the provisions of this
Mortgage or, if this Mortgage so requires, to the periodic escrow for the payment thereof;
(v) payment of expenses incurred for normal maintenance of the Mortgaged Property.
(b)Any amounts remaining after such application shall be applied as follows:
(i)if received prior to any foreclosure sale of the Mortgaged Property
to Mortgagee for payment of the indebtedness secured by this Mortgage, but no
such payment made after acceleration of the indebtedness shall affect such
acceleration; and
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(ii)if received during or with respect to a period after a foreclosure
sale of the Mortgaged Property:
(1)if the purchaser at the foreclosure sale is not Mortgagee,
first to Mortgagee to the extent of any deficiency of the sale proceeds to
repay the indebtedness secured by this Mortgage, second to the purchaser
as a credit to the redemption price, but if the Mortgaged Property is not
redeemed, then to the purchaser of the Mortgaged Property;
(2)if the purchaser at the foreclosure sale is Mortgagee, first to
Mortgagee to the extent of any deficiency of the sale proceeds to repay the
indebtedness secured by this Mortgage and the balance to be retained by
Mortgagee as a credit to the redemption price, but if the Mortgaged
Property is not redeemed, then to Mortgagee, whether or not such
deficiency exists.
4.5.Continuing Effect. The rights and powers of Mortgagee under this Assignment
and the application of the Rents shall continue and remain in full force and effect both before and
after commencement of any action or procedure to foreclose this Mortgage, after any foreclosure
sale of Mortgagor’s interest in the Property in connection with the foreclosure of this Mortgage,
and until expiration of the period of redemption from any such foreclosure sale, whether or not
any deficiency from the unpaid balance of the Obligations exists after such foreclosure sale.
4.6.Mortgagee Not Obligated. Mortgagee shall not be obligated by this Assignment
for the control, care, management or repair of the Mortgaged Property, nor for the carrying out of
any of the terms and conditions of the Leases; nor shall this Assignment operate to make
Mortgagee responsible or liable for any waste committed on the Mortgaged Property by the
tenants or any other party, or for any dangerous or defective condition of the Mortgaged
Property, or for any violation of Environmental Laws or for any negligence in the management,
upkeep, repair or control of the Mortgaged Property resulting in any loss or any injury or death to
any person.
4.7.Hold Harmless. Mortgagor shall and does agree to indemnify and to hold
Mortgagee harmless of and from any and all liability, loss or damage which it may or might
incur under or by reason of this Assignment, and of and from any and all claims and demands
whatsoever which may be asserted against it by reason of any alleged obligations or undertakings
on its part to perform or discharge any of the terms, covenants or agreements contained in the
Leases; provided, however, that such indemnification shall not apply if the same arises out of
Leases intentionally breached by Mortgagee which were made by Mortgagor in the ordinary
course of managing the Mortgaged Property and prior to the time Mortgagee obtained the right
to possess and manage the Mortgaged Property, or if the same arises out of the negligent or
willful act of Mortgagee in operating and using the Mortgaged Property. Should Mortgagee
incur any such liability, loss or damage under any Lease or by reason of this Assignment, or in
the defense of any such claims or demands, the amount thereof, including costs, expenses, and
reasonable attorneys’ fees, shall be secured hereby and Mortgagor shall reimburse Mortgagee
therefor immediately upon demand. Mortgagee shall give Mortgagor notice of any such claim
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454916v2 EL185-29
and Assignor shall have the opportunity to defend Mortgagee in connection therewith with
counsel reasonably acceptable to Mortgagee; provided Mortgagee’s failure to give such notice
and opportunity to defend shall not affect Mortgagor’s obligations under this Section except to
the extent Mortgagor is actually prejudiced by such failure.
4.8.Authorization to Tenants. The tenants under any of the Leases are hereby
irrevocably authorized and directed to recognize the claims of Mortgagee or its assigns
hereunder without investigating the reason for any action taken by Mortgagee, or the validity or
the amount of indebtedness owing to Mortgagee, or the existence of any such event of default, or
the application of the Rents to be made by Mortgagee. Mortgagor hereby irrevocably directs and
authorizes each tenant to pay to Mortgagee all sums due under its Lease and consents and directs
that said sums shall be paid to Mortgagee without the necessity for a judicial determination that
any such event of default has occurred or that Mortgagee is entitled to exercise its rights
hereunder, and to the extent such sums are paid to Mortgagee, Mortgagor agrees that the tenants
shall have no further liability to Mortgagor for the same. The sole signature of Mortgagee shall
be sufficient for the exercise of any rights under this Assignment and the sole receipt of
Mortgagee for any sums received shall be a full discharge and release therefor to the tenants or
occupants of the Mortgaged Property.
4.9.Mortgagee Attorney-in-Fact. Mortgagor hereby irrevocably appoints Mortgagee
as its agent and attorney in fact, which appointment is coupled with an interest, to exercise any
rights or remedies hereunder and to execute and deliver during the term of this Assignment such
instruments as Mortgagee may deem necessary to make this Assignment and any further
assignment effective.
4.10.Mortgagee Not in Possession. Nothing herein contained and no actions taken
pursuant to this Assignment shall be construed as constituting Mortgagee a “Mortgagee in
Possession.”
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ARTICLE FIVE
CONDEMNATION
5.1.Notice. Mortgagor will give Mortgagee prompt notice of any action, actual or
threatened, in condemnation or eminent domain, direct or inverse.
5.2.Awards. Subject to any obligations under the Contract for Deed which has
priority over this Mortgage, Mortgagor hereby assigns, transfers, and sets over to Mortgagee the
entire proceeds of any award or payment which becomes payable by reason of any taking of or
damage to the Mortgaged Property, or any part or appurtenance thereof, either temporarily or
permanently, in or by condemnation or other eminent domain proceedings or by reason of sale
under threat thereof, or in anticipation of the exercise of the right of condemnation or other
eminent domain proceedings. Mortgagor will file or prosecute in good faith and with due
diligence what would otherwise be its claim in any such award or payment and cause the same to
be collected and paid over to Mortgagee, and Mortgagor irrevocably authorizes and empowers
Mortgagee, which power is coupled with an interest and is irrevocable, in the name of Mortgagor
or otherwise, in the event that Mortgagor fails to do so, to file and prosecute any such claim and
to collect, receipt for and retain the same. The proceeds of the award or payment, after deducting
all reasonable costs, attorneys’ fees and other expenses which may have been incurred by
Mortgagee in collection thereof, at the sole discretion of Mortgagee, may be released to
Mortgagor, applied to restoration of the Mortgaged Property or applied to the payment of any
part of the Obligations, in such order of application as Mortgagee may determine. If proceeds
are made available to be applied to restoration, they shall be held and disbursed in accordance
with Paragraph 1.6(d) hereof.
ARTICLE SIX
UNIFORM COMMERCIAL CODE
6.1.Security Interest. This Mortgage shall constitute a security agreement as defined
in the Uniform Commercial Code with respect to, and Mortgagor hereby grants Mortgagee a
security interest in, all of fixtures and any personal property included in the Mortgaged Property
and substitutions therefor and proceeds thereof. Mortgagor hereby authorizes Mortgagee to file
one or more financing statements, covering such fixtures and personal property (in a form
satisfactory to Mortgagee) which Mortgagee may reasonably consider necessary or appropriate
to perfect its security interest. Mortgagor also authorizes Mortgagee to file amendments to
financing statements, and terminations of financing statements filed by other secured parties, all
with respect to all fixtures and personal property included in the Mortgaged Property, in such
form and substance as Mortgagee, in its reasonable discretion, may determine. Mortgagor will
pay to Mortgagee, on demand, the amount of any and all costs and expenses (including
reasonable attorneys’ fees and legal expenses) paid or incurred by Mortgagee in connection with
the exercise of any right or remedy referred to in this Section. In any instance where Mortgagor
in its sound discretion determines that any item subject to a security interest under this Mortgage
has become: (i) inadequate, obsolete, worn out, or (ii) unsuitable, undesirable or unnecessary for
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454916v2 EL185-29
the operation of the Mortgaged Property, Mortgagor may, at its expense, remove and dispose of
it and substitute and install other items not necessarily having the same function, provided, that
such removal and substitution shall not impair the operating utility and unity of the Mortgaged
Property. With respect to items which are a part of the Mortgaged Property, all items substituted
for such items shall become a part of the Mortgaged Property and subject to the lien of this
Mortgage. Any amounts received or allowed Mortgagor upon the sale or other disposition of the
removed items of property shall be applied against the cost of acquisition and installation of the
substituted items. Nothing herein contained shall be construed to prevent any tenant or subtenant
from removing from the Mortgaged Property trade fixtures, furniture and equipment installed by
it and removable by tenant under its terms of any one or more of the Leases, on the condition,
however, that Mortgagor shall assure the repair of any and all damages to the Mortgaged
Property resulting from or caused by the removal thereof. Mortgagee acknowledges that no
items of personal property are included in the Mortgaged Property.
6.2.Fixture Filing. From the date of its recording, this Mortgage shall be effective as
a financing statement with respect to all goods constituting part of the Mortgaged Property which
are or are to become fixtures related to the real estate described herein. For this purpose, the
following information is set forth:
(a)Name and Address of Mortgagor:
Stonesthrow Properties, LLC
13001 Twilight Road
Onamia, MN 56359
Attention: David Walters
(b)Name and address of Secured Party:
Economic Development Authority of the City of Elk River
13065 Orono Parkway
Elk River, MN 55330
Attn: Director of Economic Development
(c)This document covers goods which are or are to become fixtures.
(d)The real estate to which such fixtures are or are to be attached is that
described in Exhibit A attached hereto.
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454916v2 EL185-29
ARTICLE SEVEN
MISCELLANEOUS
7.1.Mortgagee’s Remedies Cumulative. All remedies of Mortgagee are distinct and
cumulative to any other right or remedy under this Mortgage or afforded by law or equity, and
may be exercised concurrently or independently, as often as the occasion therefore arises.
7.2.Successors and Assigns Bound; Captions. The covenants and agreements herein
contained shall bind, and the rights hereunder shall inure to, the respective heirs, legal
representatives, successors and assigns of Mortgagee and Mortgagor. The captions and headings
of the Sections of this Mortgage are for convenience only and are not to be used to interpret or
define the provisions hereof.
7.3.Notices. Any notice from Mortgagee to Mortgagor under this Mortgage shall be
deemed to have been given by Mortgagee and received by Mortgagor, when delivered personally
to an officer of Mortgagor or three (3) days after the date it is mailed by certified mail addressed
as follows:
Stonesthrow Properties, LLC
13001 Twilight Road
Onamia, MN 56359
Attention: David Walters
7.4.Governing Law; Severability. This Mortgage shall be governed by the laws of the
State of Minnesota. In the event that any provision or clause of this Mortgage conflicts with
applicable law, such conflict shall not affect other provisions of this Mortgage which can be
given effect without conflicting provisions and to this end the provisions of this Mortgage are
declared to be severable.
7.5.Counterparts. This Mortgage may be executed in any number of counterparts,
each of which shall be an original but all of which together shall constitute one instrument.
7.6.Waiver of Appraisement, Homestead, Marshaling. Mortgagor hereby waives the
benefit of any homestead, appraisement, evaluation, stay and extension laws now or hereinafter
in force. Mortgagor hereby waives any rights available with respect to marshaling of assets so as
to require the separate sales of any portion of the Mortgaged Property or to require Mortgagee to
exhaust its remedies against a specific portion of the Mortgaged Property before proceeding
against the other.
7.7.Subsequent Agreements. Any agreement hereafter made by Mortgagor and
Mortgagee pursuant to this Mortgage shall be superior to the rights of the holder of any
intervening lien or encumbrance.
[Signature Page follows]
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454916v2 EL185-29
Signature Page to Mortgage
IN WITNESS WHEREOF, Mortgagor has caused this Mortgage to be duly executed as of
the day and year first written.
STONESTHROW PROPERTIES, LLC,
a Minnesota limited liability company
By:
David M. Walters
Chief Executive Manager/President
STATE OF MINNESOTA )
) ss.
COUNTY OF ________ )
The foregoing instrument was acknowledged before me on ______________, 2015, by
David M. Walters, Chief Executive Manager/President of Stonesthrow Properties, LLC, a
Minnesota limited liability company, on behalf of the limited liability company.
Notary Public
My Commission Expires:
This Instrument was Drafted by:
Kennedy & Graven, Chartered (SJS)
470 U.S. Bank Plaza
200 South Sixth Street
Minneapolis, Minnesota 55402
Telephone: (612) 337-9300
S-1
454916v2 EL185-29
EXHIBIT A
Legal Description
Lot 2, Block 1, Elk River Business Park, according to the plat thereof on file and of record in
Sherburne County, Minnesota.
A-1
454916v2 EL185-29
EXHIBIT B
Permitted Encumbrances
1)That certain contract for deed by and between Stonesthrow Properties, LLC, and Elk
River Business Park, LLC, dated _______________, recorded in the Office of the
Sherburne County Recorder/Registrar of Titles on ________________, 20___, as
Document No. ________________.
B-1
454916v2 EL185-29
NOTICE AND CURE AGREEMENT
This Notice and Cure Agreement entered into this __ day of ________________, 2015, by
and between the ECONOMIC DEVELOPMENT AUTHORITY OF THE CITY OF ELK RIVER,
a public body corporate and politic of the State of Minnesota (“EDA”) and Elk River Business Park,
LLC, a Minnesota limited liability company (“Elk River Business Park”).
WHEREAS, the EDA is the holder of a Mortgage and Assignment of Rents and Security
Agreement and Fixture Financing Statement dated ____________, 2015, filed ___________, 2015,
as Document No. ______________, executed by Stonesthrow Properties, LLC (“Stonesthrow”) to
the EDA, in the original principal amount of $200,000.00 (the “Mortgage”) constituting a lien on
certain real property located in Sherburne County, Minnesota described as Lot 2, Block 1, Elk River
Business Park, according to the plat thereof on file and of record in Sherburne County, Minnesota
that is owned by Elk River Business Park (the “Property”);
WHEREAS, Elk River Business Park and Stonesthrow have entered into that certain
Contract for Deed dated effective ___________, 2015, between Elk River Business Park, as vendor,
and Stonesthrow, as vendee, (the “Contract for Deed”) whereby Elk River Business Park is selling
to Stonesthrow and Stonesthrow is purchasing from Elk River Business Park the Property;
WHEREAS, the Loan Agreement between the EDA and Stonesthrow requires that
Stonesthrow procure an agreement with Elk River Business Park granting the EDA notice and cure
rights in the event of a default by Stonesthrow under the Contract for Deed;
WHEREAS, Elk River Business Park desires to grant such rights to the EDA so as to
facilitate the sale of the Property.
NOW, THEREFORE, in consideration of the covenants contained herein and other good
and valuable consideration, the parties hereto agree as follows:
1. Notice and Cure Rights. Prior to commencing cancellation or otherwise
exercising any of rights under the Contract For Deed based upon any default under the Contract for
Deed, Elk River Business Park shall provide written notice of said default to the EDA and shall
allow the EDA a one-hundred eighty (180) day period after the mailing of such notice to cure such
defaults. Additionally, the EDA shall have the same rights to cure any default under the Contract for
Deed as Stonesthrow may have, whether by law or contract.
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454920v2 SJS EL185-29
2. Notices. Any notice to be given to any party hereto in connection with this
Agreement shall be in writing and shall be deemed received (a) on the date delivered if hand
delivered by receipted hand delivery and (b) two (2) days after postmark if sent postage prepaid by
certified or registered mail, return receipt requested. Notices to the parties shall be sent to their
addresses set forth below. Either party, by written notice to the other, may change its address to
which notices are to be sent.
EDA’s Address:
Economic Development Authority
of the City of Elk River
13065 Orono Parkway
Elk River, MN 55330
Attn: Director of Economic Development
Elk River Business Park’s Address
: Elk River Business Park, LLC
14698 Galaxie Avenue
Apple Valley, MN 55124
Attn: ____________________
3. Miscellaneous. This Agreement represents the complete agreement of the parties and
shall not be amended or modified except by a writing signed by both parties. This Agreement shall
be binding on the parties hereto, their heirs, successors, and assigns.
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454920v2 SJS EL185-29
IN WITNESS WHEREOF the undersigned have executed this instrument the date first
above written.
ELK RIVER BUSINESS PARK, LLC
By:
Title: ________________________
}
STATE OF MINNESOTA
ss.:
COUNTY OF _________
The foregoing instrument was acknowledged before me this _____ day of
________________, 2015, by __________________, the ___________________ of Elk River
Business Park, LLC, a Minnesota limited liability company on behalf of the company.
_____________________________
Notary Public
S-1
454920v2 SJS EL185-29
ECONOMIC DEVELOPMENT
AUTHORITY OF THE CITY OF ELK
RIVER
By:
Title: __________________________
By: ____________________________
Title: ___________________________
}
STATE OF MINNESOTA
ss.:
COUNTY OF _________
The foregoing instrument was acknowledged before me this _____ day of
________________, 2015, by __________________ and __________________, the
___________________ and _______________, respectively, of the Economic Development
Authority of the City of Elk River, a Minnesota body corporate and politic on behalf of the
authority.
_____________________________
Notary Public
This document drafted by:
Kennedy & Graven, Chartered (SJS)
470 U.S. Bank Plaza
200 South Sixth Street
Minneapolis, MN 55402
(612) 337-9300
S-2
454920v2 SJS EL185-29
PERSONAL GUARANTY
(Microloan — David M. Walters and Barbara J. Walters)
Elk River, Minnesota
_____________, 2015
FOR VALUABLE CONSIDERATION, the receipt and sufficiency of which is hereby
acknowledged, and in consideration of and to induce financial accommodations of any kind, with
or without security, given or to be given or continued at any time and from time to time by the
ECONOMIC DEVELOPMENT AUTHORITY OF THE CITY OF ELK RIVER (the “Lender”)
to or for the account of STONESTHROW PROPERTIES, LLC (the “Borrower”), the
undersigned absolutely and unconditionally guaranty to the Lender the full and prompt payment
when due, whether at maturity or earlier by reason of acceleration or otherwise, of any and all
indebtedness, obligations and liabilities of the Borrower (and any and all successors of the
Borrower) to the Lender, now or hereafter existing, absolute or contingent, independent, joint,
several or joint and several, secured or unsecured, due or to become due, contractual or tortious,
liquidated or unliquidated, arising by assignment or otherwise, including without limitation all
indebtedness, obligations and liabilities owed by the Borrower (and any and all successors of the
Borrower) as a member of any partnership, syndicate, association or other group, and whether
incurred by the Borrower (or any successor of the Borrower) as principal, surety, endorser,
guarantor, accommodation party or otherwise (collectively, the “Indebtedness”); and the
undersigned agree to pay on demand all of the Lender’s fees, costs, expenses and reasonable
attorneys’ fees in connection with the Indebtedness, any security therefor, and this guaranty, plus
interest on such amounts at the highest rate then applicable to any of the Indebtedness.
The Lender may at any time and from time to time, without consent of or notice to the
undersigned, without incurring responsibility to the undersigned, without releasing, impairing or
affecting the liability of the undersigned hereunder, upon or without any terms or conditions, and
in whole or in part: (1) sell, pledge, surrender, compromise, settle, release, renew, subordinate,
extend, alter, substitute, exchange, change, modify or otherwise dispose of or deal with in any
manner and in any order any Indebtedness, any evidence thereof, or any security or other
guaranty therefor; (2) accept any security for, or other guarantors of, any Indebtedness; (3) fail,
neglect or omit to obtain, realize upon or protect any Indebtedness or any security therefor, to
exercise any lien upon or right to any money, credit or property toward the liquidation of the
Indebtedness, or to exercise any other right against the Borrower, the undersigned, any other
guarantor or any other person; and (4) apply any payments and credits to the Indebtedness in any
manner and in any order. No act, omission or thing, except full payment and discharge of the
Indebtedness, which but for this provision could act as a release or impairment of the liability of
the undersigned hereunder, shall in any way release, impair or otherwise affect the liability of the
undersigned hereunder, and the undersigned waive any and all defenses of the Borrower
pertaining to the Indebtedness, any evidence thereof, and any security therefor, except the
defense of discharge by payment. The failure of any person or persons to sign this or any other
guaranty shall not release, impair or affect the liability of the undersigned hereunder. This
guaranty is a primary obligation of the undersigned and the Lender shall not be required to first
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454905v2 EL185-29
resort for payment of the Indebtedness to the Borrower or any other person, their properties or
estates, or any security or other rights or remedies whatsoever. The undersigned shall be and
remain liable for any deficiency remaining after foreclosure of any mortgage or security interest
securing the Indebtedness, whether or not the liability of the Borrower or any other person for
such deficiency is discharged pursuant to statute, judicial decision or otherwise.
The liability of the undersigned under this guaranty is joint and several and is in addition
to and shall be cumulative with all other liabilities of the undersigned to the Lender, as guarantor
or otherwise, without any limitation as to amount, unless the writing evidencing or creating such
other liability specifically provides to the contrary. If any payment applied by the Lender to the
Indebtedness is thereafter set aside, recovered, rescinded or required to be returned for any
reason (including without limitation the bankruptcy, insolvency or reorganization of the
Borrower or any other person), the Indebtedness to which such payment was applied shall for the
purposes of this guaranty be deemed to have continued in existence, notwithstanding such
application, and this guaranty shall be enforceable as to such Indebtedness as fully as if such
application had never been made.
The undersigned waive: (1) notice of acceptance of this guaranty and of the creation and
existence of the Indebtedness; (2) presentment, demand for payment, notice of dishonor, notice
of nonpayment, and protest of any instrument evidencing the Indebtedness; and (3) all other
demands and notices to the undersigned or any other person and all other actions to establish the
liability of the undersigned hereunder. The undersigned consent to the personal jurisdiction of
the state and federal courts located in the State of Minnesota in connection with any controversy
related to this guaranty, waive any argument that venue in such forums is not convenient, and
agree that any litigation initiated by the undersigned against the Lender in connection with this
guaranty shall be venued in either the District Court of Sherburne County, Minnesota, or the
United States District Court, District of Minnesota.
All property of the undersigned, now or hereafter in the possession, control or custody of
or in transit to the Lender for any purpose, including without limitation the balance of every
account of the undersigned with and each claim of the undersigned against the Lender, shall be
subject to a lien and security interest in favor of the Lender, as security for all liabilities of the
undersigned to the Lender, and shall be subject to be set off against any and all such liabilities,
and the Lender may at any time and from time to time at its option and without notice
appropriate and apply any such property toward the payment of any and all such liabilities. The
undersigned agree to promptly provide the Lender from time to time with financial statements of
the undersigned, in form and substance acceptable to the Lender, at least once every 12 months
and as otherwise requested by the Lender. The undersigned agree to promptly provide the
Lender from time to time with such other information respecting the condition (financial and
otherwise), business and property of the undersigned as the Lender may request, in form and
substance acceptable to the Lender.
The undersigned waive all claims, rights and remedies which the undersigned may now
have or hereafter acquire against any person at any time now or hereafter liable to payment of
any of the Indebtedness and as to any collateral security, including but not limited to all claims,
rights and remedies of contribution, indemnification, exoneration, reimbursement, recourse and
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subrogation, whether or not such claim, right or remedy arises in equity, under contract, by
statute, under common law or otherwise, whether or not the Indebtedness has been fully paid,
and all payments and recoveries under this guaranty shall be considered equity investments by
the undersigned in the Borrower; provided, nothing contained in this guaranty shall deprive the
undersigned of any claim, right or remedy, after the Indebtedness has been fully paid, against any
person other than the Borrower. No delay or failure by the Lender in exercising any right, and
no partial or single exercise thereof shall constitute a waiver thereof. No waiver of any rights
hereunder, and no modification or amendment of this guaranty shall be effective unless the same
is in writing duly executed by the Lender, and each such waiver, if any, shall apply only with
respect to the specific instance involved and shall not impair or affect the rights of the Lender or
the provisions of this guaranty in any other respect at any other time. This guaranty shall
continue until written notice of revocation of this guaranty, executed by the undersigned, has
been received by the Lender; provided, no revocation of this guaranty shall affect in any manner
any liability of the undersigned under this guaranty with respect to Indebtedness arising before
the Lender receives such written notice of revocation, and the sole effect of revocation of this
guaranty shall be to exclude from this guaranty Indebtedness thereafter arising which is
unconnected with Indebtedness theretofore arising or transactions theretofore entered into.
Any invalidity or unenforceability of any provision or application of this guaranty shall
not affect other lawful provisions and applications hereof and to this end the provisions of this
guaranty are declared to be severable. This guaranty shall bind the undersigned and the heirs,
representatives, successors and assigns of the undersigned, and of each of them respectively, and
shall benefit the Lender, its successors and assigns. This guaranty shall be governed by and
construed in accordance with the laws of the State of Minnesota.
The undersigned are the owners and members of the Borrower and the undersigned
acknowledge and agree that the Indebtedness is being utilized by the Borrower to purchase the
real property legally described as Lot 2, Block 1, Elk River Business Park, Sherburne County,
Minnesota (the “Property”), and such purchase will materially financially benefit the
undersigned and, therefore, the undersigneds’ obligations under this Guaranty are proper, valid
and enforceable.
THE UNDERSIGNED REPRESENT, CERTIFY, WARRANT AND AGREE THAT
THE UNDERSIGNED HAVE READ ALL OF THIS GUARANTY AND UNDERSTAND ALL
OF THE PROVISIONS OF THIS GUARANTY. THE UNDERSIGNED ALSO AGREE THAT
COMPLIANCE BY THE LENDER WITH THE EXPRESS PROVISIONS OF THIS
GUARANTY SHALL CONSTITUTE GOOD FAITH AND SHALL BE CONSIDERED
REASONABLE FOR ALL PURPOSES.
David M. Walters
____________________________________
Barbara J. Walters
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454905v2 EL185-29
PROMISSORY NOTE
(Microloan)
_______________, 2015
Amount: $200,000.00
Interest: 2.00%
Maturity: ___________, 2020
FOR VALUE RECEIVED, the undersigned, STONESTHROW PROPERTIES, LLC, a
Minnesota limited liability company (“Borrower”), promises to pay to the order of the
ECONOMIC DEVELOPMENT AUTHORITY OF THE CITY OF ELK RIVER, a public body
corporate and politic of the State of Minnesota (“Lender”), at 13065 Orono Parkway, Elk River,
Minnesota 55330, or such other place as the Lender or any other holder of this Note may
designate in writing, on or before ____________, 2020 (“Maturity Date”), the principal sum of
Two Hundred Thousand and 00/100 Dollars ($200,000.00), together with interest on any and all
amounts remaining unpaid thereon from time to time from the date hereof (computed on the
basis of actual days elapsed in a year of 360 days) at a fixed interest rate of two percent (2%) per
annum.
Monthly payments shall be calculated using a twenty (20) year amortization period. The
Borrower shall be obligated to make monthly installments (“Monthly Installment”) in the amount
of _______________ Dollars ($______), which Monthly Installments shall commence on
[A1]
_____________ 1, 2015, and continue on the first (1st) day of each and every month thereafter
until the Maturity Date, when all outstanding principal and accrued but unpaid interest shall be
payable in full. This final payment shall be a balloon payment.
This Note is made pursuant to a Loan Agreement (“Loan Agreement”) between Borrower
and Lender of even date herewith and secured by, among other things a Security Agreement
(“Security Agreement”) given by Coin-Tainer Co., LLC to Lender, an Assignment of Life
Insurance Policy as Collateral assigning a life insurance policy on the life of David M. Walters
(the “Life Insurance Security Agreement”), a Mortgage and Assignment of Rents and Security
Agreement and Fixture Financing Statement covering property owned by the Borrower (the
“Mortgage”), a Personal Guaranty made by David M. Walters and Barbara J. Walters and that
certain Entity Guaranty made by Coin-Tainer Co., LLC, all of which are made to Lender of even
date herewith (collectively, the “Security Documents”). All of the terms and conditions
contained in the Security Documents which are to be kept and performed by Borrower are
hereby made a part of this Note to the same extent and with the same force and effect as if they
were fully set forth herein; and Borrower covenants and agrees to keep and perform them, or
cause them to be kept and performed, strictly in accordance with their terms.
If the Lender, or any other holder of this Note, has not received the full amount of any
Monthly Installment provided for in this Note, by the end of seven (7) calendar days after the
date it is due, Borrower shall pay a late charge fee to the Lender, or any other holder of this Note.
The amount of the late charge fee shall be eight percent (8.00%) of the overdue Monthly
Installment. The Borrower shall pay this late charge fee on demand, however, collection of the
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454896v2 EL185-29
late charge fee shall not be deemed a waiver of the Lender’s right to declare an Event of Default
and exercise its rights and remedies as provided for in the Loan Agreement and the Security
Agreement.
Each Monthly Installment and other payments made under this Note shall be applied as
follows: (i) first, to be applied against and pay interest which has accrued and remains unpaid on
the date the payment is received; then (ii) to be applied against and pay unpaid late charges and
any other charges, including attorneys’ fees and protective advances; and then (iii) all remaining
amounts, if any, shall be applied against and reduce the then outstanding principal balance of this
Note.
If an Event of Default shall occur hereunder or under the Loan Agreement or any
Security Document and any cure period provided for in the Loan Agreement or such Security
Document has expired, the Borrower agrees to pay a default rate of interest equal to ten percent
(10.00%) per annum as the applicable interest rate of this Note, and the entire principal amount
outstanding, accrued interest and any other charges due hereon shall at once become due and
payable at the option of the Lender or the holder hereof. Any failure of the Lender to exercise its
right to increase the interest rate by the default rate of interest set forth above or its option to
accelerate this Note at any time shall not constitute a waiver of the right to exercise the same
right to increase the interest rate or accelerate at any subsequent time. Notwithstanding anything
contained herein to the contrary, the default rate of interest hereon shall never exceed the highest
rate permitted by law.
The Borrower may prepay the principal under this note at any time and from time to time,
in whole or in part, without premium or penalty. No partial prepayment shall postpone the due
date of any Monthly Installment or reduce the amount of any such Monthly Installment unless
the Lender agrees otherwise in writing.
All sums payable to the Lender under this Note shall be paid in immediately available
funds.
The Borrower promises to pay all costs in connection with the enforcement of this Note,
including but not limited to, those costs, expenses and attorneys’ fees of Lender whether or not
suit is filed with respect thereto and whether or not such cost or expense is paid or incurred or to
be paid or incurred prior to or after the entry of judgment or for the pursuance of, or defense of,
any litigation, appellate, bankruptcy or insolvency proceeding.
Presentment, notice of dishonor and protest are hereby waived by all makers, sureties,
guarantors and endorsers hereof. This Note shall be binding upon Borrower, its successors and
assigns.
The remedies of Lender, as provided herein and in the Loan Agreement and the Security
Documents, shall be cumulative and concurrent and may be pursued singly, successively or
together, at the sole discretion of Lender, and may be exercised as often as occasion therefor
shall occur; and the failure to exercise any such right or remedy shall in no event be construed as
a waiver or release thereof.
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454896v2 EL185-29
Time is of the essence hereof.
This Note shall be governed by and be construed under the laws of the State of Minnesota,
without regard to principles of conflicts of law.
[Signature Page Follows]
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454896v2 EL185-29
IN WITNESS WHEREOF
, the undersigned has caused this Note to be effective as of the
day and year first above written.
STONESTHROW PROPERTIES, LLC
a Minnesota limited liability company
By:
David M. Walters
Its: Chief Executive Manager/President
S-1
454896v2 EL185-29
SECURITY AGREEMENT
(Microloan)
This SECURITY AGREEMENT (“Agreement”) is made to be effective as of
_________, 2015, by COIN-TAINER CO., LLC, a Minnesota limited liability company (“Coin-
Tainer”) and THE ECONOMIC DEVELOPMENT AUTHORITY OF THE CITY OF ELK
RIVER (the “Secured Party”).
AGREEMENT
In consideration of the above recitals, and the promises set forth in this Agreement, the
parties agree as follows:
1. OBLIGATIONS. “Obligations” means collectively each debt, liability and obligation of
every type and nature which Stonesthrow Properties, LLC, a Minnesota limited liability
company (“Stonesthrow”) may now or at any time hereafter owe to Secured Party
(including without limitation the obligations created under the loan agreement (the “Loan
Agreement”) and the promissory note of Stonesthrow to Secured Party of even date
herewith and all amendments, replacements, restatements, and substitutions therefore),
together with Coin-Tainer’s obligations to Secured Party pursuant to the Entity Guaranty
of even date herewith, whether now existing or hereafter created or arising, and whether
direct or indirect, due or to become due, absolute or contingent, and the repayment or
performance of any of the foregoing if any such payment or performance is at any time
avoided, rescinded, set aside, or recovered from or repaid by Secured Party, in whole or
in part, in any bankruptcy, insolvency, or similar proceeding instituted by or against
Stonesthrow, Coin-Tainer or any guarantor of any Obligation, or otherwise, including but
not limited to all principal, interest, fees, expenses and other charges.
2. COLLATERAL. “Collateral” means collectively all of the following property of Coin-
Tainer, whether now owned or hereafter acquired and wherever located: (a) equipment
specified on the attached Exhibit A; (b) accessions, additions and improvements to,
replacements of, and substitutions for any of the foregoing; (c) all products and proceeds
of any of the foregoing; and (d) books, records and data in any form relating to any of the
foregoing.
3. SECURITY INTEREST. Coin-Tainer grants to Secured Party a security interest
(“Security Interest”) in the Collateral to secure the payment and performance of the
Obligations. The Security Interest continues in effect until this Agreement is terminated
in writing by Secured Party.
4. REPRESENTATIONS, WARRANTIES AND COVENANTS. Coin-Tainer represents,
warrants and agrees that:
4.1.Principal Office/Residence. Coin-Tainer’s chief executive office/residence is
located at the address specified on the signature pages to this Agreement. Coin-
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454899v2 EL185-29
Tainer must give Secured Party written notice prior to any change in the location
of Coin-Tainer’s principal office/residence.
4.2.Organization; Authority. Coin-Tainer is a limited liability company, duly
organized, existing and in good standing under the laws of the state of its
organization and has full power and authority to enter into this Agreement. Coin-
Tainer’s state of organization/residence is Minnesota and its exact legal name is
as set forth on the signature page to this Agreement. Coin-Tainer will not change
its state of organization, form of organization or name without Secured Party’s
prior written consent.
4.3.Perfection of Security Interest. Coin-Tainer will execute and deliver, and
irrevocably appoints Secured Party (which appointment is coupled with an
interest) Coin-Tainer’s attorney-in-fact to execute and deliver in Coin-Tainer’s
name, all financing statements (including, but not limited to, amendments,
terminations and terminations of other security interests in any of the Collateral),
control agreements and other agreements which Secured Party may at any time
reasonably request in order to secure, protect, perfect, collect or enforce the
Security Interest, Coin-Tainer shall, at any time and from time to time, take such
steps as Secured Party may reasonably request for Secured Party: (i) to obtain an
acknowledgement, in form and substance reasonably satisfactory to Secured
Party, of any bailee having possession of any of the Collateral that such bailee
holds such Collateral for Secured Party; (ii) to obtain “control” of any investment
property, deposit accounts, letter-of-credit rights or electronic chattel paper (as
such terms are defined in the UCC, as hereinafter defined), with any agreements
establishing control to be in form and substance reasonably satisfactory to
Secured Party; and (iii) otherwise to ensure the continued perfection and priority
of the Security Interest in any of the Collateral and the preservation of the rights
of Secured Party therein.
4.4.Enforceability of Collateral. To the extent the Collateral consists of accounts,
instruments, documents, chattel paper, letter-of-credit rights, letters of credit or
general intangibles, the Collateral is enforceable in accordance with its terms, is
genuine, complies with applicable laws concerning form, content and manner of
preparation and execution, and all persons appearing to be obligated on the
Collateral have authority and capacity to contract and are in fact obligated as they
appear to be on the Collateral.
4.5.Title to Collateral. Coin-Tainer holds good and marketable title to the Collateral
free of all security interests and encumbrances. Coin-Tainer will keep the
Collateral free of all security interests and encumbrances except for the Security
Interest. Coin-Tainer will defend Secured Party’s rights in the Collateral against
the claims and demands of all other persons.
4.6.Collateral Location. Coin-Tainer will keep all tangible Collateral at 17834
Industrial Circle NW, Elk River, MN 55330.
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454899v2 EL185-29
4.7.Collateral Use. Coin-Tainer must use the Collateral only for business purposes.
Coin-Tainer must not use or keep any Collateral for any unlawful purpose or in
violation of any federal, state or local law, statute or ordinance.
4.8.Maintenance of Collateral. Coin-Tainer must maintain all tangible Collateral in
good condition and repair. Coin-Tainer must not commit or permit damage to or
destruction of any of the Collateral. Coin-Tainer must give Secured Party prompt
written notice of any material loss of or damage to any tangible Collateral and of
any other happening or event that materially affects the existence, value or
amount of the Collateral.
4.9.Disposition of Collateral. Coin-Tainer must not sell or otherwise dispose of any
Collateral or any interest in any Collateral without the prior written consent of
Secured Party, except that until the occurrence of an Event of Default (as defined
in Section 5 below), Coin-Tainer may sell any inventory constituting Collateral in
the ordinary course of Coin-Tainer’s business.
4.10.Taxes, Assessments and Liens. Coin-Tainer must promptly pay all taxes and
other governmental charges levied or assessed upon or against any Collateral.
4.11.Records; Access. Coin-Tainer must keep accurate and complete records
pertaining to the Collateral and to Coin-Tainer’s business and financial condition
and will submit to Secured Party all reports regarding the Collateral and Coin-
Tainer’s business and financial condition as and when Secured Party may
reasonably request. During normal business hours, Coin-Tainer must permit
Secured Party and its representatives to examine or inspect any Collateral,
wherever located, and to examine, inspect and copy Coin-Tainer’s books and
records relating to the Collateral and Coin-Tainer’s business and financial
condition.
4.12.Insurance. Coin-Tainer must keep all tangible Collateral insured against risks of
fire (including so-called extended coverage), theft and other risks and in such
amounts as Secured Party may reasonably request, with any loss payable to
Secured Party to the extent of its interest. Coin-Tainer assigns to Secured Party
all money due or to become due with respect to, and all other rights of Coin-
Tainer with respect to, all insurance concerning the Collateral and Coin-Tainer
directs the issuer of any such insurance to pay all such money directly to Secured
Party.
4.13.Collection Costs. Coin-Tainer must reimburse Secured Party on demand for all
costs of collection of any of the Obligations and all other expenses incurred by
Secured Party in connection with the perfection, protection, defense or
enforcement of the Security Interest and this Agreement, including all reasonable
attorneys’ fees incurred by Secured Party whether or not any litigation or
bankruptcy or insolvency proceeding is commenced.
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454899v2 EL185-29
4.14.Financing Statements. Coin-Tainer authorizes Secured Party to file one or more
financing or continuation statements, and amendments thereto, relative to all or
any part of the Collateral without Coin-Tainer’s signature where permitted by
law, in each case in such form and substance as Secured Party may determine.
Coin-Tainer shall pay all filing, registration and recording fees and any taxes,
duties, imports, assessments and charges arising out of or in connection with the
execution and delivery of this Agreement, any agreement supplemental hereto,
any financing statements, and any instruments of further assurance.
5. EVENTS OF DEFAULT. Each of the following is an “Event of Default” under this
Agreement: (a) Stonesthrow or Coin-Tainer fails to pay any of the Obligations when due
and any applicable grace period lapses without cure by Stonesthrow or Coin-Tainer; (b)
Stonesthrow or Coin-Tainer fails to timely perform any other Obligation and any
applicable grace period lapses without cure by Stonesthrow or Coin-Tainer; (c) any
representation made by Coin-Tainer in this Agreement or in any financial statement or
report submitted by Stonesthrow or Coin-Tainer to Secured Party proves to have been
materially false or misleading when made; (d) Coin-Tainer or Stonesthrow ceases to
conduct its business; (e) Coin-Tainer or Stonesthrow is or becomes insolvent, however
defined; (f) Coin-Tainer or Stonesthrow voluntarily files, or has filed against it
involuntarily, a petition under the United States Bankruptcy Code; or (g) if Coin-Tainer
or Stonesthrow is dissolved or liquidated.
6. REMEDIES UPON EVENT OF DEFAULT. Upon the occurrence of an Event of
Default and at any time thereafter, Secured Party may exercise one or more of the
following rights and remedies: (a) declare any or all unmatured Obligations to be
immediately due and payable without presentment or any other notice or demand and
immediately enforce payment of any or all of the Obligations; (b) require Coin-Tainer to
make the Collateral available to Secured Party at a place to be designated by Secured
Party; (c) exercise and enforce any rights or remedies available upon default to a secured
party under the Uniform Commercial Code as amended from time to time (“UCC”), and,
if notice to Coin-Tainer of the intended disposition of Collateral or any other intended
action is required by law, such notice shall be commercially reasonable if given at least
ten (10) calendar days prior to the intended disposition or other action; and (d) exercise
and enforce any other rights or remedies available to Secured Party by law or agreement
against the Collateral, Coin-Tainer, Stonesthrow, or any other person or property.
Secured Party’s duty of care with respect to Collateral in its possession will be fulfilled if
Secured Party exercises reasonable care in physically safekeeping the Collateral or, in the
case of Collateral in the possession of a bailee or other third person, exercises reasonable
care in the selection of the bailee or other third person. Mere delay or failure to act will
not preclude the exercise or enforcement of any of Secured Party’s rights or remedies.
All rights and remedies of Secured Party are cumulative and may be exercised singularly
or concurrently, at Secured Party’s option.
7. MISCELLANEOUS. The following miscellaneous provisions are a part of this
Agreement:
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454899v2 EL185-29
7.1.Definitions. Terms not otherwise defined in this Agreement shall have the
meanings ascribed to them, if any, under the UCC and such meanings shall
automatically change at the time that any amendment to the UCC, which changes
such meanings, shall become effective.
7.2.Notices. All notices under this Agreement must be in writing and will be deemed
given when delivered or placed in the United States mail, registered or certified,
postage prepaid, addressed to the respective party at the respective address set
forth below its signature on the signature page to this Agreement. Any party may
change its address for notices under this Agreement by giving written notice to
the other parties.
7.3.Amendments/Waivers. This Agreement may be waived, amended, modified or
terminated and the Security Interest may be released only in a writing signed by
Secured Party. Any waiver signed by Secured Party will be effective only in the
specific instance and for the specific purpose given.
7.4.Applicable Law. This Agreement is governed by the laws of the State of
Minnesota without regard to the conflict of law principles. If any provision of
this Agreement is held unlawful or unenforceable in any respect, such illegality or
unenforceability will not affect other provisions or applications that can be given
effect and this Agreement will be construed and enforced as if the unlawful or
unenforceable provision or application had never been contained in or prescribed
by this Agreement.
7.5.Caption Headings. Caption headings in this Agreement are for convenience
purposes only and are not to be used to interpret or define the provisions of this
Agreement.
7.6.Integration. This Agreement embodies the entire agreement and understanding
among the parties relative to subject matter hereof and supersedes all prior
agreements and understandings relating to such subject matter.
7.7.Successors and Assigns. This Agreement is binding upon and will inure to the
benefit of the parties and their successors and assigns.
7.8.Counterparts. This Agreement may be executed in several counterparts, each of
which will be an original, and all of which will constitute one and the same
instrument.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first
written above.
COIN-TAINER:
COIN-TAINER CO., LLC,
a Minnesota limited liability company
By:
David Walters, President
Address:
17834 Industrial Circle NW
Elk River, MN 55330
OR
13001 Twilight Road
Onamia, MN 56359
[A1]
S-1
454899v2 EL185-29
SECURED PARTY:
ECONOMIC DEVELOPMENT
AUTHORITY OF THE CITY OF ELK
RIVER
By:
Its:
By:
Its:
Address:
13065 Orono Parkway
Elk River, MN 55330
S-2
454899v2 EL185-29
EXHIBIT A
List of Equipment
All of the following property of Coin-Tainer, whether now owned or hereafter acquired and
wherever located: (a) equipment specified below; (b) accessions, additions and improvements to,
replacements of, and substitutions for any of the foregoing; (c) all products and proceeds of any
of the foregoing; and (d) books, records and data in any form relating to any of the foregoing.
[specific items of Equipment to be inserted]
A-1
454899v2 EL185-29
Resolution 15-01
A Resolution of Economic Development Authority of the City of Elk River, County
of Sherburne, State of Minnesota, approving Loan Agreement and Related
Documents (Coin-Tainer Project)
WHEREAS
, the Board of Commissioners (the “Board”) of the Economic Development Authority
of the City of Elk River (the “EDA”) has received a proposal from Stonesthrow Properties, LLC
(the “Borrower”) that the EDA assist in financing the Borrower’s acquisition certain real property
by providing a loan to the Borrower in the amount of $200,000 (the “Loan”) pursuant to the EDA’s
Microloan Program (the “Program”).
WHEREAS
, the EDA has caused to be prepared a Loan Agreement (the “Loan Agreement”) with
the Borrower setting forth, among other things, the terms and conditions under which the EDA will
make the loan, a copy of which is on file with the Executive Director.
NOW THEREFORE, BE IT RESOLVED
by the Economic Development Authority of
the City of Elk River as follows:
1.01. The Loan Agreement as presented to the EDA, together with all related documents necessary
in connection therewith, including without limitation, a Promissory Note from the Borrower evidencing
the Loan, a Mortgage in certain real property, a Security Agreement in certain equipment, personal
guaranties from David M. Walters and Barbara J. Walters, entity guaranty from Coin-Tainer Co., LLC
and an Assignment of Life Insurance Policy as Collateral assigning a life insurance policy on the life of
David M. Walters (all as defined in and described in the Loan Agreement) (collectively, the “Loan
Documents”) are hereby in all respects approved, in substantially the form submitted and the President
and Executive Director are hereby authorized and directed to execute the Loan Agreement and any
Loan Documents to which it is a party on behalf of the EDA and to carry out, on behalf of the EDA,
the EDA’s obligations thereunder.
1.02. The approval hereby given to the Loan Documents includes approval of such additional details
therein as may be necessary and appropriate and such modifications thereof, deletions therefrom and
additions thereto as may be necessary and appropriate and approved by legal counsel to the EDA and
by the President and Executive Director prior to executing said documents; and said officers are hereby
authorized to approve said changes on behalf of the EDA. The execution of any instrument by the
President and Executive Director shall be conclusive evidence of the approval of such document in
accordance with the terms hereof. In the event of absence or disability of said officers, any of the
documents authorized by this Resolution to be executed may be executed without further act or
authorization of the Board by any duly designated acting official, or by such other officer or officers of
the Board as, in the opinion of the City Attorney, may act in their behalf.
455494v1 JSB EL185-29
Approved by the Economic Development Authority of the City of Elk River this 20th day of January,
2015.
President
ATTEST:
Executive Director
455494v1 JSB EL185-29