4.5 HRSR 09-06-2016 ')ILIC) .,
ht 1 Request for Action
River
To Item Number
Housing and Redevelopment Authority 4.5
Agenda Section Meeting Date Prepared by
Consent Agenda September 6,2016 Amanda Othoudt, EDD
Item Description Reviewed by
Satisfaction of Mortgage Agreement. Cal Portner,City Administrator
Reviewed by
Action Requested
Approve,by motion,the satisfaction of mortgage for real property located at 19141 Freeport St NW.
Background/Discussion
On August 2011,the HRA approved a$90,000 interfund loan to Pizza Ranch generated by available tax
increment dollars received from TIF District No. 16.The funds were used to finance SAC and WAC fees
and a portion of the cost of land for additional parking in connection with substantial renovations to and
equipping of the building located at 19141 Freeport St NW.
The owner has since refinanced and payed off this loan with the HRA in the amount of$52,154.26 with
the HRA and is requesting a satisfaction of mortgage be signed and recorded releasing them of all
obligations under the Mortgage and Repayment Agreement.
Financial Impact
None. The funds were lent to Pizza Ranch from excess redevelopment TIF funds.The payoff was
returned to the county as excess TIF funds,to which the county distributes them to the appropriate
tang districts.
Attachments
• Mortgage&Repayment Agreement
• Satisfaction of Mortgage
roillEl i'T
1ATURJ�
SATISFACTION OF REPAYMENT AGREEMENT
DATE: September 6,2016
THAT CERTAIN GRANT AGREEMENT owned by the undersigned,dated the 24th day of August,_
2011,executed by GRM OF MINNESOTA,LLC,a Minnesota limited liability company,and Robert
McDonald as Mortgagor,to the Housing and Redevelopment Authority of the City of Elk River,Minnesota,
a public body corporate and politic of the State of Minnesota,as Mortgagee and filed for record the 25th day of
August,2011,as Document Number 46200,in the Office of the County Recorder of Sherburne County,
Minnesota,is,with the indebtedness thereby secured,fully paid and satisfied.
City of Elk River Housing and
Redevelopment Authority
By:
Its:
STATE OF MINNESOTA )
) ss
COUNTY OF )
The foregoing instrument was acknowledged before me this day of ,20
By, ,the of the City of
Elk River Housing and Redevelopment Authority.
NOTARIAL STAMP OR SEAL(OR OTHER TITLE OR RANK)
Notary Public
THIS INSTRUMENT WAS DRAFTED BY TAX STATEMENTS FOR THE REAL PROPERTY DESCRIBED
City of Elk River IN THIS INSTRUMENT SHOULD BE SENT TO:
13065 Orono Parkway
Elk River,MN 55330 Unaffected
LOAN AGREEMENT
THIS LOAN AGREEMENT ("Agreement") is made effective as of August
2011, by and between GRM OF MINNESOTA, LLC, a Minnesota limited liability
company, ("Borrower") and the HOUSING AND REDEVELOPMENT AUTHORITY
OF THE CITY OF ELK RIVER, MINNESOTA, a public body corporate and politic of
the State of Minnesota("Lender").
RECITALS
A. Borrower has applied to Lender for a construction and term mortgage loan
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on the Loan Property(as hereinafter defined) in the principal amount of$90,000.00.
B. Lender is willing to make such mortgage loan to Borrower in the principal
amount of$90,000.00,subject to all of the terms and conditions of this Agreement.
C. Contemporaneously with the execution hereof, Borrower is executing and
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$90,000.00.
(ii) A Mortgage and Assignment of Rents and Security Agreement and
Fixture Financing Statement securing the Note("Mortgage"). The Mortgage is of
even date herewith, is executed by Borrower and Robert McDonald, as
mortgagor, in favor of Lender, as mortgagee, and covers property therein
described situated in Sherburne County,Minnesota(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 $90,000.00 (the "Loan") to be
advanced in a single disbursement as hereinafter provided, the Loan to be evidenced b
g p by
the Note and secured by the Mortgage and any other security document required under
this Agreement. The sole source of the Loan is available tax increments generated within
the Lender's Tax Increment Financing District No. 16 (A Redevelopment District) and
authorized to be spent in accordance with the spending plan adopted by the Lender on
June 7, 2010, as amended on August 1, 2011, and the City Council of the City of Elk
River, Minnesota (the "City") on June 21, 2010, as amended on August 15, 2011, (the
"Spending Plan"), pursuant to Minnesota Statutes, Section 469.176 Subd. 4m (the
"Temporary Authority").
385593v4 JSB EL185-12
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pt
2. Construction of Improvements. For the purposes of this Agreement, the
term "Loan Property" means the real estate described in the Mortgage together with all
improvements now located or hereafter placed thereon.
Borrower agrees to improve as a part of the Loan Property a project ("Project")
consisting generally of substantial renovations to and equipping of the building located at
19141 Freeport St NW, Elk River, Minnesota, in accordance with plans and
specifications which have been provided to and approved by City building department
(the "Plans and Specifications") to be operated by the Borrower as Class I restaurant of
approximately 220 seats. The improvements to and equipping of the Loan Property
contemplated by the Plans and Specifications, as the same may be changed with the
approval of Lender, are herein referred to as the "Improvements." Borrower covenants
all applicable restrictions,
when completed, the Improvements shall comply with al pp
conditions, codes, ordinances, regulations and laws of the City of Elk River, Minnesota
("City") and all other governmental bodies having jurisdiction over the Loan Property,
including, without limitation, the Americans with Disabilities Act and those related to
environmental protection. Borrower shall commence construction of the Improvements
prior to July 1, 2012. For purposes of this Agreement, the term "commence" means the
making of visible improvements, including without limitation demolition of interior
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walls,paving for parking, and subsurface excavation but excluding mere surface grading.
Borrower represents he would not construct the Improvements on the Loan Property but
for the financial assistance being provided by the Lender hereunder, and more
specifically, would not commence such construction prior to July 1, 2012 without the
assistance rovided under this Agreement and the Spending Plan. Borrower agrees to
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carry on continuously, diligently and with reasonable dispatch the construction of the
Improvements to full and final completion.
3. Title Insurance. Commercial Partners Title, LLC ("Title"), is 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 insure that the Mortgage constitutes a second lien upon Borrower's
interest in the Loan Property as contemplated by this Agreement, subject only to a
mortgage made or granted by way of security for, and only for, the purpose of obtaining
construction, interim or permanent financing necessary to enable Borrower to construct
the Improvements or any component thereof. Borrower agrees to 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) Mortgage. Deliver to Lender the Mortgage,together with evidence
that the Mortgage has been or will be duly filed for record.
385593v4 JSB EL185-12
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(c) Title Insurance Policy. Deliver to Lender a mortgagee's title
insurance policy ("Title Policy"), from Title issued to Lender in the amount of
$90,000.00 with respect to the Mortgage and insuring that the Mortgage is a
second lien on the Loan Property, subject only to a mortgage made or granted by
way of security for,and only for,the purpose of obtaining construction, interim or
permanent financing necessary to enable Borrower to construct the Improvements
or any component thereof,free and clear of mechanic's liens,materialmen's liens,
taxes, special assessments, rights of parties in possession, other than the rights of
tenants as tenants only under existing leases, and questions of survey and subject
only to exceptions approved in writing by Lender.
(d) Organizational Documents and Resolutions. Deliver to Lender
copies of the (i) articles of organization for Borrower certified by the Minnesota
Secretary of State, (ii) operating agreement and member control agreement for
Borrower, (iii) a certificate of good standing for Borrower issued by the
Minnesota Secretary of State; and(iv) a certified copy 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.
(e) Insurance. Deliver to Lender (i) a certificate or policy for all
insurance required, under the terms hereof or of the Mortgage, to be maintained
by Borrower, and (ii) evidence that no art of the Loan Pro a is located in an
Y part Property
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.
(0 Compliance With Laws, Etc. Deliver to Lender such evidence as
Lender may require as to the compliance of the Loan Property and the
Improvements with (i) all applicable laws, codes, rules, regulations and
ordinances, including, without limitation, those relative to environmental
protection,protection of wetlands,building�p g and zoning matters and the Americans
with Disabilities Act, and (ii) the requirements of any restrictive covenants,
conditions and restrictions; conditional use permit and/or planned unit
development applicable to the Loan Property.
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(g) Hazardous Substances. Deliver to Lender evidence acceptable to
Lender, that (i)the Loan Pro ert has not been used as a hazardous waste storage Property
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.
385593v4 JSB EL185-12
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(h) 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
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policies referred to above.
(i) Project Cost and Total Equity Contribution Certificates. Deliver to
Lender a sworn project cost certificate ("Project Cost Certificate"), in a form
acceptable to Lender, verified on oath by the President of Borrower, showing the
itemized breakdown of the total cost of the Improvements, including, without
limitation, the cost of constructing the Improvements, special assessments, soft
costs and all other costs and charges to be paid from the Loan or necessary to
complete the Improvements, and a Certificate of Total Equity Contribution
showing the portion of all such costs and charges paid to the date of the Project
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Cost Certificate. Borrower shall deliver to Lender lien waivers, receipts for
payment and other evidence of payment acceptable to Lender with respect to any
such portion of costs and charges incurred to the date of the Project Cost
Certificate.
(j) Sworn Construction Statement. Deliver to Lender a Sworn
Construction Statement acceptable to Lender completed and executed by
Borrower and Borrower's general contractor which identifies all subcontractors
and suppliers having a contract with the Borrower or Borrower's contractor and
the amount of the contract between Borrower or Borrower's contractor and each
subcontractor or supplier with respect to the construction of the Improvements.
(k) Personal Guaranty. Deliver to Lender the Personal Guaranty,
executed by Robert G,McDonald,Denise A. McDonald and Gerald H. McDonald
(the"Guarantors") guaranteeing the obligations of the Borrower under the Note.
(1) Project Financing. Deliver to Lender evidence the Borrower has
closed on the construction loan or loans providing financing for the construction
of the Improvements in an amount sufficient, together with equity contributed by
the Borrower as shown in the Project Cost Certificate, to pay all costs shown in
the Sworn Construction Statement.
(m) Expend Funds; Lien Waivers. Deliver evidence acceptable to
Lender that Borrower has completed the Improvements not later than December
31, 2012 and paid all costs referred to in the Project Cost Certificate, and provide
an original written lien waiver from each contractor, subcontractor and supplier
who performed work or supplied materials which were paid for out of Borrower's
Total Equity Contribution.
Lender may waive any of the above requirements in its sole discretion.
5. Disbursement of Loan. Upon (a) receipt by Lender of the items required
pursuant to paragraph 4(a) — (1) above, (b) issuance by the City of a building permit for
the Improvements, (c) receipt by Lender of a signed settlement statement in connection
385593v4 JSB EL 185-12
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with closing on the acquisition of the Loan Property, including the land necessary for all
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required parking, and (d) determination by Lender that construction of the Improvements
has commenced, Lender agrees to disburse the Loan to Borrower, provided no event of
default exists under this Agreement or the Mortgage.
6. Business Subsidies Act.
(a) In order to satisfy the provisions of Minnesota Statutes, Sections
116J.993 to 1161995 (the "Business Subsidies Act"), Borrower acknowledges
and agrees that the amount of the "Business Subsidy" granted to the Borrower
under this Agreement is the amount of the Loan, and that the Business Subsidy is
needed because the cost of the Improvements is prohibitive for the Borrower to
undertake without the Business Subsidy. The public purpose of the Business
Subsidy is to develop new jobs within the City and better utilize an existing
property in the City. The Borrower agrees that it will meet the following goals
(the "Goals"): it will create 4 new full time equivalent positions at the Loan
Property at a wage of at least $12.00 per hour within two years of the date which
is the earlier of (i) the date the Borrower completes the Improvements in
accordance with the Plans and Specifications, or (ii) the date the Borrower
receives a certificate of occupancy for the Loan Property and the Improvements
(the"Benefit Date").
(b) If the Goals are not met,the Borrower agrees to immediately repay
all or a part of the Business Subsidy to the Lender on a pro rata basis,plus interest
("Interest") set at the greater of 2% or the implicit price deflator defined in
Minnesota Statutes, Section 275.70, Subdivision 2, accruing from and after the
Benefit Date, compounded semiannually. If the Goals are met in part, the
Borrower will 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 4 (i.e. number of jobs set forth in the
Goals).
(c) To the extent required by the Minnesota Department of
Employment and Economic Development, the Borrower agrees to (i) report its
progress on achieving the Goals to the Lender 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 Lender. The Lender shall
have the right to inspect the Borrower's books and records to verify compliance
with the requirements of this Section 6. The Borrower agrees to file these reports
no later than March 1 of each year commencing March 1, 2012, and within 30
days after the deadline for meeting the Goals. The Lender agrees that if it does
not receive the reports,it will mail the Borrower a warning within one week of the
385593v4 JSB EL185-12
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•
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 Lender a penalty of$100
for each subsequent day until the report is filed up to a maximum of$1,000.
(d) The Borrower agrees to continue operations of its Class I
restaurant facility in the City for at least five(5)years after the Benefit Date.
(e) The Borrower does not expect to receive any financial assistance in
connection with its activities at the facility located on the Loan Property from any
other state or local government entity.
(f) There is no parent corporation of the Borrower.
(g) The Borrower certifies that it does not appear on the Minnesota
Department of Employment and Economic Development's list of recipients that
have failed to meet the terms of a business subsidy agreement.
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 all work done, labor performed and material furnished in
connection therewith.
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.
9. Encumbrances and Transfer. Other than a or e a mort made granted b
mortgage g by
way of security for, and only for, the purpose of obtaining construction, interim or
permanent necessary ermanent financin necess to enable Borrower to construct the Improvements or any
component thereof, Borrower agrees not to sell, transfer, lease or convey the Loan
Property or any part thereof, or any interest therein, or encumber the Loan Property or
any part thereof, in any manner, without the prior written consent of Lender which
consent may be granted or withheld in the sole discretion of Lender. This requirement
conveyance, whether voluntary or
shall apply to each and every sale, transfer, lease or y
involuntary and whether or not Lender has consented to any prior sale, transfer lease or
conveyance. The Loan shall be immediately due and payable upon any sale, transfer,
lease, conveyance, or encumbrance of the Loan Property or any part thereof, or any
interest therein, in any manner,without the prior written consent of Lender.
10. Time of Essence. Time is of the essence in the performance of this
Agreement. If Borrower fails to commence construction of the Improvements prior to
Jul 1, 2012 or to submit the items required by Section 5 prior to December 31, 2012, no
July q y p
Loan proceeds will be disbursed.
385593v4 JSB EL185-12
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11. Assignability. Borrower shall not assign this Agreement or all or any part
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of any Advances to be made hereunder without written consent of Lender.
12. Miscellaneous Covenants of Borrower. Borrower covenants and agrees
with Lender that,without costs to Lender,Borrower will:
(a) Performance of Conditions. Promptly keep, perform and comply with all
of the terms, covenants and conditions to be kept and performed by
Borrower, as required by the City and any other governmental body
having jurisdiction over the Loan Property as a condition of platting,
rezoning or developing the Loan Property; keep unimpaired the rights of
Borrower under any permit or agreement issued or made by the City or
other governmental body having jurisdiction over the Loan Property and
the Construction Contracts and any other contracts obtained or held by
Borrower in connection with the construction or operation of the
Improvements; 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, or by the architect or other design
professional, the general contractor and any other contractors under all
contracts obtained or held by Borrower in connection with construction or
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operation of the Improvements.
(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 in connection with the
construction of the Improvements or operation of the Loan Property or any
contracts, documents or agreements referred to herein without the prior
written approval of Lender. Borrower will provide to Lender complete
documentation concerning any change made to the Improvements.
(c) Performance of Note, Mortgage, Etc. Without limiting the foregoing,
keep and perform all of the terms, covenants, conditions and requirements
of the Note,the Mortgage,and this Agreement.
(d) Insurance. During the term of the Mortgage, Borrower shall procure and
maintain or cause to be procured and maintained at its sole expense
builder's risk insurance, 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 by the Mortgage, insuring Lender and Borrower with coverages,
in amounts and with companies satisfactory to Lender. The policy or
385593v4 JSB ELI 85-12
-7-
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, title insurance fees, mortgage registration taxes and filing fees of the
Mortgage and any other instruments required under this Agreement,
except to the extent otherwise payable by Lender.
(f) Pay Certain Costs. Immediately after written demand from Lender and
without regard to whether or not any of the Loan proceeds have been
advanced under this Agreement,pay or cause to be paid from time to time
if requested by Lender, costs referred to in the Project Cost Certificate in
an amount equal to the costs referred to therein in excess of the Loan
proceeds remaining available to be advanced to pay such costs, and
furnish to Lender proof of payment thereof satisfactory to Lender and
Title.
(g) Copies of Plans, Contracts, etc. Furnish Lender from time to time as
reasonably requested by Lender, copies of the Plans and Specifications,
contracts and any other specifications and contracts relating to the
Improvements together with estimated costs of such Improvements.
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13. Warranties. Borrower represents and warrants to Lender the following:
(a) The Borrower is a 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 and any other instrument required
hereunder are within the powers of the Borrower and have been duly
authorized by all necessary action of the governing body of the Borrower.
This a Agreement and the Note, the Mortgage and any other instruments
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required hereunder have been duly executed and delivered and are the legal,
valid and binding obligations of the Borrower enforceable in accordance
with their respective terms.
(c) No litigation, tax claims or governmental proceedings are pending
or threatened against the Borrower or the Loan Property, and no judgment or
order of any court or administrative agency is outstanding against the
Borrower or the Loan Property which would have a materially adverse effect
on Borrower or the Loan Property.
(d) Borrower has 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 will file all such returns and pay all such
taxes for the current and future years.
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385593v4 JSB ELI85-12
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(e) All information, financial or other, which has been submitted by
Borrower and Guarantors in connection with the Loan is true, accurate and
complete in all material respects.
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.
15. Defaults. Each of the following shall constitute an Event of Default:
Borrower abandons the Loan Property, work on construction of the
(a)
Improvements is halted or the Improvements are not constructed in accordance
with this Agreement.
(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 or
Guarantors and, if such proceedings are instituted against Borrower or
Guarantors, an order, judgment or decree, without the consent of Borrower or
Guarantors appointing a trustee or receiver for Borrower or any part of its or their
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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 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 30 days
of entry.
Borrower fails to commence or com lete construction of the(d) p {
Improvements within the time designated in this Agreement or Borrower fails to
submit the items required by Section 5 prior to December 31,2012.
(e) 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, including, but not limited to,those relating to
the cost of or time for installation of the Improvements, 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 the necessary steps to
correct or cure the same within 30 days after written notice is given by Lender.
(f) 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
385593v4 JSB EL185-12
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t
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satisfaction, subject, however, to Borrower's right to contest the same in
accordance with the provisions of the Mortgage.
(g) A transfer which violates by Section 9 hereof occurs.
(h) Borrower(i) fails to pay any amount due under this Agreement,the
Note or the Mortgage when due; or (ii) fails to perform any other obligation to be
•
performed under this Agreement, the Note, the Mortgage or any other document
executed by Borrower pursuant to this Agreement and such failure continues
beyond any applicable cure period.
(i) Any representation or warranty by Borrower contained herein or in.
the Note, the Mortgage or any other instrument required hereunder is false or
untrue in any material respect when made.
(i) Borrower defaults in the payment or performance of anything by it
•
to be paid or performed under any 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 and as to defaults other than in the payment of a sum •
when due, the continuance thereof beyond any notice and/or cure period •
contained therein.
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:
(1) To refrain from making advances under this Agreement; •
(2) To enter into possession of the Loan Property and perform any and all
work and labor necessary to complete the Improvements substantially as
required under this Agreement and to do all things necessary or incidental
thereto;
•
(3) 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:
(i) All sums expended by Lender in effectuating its rights under
Subparagraphs (2) and (3) of this Paragraph shall be deemed to
have been advanced under this Agreement and to be secured by the
Mortgage and any other security document required under this
•
Agreement as security for the Loan.
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(ii) Borrower hereby constitutes and appoints Lender its true and
lawful 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 complete the Improvements or •
385593v4 JSB EL185-12
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(
cause the same to be completed; to use the plans and
specifications; to make such additions, changes and corrections in
the plans and specifications as Lender reasonably shall deem
necessary or desirable;to collect and use any funds of Borrower; to
use any funds which may remain unadvanced under this
Agreement;' to employ such contractors, subcontractors, agents,
design professionals and inspectors and enter into such contracts
and arrangements as Lender reasonably deems necessary for such
purposes; to pay, settle or compromise all existing bills and claims
which may be liens against the Loan Property or as may be
necessary or reasonably desirable for the completion of the
Improvements or clearance of title; to execute all applications and
certificates in the name of Borrower; to prosecute and defend all
actions or proceedings in connection with the construction of the
Improvements on, or any other matter relating to, the Loan
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Property and do any and every act which Borrower might do in its
own behalf; (b) to enforce by any means that Lender then
reasonably deems necessary or advisable, all of the terms,
covenants and conditions of any permit or agreement issued by the
City or any other governmental body having jurisdiction over the
Loan Property or the construction contracts or any other contracts
obtained or held by Borrower in connection with the construction
of and any other contracts; (c) to perform each of the terms,
covenants and conditions to be kept and performed by Borrower
under any permit or authorization issued by the City or any other
governmental body having jurisdiction over the Loan Property or
the construction contracts or any other contracts and/or leases
obtained or held by Borrower in connection with the construction
or operation of the Improvements, and any other contracts; (d)
without limiting the foregoing to perform each of the terms,
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covenants and conditions to be kept or performed by Borrower
under this Agreement, the Mortgage and any other instrument
required under this Agreement; and (e)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);
The owers herein ranted Lender shall be deemed to be owers
(iii) powers granted powers
with an interest and the same are irrevocable;
(4) cancel this Agreement;
(5) bring appropriate action to enforce such performance and the
correction of such Event of Default;
385593v4 JSB EL 185-12
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(6) declare the entire unpaid principal of the Note and all accrued
interest thereon immediately due and payable without notice;
(7) 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 Mortgage and such other security instrument.
16. Default under Note and Mortgage. The failure by Borrower to keep or
perform any of the terms, covenants and conditions to be kept or performed by it under
this Agreement shall constitute a default under the Note, the Mortgage 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:
GRM of Minnesota,LLC
19141 Freeport St NW
Elk River,Minnesota 55330
If to Lender:
Housing and Redevelopment Authority of the City of Elk River
13065 Orono Parkway
Elk River, Minnesota 55330
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
p tY Y g g g Yg g
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. Assignability. Borrower shall not assign this Agreement or all or any part
of any advances to be made hereunder without written consent of Lender which consent
may be granted or withheld in the sole discretion of Lender.
385593v4 JSB EL185-12
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21. 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.
22. 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.
23. Entire Agreement. This Agreement, the Note, the Mortgage 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
su p ersede all prior understandings and agreements, both oral and written. This
Agreement may be amended only in a writing signed by the parties hereto.
24. 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
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collection of any amounts which become.due to Lender under this Agreement,the Note,
the Mortgage 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
Mortgage or the other documents executed in connection herewith.
25. Subordination. In order to facilitate the obtaining of financing for the
construction of the Improvements, Lender agrees to execute a subordination agreement
in form and substance mutually acceptable to Lender and the . Small Business
Adminitration lender of such financing to subordinate the provisions of the Mortgage to
the documents executed in connection with the SBA loan.
[Signature Pages follow]
[Remainder of page intentionally left blank.]
385593v4 JSB EL185-12
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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.
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GRM OF MINNESOTA, LLC
By:
Name:Rd. `.-fo r , ( j
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Its:
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385593v4 JSB 0,185-12
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Signature Page to Loan Agreement
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IN TESTIMONY WHEREOF, each of the parties hereto has caused these
presents to be effective as of the day and year first above written.
HOUSING AND REDEVELOPMENT
AUTHORITY OF THE CITY OF ELK
RIVER,MINNESOTA
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By: —� fk
Name: Annie Deckert
Its: Director of Economic
Development
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And By: ' /Stewart Wilson
Its: Chairman,Elk River Housing&
Redevelopment Authority
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385593v4 JSB EL185-12
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Office of the Registrar of Titles
L
4)77 Sherburne County, MN
Doc. No. 46200
Cered,filed,and/or recorded on
/79?,35 DA"ri: 26 iii 8/25/2011 12:05 PM
MTG REGISTRY TAX OF $ 20.00 FA 1 D Cert.: 9282, 928:
C jaMichelle Ashe,Registrar of Titles
,
BI Deputy
Couqi AudiToriTroasurer
Fees: $66.00
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Deputy Auditor/Treasurer 11 1.111 -I II- II
46200
MORTGAGE
AND
ASSIGNMENT OF RENTS
AND
SECURITY AGREEMENT
AND
FIXTURE FINANCING STATEMENT
This Mortgage and Assignment of Rents and Security Agreement and Fixture
C/) Financing Statement ("Mortgage") is made as of August 2_4-rv‘, 2011, by GRM of
Minnesota, LLC, a Minnesota limited liability company, and Robert G. McDonald
U.I (collectively, the "Mortgagor"), in favor of the Housing and Redevelopment Authority of
CC the City of Elk River, Minnesota, a public body corporate and politic of the State of
CC Minnesota("Mortgagee").
THE MAXIMUM AMOUNT SECURED BY THIS MORTGAGE IS $90,000.00
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. GRM of Minnesota, LLC, a Minnesota limited liability company
("Borrower") has executed and delivered to Mortgagee a Promissory Note effective as of
the date hereof in the principal amount of$90,000.00 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 August 1, 2016 (the
Promissory Note as the same may be renewed, extended, replaced, modified or amended
is herein called the"Note").
B. Robert McDonald ("McDonald") is the President of Borrower and as such,
McDonald receives the beneficial interest of the amounts being loaned to Borrower by
Mortgagee pursuant to the Note.
385595v3 JSB EL185-12
A-1
B. McDonald and Borrower own all of the Mortgaged Property (hereafter
defined), and are executing and delivering this Mortgage to Mortgagee as security for
payment of the Note.
NOW THEREFORE, in consideration of the Recitals and for the purpose of
securing the repayment of all advances made under the Note; all other sums which may
be advanced by Mortgagee in accordance with this Mortgage, and all interest
(collectively "Indebtedness"); and to secure the performance of all covenants, conditions
and agreements herein and in the Note, 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 to Mortgagee as and when due and
payable the principal of and the interest on the Note and all other indebtedness, 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 is lawfully seized of the Mortgaged Property in fee simple;
that it has good right and full power and authority to execute this Mortgage and to
mortgage the Mortgaged Property; that the Mortgaged Property is free from all liens and
385595v3 JSB EL185-12
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encumbrances except those identified in Exhibit B hereto ("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
Section 1.1 Payment of Indebtedness; Observance of Covenants. Mortgagor
will duly pay when due each installment of principal and interest on the Note and all
other Indebtedness and will perform all other agreements and covenants by Mortgagor to
be performed hereunder.
Section 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
Indebtedness, 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 Indebtedness. 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 Indebtedness, the Indebtedness, 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
Indebtedness unlawful or usurious, in which event Mortgagor shall concurrently
therewith pay the remaining lawful and non-usurious portion or balance of said
Imposition.
Section 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; except for Permitted Encumbrances set forth in Exhibit B, 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.
385595v3 JSB EL185-12
-3-
Section 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 insure 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, 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.
Section 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
written 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.
385595v3 JSB ELI 85-12
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Section 1.6 Insurance.
(a) So long as the Indebtedness remains unpaid, Mortgagor shall, at its
own cost, maintain or cause to be maintained with insurers of recognized
responsibility acceptable to Mortgagee the following insurance:
(i) hazard and fire insurance on the improvements now
existing or 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 insurable value thereof
(without deduction for depreciation) or such additional amounts and for
such periods as may be required by Mortgagee;
(ii) comprehensive general public liability insurance covering
the 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 $1,000,000.00 combined single limit per occurrence and naming
Mortgagee as an additional insured;
(iii) insurance covering the Mortgaged Property against loss or
damage 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 coverages;
(iv) rent and rental value insurance or business interruption
insurance covering risk of loss due to the occurrence of any hazards
described in the foregoing Subsections (i), (ii), and (iii) in an amount equal
to income from the Mortgaged Property, and Impositions, for a period of
twelve (12) months and based upon such estimate of annual income either
from Mortgagor's use of the Mortgaged Property or any leases of the
Mortgaged Property, or both, as Mortgagee may reasonably estimate; and
(v) such other forms of insurance in such minimum amounts as
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 indebtedness secured hereby. In the event of
foreclosure of this Mortgage, all right, title and interest of Mortgagor in and to any
385595v3 JSB EL185-12
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insurance policies then in force shall pass to the purchaser at the foreclosure sale.
Mortgagee agrees that the insurance required by this Mortgage may be provided
by a tenant of the Mortgaged Property or an affiliate of Mortgagor.
(b) The policies of all such insurance shall have mortgagee and loss
payable provisions in favor of Mortgagee and Franklin Bank. All such insurance
shall be in form acceptable to Mortgagee, shall provide for at least 30 days' prior
written notice of cancellation, termination or modification thereof to Mortgagee,
shall permit Mortgagee to make 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.
(c) 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 Indebtedness 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.
(d) If Mortgagee elects to apply the Net Proceeds to repair and
restoration of 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, 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 Indebtedness. If an Event of Default occurs
prior to full disbursement, any undisbursed portion of the Net Proceeds and any
385595v3 JSB ELI 85-12
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funds deposited by Mortgagor with Mortgagee may at Mortgagee's option be
applied to the Indebtedness.
Section 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, and in no event is
Mortgagee entitled to inspect any records maintained by Mortgagor related to any other
matter, including but not limited to any records maintained by Mortgagor related to
Mortgagor's parishioners.
Section 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 Indebtedness 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.
Section 1.9 Hazardous Materials. Mortgagor hereby represents and warrants
to Mortgagee that to the best of Mortgagor's knowledge and except as may have been
disclosed in written environmental reports provided to Mortgagee, 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
385595v3 JSB EL185-12
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(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 to the best of Mortgagor's knowledge, except as disclosed in the
environmental referred to above, 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 except for the use, storage and handling of
Hazardous Substances in the ordinary course of operating Mortgagor's business on the
Mortgaged Property. Mortgagor will cause all future use, storage, handling and disposal
of Hazardous Substances to be in accordance with all applicable laws, ordinances, rules
and regulations and all disposals to be off of the Mortgaged Property. 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. 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 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.
Section 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:
(a) One-twelfth (1/12) of the Impositions next to become due upon the
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
(b) One-twelfth (1/12) of the annual premiums on each policy of
insurance 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.
385595v3 JSB ELI85-I2
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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 Indebtedness, in such order and manner as
Mortgagee may elect. When the Indebtedness has been fully paid, any remaining
deposits shall be returned to Mortgagor as its interests may appear. All deposits are
hereby pledged as additional security for the Indebtedness, 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 makin g any payments,
YP �
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,
,
p y
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.
ARTICLE TWO
EVENTS OF DEFAULT
Each of the following occurrences shall constitute an Event of Default hereunder:
Section 2.1 Failure to pay. Mortgagor's failure to pay any amount due under
the Note or any other amount required to be paid by Mortgagor hereunder or under the
Loan Agreement when due.
Section 2.2 Other Performance Failure. The Mortgagor's failure duly to
observe or perform any of the other terms, conditions, covenants or agreements required
to be observed or performed by Mortgagor hereunder or under the Loan Agreement and
the continuation of such failure for a period of 30 days after Mortgagee gives Mortgagor
written notice of such failure.
Section 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 warrant y of title
or any other warranty made by Mortgagor hereunder.
Section 2.4 Misrepresentation. The making of any material misstatement in
any financial statement or report submitted to Mortgagee by or on behalf of Mortgagor.
385595v3 JSE ELI 85-12
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Section 2.5 Foreclosure. The institution of 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).
Section 2.6 Sale of Property Other than Permitted Encumbrances, the sale,
assignment, conveyance, mortgage, encumbrance, lease or transfer of Mortgagor's
interest in the Mortgaged Property or any part thereof, or any interest therein without the
prior written consent of Mortgagee, which consent may be granted or withheld by
Mortgagee at its sole discretion.
Section 2.7 Breach of Other Agreements, etc. Any default or breach under any
other note, mortgage or other obligation of Mortgagor now held or hereafter acquired by
Mortgagee, or any other failure to comply with the terms and conditions thereof and the
continuance thereof beyond any applicable notice andior cure period contained therein.
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):
Section 3.1 Acceleration. Mortgagee may declare immediately due and
payable all unmatured Indebtedness secured by this Mortgage, and the same shall
thereupon be immediately due and payable, without notice or demand.
Section 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.
Section 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 Indebtedness 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 Note 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
385595v3 iSI3 ELI 85-12
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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 attorney's fees allowed by law.
Section 14 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 in the following order to (0 payment of the reasonable fees of said
receiver, (ii) application of tenant security deposits as required by Minnesota Statutes §
504B.178, (iii) payment when due of 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 Indebtedness (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 attorney's
fees, to the repayment of the Indebtedness 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.
Section 3.5 Specific Performance. Mortgagee may bring suit for specific
performance of any covenant or warranty hereunder.
Section 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 Indebtedness 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
Indebtedness 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 Indebtedness. 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 Indebtedness, extend the
time or agree to alter the terms of payment of any of the Indebtedness, 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
385595v3 JSB ELI 85-12
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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 Indebtedness, nor affect the priority and first lien status of
this Mortgage upon any property not so released.
ARTICLE FOUR
ASSIGNMENT OF RENTS
Section 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.
Section 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
385595v3 JSB EL185-I2
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(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.
Section 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.
Section 4.4 Application of Rents. All Rents collected by Mortgagee, or by a
receiver, shall be held and applied in the following order:
(a) to payment of all reasonable fees of the receiver, if any, approved
by the court;
(b) to the repayment when due of all tenant security deposits pursuant
to the provisions of Minnesota Statutes § 50413.178;
(c) to 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;
385595v3 JSB ELI 85-12
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(d) to 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;
(e) to payment of expenses incurred for normal maintenance of the
Mortgaged Property;
(0 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
(g) 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.
Section 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 Indebtedness exists after such foreclosure sale.
Section 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 negligence in the management,
upkeep, repair or control of the Mortgaged Property resulting in any loss or any injury or
death to any person.
Section 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
385595v3 JSB ELI 85-12
-14-
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 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.
Section 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.
Section 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.
Section 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."
385595v3 JSB EL185-12
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ARTICLE FIVE
CONNDEMNATION
Section 5.1 Notice. Mortgagor will give Mortgagee prompt notice of any
action, actual or threatened, in condemnation or eminent domain, direct or inverse.
Section 5.2 Awards. 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 Indebtedness, 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 Section 1.6(d) hereof.
ARTICLE SIX
UNIFORM COMMERCIAL CODE
Section 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 the operation of the
385595v3 JSB EL185-12
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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 the terms of any one or more of its 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.
Section 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:
•
385595v3 JSB EL185-12
-I 7-
(a) Name and Address of Debtors:
GRM of Minnesota, LLC
19141 Freeport St NW
Elk River, Minnesota 55330
Organization 1.D.Number: 4383-LLC
Robert McDonald
9111 Andrie Court NW
Ramsey, Minnesota 55303
Organization I.D.Number: None
(b) Name and address of Secured Party:
Housing and Redevelopment Authority of the City of Elk River
13065 Orono Parkway
Elk River, MN 55330
(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. The owner of such real estate is
Debtor.
ARTICLE SEVEN
MISCELLANEOUS
Section 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.
Section 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.
Section 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:
385595v3 JSB ELI 85-12
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GRM of Minnesota, LLC
19141 Freeport St NW
Elk River, Minnesota 55330
Section 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.
Section 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.
Section 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.
Section 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.
Section 7.8 Construction Mortgage. This Mortgage secures an obligation
incurred for the construction of an improvement on land and is a construction mortgage.
This Instrument was Drafted by:
KENNEDY & GRAVEN, Chartered (JSB)
470 U.S. Bank Plaza
200 South Sixth Street
Minneapolis, Minnesota 55402
Telephone: (612) 337-9300
[Remainder of page intentionally left blank]
[Signature Pages follow]
385595v3 JSB ELI 85-12
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Signature Page to Mortgage
IN WITNESS WHEREOF, Mortgagor has caused this Mortgage to be duly
executed as of the day and year first written.
/0d4/74,/ :1 7
R•BERT G. MCDONALD
STATE OF MIN-NTESOTA )
) ss.
COUNTY OF 3k/6 t.i.ill e)
The foregoing instrument was acknowledged before me on / L6-V57 ) 5'(
2011,by Robert a McDonald.
4df-/:6t-t---
•ii DEBORAH KAY HUEBNER Notary Public
g
— NOTARY PUBLIC.MINNESOTA
.., -,- My Commission Expires:
My emission Bcpires Jan,31,2015
GRM OF MINNESOTA, LLC
By - "c -4 .
Its fief/ . 4 '1t
STATE OF MINNESOTA )
) ss.
COUNTY OFhe/eat'oe-)
The foregoing instrument was acknowledged before me on 4446-ed S 7 -D--,V
2011, by Robert G. McDonald, the President of GRM of Minnesota, LLC, a Minnesota
limited liability company, on behalf of the comp y.
' t/ritti (d
Notary Public
DEBORAH KAY HUEBNER My Commission Expires:
At..., NOTARY PUBUC-MINNESOTA
.
, My Commission Expires Jan.31,2015
385595v2 BB ELI 85-12
S-1
EXHIBIT A
Legal Description
The following described real property located in the County of Sherburne and State of
Minnesota:
Lot 2, Block 4, Elk Park Center, according to the recorded plat thereof, City of Elk River,
Sherburne County, Minnesota and the South 65.00 feet of Lot 1, Block 4, Elk Park
Center, according to the recorded plat thereof, City of Elk River, Sherburne County,
Minnesota
Torrens Property
Torrens Certificate No. 5625 (Lot 2,Block 4)
Torrens Certificate No. 5441 (all of Lot 1,Block 4)
385595v2 JSB ELI 85-12
A-1
EXHIBIT B
Permitted Encumbrances
I. The boundary lines of the property are shown upon the Certificate of Survey dated
May 10, 1993, filed herein and evidenced upon the property by the placement and
location of Judicial Landmarks. (Per Recital on Certificate of Title.) (Lot 2)
2. Subject to utility and drainage easement as shown on the plat of Elk Park Center.
(Per Recital on Certificate of Title.) (Lots 1. and 2)
3. Subject to all rights of access, being the right of ingress and egress from Trunk
Highway No. 169, as contained in Final Certificate recorded as Sherburne County
Recorder Document No. 104028 as to Lots 1, 2 and 3, Block 4, Elk Park Center.
(Per Recital on Certificate of Title.) (Lots I and 2)
4. Terms and conditions of a Developer Agreement by and between Elk Park Center
Limited Partnership and the City of Elk River dated May 4, 1994, filed May 19,
1994, as Document No. T16613. (Lots 1 and 2)
5. Terms and conditions of a Planned Unit Development Agreement by and between
the Elk Park Center Limited Partnership and the City of Elk River dated May 4,
1994, filed May 19, 1994, as Document No. T16614. (Lots 1 and 2)
6. Terms and conditions of an Operation and Easement Agreement between Dayton
Hudson Corporation and the Elk Park Center Limited Partnership, dated May 2,
1994, filed May 19, 1994, as Document No. T16618, as amended by that certain
Restatement of Operation and Easement Agreement dated September 22, 1994,
filed December 22, 1994 as Document No. T17293; as further amended by that
certain Declaration Amending Operation and Easement Agreement dated March
1, 1995, filed March 17, 1995, as Document No. T17482. (Lots 1 and 2)
7. Terms and conditions of Order Granting Conditional Use, dated November 8,
1994, filed December 22, 1994, as Document No. 17291. (Lot 1)
8. Terms and conditions of Declaration of Restrictions, dated October 30, 1994, filed
December 22, 1994, as Document No. 17924. (Lot 1)
9. Terms and conditions of Declaration of Restrictive Covenant (Fashion Bug) dated
August 9, 1995, filed September 21, 1995, as Document No. T18112; as
consented to by a Joinder and Consent Agreement dated October 31, 1995, filed
November 27, 1995, as Document No. T18378. (Lot 2)
10. Terms and Conditions of Order Granting Conditional Use, dated June 13, 2011,
filed July 11, 2011 as Document No. 46061. (Lot 2)
385595v2 iSB al 85-12
B-2
H. Terms and Conditions of Certificate of Exemption from Subdivision Regulations
dated May 17, 2011. filed July 11. 2011 as Document No. 46062.(Lots 1 and 2)
12. Mortgage dated August 12, 2011 filed August 15, 2011, as Document No. 46165
executed by GRM of Minnesota, LLC, a Minnesota limited liability company, as
mortgagor, to Bank Vista, as mortgagee, in the original principal amount of
$1,481,890.00.
13. Financing Statement filed August 15, 2011, as Document No. 46166 between
GRM of Minnesota, LLC, a Minnesota limited liability company, as debtor, and
Bank Vista, as secured party.
3855950 JSB EL185-12
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PROMISSORY NOTE
Effective as of August , 2011
Amount: $90,000.00
Interest: 2.00%
Maturity: August 1, 2016
FOR VALUE RECEIVED, the undersigned, GRM OF MINNESOTA, LLC, a
Minnesota limited liability company, ("Borrower"), promises to pay to the order of
Housing and Redevelopment 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 August 1, 2016 ("Maturity Date"), the principal sum of
Ninety Thousand and 00/100 Dollars ($90,000.00), together with interest on any and all
amounts remaining unpaid thereon from time to time from the date hereof(computed on
the basis of actual days elapsed in a year of 360 days) at a fixed interest rate of two
percent(2%)per annum.
The Borrower shall be obligated to make semiannual installments ("Senjiannual g
Installments") in the amount of 4,1 ki(6 and /100 Dollars ($ 4 1 14:lb
which Semiannual Installments shall commence on February 1, 2012, and continue on
each February 1 and August 1 thereafter through and including the Maturity Date, when
all unpaid accrued but unpaid interest shall be payable in full. The final payment will 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
Mortgage and Assignment of Rents and Security Agreement and Fixture Financing
Statement("Mortgage") given by Borrower and Robert McDonald to Lender of even date
herewith. All of the terms and conditions contained in the Loan Agreement and the
Mortgage 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 Semiannual 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 Semiannual Installment. The Borrower shall pay this late charge
fee on demand, however, collection of the 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 Mortgage.
385594v4,TSB EL185-12
Each Semiannual 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 the
Mortgage and any cure period provided for in the Loan Agreement or the Mortgage 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 Semiannual Installment or reduce the amount of any such
Semiannual 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 p
romises to pay all costs in connection with the enforcement of this
p
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 entr of judgment or for the
p p p Y J
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
Mortgage, 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.
Time is of the essence hereof.
385594v4 JSB EL185-12
•
-2-
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.
•
{
385594v4 JSB EL185-12
-3-l-
IN WITNESS WHEREOF, the undersigned has caused this note to be effective
as of the day and year first above written.
•
GRM OF MINNESOTA, T.I_,C
r')
By /' c, ve7
•
Its Aes,'4)&1
•
7t
}
}
fI
{
385594v2 JSB EL 185-12 •
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