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3.5 EDSR 11-21-2016 Request for Action L.- River To Item Number Economic Development Authority 3.5 Agenda Section Meeting Date Prepared by Consent November 21,2016 Amanda Othoudt, EDD Item Description Reviewed by Satisfaction Agreement for Blue Egg Market,LLC Cal Portner,City Administrator Reviewed by Action Requested Approve,by motion,a satisfaction of mortgage for Blue Egg Market LLC. Background/Discussion The EDA approved a$74,500 microloan on April 25, 2013, to Blue Egg Market,LLC. for the purpose of financing inventory,equipment, furniture,and fixtures in conjunction with renovating an existing facility located at 707 Main Street. The city received payment of the balance of the loan in full on October 17, 2016. Sherburne County Abstract on behalf of the owner of Blue Egg Market,LLC is requesting a satisfaction of mortgage be signed and recorded releasing them of all obligations under the Mortgage Agreement. Financial Impact N/A Attachments • Sherburne County Abstract Request for Satisfaction • Satisfaction Agreement • Mortgage Document Number 770025(April 26,2013) • Loan Agreement • Promissory Note • Personal Guarantee 1OIEREO � r t�A�'URE Sherburne County Abstract&Title 351 Main Street OCT 1 ? 2016 Elk River,MN 55330 Phone:763-441-3280 Fax: 763-441-8390 �.. PAYOFF&AUTHORIZATION Date: October 1.3,2016 Lender:City of Elk River EDA Re: Mortgagor: Blue Egg Market LLC Address: / Oir-Cil 0 YUL Loan# k//'4` c 'ellIk. ,) Property: 707 Main St.NW Elk River,MN 55330 Our File No. 1643482 �� ATTENTION: Mortgage Payoff Department: \1 \ Enclosed please find our escrow check in the amount of$50,750.19 which represents( X payment in full,or partial payment)of the above referenced mortgage. Please send a( X Satisfaction of Mortgage, Partial Release)and A COPY OF THIS LETTER TO: Sherburne County Abstract&Title Mortgage dated:4-25-13 351 Main Street Mortgage filed:4-26-13 Elk River,MN 55330 Mtg Doc No.: 770025 County:Sherburne Thank - ou, '''411 .,`•-.— NOTE: Please forward any overages and remaining escrow balances to the Mortgagor. Also: Please reference our File#when returning the Satisfaction/Partial Release to us. Thank You. ••••••••••••••••••••••••••••••••••••••••••••••••••♦••••••••••••••••s•••••••••••••••••••••••••••••• THE UNDERSIGNED AUTHORIZES SHERBURNE COUNTY ABSTRACT&TITLE,IT'S AGENTS OR ASSIGNS,TO VERIFY THE ACCOUNT AND PAYOFF INFORMATION THAT ARE NEEDED TO PROCESS OUR CLOSING.IT IS UNDERSTOOD THAT A PHOTOCOPY OF THIS FORM WILL ALSO SERVE AS AUTHORIZATION. . NOTICE TO EQUITY LINE OR LINE OF CREDIT MORTGAGE HOLDERS THE UNDERSIGNED BORROWERS HEREBY INSTRUCT YOU TO CLOSE OUT THE ACCOUNT AND FORWARD A SATISFACTION TO SHERBURNE COUNTY ABSTRACT&TITLE ('''- tr( 4 i in A itlf Vic9< 1---- /(1-/(1-tt ()bin L.DeWitt •......•.•...!...•.•....•.•.•.••••••••••••••......•.•.............•••••••••••••••••••••••••••••••• �a Office of the County Recorder Sherburne County,MN DocNo.770025 Certified,tiled,mid/at monied on /� 4/2612013 2:50 PM NO.1�)q6.,2 DA't'E g �J�------- ;.,�.le Ache.County Recorder MTG REGISTRY TAX OF$12/ AtD �`'�� By, peputy F8.5: $4600 County Auditor/Treasurer 111111111111111 I 416Adli.06.2 A-44' DeputyAuditor reasuror 770025 MORTGAGE AND ASSIGNMENT OF RENTS AND SECURITY AGREEMENT AND fJXTUREFINANCING STATEMENT This Mortgage and Assignment of Rents and Security Agreement and Fixture Financing Statement ("Mortgage") is made as of April 25, 2013, by BLUE EGG MARKET, LLC, a Minnesota limited liability company ("Mortgagor"}, in favor of Economic Development Authority of the City of Elk River, a public body corporate and politic of the State of Minnesota("Mortgagee"). THE MAXIMUM AMOUNT SECURED BY THIS MORTGAGE IS $74,500.00 OF PRINCIPAL INDEBTEDNESS, TOGETHER WITH ALL INTEREST ACCRUING THEREON AND ANY AMOUNTS WHICH MAY BE ADVANCED BY MORTGAGEE IN PROTECTION OF THE MORTGAGED FREMISES OR TIC LIEN OF THIS MORTGAGE. RECITALS A. Mortgagor has executed and delivered to Mortgagee a Promissory Note effective as of the date hereof in the principal amount of$74,500.00 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 May I,2023 (the Promissory Note as the same may be renewed, extended, replaced, modified or amended is herein called the"Nate"); Return to; Sherburne Co.Abstract&TWo CO. 351 Main street j 3L )1q , Elk River,MN 55330 13. Contemporaneous herewith, Mortgagor has entered into that certain loan agreement (the"Loan Agreement") setting forth the terms and conditions of the parties' obligations with relation to this loan facility. In addition to this Mortgage, Mortgagor's obligations under the Note are secured by a "Personal Guaranty" of all of Mortgagor's obligations under the Note,the Loan Agreement,this Mortgage and any other documents relating to or arising from this loan facility. 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 equipment purchased with the Loan proceeds, as set forth on Exhibit A to the Loan Agreement, as updated from time to time (collectively, the "Equipment"); and (v) all additions, accessions, increases, parts, fittings, accessories, replacements, substitutions, betterments, repairs and proceeds to any and all of the foregoing; and (vi) 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 (vii) 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 leg F g 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 the vendee under those certain contracts for deed set forth as items I and 2 on Exhibit B attached hereto (the "Contracts for Deed"); 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 encumbrances except those identified in Exhibit B hereto; 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 L l P nient of Indebtedness:Observance.of Covenants. Mortgagor will duly pay when due each installment of principal and interest on the Note, the Contract for Deed and all other Indebtedness and will perform all other agreements and covenants by Mortgagor to be performed hereunder. 1.2 Payment of Impositions. Mortgagor agrees to pay, before a penalty might attach for nonpayment thereof, all taxes,assessments,water and sewer charges,and other fees,taxes and charges of whatsoever nature levied upon or assessed or placed against the Mortgaged Property(collectively"Impositions"). Mortgagor will likewise pay all taxes, assessments and other charges, levied upon or assessed, placed or made against, or measured by,this Mortgage,or the recordation hereof, or the 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. 1.3 Pa ent of a ,-ratin. Costs. Prior Mort l a l es and Liens. Mortgagor agrees that it will pay, or cause to be paid, all operating costs and expenses of the Mortgaged Property; keep the Mortgaged Property free from mechanics' and material suppliers' and other liens, subject to Mortgagor's right to contest in good faith as set forth in Section 1.4 hereof; will keep the Mortgaged Property free from levy, execution or -3- 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. 1.4 Contest of Imaitions.Liens and Levies. Mortgagor shall not be required to p ay, 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. 1.5 Maintenance and Repairs; Inventory. Mortgagor agrees that it will keep and maintain (or cause to be kept and maintained) the Mortgaged Property (including, m. ' without limitation, the Equipment) in good condition and repair, free from any waste or misuse, and will comply with all requirements of law, municipal ordinances and regulations, restrictions and covenants affecting the Mortgaged Property and its use, and will promptly repair or restore any buildings, improvements or structures now or hereafter on the Mortgaged Property which may become damaged or destroyed. Mortgagor further agrees that without the prior consent of Mortgagee it will not remove from the Mortgaged Property any or all of the Equipment or 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 if list any conditional sales contracts and other title retention arrangements to which such personal property may be subject. 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 replacement cost 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 $2,000,000.00 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(1),(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 -5- 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 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. All such insurance shall be in form acceptable to Mortgagee,shall provide for at least thirty(30)days' prior written notice of cancellation, termination or modification thereof to Mortgagee, shall permit Mortgagee to make 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) Subject to the rights of the vendor under the Contracts for Deed, Mortgagee i s 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; p rovided, 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(1)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 -6- �- disbursement practices, including, but not limited to, approval of the plans and specifications, appraisal, its other conditions for disbursement of draw requests and inspection of the work, and such other reasonable conditions as Mortgagee may impose and (iv) any Net Proceeds not so applied to repair and restoration shall be applied to the payment of the Indebtedness. If an Event of Default occurs prior to full disbursement, any undisbursed portion of the Net Proceeds and any funds deposited by Mortgagor with Mortgagee may at Mortgagee's option be applied to the Indebtedness. 1.7 Inpection. 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. 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. 1.9 Lisuardous Materials. Mortgagor hereby represents and warrants to Mortgagee that the Mortgaged Property has not at any time been used for storage, -7- transfer,transportation or disposal of hazardous substances,hazardous wastes,pollutants, contaminants or similar substances (collectively "Hazardous Substances"), or for the discharge of the same into the environment in violation of any law,regulation,or judicial or administrative order or judgment;and the Mortgaged Property is not contaminated by, and does not contain, any Hazardous Substances. Mortgagor will not use or permit the use of the Mortgaged Property for such purposes. Mortgagor will fully indemnify Mortgagee and defend Mortgagee against any claims, losses,damages, actions,costs and expenses of any kind, including without limitation, court costs and reasonable attorneys fees, in connection with any Hazardous Substances now or hereafter located on the Mortgaged Property or any other violation of any federal, state or local environmental statute, ordinance, rule or regulation ("Environmental Laws"). This indemnity shall not apply to the extent that the willful act or omission of the Mortgagee contributes to the actual or threatened discharge, dispersal, release, storage, treatment,generation, disposal or escape of the Hazardous Substances. The indemnity provisions of this Section shall survive the foreclosure or other termination of this Mortgage. Without limiting the generality of the foregoing, Mortgagor agrees that upon the discovery of a release or threatened release of Hazardous Substances on or from the Mortgaged Property, it will promptly, diligently and without cost to Mortgagee, proceed to remediate all contamination in accordance with all applicable laws, ordinances, rules and regulations, and the requirements of all governmental authorities having jurisdiction, and otherwise to the satisfaction of Mortgagee. A failure to do so shall constitute a default by Mortgagor under this Mortgage. 1.10 Escrows. Upon the request of Mortgagee after the occurrence of an Event of Default(whether or not such Event of Default is subsequently cured), Mortgagor shall deposit with Mortgagee, on the first day of each and every month,commencing.with the date the first payment shall be due on the Note which is after the date of such request, a deposit to pay the Impositions and insurance premiums (collectively "Charges") in an amount equal to: (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. 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 -8- 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 interest 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 making any payments, Mortgagee may rely on any statement, bill or estimate procured from or issued by the payee without inquiry into the validity or accuracy of the same. If the taxes shown in the tax statement shall be levied on property more extensive than the Mortgaged Property, Mortgagee shall be under no duty to seek a tax division or apportionment of the tax bill, and any payment of taxes based on a larger parcel shall be paid by Mortgagor, and Mortgagor shall expeditiously cause a tax subdivision to be made. ARTICLE TWO EVENTS OF DEFAULT Each of the following occurrences shall constitute an Event of Default hereunder: 2.1 Failure to pay. Mortgagor's failure to pay any amount due under the Note, the Contracts for Deed or any other amount required to be paid by Mortgagor hereunder when due. 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 in the Contract for Deed and the continuation of such failure for a period of thirty (30) days after Mortgagee gives Mortgagor written notice of such failure. 2.3 Breach of Warranty of Title. Subject to Mortgagor's right to contest in good faith as set forth in Section 1.4 hereof, the breach of any warranty of title or any other warranty made by Mortgagor hereunder. 2.4 Misrepresentation. The making of any material misstatement in any financial statement or report submitted to Mortgagee by or on behalf of Mort ;gor. 2.5 Foreclosure. The institution of a cancelation or other enforcement action of either or both Contracts for Deed or foreclosure or other enforcement proceedings by -9- the holder of any other lien on the Mortgaged Property (without hereby implying Mortgagee's consent to any'mortgage or other lien). 2.6 Sale of Property. The sale, assignment, conveyance, mortgage, encumbrance, lease or transfer of: (i)Mortgagor's interest in the Mortgaged Property or any part thereof, or any interest therein; or (ii) any transfer in ownership or control of Mortgagor, without the prior written consent of Mortgagee, which consent may be granted or withheld by Mortgagee at its sole discretion. r Agreements. Any default or breach under any other 2.9 Breach of Othe Agree eats, etc. y y 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 and/or cure period contained therein. ARTICLE THREE ACCELE1_•TION AND FORECLOSURE.OTHE' REMEDIES Upon any Event of Default,Mortgagee may,at its option,exercise one or more of the following rights and remedies(and any other rights and remedies available to it): 3.1 Acceleration. Mortgagee may declare immediately due and payable all unmatured Indebtedness secured by this Mortgage, and the same shall thereupon be immediately due and payable,without notice or demand. 3.2 UCC Remedies. Mortgagee shall have and may exercise with respect to all fixtures and any personal property included in the Mortgaged Property, all the rights and remedies accorded upon default to a secured party under the Uniform Commercial Code,as in effect in the State of Minnesota. 3.3 Foreclosure: Action or Advertisement. Mortgagee may (and is hereby authorized and empowered to) foreclose this Mortgage by action or advertisement, pursuant to the statutes of the State of Minnesota in such case made and provided,power being expressly granted to sell the Mortgaged Property at public auction and convey the same to the purchaser to the full extent of Mortgagor's interest and, out of the proceeds arising from such sale,to pay all 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, p a , together with all other sums, with interest, advanced and unpa id hereunder, and all statutory charges for such foreclosure including maximum attorney's fees allowed by law in order that there may be credited as paid on the purchase price the _1O_ 4I__ 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. 3.4 Receiver. Mortgagee shall be entitled as a matter of right without notice and without giving bond and without regard to the solvency or insolvency of Mortgagor, or waste of the Mortgaged Property or adequacy of the security of the Mortgaged Property, to apply for the appointment of a receiver, in accordance with the statutes and law made and provided. The receiver shall collect the rents, and all other income of any kind; manage the Mortgaged Property so to prevent waste; execute leases within or beyond the period of receivership, pay all expenses for normal maintenance of the Mortgaged Property and perform the terms of this Mortgage and apply the rents, issues and profits in the following order to (1) 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. 3.5 ,Specific Performance. Mortgagee may bring suit for specific performance of any covenant or warranty hereunder. 3.6 Forbearance and Qther Rights of Mortga . 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 shalt 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 alter or amend the terms of this Mortgage in any way. No such release,modification, addition or change shall affect the liability of -11- 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 4.1 Asignment. As security in addition to the lien of this Mortgage upon the Property, Mortgagor hereby grants, transfers and assigns to Mortgagee all of the right, title and interest of Mortgagor in and to all Leases and all rents, income, profits, revenues, royalties, bonuses, rights, accounts, contract rights, general intangibles and benefits(all of which are sometimes hereinafter referred to as"Rents"),now or hereafter accruing or owing by reason of a Lease of any or all of the Property. 4.2 Covenants of Performance. To protect the security of this Assignment, Mortgagor warrants,covenants and agrees: (a) to faithfully abide by, perform and discharge each and every obligation, covenant and agreement under any Leases to be performed by Mortgagor thereunder; to give prompt written notice to Mortgagee of any notice of default on the part of Mortgagor with respect to any Lease received from a tenant thereunder;to enforce or secure short of termination of any Lease the performance of each and every obligation, covenant,condition and agreement of the Leases by the tenants thereunder to be performed;not to borrow against, pledge or assign of the Rents, g � p g � an y 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 -12- • to Mortgagee in writing; and that there is no outstanding assignment or g l; pledge of the Leases or Rents;and (d) to furnish to Mortgagee, at Mortgagee's written request, a complete list of all Leases and security deposits made thereunder as to any part of the Mortgaged Property, showing the type of lease,the name of the tenant, the monthly rental, the date to which paid, the term of the Lease, the date of occupancy, and the date of expiration and any and every special premium,concession or inducement granted to the tenant. 4.3 Assignmejit 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 Mort g a g or after any foreclosure of this Mortgage Mortgagee shall continue to deal with the Leases on the Property in a reasonable businesslike manner, recognizing • and protecting Mortgagor's continuing rights during such period to retake possession and control of the Mortgaged Property upon paying the appropriate redemption price, and to resume the management of such Leases; (b) give or require Mortgagor to give notice to any and all tenants under the Leases authorizing and directing the tenants to pay all Rents due under the Leases directly to Mortgagee; and (c) apply for, and Mortgagor hereby consents to, the appointment of a receiver of the Mortgaged Property. 4.4 Application of Rents,. (a) All Rents collected by Mortgagee, or by a receiver, shall be held and applied by Mortgagee in its reasonable discretion, in accordance with applicable law,including,without limitation to: (i)payment of all reasonable fees of the receiver, if any, approved by the court; (ii)the repayment when due of all tenant security deposits pursuant to the provisions of Minnesota Statutes § 504B.178; (iii)payment of all delinquent or current real estate taxes and special w 1 3� assessments payable with respect to the Property or, if this Mortgage so requires, to the periodic escrow for the payment thereof;(iv)payment of all premiums then due for the insurance required by the provisions of this Mortgage or, if this• Mortgage so requires,to the periodic escrow for the payment thereof;(v)payment of expenses incurred for normal maintenance of the Mortgaged Property. (b) Any amounts remaining after such application shall be applied as follows: 0i} if received prior to any foreclosure sale of the Mortgaged Property to A ee Mort g a g for payment of the indebtedness secured by this Mortgage, but no such payment made after acceleration of the indebtedness shall affect such acceleration;and (ii) if received during or with respect to a period after a foreclosure sale of the Mortgaged Pro Property: Ae (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; Mortgagee,first to purchaser urchaser at the foreclosure sale is (2) if �g ee Mortgagee to the extent of any deficiency of the sale proceeds to repay the indebtedness secured by this Mortgage and the balance to be retained by Mortgagee as a credit to the redemption price, but if the Mortgaged Property is not redeemed, then to Mortgagee, whether or not such deficiency exists. 4.5 Continuing Effect. The rights and powers of Mortgagee under this Assignment and the application of the Rents shall continue and remain in full force and effect both before and after commencement of any action or procedure to foreclose this Mortgage,after any foreclosure sale of Mortgagor's interest in the Property in connection with the foreclosure of this Mortgage, and until expiration of the period of redemption • from any such foreclosure sale,whether or not any deficiency from the unpaid balance of the Indebtedness exists after such foreclosure sale. 4.6 Mortgagee_ Not Q ated. Mortgagee shall not be obligated by this Assignment for the control, care, management or repair of the Mortgaged Property, nor for the carrying out of any of the terms and conditions of the Leases; nor shall this Assignment operate to make Mortgagee responsible or liable for any waste committed on the Mortgaged Property by the tenants or any other party, or for any dangerous or defective condition of the Mortgaged Property, or for any violation of Environmental Laws or for any negligence in the management, upkeep, repair or control of the Mortgaged Property resulting in any loss or any injury or death to any person. -14- f 4.7 Hold Harmless. Mortgagor shall and does agree to indemnify and to hold Mortgagee harmless of and from any and all liability, loss or damage which it may or might incur under or by reason of this Assignment, and of and from any and all claims and demands whatsoever which may be asserted against it by reason of any alleged obligations or undertakings on its part to perform or discharge any of the terms, covenants or agreements contained in the Leases; provided, however, that such indemnification shall not apply if the same arises out of Leases intentionally breached by Mortgagee which were made by Mortgagor in the ordinary course of managing the Mortgaged Property and prior to the time Mortgagee obtained the right to possess and manage the Mortgaged Property,or if the same arises out of the negligent or willful act of Mortgagee in operating and using the Mortgaged Property. Should Mortgagee incur any such liability, loss or damage under any Lease or by reason of this Assignment, or in the defense of any such claims or demands, the amount thereof, including costs, expenses, and reasonable attorneys' fees, shall be secured hereby and Mortgagor shall reimburse Mortgagee therefor immediately upon demand. Mortgagee shall give Mortgagor notice of any such claim and Assignor shall have the opportunity to defend Mortgagee in connection therewith with counsel reasonably acceptable to Mortgagee; provided Mortgagee's failure to give such notice and opportunity to defend shall not affect Mortgagor's obligations under this Section except to the extent Mortgagor is actually prejudiced by such failure. 4.8 Authorization to Tenants. The tenants under any of the Leases are hereby irrevocably authorized and directed to recognize the claims of Mortgagee or its assigns hereunder without investigating the reason for any action taken by Mortgagee, or the validity or the amount of indebtedness owing to Mortgagee, or the existence of any such event of default, or the application of the Rents to be made by Mortgagee. Mortgagor hereby irrevocably directs and authorizes each tenant to pay to Mortgagee all sums due under its Lease and consents and directs that said sums shall be paid to Mortgagee without the necessity for a judicial determination that any such event of default has occurred or that Mortgagee is entitled to exercise its rights hereunder, and to the extent such sums are paid to Mortgagee, Mortgagor agrees that the tenants shall have no further liability to Mortgagor for the same. The sole signature of Mortgagee shall be sufficient � g for the exercise of any rights under this Assignment and the sole receipt of Mortgagee for any sums received shall be a full discharge and release therefor to the tenants or occupants of the Mortgaged Property. 4.9 Mortgagee Attorney-in-Fact. Mortgagor hereby irrevocably appoints Mortgagee as its agent and attorney in fact, which appointment is coupled with an interest, to exercise any rights or remedies hereunder and to execute and deliver during the term of this Assignment such instruments as Mortgagee may deem necessary to make this Assignment and any further assignment effective. 4.10 Mo a ee of jalfausaiss. Nothing herein contained and no actions taken pursuant to this Assignment shall be construed as constituting Mortgagee a "Mortgagee in Possession." I' -15- • ARTICLE FIVE CONDEMNATION 5.1 Notice. Mortgagor will give Mortgagee prompt notice of any action, actual or threatened,in condemnation or eminent domain,direct or inverse. 5.2 Awards. Subject to any obligations under the Contracts for Deed, 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 Paragraph 1.6 pp � Y (d)hereof. ARTICLE SIX UNIFORM COMMERCIAL CODE 6.1 Security� Interest. This Mort g a g e shall constitute a security agreement as defined in the Uniform Commercial Code with respect to, and Mortgagor hereby grants Mortgagee a security interest in, the Equipment and 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, -16- '�. obsolete, worn out,or(ii) unsuitable,undesirable or unnecessary for the operation of the Mortgaged Property, Mortgagor may, at its expense, remove and dispose of it and substitute and install other items not necessarily having the same function, provided,that such removal and substitution shall not impair the operating utility and unity of the Mortgaged Property. The foregoing notwithstanding, any Equipment that is replaced pursuant to the foregoing sentence must be replaced with new equipment of substantially similar function and value, unless Mortgagee consents otherwise. In any such case, Mortgagor shall promptly inform Mortgagee of such replacement and shall provide Mortgagee with any information Mortgagee reasonably requires to secure its interest in such replacement Equipment. With respect to items which are a part of the Mortgaged Property, all items substituted for such items shall become a part of the Mortgaged Property and subject to the lien of this Mortgage. Any amounts received or allowed Mortgagor upon the sale or other disposition of the removed items of property shall be applied against the cost of acquisition and installation of the substituted items. Nothing herein contained shall be construed to prevent any tenant or subtenant from removing from the Mortgaged Property trade fixtures, furniture and equipment installed by it and removable by tenant under its terms of any one or more of the Leases, on the condition, however, that Mortgagor shall assure the repair of any and all damages to the Mortgaged Property resulting from or caused by the removal thereof. Mortgagee acknowledges that no items of personal property are included in the Mortgaged Property. 6.2 Fixture Filing. From the date of its recording, this Mortgage shall be effective as a financing statement with respect to all goods constitutin g part of the Mortgaged Property which are or are to become fixtures related to the real estate described herein. For this purpose,the following information is set forth: (a) Name and Address of Debtors: Blue Egg Market,LLC 713 Main Street Elk River,Minnesota Attn: Chief Manager Organization I.D.Number:4135101-4 (b) Name and address of Secured Party: Economic Development Authority of the City of Elk River 13065 Orono Parkway Elk River,MN 55330 Attn:Director of Economic Development • (c) This document covers goods which are or are to become fixtures. -17- • (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 7.1 Mortgagee's Remedies Cumulative. All remedies of Mortgagee are distinct and cumulative to any other right or remedy under this Mortgage or afforded by law or equity, and may be exercised concurrently or independently, as often as the occasion therefore arises. 7.2 Successors and Assigns Bound;,,.Ca„ions. The covenants and agreements herein contained shall bind, and the rights hereunder shall inure to, the respective heirs, le g al representatives,successors and assi gns of Mort g agee and Mortgagor. The captions and headings of the Sections of this Mortgage are for convenience only and are not to be used to interpret or define the provisions hereof. 7.3 Notices. Any notice from Mortgagee to Mortgagor under this Mortgage shall be deemed to have been given by Mortgagee and received by Mortgagor, when delivered personally to an officer of Mortgagor or three(3)days after the date it is mailed by certified mail addressed as follows: • Blue Egg Market,LLC 713 Main Street Elk River,Minnesota Attn:Robin DeWitt 7.4 Governing Law: Severability. This Mortgage shall be governed by the Laws of the State of Minnesota. In the event that any provision or clause of this Mortgage conflicts with applicable law, such conflict shall not affect other provisions of this Mortgage which can be given effect without conflicting provisions and to this end the provisions of this Mortgage are declared to be severable. 7.5 Counter .s. This Mortgage may be executed in any number of counterparts, each of which shall be an original but all of which together shall constitute one instrument. 7.6 Waiver of.Anoraisement, 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. -18- • 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. 7.8 Construction Mortgag . This Mortgage secures an obligation incurred for the construction of an improvement on land and is a construction mortgage. [Remainder of page intentionally left blank] [Signature Page follows] � I w19 Signature Page to Mortgage IN WITNESS WHEREOF, Mortgagor has caused this Mortgage to be duly executed as of the day and year first written. BLUE EGG MARKET, LLC, a Minnesota limited li .•lity compan --- da A A STATE OF MINNESOTA ) ss. COUNTY OF HENNEPIN ) The foregoing instrument was acknowledged before me on April .� , 013, by Robin DeWitt, the a of Blue Egg Market, LLC, a Minnesota limited '�tl liability company,on behalf of the limited liabil' company. BETH A.BROGAN Notary Public .r'�' . t-. NOTARY PUBLC-MINNESOTA My Commission Expires: ! r'' 1 Connir des Jan 31,20t& �... Yr mow. This Instrument was Drafted by: Gray,Plant,Mooty,Mooty &Bennett,P.A.(BAH) 500 IDS Center 80 South Eighth Street Minneapolis,Minnesota 55402-3796 Telephone: (612)632-3000 -20- • • EXHIBIT A Legal l ription Parcel 1 (707 Main Street): The North 100 feet of the East 20 feet of Lot 4, Block 5,Village of Elk River,according to the plat thereof on file and of record in the office of the County Recorder of Sherburne County,Minnesota Parcel 2(713 Main street) The North 100 feet of the East 6 feet of Lot 3,Block 5,Village of Elk River and the West 14 feet of the North 100 feet of Lot 4,Block 5,Village of Elk River,according to the plat thereof on file and of record in the office of the County Recorder of Sherburne County, Minnesota -21- b M■ • EXHIBIT B Permitted Encumbrances 1) Terms and conditions of that certain Contract for Deed by and between Houlton Investment Company,as seller,and Blue Egg Market,LLC,as purchaser,dated February 1, 2013, filed February 8, 2013. as Document No. 765883, in the original amount of $73,000.00(as to 707 Main Street). 2) Terms and conditions of that certain Contract for Deed by and between Houlton Investment Company,as seller,and Blue Egg Market,LLC,as purchaser,dated March 1, 2012, filed March 5, 2012. as Document No. 745462, in the original amount of $70,000.00(as to 713 Main Street). 3) Party Wall Agreement dated October 3, 1945, filed August 3, 1946, in Book 0 of Misc.Rec.,page 101. 4) Declaration dated April 7, 2012,filed April 9,2012,as Document No.710996,as amended by Document No. 732063. 5) Access Easement dated May 2, 2011, filed May 25, 2001, as Document No. --.s, 1 732071. 6) Conditional Use Permit dated July 20, 2009, filed August 6, 2009, as Document No.698145. I i I -22- EXHIBIT C CQNSENT , [INTRACT FQR EFJ YENROR Houlton Investment Company, a Minnesota corporation, vendor ("Vendor") under the terms of those certain Contracts for Deed ("Contracts for Deed"), dated February 1, 2013, recorded in the Sherburne County Recorder's Office on February 8, 2013, as Document No 765883 (as to 707 Main Street) and dated March 1, 2012, recorded in the Sherburne County Recorder's Office on March 5,2012,as Document No 745462(as to 713 Main Street)pertaining to the real property("Property")in Sherburne County,Minnesota,described as follows: Parcel 1 (707 Main Street): The North 100 Feet of the East 20 Feet of Lot 4,Block 5,Village of Elk River Parcel 2(713 Main Street) The North 100 feet of the East 6 feet of Lot 3,Block 5,Village of Elk River and the West 14 feet of the North 100 feet of Lot 4,Block 5,Village of Elk River does hereby acknowledge that: (i) notwithstanding any contrary provisions in the Contracts for Deed, the Mortgage, Assignment of Rents, Security Agreement and Fixture Financing Statement as set forth in the foregoing instrument will not constitute �-- a violation of the "due on sale" clause under the terms of the Contracts for Deed and will attach to the interest of the undersigned in and to the Property, subject, however, to cancellation of such interest as provided for in the Contract for Deed pursuant to Minnesota Statutes 559.21; and (ii) the undersigned will give Mortgagee notice of any Mortgagor default under the Contracts for Deed at the time and in the same manner as such notice is given to Mortgagor pursuant to the terms of the Contract for Deed. Houlto investment Company,a Minnesota corporation William Houlton,President STATE OF MINNESOTA) ss. COUNTY OF5igilatifiu The foregoing was acknowledged before me this ea day of April, 2013, by William Houlton the President of Houlton Investment Company, a Minnesota corporation,on behalf of the corporation. 4 111 _DER s HEBEISEN Notary Public Notafic Public GP:3399703 vt 741'' nne ota r' }' lion Expires Ja 31,2015 SATISFACTION OF REPAYMENT AGREEMENT DATE: November 16,2016 THAT CERTAIN GRANT AGREEMENT owned by the undersigned,dated the 25th day of April,_ 2013,executed by Blue Egg Market,an Minnesota Limited Liability Company,as Mortgagor,to the Economic Development 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 26th day of April,2013,as Document Number 770025,in the Office of the County Recorder of Sherburne County,Minnesota,is,with the indebtedness thereby secured,fully paid and satisfied. Economic Development Authority of the City of Elk River By: Its: STATE OF MINNESOTA ) ) SS COUNTY OF ) The foregoing instrument was acknowledged before me this day of ,20_ By, ,the of the Economic Development Authority of the City of Elk River. NOTARIAL STAMP OR SEAL(OR OTHER TITLE OR RANK) Notary Public THIS INSTRUMENT WAS DRAF TED 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 MORTGAGE AND ASSIGNMENT OF RENTS AND SECURITY AGREEMENT AND FIXTURE FINANCING STATEMENT This Mortgage and Assignment of Rents and Security Agreement and Fixture Financing Statement ("Mortgage") is made as of April 25, 2013, by BLUE EGG MARKET, LLC, a Minnesota limited liability company ("Mortgagor"), in favor of Economic Development Authority of the City of Elk River, a public body corporate and politic of the State of Minnesota ("Mortgagee"). THE MAXIMUM AMOUNT SECURED BY THIS MORTGAGE IS $74,500.00 OF PRINCIPAL INDEBTEDNESS, TOGETHER WITH ALL INTEREST ACCRUING THEREON AND ANY AMOUNTS WHICH MAY BE ADVANCED BY MORTGAGEE IN PROTECTION OF THE MORTGAGED PREMISES OR THE LIEN OF THIS MORTGAGE. RECITALS A. Mortgagor has executed and delivered to Mortgagee a Promissory Note effective as of the date hereof in the principal amount of$74,500.00 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 May 1, 2023 (the Promissory Note as the same may be renewed, extended, replaced, modified or amended is herein called the"Note"). B. Contemporaneous herewith, Mortgagor has entered into that certain loan agreement (the "Loan Agreement") setting forth the terms and conditions of the parties' obligations with relation to this loan facility. In addition to this Mortgage, Mortgagor's obligations under the Note are secured by a "Personal Guaranty" of all of Mortgagor's obligations under the Note,the Loan Agreement, this Mortgage and any other documents relating to or arising from this loan facility. 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 equipment purchased with the Loan proceeds, as set forth on Exhibit A to the Loan Agreement, as updated from time to time (collectively, the "Equipment"); and (v) all additions, accessions, increases, parts, fittings, accessories, replacements, substitutions, betterments, repairs and proceeds to any and all of the foregoing; and (vi) 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 (vii) 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. _2_ MORTGAGOR REPRESENTS, WARRANTS AND COVENANTS to and with Mortgagee that Mortgagor is the vendee under those certain contracts for deed set forth as items I and 2 on Exhibit B attached hereto (the "Contracts for Deed"); 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 encumbrances except those identified in Exhibit B hereto; that Mortgagee shall quietly enjoy and possess the Mortgaged Property; that Mortgagor will warrant and defend the title to the Mortgaged Property against all claims, whether now existing or hereafter arising. The covenants and warranties of this paragraph shall survive foreclosure of this Mortgage and shall run with the Land. AND IT IS FURTHER COVENANTED AND AGREED AS FOLLOWS: ARTICLE ONE GENERAL COVENANTS,AGREEMENTS, WARRANTIES 1.1 Pa ment of Indebtedness. Observance of Covenants. Mortgagor will duly pay when due each installment of principal and interest on the Note, the Contract for Deed and all other Indebtedness and will perform all other agreements and covenants by Mortgagor to be performed hereunder. 1.2 Payment of Impositions. Mortgagor agrees to pay, before a penalty might attach for nonpayment thereof, all taxes, assessments, water and sewer charges, and other fees, taxes and charges of whatsoever nature levied upon or assessed or placed against the Mortgaged Property (collectively "Impositions"). Mortgagor will likewise pay all taxes, assessments and other charges, levied upon or assessed, placed or made against, or measured by, this Mortgage, or the recordation hereof, or the 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. 1.3 Payment of Operating Costs: Prior Mortgages and Liens. Mortgagor agrees that it will pay, or cause to be paid, all operating costs and expenses of the Mortgaged Property; keep the Mortgaged Property free from mechanics' and material suppliers' and other liens, subject to Mortgagor's right to contest in good faith as set forth in Section 1.4 hereof; will keep the Mortgaged Property free from levy, execution or -3- 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. 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. 1.5 Maintenance and Repairs; Inventory. Mortgagor agrees that it will keep and maintain (or cause to be kept and maintained) the Mortgaged Property (including, without limitation, the Equipment) in good condition and repair, free from any waste or misuse, and will comply with all requirements of law, municipal ordinances and regulations, restrictions and covenants affecting the Mortgaged Property and its use, and will promptly repair or restore any buildings, improvements or structures now or hereafter on the Mortgaged Property which may become damaged or destroyed. Mortgagor further agrees that without the prior consent of Mortgagee it will not remove from the Mortgaged Property any or all of the Equipment or 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 _4_ list any conditional sales contracts and other title retention arrangements to which such personal property may be subject. 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 replacement cost 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 $2,000,000.00 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 pr 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 -5- 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 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. All such insurance shall be in form acceptable to Mortgagee, shall provide for at least thirty(30) days' prior written notice of cancellation, termination or modification thereof to Mortgagee, shall permit Mortgagee to make 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) Subject to the rights of the vendor under the Contracts for Deed, 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 di sbursed in accordance with sound construction loan -6- disbursement practices, including, but not limited to, approval of the plans and specifications, appraisal, its other conditions for disbursement of draw requests and inspection of the work, and such other reasonable conditions as Mortgagee may impose and (iv) any Net Proceeds not so applied to repair and restoration shall be applied to the payment of the Indebtedness. If an Event of Default occurs prior to full disbursement, any undisbursed portion of the Net Proceeds and any funds deposited by Mortgagor with Mortgagee may at Mortgagee's option be applied to the Indebtedness. 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. 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. 1.9 Hazardous Materials. Mortgagor hereby represents and warrants to Mortgagee that the Mortgaged Property has not at any time been used for storage, -7- transfer, transportation or disposal of hazardous substances, hazardous wastes, pollutants, contaminants or similar substances (collectively "Hazardous Substances"), or for the discharge of the same into the environment in violation of any law, regulation, or judicial or administrative order or judgment; and the Mortgaged Property is not contaminated by, and does not contain, any Hazardous Substances. Mortgagor will not use or permit the use of the Mortgaged Property for such purposes. Mortgagor will fully indemnify Mortgagee and defend Mortgagee against any claims, losses, damages, actions, costs and expenses of any kind, including without limitation, court costs and reasonable attorneys fees, in connection with any Hazardous Substances now or hereafter located on the Mortgaged Property or any other violation of any federal, state or local environmental statute, ordinance, rule or regulation ("Environmental Laws"). This indemnity shall not apply to the extent that the willful act or omission of the Mortgagee contributes to the actual or threatened discharge, dispersal, release, storage, treatment, generation, disposal or escape of the Hazardous Substances. The indemnity provisions of this Section shall survive the foreclosure or other termination of this Mortgage. Without limiting the generality of the foregoing, Mortgagor agrees that upon the discovery of a release or threatened release of Hazardous Substances on or from the Mortgaged Property, it will promptly, diligently and without cost to Mortgagee, proceed to remediate all contamination 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. I.1 o 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. 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 -8- 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 interest 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 making any payments, Mortgagee may rely on any statement, bill or estimate procured from or issued by the payee without inquiry into the validity or accuracy of the same. If the taxes shown in the tax statement shall be levied on property more extensive than the Mortgaged Property, Mortgagee shall be under no duty to seek a tax division or apportionment of the tax bill, and any payment of taxes based on a larger parcel shall be paid by Mortgagor, and Mortgagor shall expeditiously cause a tax subdivision to be made. ARTICLE TWO EVENTS OF DEFAULT Each of the following occurrences shall constitute an Event of Default hereunder: 2.1 Failure to pay. Mortgagor's failure to pay any amount due under the Note, the Contracts for Deed or any other amount required to be paid by Mortgagor hereunder when due. 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 in the Contract for Deed and the continuation of such failure for a period of thirty (30) days after Mortgagee gives Mortgagor written notice of such failure. 2.3 Breach of Warranty of Title. Subject to Mortgagor's right to contest in good faith as set forth in Section 1.4 hereof, the breach of any warranty of title or any other warranty made by Mortgagor hereunder. 2.4 Misrepresentation. The making of any material misstatement in any financial statement or report submitted to Mortgagee by or on behalf of Mortgagor. 2.5 Foreclosure. The institution of a cancelation or other enforcement action of either or both Contracts for Deed or foreclosure or other enforcement proceedings by -9- the holder of any other lien on the Mortgaged Property (without hereby implying Mortgagee's consent to any mortgage or other lien). 2.6 Sale of Property. The sale, assignment, conveyance, mortgage, encumbrance, lease or transfer of: (i) Mortgagor's interest in the Mortgaged Property or any part thereof, or any interest therein; or (ii) any transfer in ownership or control of Mortgagor, without the prior written consent of Mortgagee, which consent may be granted or withheld by Mortgagee at its sole discretion. 2.9 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 and/or 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): 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 p a Y able, without notice or demand. 3.2 UCC Remedies. Mortgagee shall have and may exercise with respect to all fixtures and any personal property included in the Mortgaged Property, all the ri g hts and remedies accorded upon default to a secured party under the Uniform Commercial Code, as in effect in the State of Minnesota. 3.3 Foreclosure; Action or Advertisement. Mortgagee may (and is hereby authorized and empowered to) foreclose this Mortgage by action or advertisement, pursuant to the statutes of the State of Minnesota in such case made and provided, power being expressly granted to sell the Mortgaged Property at public auction and convey the same to the purchaser to the full extent of Mortgagor's interest and, out of the proceeds arising from such sale, to pay all 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 maximum attorney's fees allowed by law in order that there may be credited as paid on the purchase price the _1p_ 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. 3.4 Receiver. Mortgagee shall be entitled as a matter of right without notice and without giving bond and without regard to the solvency or insolvency of Mortgagor, or waste of the Mortgaged Property or adequacy of the security of the Mortgaged Property, to apply for the appointment of a receiver, in accordance with the statutes and law made and provided. The receiver shall collect the rents, and all other income of any kind; manage the Mortgaged Property so to prevent waste; execute leases within or beyond the period of receivership, pay all expenses for normal maintenance of the Mortgaged Property and perform the terms of this Mortgage and apply the rents, issues and profits in the following order to (i) payment of the reasonable fees of said receiver, (ii) application of tenant security deposits as required by Minnesota Statutes § 50413.178, (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. 3.5 Specific Performance. Mortgagee may bring suit for specific performance of any covenant or warranty hereunder. 3.6 Forbearance and Other Rights of Mortgagee. Any delay by Mortgagee in exercising any right or remedy hereunder, or otherwise afforded by law or equity, shall not be a waiver of or preclude the exercise of such right or remedy or any other right or remedy hereunder or at law or in equity. The failure of Mortgagee to exercise any option to accelerate maturity of the 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 alter or amend the terms of this Mortgage in any way. No such release, modification, addition or change shall affect the liability of -11- 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 4.1 Assignment. As security in addition to the lien of this Mortgage upon the Property, Mortgagor hereby grants, transfers and assigns to Mortgagee all of the right, title and interest of Mortgagor in and to all Leases and all rents, income, profits, revenues, royalties, bonuses, rights, accounts, contract rights, general intangibles and benefits (all of which are sometimes hereinafter referred to as "Rents"), now or hereafter accruing or owing by reason of a Lease of any or all of the Property. 4.2 Covenants of Performance. To protect the security of this Assignment, Mortgagor warrants, covenants and agrees: (a) to faithfully abide by, perform and discharge each and every obligation, covenant and agreement under any Leases to be performed by Mortgagor thereunder; to give prompt written notice to Mortgagee of any notice of default on the part of Mortgagor with respect to any Lease received from a tenant thereunder; to enforce or secure short of termination of any Lease the performance of each and every obligation, covenant, condition and agreement of the Leases by the tenants thereunder to be performed; not to borrow against, pledge or assign any of the Rents, or anticipate the Rents; not to waive, excuse, condone or in any manner release or discharge any tenant thereunder of or from the obligations, covenants, conditions and agreements to be performed under the Lease or to permit the tenant to assign its interest in the Lease unless required to do so by the terms of the Lease; not to terminate the Leases or accept a surrender thereof or a discharge of the tenant unless required to do so by the terms of the Lease; not to consent to a subordination of the interest of the tenant thereunder to any party other than Mortgagee and then only if specifically required to do so by Mortgagee; (b) at Mortgagor's sole cost and expense, to appear in and defend any action or proceeding arising under, growing out of or in any manner connected with the Leases or the obligations, duties or liabilities of Mortgagor and tenants thereunder, and to pay all costs and expenses of Mortgagee, including attorneys' fees in a reasonable sum, in any such action or proceeding in which Mortgagee may appear or with respect to which it may incur costs; (c) that Mortgagor has the full right and title to assign the Rents; that at the date of this Mortgage there exist no Leases which now or in the future affect the Mortgaged Property which have not been disclosed -.12- to Mortgagee in writing; and that there is no outstanding assignment or pledge of the Leases or Rents; and (d) to furnish to Mortgagee, at Mortgagee's written request, a complete list of all Leases and security deposits made thereunder as to any part of the Mortgaged Property, showing the type of lease, the name of the tenant, the monthly rental, the date to which paid, the term of the Lease, the date of occupancy, and the date of expiration and any and every special premium, concession or inducement granted to the tenant. 4.3 Assignment Absolute. This Assignment is absolute and is effective immediately. Notwithstanding the foregoing, until an Event of Default, as defined in ARTICLE TWO above, has occurred, Mortgagor may receive, collect and enjoy the Rents. Upon or at any time after an Event of Default has occurred, Mortgagee may at its option,without notice: (a) in the name, place and stead of Mortgagor (i) enter upon, manage and operate the Mortgaged Property, or retain the services of an independent contractor to manage and operate the same, (ii) make, enforce, modify and accept surrender of the Leases, (iii) obtain or evict tenants, demand, collect, sue for, receive and give acquittances for, fix or modify Rents and enforce all rights of Mortgagor under the Leases, and (iv) perform any and all other acts that may be necessary or proper to protect the security of this Assignment; provided always, however, that until the end of any redemption period available to Mortgagor after any foreclosure of this Mortgage Mortgagee shall continue to deal with the Leases on the Property in a reasonable businesslike manner, recognizing and protecting Mortgagor's continuing rights during such period to retake possession and control of the Mortgaged Property upon paying the appropriate redemption price, and to resume the management of such Leases; (b) give or require Mortgagor to give notice to any and all tenants under the Leases authorizing and directing the tenants to pay all Rents due under the Leases directly to Mortgagee; and (c) apply for, and Mortgagor hereby consents to, the appointment of a receiver of the Mortgaged Property. 4.4 Application of Rents. (a) All Rents collected by Mortgagee, or by a receiver, shall be held and applied by Mortgagee in its reasonable discretion, in accordance with applicable law, including, without limitation to: (i) payment of all reasonable fees of the receiver, if any, approved by the court; (ii) the repayment when due of all tenant security deposits pursuant to the provisions of Minnesota Statutes § 50413.178; (iii) payment of all delinquent or current real estate taxes and special -I 3- assessments payable with respect to the Property or, if this Mortgage so requires, to the periodic escrow for the payment thereof; (iv) payment of all premiums then due for the insurance required by the provisions of this Mortgage or, if this Mortgage so requires,to the periodic escrow for the payment thereof; (v) payment of expenses incurred for normal maintenance of the Mortgaged Property. (b) Any amounts remaining after such application shall be applied as follows: (i) if received prior to any foreclosure sale of the Mortgaged Property to Mortgagee for payment of the indebtedness secured by this Mortgage, but no such payment made after acceleration of the indebtedness shall affect such acceleration;and (ii) if received during or with respect to a period after a foreclosure sale of the Mortgaged Property: (1) if the purchaser at the foreclosure sale is not Mortgagee, first to Mortgagee to the extent of any deficiency of the sale proceeds to repay the indebtedness secured by this Mortgage, second to the purchaser as a credit to the redemption price, but if the Mortgaged Property is not redeemed, then to the purchaser of the Mortgaged Property; (2) if the purchaser at the foreclosure sale is Mortgagee, first to Mortgagee to the extent of any deficiency of the sale proceeds to repay the indebtedness secured by this Mortgage and the balance to be retained by Mortgagee as a credit to the redemption price, but if the Mortgaged Property is not redeemed, then to Mortgagee, whether or not such deficiency exists. 4.5 Continuing Effect. The rights and powers of Mortgagee under this Assignment and the application of the Rents shall continue and remain in full force and effect both before and after commencement of any action or procedure to foreclose this Mortgage,after any foreclosure sate 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. 4.6 Mortgagee Not Obligated. Mortgagee shall not be obligated by this Assignment for the control, care, management or repair of the Mortgaged Property, nor for the carrying out of any of the terms and conditions of the Leases; nor shall this Assignment operate to make Mortgagee responsible or liable for any waste committed on the Mortgaged Property by the tenants or any other party, or for any dangerous or defective condition of the Mortgaged Property, or for any violation of Environmental Laws or for any negligence in the management, upkeep, repair or control of the Mortgaged Property resulting in any loss or any injury or death to any person. _14_ 4.7 Hold Harmless. Mortgagor shall and does agree to indemnify and to hold Mortgagee harmless of and from any and all liability, loss or damage which it may or might incur under or by reason of this Assignment, and of and from any and all claims and demands whatsoever which may be asserted against it by reason of any alleged obligations or undertakings on its part to perform or discharge any of the terms, covenants or agreements contained in the Leases; provided, however, that such indemnification shall not apply if the same arises out of Leases intentionally breached by Mortgagee which were made by Mortgagor in the ordinary course of managing the Mortgaged Property and prior to the time Mortgagee obtained the right to possess and manage the Mortgaged Property, or if the same arises out of the negligent or willful act of Mortgagee in operating and using the Mortgaged Property. Should Mortgagee incur any such liability, loss or damage under any Lease or by reason of this Assignment, or in the defense of any such claims or demands, the amount thereof, including costs, expenses, and reasonable attorneys' fees, shall be secured hereby and Mortgagor shall reimburse Mortgagee therefor immediately upon demand. Mortgagee shall give Mortgagor notice of any such claim and Assignor shall have the opportunity to defend Mortgagee in connection therewith with counsel reasonably acceptable to Mortgagee; provided Mortgagee's failure to give such notice and opportunity to defend shall not affect Mortgagor's obligations under this Section except to the extent Mortgagor is actually prejudiced by such failure. 4.8 Authorization to Tenants. The tenants under any of the Leases are hereby irrevocably authorized and directed to recognize the claims of Mortgagee or its assigns hereunder without investigating the reason for any action taken by Mortgagee, or the validity or the amount of indebtedness owing to Mortgagee, or the existence of any such event of default, or the application of the Rents to be made by Mortgagee. Mortgagor hereby irrevocably directs and authorizes each tenant to pay to Mortgagee all sums due under its Lease and consents and directs that said sums shall be paid to Mortgagee without the necessity for a judicial determination that any such event of default has occurred or that Mortgagee is entitled to exercise its rights hereunder, and to the extent such sums are paid to Mortgagee, Mortgagor agrees that the tenants shall have no further liability to Mortgagor for the same. The sole signature of Mortgagee shall be sufficient for the exercise of any rights under this Assignment and the sole receipt of Mortgagee for any sums received shall be a full discharge and release therefor to the tenants or occupants of the Mortgaged Property. 4.9 Mortgagee Attorney-in-Fact. Mortgagor hereby irrevocably appoints Mortgagee as its agent and attorney in fact, which appointment is coupled with an interest, to exercise any rights or remedies hereunder and to execute and deliver during the term of this Assignment such instruments as Mortgagee may deem necessary to make this Assignment and any further assignment effective. 4.10 Mortgagee Not in Possession. Nothing herein contained and no actions taken pursuant to this Assignment shall be construed as constituting Mortgagee a "Mortgagee in Possession." -15- ARTICLE FIVE CONDEMNATION 5.1 Notice. Mortgagor will give Mortgagee prompt notice of any action, actual or threatened, in condemnation or eminent domain, direct or inverse. 5.2 Awards. Subject to any obligations under the Contracts for Deed, 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 Paragraph I. (d)hereof. ARTICLE SIX UNIFORM COMMERCIAL CODE 6.1 Security Interest. This Mortgage shall constitute a security agreement as defined in the Uniform Commercial Code with respect to, and Mortgagor hereby grants Mortgagee a security interest in, the Equipment and 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, -1 6-- obsolete, worn out, or (ii) unsuitable, undesirable or unnecessary for the operation of the Mortgaged Property, Mortgagor may, at its expense, remove and dispose of it and substitute and install other items not necessarily having the same function, provided, that such removal and substitution shall not impair the operating utility and unity of the Mortgaged Property. The foregoing notwithstanding, any Equipment that is replaced pursuant to the foregoing sentence must be replaced with new equipment of substantially similar function and value, unless Mortgagee consents othenvise. In any such case, Mortgagor shall promptly inform Mortgagee of such replacement and shall provide Mortgagee with any information Mortgagee reasonably requires to secure its interest in such replacement Equipment. With respect to items which are a part of the Mortgaged Property, all items substituted for such items shall become a part of the Mortgaged Property and subject to the lien of this Mortgage. Any amounts received or allowed Mortgagor upon the sale or other disposition of the removed items of property shall be applied against the cost of acquisition and installation of the substituted items. Nothing herein contained shall be construed to prevent any tenant or subtenant from removing from the Mortgaged Property trade fixtures, furniture and equipment installed by it and removable by tenant under its terms of any one or more of the Leases, on the condition, however, that Mortgagor shall assure the repair of any and all damages to the Mortgaged Property resulting from or caused by the removal thereof. Mortgagee acknowledges that no items of personal property are included in the Mortgaged Property. 6.2 Fixture Filing. From the date of its recording, this Mortgage shall be effective as a financing statement with respect to all goods constituting part of the Mortgaged Property which are or are to become fixtures related to the real estate described herein. For this purpose,the following information is set forth: (a) Name and Address of Debtors: Blue Egg Market, LLC 713 Main Street Elk River, Minnesota Attn: Chief Manager Organization I.D.Number: 4135101-4 (b) Name and address of Secured Party: Economic Development Authority of the City of Elk River 13065 Orono Parkway Elk River, MN 55330 Attn: Director of Economic Development (c) This document covers goods which are or are to become fixtures. -17- (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 7.1 Mortgagee's Remedies Cumulative. All remedies of Mortgagee are distinct and cumulative to any other right or remedy under this Mortgage or afforded by law or equity, and may be exercised concurrently or independently, as often as the occasion therefore arises. 7.2 Successors and Assigns Bound; Captions. The covenants and agreements herein contained shall bind, and the rights hereunder shall inure to, the respective heirs, legal representatives, successors and assigns of Mortgagee and Mortgagor. The captions and headings of the Sections of this Mortgage are for convenience only and are not to be used to interpret or define the provisions hereof. 7.3 Notices. Any notice from Mortgagee to Mortgagor under this Mortgage shall be deemed to have been given by Mortgagee and received by Mortgagor, when delivered personally to an officer of Mortgagor or three (3)days after the date it is mailed by certified mail addressed as follows: Blue Egg Market, LLC 713 Main Street Elk River, Minnesota Attn: Robin DeWitt 7.4 Governing Law; Severability. This Mortgage shall be governed by the Laws of the State of Minnesota. In the event that any provision or clause of this Mortgage conflicts with applicable law, such conflict shall not affect other provisions of this Mortgage which can be given effect without conflicting provisions and to this end the provisions of this Mortgage are declared to be severable. 7.5 Counterparts. This Mortgage may be executed in any number of counterparts, each of which shall be an original but all of which together shall constitute one instrument. 7.6 Waiver of Appraisementi 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. -18- 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. 7.8 Construction Mortgage. This Mortgage secures an obligation incurred for the construction of an improvement on land and is a construction mortgage. [Remainder of page intentionally left blank] [Signature Page follows] -I 9- Signature Page to Mortgage IN WITNESS WHEREOF, Mortgagor has caused this Mortgage to be duly executed as of the day and year first written. BLUE EGG MARKET, LLC, a Minnesota limited liability company__ B, <,y 7 its: ofariLeA STATE OF MINNESOTA ) ) ss. COUNTY OF HENNEPIN ) ' ....- The foregoing instrument was acknowledged before me on April Al 2013, by Robin DeWitt, the oc). Li----- of Blue Egg Market, LLC, a Minnesota limited liability company,on behalf of the limited Habil.p company. I , Ada, A116,.. A "--., _ , Notary Public ' „ r;i rk:„, My Commission Expires 1/ /if------ C,T This Instrument was Drafted by: Gray, Plant,Mooty, Mooty & Bennett, PA. (BJH) 500 IDS Center 80 South Eighth Street Minneapolis, Minnesota 55402-3796 Telephone: (612) 632-3000 L.- -20- EXHIBIT A Legal Description Parcel 1 (707 Main Street): The North 100 feet of the East 20 feet of Lot 4, Block 5, Village of Elk River, according to the plat thereof on file and of record in the office of the County Recorder of Sherburne County, Minnesota Parcel 2 (713 Main Street) The North 100 feet of the East 6 feet of Lot 3, Block 5, Village of Elk River and the West 14 feet of the North 100 feet of Lot 4, Block 5, Village of Elk River, according to the plat thereof on file and of record in the office of the County Recorder of Sherburne County, Minnesota -2 1- EXHIBIT B Permitted Encumbrances 1) Terms and conditions of that certain Contract for Deed by and between Houlton Investment Company, as seller, and Blue Egg Market, LLC, as purchaser, dated February 1, 2013, filed February 8, 2013. as Document No. 765883, in the original amount of $73,000.00 (as to 707 Main Street). 2) Terms and conditions of that certain Contract for Deed by and between Houlton Investment Company, as seller, and Blue Egg Market, LLC, as purchaser, dated March 1, 2012, filed March 5, 2012. as Document No. 745462, in the original amount of $70,000.00 (as to 713 Main Street). 3) Party Wall Agreement dated October 3, 1945, filed August 3, 1946, in Book 0 of Misc. Rec., page 101. 4) Declaration dated April 7, 2012, filed April 9, 2012, as Document No. 710996, as amended by Document No. 732063. 5) Access Easement dated May 2, 2011, filed May 25, 2001, as Document No. 732071. 6) Conditional Use Permit dated July 20, 2009, tiled August 6, 2009, as Document No. 698145. -22- EXHIBIT C CONSENT QF CONTRACT FOR DEED VENDOR Houlton Investment Company, a Minnesota corporation, vendor ("Vendor") under the terms of those certain Contracts for Deed ("Contracts for Deed"), dated February 1, 2013, recorded in the Sherburne County Recorder's Office on February 8, 2013, as Document No 765883 (as to 707 Main Street) and dated March 1, 2012, recorded in the Sherburne County Recorder's Office on March 5, 2012, as Document No 745462(as to 713 Main Street)pertaining to the real property("Property")in Sherburne County,Minnesota, described as follows: Parcel I (707 Main Street): The North 100 Feet of the East 20 Feet of Lot 4, Block 5,Village of Elk River Parcel 2 (713 Main Street) The North 100 feet of the East 6 feet of Lot 3, Block 5, Village of Elk River and the West 14 feet of the North 100 feet of Lot 4, Block 5,Village of Elk River does hereby acknowledge that: (i) notwithstanding any contrary provisions in the llmp Contracts for Deed, the Mortgage, Assignment of Rents, Security Agreement and Fixture Financing Statement as set forth in the foregoing instrument will not constitute a violation of the "due on sale" clause under the terms of the Contracts for Deed and will attach to the interest of the undersigned in and to the Property, subject, however, to cancellation of such interest as provided for in the Contract for Deed pursuant to Minnesota Statutes 559.21; and (ii) the undersigned will give Mortgagee notice of any Mortgagor default under the Contracts for Deed at the time and in the same manner as such notice is given to Mortgagor pursuant to the terms of the Contract for Deed. Houlto Investment Company,a Minnesota corporation William Houlton, President STATE OF MINNESOTA) ss. COUNTY OFaigetta)10 6, The foregoing was acknowledged before me this gp„day of April, 2013, by William Houlton the President of Houlton Investment Company, a Minnesota corporation, on behalf of the corporation. ‘114{;GER JTHEBgrSTril Notary Public Notary Public GP:3399703 vi • Minnesota L. My ommission Expires January 31.2015 LOAN AGREEMENT THIS LOAN AGREEMENT ("Agreement") is made effective as of April 25, 2013, by and between BLUE EGG MARKET, LLC, a Minnesota limited liability company, a Minnesota limited liability company ("Borrower"), and Economic Development Authority of the City of Elk River, a public body corporate and politic of the State of Minnesota("Lender"). RECITALS A. Borrower has applied to Lender for a construction and term mortgage loan on the Loan Property(as hereinafter defined) in the principal amount of$74,500.00. B. Lender is willing to make such mortgage loan to Borrower in the principal amount of $74,500.00 (the "Loan"), 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$74,500.00. (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, as mortgagor, in favor of Lender, as mortgagee, and covers property therein described situated in Sherburne County, Minnesota (the "Loan Property") as well as a security interest in certain equipment to be purchased using the proceeds of the Loan(the "Equipment"). (iii) A personal guaranty of Robin DeWitt and Bruce DeWitt (the "Guaranty"), all of the members of Borrower. 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 $74,500.00 (the "Loan") to be advanced in a single disbursement as hereinafter provided, the Loan to be evidenced by the Note and secured by the Mortgage, the Guaranty and any other security document required under this Agreement. The Loan proceeds will be used only to pay for the costs of: (i) materials, labor and soft costs of constructing the Improvements (as defined below); and (ii)the purchase of the Equipment. 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 renovations to and equipping of the building located at 707 Main Street, Elk River, Minnesota, substantially in accordance with plans and specifications which have been provided to Lender. 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 that when completed, the Improvements shall comply with all applicable restrictions, conditions, codes, ordinances, regulations and laws of the City of Elk River ("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 has commenced construction of the Improvements. Borrower agrees to carry on continuously, diligently and with reasonable dispatch the construction of the Improvements to full and final completion. 3. Purchase of Equipment. Borrower has provided Lender a preliminary list of the Equipment that it intends to purchase for use in its business from the Project, attached hereto as Exhibit A. Borrower will complete the purchase of the Equipment and, to the extent possible, take delivery of the same, within thirty (30) days after the disbursal of the Loan proceeds. If Borrower wishes to purchase other or different Equipment, Borrower shall provide Lender an updated Exhibit A for its review and approval, which approval will not be unreasonably withheld, so long as the replacement equipment is substantially similar to the replaced Equipment in function and value. Borrower will provide Lender a final list of Equipment purchased within forty-five (45) days after the disbursal of the Loan proceeds. 4. Title Insurance. Sherburne County Abstract and Title Company ("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 position lien upon Borrower's interest in the Loan Property as contemplated by this Agreement, subject only to the contracts for deed set forth as Items 1 and 2 on Exhibit B to the Mortgage(the "Contracts for Deed"). 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. As of the date of this Agreement, construction of the Improvements is not complete nor have all lien waivers been received. As such, Lender's title insurer may not be able to insure that Lender's Mortgage has the second priority position. Borrower covenants that: (i) it will pay all lienable amounts incurred in relation to the Improvements and the purchase of the Equipment promptly upon receipt of an invoice for the same; (ii) will provide lien waivers to Lender promptly upon receipt; and (iii) will indemnify Lender for any damages suffered (including reasonable attorneys fees) by virtue of Lender's Mortgage not being the second priority lien as of the date of this Agreement. 5. 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. (c) Guaranty. Deliver to Lender the Guaranty. (d) Title Insurance Policy. Deliver to Lender a Mortgagee's title insurance policy ("Title Policy"), from Title issued to Lender in the amount of $74,500.00 with respect to the Mortgage and insuring that the Mortgage is a first lien on the Loan Property free and clear of mechanic's liens, materialmen's liens, taxes, special assessments, rights of parties in possession, other than: (i) the Contracts for Deed; and (ii) the rights of tenants as tenants only under existing leases, and questions of survey and subject only to exceptions approved in writing by Lender. (e) Organizational Documents and Resolutions. Deliver to Lender copies of the (i) articles of organization for Borrower certified by the Minnesota Secretary of State, (ii) a certificate of good standing for Borrower issued by the Minnesota Secretary of State; (iii) a copy of Borrower's member control agreement and bylaws; 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. 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 part of the Loan Property is located in an area designated as being a flood plain or flood hazard area as defined by the Flood Hazard Boundary Map published by the Federal Insurance Administration. (g) 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 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. (h) Hazardous Substances. Deliver to Lender evidence acceptable to Lender, that: (i) the Loan Property has not been used as a hazardous waste storage facility or burial site; (ii) the soil is free from hazardous waste, hazardous substances, pollutants and contaminants; and (iii) no hazardous waste, hazardous substance, pollutant or contaminant has been used in the construction or use of any building or other improvement on the Loan Property. For purposes of this subparagraph, the terms "hazardous waste," "hazardous substances," "pollutants" and "contaminants" shall include, but not be limited to, polychlorinated biphenyls (PCBs), asbestos, petroleum products and any other chemical or substance determined to be a hazard to human health or the environment. (i) Indemnity. Deliver to Title any indemnity agreement in favor of Title in the form required by Title in order for Title to issue the title insurance policies referred to above. Project Cost and Total Equity Contribution Certificates. Deliver to Lender a preliminary sworn project cost certificate ("Project Cost Certificate"), in a form acceptable to Lender, verified on oath by an officer 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 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 preliminary Project Cost Certificate. (k) Sworn Construction Statement. Deliver to Lender a preliminary Sworn Construction Statement acceptable to Lender completed and executed by an officer of Borrower 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. (1) Expend Funds.,Lien Waivers; Property Documents. Not later than thirty (30) days after the disbursal of the Loan proceeds, Borrower shall deliver to Lender: (i) a final Project Cost Certificate; (ii) a final Sworn Construction Statement; (iii) 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 or the Loan proceeds; (iv) a Certificate of Occupancy for the Loan Property; and (v) evidence acceptable to Lender that Borrower has paid all costs referred to in the Project Cost Certificate in excess of $74,500.00. Items (iii)-(v) will be considered timely if Borrower delivers them to Lender promptly after receipt and in any case, not more than forty-five (45) days after disbursal of the Loan proceeds. _4- (m) Consent. Deliver to Lender a copy of the consent to the Mortgage from the Contracts for Deed vendor, in the form attached to the Mortgage as Exhibit C. (n) Equipment List. Deliver to Lender an Equipment list, to be attached hereto as Exhibit A. Within forty-five (45) days after the date the Loan proceeds are disbursed, Borrower shall provide Lender with a final Equipment list to be attached hereto as Exhibit A-1. Lender may waive any of the above requirements in its sole discretion. 6. Disbursement of Loan. Upon receipt by Lender of the items required pursuant to paragraph 4 above, Lender agrees to disburse the Loan to Borrower. 7. Access to Loan Property. Lender and its respective representatives shall have at all reasonable times the right to enter and have free access to the Loan Property and the right to inspect all work done, labor performed and material furnished in connection therewith. 8. Books and Records. Borrower agrees to maintain accurate and complete L. 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. Borrower agrees not to sell, transfer, lease or convey the Loan Property, the Equipment or any part of either, or any interest therein, or encumber the Loan Property, the Equipment or any part of either, in any manner, without written consent of Lender which consent may be granted or withheld in the sole discretion of Lender. This requirement shall apply to each and every sale, transfer, lease or conveyance, whether voluntary or involuntary and whether or not Lender has consented to any such prior sale, transfer lease or conveyance. 10. Time of Essence. Time is of the essence in the performance of this Agreement. 11. Assignability. Borrower shall not assign this Agreement or all or any part 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 L. 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 any 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, and any contractors under all contracts obtained or held by Borrower in connection with construction or operation of the Improvements or Borrower's business. (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 or operation of the Improvements or any contracts, documents or agreements referred to herein (including, without limitation, L. the Contracts for Deed) without the prior written approval of Lender. Borrower will provide to Lender complete documentation concerning any change made to the Project. (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, this Agreement and the Contracts for Deed. Borrower will provide Lender with copies of the deeds for each parcel of the Loan Property promptly after full performance of each Contract for Deed. (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 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. _A_ (0 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 preliminary Project Cost Certificate (or, from and after such 30th day, the final 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. (h) Default Notices. Provide Lender with a copy of any default notice received pursuant to the Contracts for Deed, promptly after receipt of the same. (i) Continual Operation. At all times while any portion of the Loan remains outstanding, Borrower will: (i) maintain its status as a for profit entity; (ii)maintain a positive net worth; and (iii) will operate its business from the Loan Property in a first class manner. (1) Title to Equipment. Borrower owns or will own all of the Equipment "free and clear," that Lender will have a "first position" lien in the Equipment pursuant to the Mortgage and that no other party has any right, title or interest in the Equipment. (k) Lease Termination. The lease between Moulton Investment Company and Sweet P's Ice Cream and Candies, assigned to Borrower on or about February 1, 2013, will be terminated and the tenant thereunder will be removed from the Loan Property within fifteen (15) days after the Loan proceeds are disbursed. 13. Warranties. Borrower represents and warrants to Lender the following: (a) The Borrower is corporation 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 company action on the part of the Borrower. This Agreement and the Note, the Mortgage and any other instruments -'7- 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 material 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. (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 L. Property. Borrower will indemnify and hold Lender harmless from any damages Lender may suffer or incur from Borrower's breach of its covenant in Section 12(j). 15. Defaults. Each of the following shall constitute an Event of Default: (a) Borrower abandons the Loan Property, work on construction of the 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 and, if such proceedings are instituted against Borrower, an order, judgment or decree, without the consent of Borrower appointing a trustee or receiver for Borrower or any part of its property or approving a petition under the bankruptcy laws of the United States or any similar laws of any state or other competent jurisdiction, shall have remained in force undischarged or unstayed for a period of thirty (30) days. (c) Any judgment, attachment, garnishment or other similar process is entered against Borrower or against any property or assets of Borrower and is not released, satisfied or discharged or bonded to Lender's satisfaction within thirty (30)days of entry. -8- (d) Borrower fails to commence or complete construction of the Improvements within the time designated in this Agreement. (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 thirty (30) days after written notice is given by Lender. (0 Any mechanic's or material supplier's lien is filed, against the Loan Property and is not released, satisfied or discharged or bonded to Lender's satisfaction, subject, however, to Borrower's right to contest the same in accordance with the provisions of the Mortgage. (g) A transfer which violates by Paragraph 9 hereof, Encumbrances and Transfer,occurs. (h) Borrower: (i) fails to pay any amount due under this Agreement, the Note the Mortgage, or the Contracts for Deed when due; or (ii) fails to p erform any other obligation to be performed under this Agreement, the Note, the Mortgage, the Contracts for Deed 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, the Contracts for Deed or any other instrument required hereunder is false or untrue in any material respect when made. (j) 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 or either Contract for Deed 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: (l) 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 _0_ 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: 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. (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 purchase the Equipment or to complete the Improvements or 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 Property or the Equipment 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, covenants and conditions to be kept or performed by Borrower under this Agreement, the Mortgage and any other instrument required under this Agreement or the Contracts for Deed; 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); (iii) The powers herein granted Lender shall be deemed to be powers coupled 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; (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: Blue Egg Market, LLC 713 Main Street Elk River,Minnesota Attention: Robin DeWitt If to Lender: Economic Development Authority of the City of Elk River 13065 Orono Parkway Elk River, Minnesota 55330 Attn: Director of Economic Development or addressed to any such party at such other address as such party shall hereafter furnish by notice to the other party. Any notice delivered personally to Borrower shall be delivered to an officer of Borrower, and any notice delivered personally to Lender shall be delivered to an officer of Lender at the address for Lender for the mailing of notices. Either party may change its address for the giving of notices by giving the other party at least ten(10)days notice in the manner provided above. 18. Headings. The headings used in this Agreement are for convenience only and do not define, limit or construe the contents of this Agreement. 19. Bindings on Successors and Assigns. Subject to the limitations on transfer contained in this Agreement, this Agreement shall be binding upon and inure to the benefit of the successors and assigns of the parties hereto. 20. 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. 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 supersede 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 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. [Signature Pages follow] [Remainder of page intentionally left blank.] -12- 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. BLUE EGG MARKET, LLC By: /Ci ft. Name: Robin DeWitt Its: 0a77W,4_ -1 1- Signature Page to Loan Agreement IN TESTIMONY WHEREOF, each of the parties hereto has caused these presents to be effective as of the day and year first above written. ECONOMIC DEVELOPMENT AUTHORITY OF THE CITY OF ELK RIVER - - Name: >A Al I E P Tvi i TE Its: Pre : By: N gYI/L..11 e: I 1 EXHIBIT A Equipment List - Reach in freezer with racks(2 door) - Reach-in cooler with racks(1 door) - 3 compartment sink - Hand sink(2) - Work tables: O 24x96 O 48x96 O 36x60 (5) - Mixer,countertop (2) - Mixer— 15 qt Hobart - Mixer Spiral 50 lb - Display Case Dry - Display Case—Ref - Display Case—Hum - Stainless shelving units(10) - Fudge pot/pans - Reception table - Chairs(6) - Work Stools (4) - Ingredient bins (10) - Pan Racks(6) - Cash Register - Credit Card machine - Wooden shelving display unit GP:3399567 v3 -15- PROMISSORY NOTE Effective as of April 25, 2013 Amount: $74,500.00 Interest: 2.00% Maturity: May 1,2023 FOR VALUE RECEIVED, the undersigned, BLUE EGG MARKET, LLC, a Minnesota limited liability company ("Borrower"), promises to pay to the order of Economic Development Authority of the City of Elk River, a public body corporate and politic of the State of Minnesota ("Lender"), at 13065 Orono Parkway, Elk River, Minnesota 55330, or such other place as the Lender or any other holder of this note may designate in writing, on or before May 1, 2023 ("Maturity Date"), the principal sum of Seventy-Four Thousand Five Hundred and 00/100 Dollars ($74,500.00), 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 monthly installments ("Monthly Installment") in the amount of Six Hundred Eighty-five and 50/100 Dollars ($685.50), which Monthly Installment shall commence on June 1, 2013, and continue on the first (V) day of each and every month thereafter until the Maturity Date, when all accrued but unpaid interest shall be payable in full. 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 to Lender and that certain Personal Guaranty made by Robin DeWitt and Bruce DeWitt 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 Monthly Installment provided for in this note, by the end of seven (7) calendar days after the date it is due, Borrower shall pay a late charge fee to the Lender, or any other holder of this note. The amount of the late charge fee shall be eight percent (8.00%) of the overdue Monthly Installment. The Borrower shall pay this late charge fee on demand, however, collection of the 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. Each Monthly Installment and other payments made under this note shall be applied as follows, (0 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 Monthly Installment or reduce the amount of any such Monthly Installment unless the Lender agrees otherwise in writing. All sums payable to the Lender under this note shall be paid in immediately available funds. The Borrower promises to pay all costs in connection with the enforcement of this note, including but not limited to, those costs, expenses and attorneys' fees of Lender whether or not suit is filed with respect thereto and whether or not such cost or expense is paid or incurred or to be paid or incurred prior to or after the entry of judgment or for the pursuance of, or defense of, any litigation, appellate, bankruptcy or insolvency proceeding. Presentment, notice of dishonor and protest are hereby waived by all makers, sureties, guarantors and endorsers hereof. This note shall be binding upon Borrower, its successors and assigns. The remedies of Lender, as provided herein and in the Loan Agreement and the 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. -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. IN WITNESS WHEREOF, the undersigned has caused this note to be effective as of the day and year first above written. BLUE EGG MARKET, LLC a Minnesota limited liability company ( /LA& By: Robin DeWitt Its: (rrlir74 CiP 3399706 v3 -3- PERSONAL GUARANTY Elk River, Minnesota April 25, 2013 FOR VALUABLE CONSIDERATION, the receipt and sufficiency of which is hereby acknowledged, and in consideration of and to induce financial accommodations of any kind, with or without security,given or to be given or continued at any time and from time to time by the ECONOMIC DEVELOPMENT AUTHORITY OF THE CITY OF ELK RIVER(hereinafter called the "Lender")to or for the account of BLUE EGG MARKET, LLC (hereinafter collectively called the "Borrower"), the undersigned absolutely and unconditionally guarantees to the Lender the full and prompt payment when due, whether at maturity or earlier by reason of acceleration or otherwise, of any and all indebtedness, obligations and liabilities of the Borrower(and any and all successors of the Borrower)to the Lender, now or hereafter existing, absolute or contingent, independent, joint, several or joint and several, secured or unsecured, due or to become due,contractual or tortious, liquidated or unliquidated, arising by assignment or otherwise, including without limitation all indebtedness, obligations and liabilities owed by the Borrower (and any and all successors of the Borrower) as a member of any partnership, syndicate, association or other group, and whether incurred by the Borrower (or any successor of the Borrower) as principal, surety, endorser, guarantor, accommodation party or otherwise (hereinafter collectively referred to as the "Indebtedness"); and the undersigned agrees to pay on demand all of the Lender's fees, costs, expenses and reasonable attorneys'fees in connection with the Indebtedness,any security therefor,and this guaranty, plus interest on such amounts at the highest rate then applicable to any of the Indebtedness. The Lender may at any time and from time to time, without consent of or notice to the undersigned, without incurring responsibility to the undersigned, without releasing, impairing or affecting the liability of the undersigned hereunder,upon or without any terms or conditions,and in whole or in part: (I) sell, pledge, surrender, compromise, settle, release, renew, subordinate, extend, alter, substitute, exchange, change, modify or otherwise dispose of or deal with in any manner and in any order any Indebtedness, any evidence thereof, or any security or other guaranty therefor; (2)accept any security for, or other guarantors of, any Indebtedness; (3) fail, neglect or omit to obtain, realize upon or protect any Indebtedness or any security therefor, to exercise any lien upon or right to any money, credit or property toward the liquidation of the Indebtedness, or to exercise any other right against the Borrower, the undersigned, any other guarantor or any other person; and (4) apply any payments and credits to the Indebtedness in any manner and in any order. No act, omission or thing, except full payment and discharge of the Indebtedness, which but for this provision could act as a release or impairment of the liability of the undersigned hereunder, shall in any way release, impair or otherwise affect the liability of the undersigned hereunder, and the undersigned waives any and all defenses of the Borrower pertaining to the Indebtedness, any evidence thereof, and any security therefor, except the defense of discharge by payment. The failure of any person or persons to sign this or any other guaranty shall not release, impair or affect the liability of the undersigned hereunder. This guaranty is a primary obligation of the undersigned and the Lender shall not be required to first resort for payment of the Indebtedness to the Borrower or any other person, their properties or estates, or any security or other rights or remedies whatsoever. The undersigned shall be and remain liable for any deficiency remaining after foreclosure of any mortgage or security interest securing the indebtedness,whether or not the liability of the Borrower or any other person for such deficiency is discharged pursuant to statute,judicial decision or otherwise. The liability of the undersigned under this guaranty is joint and several and is in addition to and shall be cumulative with all other liabilities of the undersigned to the Lender, as guarantor or otherwise, without any limitation as to amount, unless the writing evidencing or creating such other liability specifically provides to the contrary. If any payment applied by the Lender to the Indebtedness is thereafter set aside, recovered, rescinded or required to be returned for any reason (including without limitation the bankruptcy, insolvency or reorganization of the Borrower or any other person), the Indebtedness to which such payment was applied shall for the purposes of this guaranty be deemed to have continued in existence, notwithstanding such application,and this guaranty shall be enforceable as to such Indebtedness as fully as if such application had never been made. The undersigned waive: (I)notice of acceptance of this guaranty and of the creation and existence of the Indebtedness; (2) presentment,demand for payment, notice of dishonor, notice of nonpayment, and protest of any instrument evidencing the Indebtedness; and (3) all other demands and notices to the undersigned or any other person and all other actions to establish the liability of the undersigned hereunder. The undersigned consent to the personal jurisdiction of the state and federal courts located in the State of Minnesota in connection with any controversy related to this guaranty, waive any argument that venue in such forums is not convenient, and agree that any litigation initiated by the undersigned against the Lender in connection with this guaranty shall be venued in either the District Court of Sherburne County,Minnesota,or the United States District Court,District of Minnesota. All property of the undersigned, now or hereafter in the possession, control or custody of or in transit to the Lender for any purpose, including without limitation the balance of every account of the undersigned with and each claim of the undersigned against the Lender, shall be subject to a lien and security interest in favor of the Lender, as security for all liabilities of the undersigned to the Lender, and shall be subject to be set off against any and all such liabilities, and the Lender may at any time and from time to time at its option and without notice appropriate and apply any such property toward the payment of any and all such liabilities. The undersigned agree to promptly provide the Lender from time to time with financial statements of the undersigned, in form and substance acceptable to the Lender, at least once every 12 months and as otherwise requested by the Lender. The undersigned agree to promptly provide the Lender from time to time with such other information respecting the condition (financial and otherwise), business and property of the undersigned as the Lender may request, in form and substance acceptable to the Lender. The undersigned waive all claims, rights and remedies which the undersigned may now have or hereafter acquire against any person at any time now or hereafter liable to payment of any of the Indebtedness and as to any collateral security, including but not limited to all claims, rights and remedies of contribution, indemnification, exoneration, reimbursement, recourse and subrogation, whether or not such claim, right or remedy arises in equity, under contract, by statute, under common law or otherwise, whether or not the Indebtedness has been fully paid, and all payments and recoveries under this guaranty shall be considered equity investments by the undersigned in the Borrower; provided,nothing contained in this guaranty shall deprive the undersigned of any claim, right or remedy, after the Indebtedness has been fully paid,against any person other than the Borrower. No delay or failure by the Lender in exercising any right, and no partial or single exercise thereof shall constitute a waiver thereof. No waiver of any rights hereunder, and no modification or amendment of this guaranty shall be effective unless the same is in writing duly executed by the Lender, and each such waiver, if any, shall apply only with respect to the specific instance involved and shall not impair or affect the rights of the Lender or the provisions of this guaranty in any other respect at any other time. This guaranty shall continue until written notice of revocation of this guaranty, executed by the undersigned, has been received by the Lender; provided, no revocation of this guaranty shall affect in any manner any liability of the undersigned under this guaranty with respect to Indebtedness arising before the Lender receives such written notice of revocation, and the sole eftect of revocation of this guaranty shall be to exclude from this guaranty Indebtedness thereafter arising which is unconnected with Indebtedness theretofore arising or transactions theretofore entered into. 2 Any invalidity or unenforceability of any provision or application of this guaranty shall not affect other lawful provisions and applications hereof and to this end the provisions of this guaranty are declared to be severable. This guaranty shall bind the undersigned and the heirs, representatives, successors and assigns of the undersigned, and of each of them respectively, and shall benefit the Lender, its successors and assigns. This guaranty shall he governed by and construed in accordance with the laws of the State of Minnesota. THE UNDERSIGNED REPRESENT, CERTIFY, WARRANT AND AGREE THAT THE UNDERSIGNED HAVE READ ALL OF THIS GUARANTY AND UNDERSTAND ALL OF THE PROVISIONS OF THIS GUARANTY. THE UNDERSIGNED ALSO AGREE THAT COMPLIANCE BY THE LENDER WITH THE EXPRESS PROVISIONS OF THIS GUARANTY SHALL CONSTITUTE GOOD FAITH AND SHALL BE CONSIDERED REASONABLE FOR ALL PURPOSES. J I Robin DeWitt ( Bruce Dewitt GP:3399707 v3 3