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7.5 HRSR 05-01-2017
E lls River` Request for Action To Item Number Housing and Redevelopment Authority 7.5 Agenda Section Meeting Date Prepared by General Business May 1, 2017 Amanda Othoudt, EDD Item Description Reviewed by Truck Shop Forgivable Commercial /Industrial Cal Portner, City Administrator Loan application review Reviewed by Action Requested Consider the following HRA Blighted Properties Commercial /Industrial Forgivable Loan application for The Truck Shop. Background /Discussion The city received an application from The Truck Shop for a $75,000 HRA Blighted Properties Forgivable Commercial /Industrial loan. The Truck Shop is a division of Beaudry Oil and is owned and operated by Ken Beaudry. The project will consist of the construction of a new 7,216 sf facility to operate a light maintenance facility for Beaudry Oil existing fleet vehicles. Approximately 224 sf will be used for office and 1,600 sf for mezzanine storage on the northern quarter of the building. Three overhead doors will be located on the west end of the building and three on the east. The proposed facility will be constructed of block and will be approximately 20' -22' high. The Truck Shop will provide for minor repair including oil changes, replacing tires, changing breaks, minor service, light maintenance, cleaning and detailing for Beaudry Oil & Propane fleet only, not open to the public. This project consists of the demolition and redevelopment of four existing residential homes across from Beaudry Oil on CR1 /Proctor. 634 Quinn — Applicant owns the property 620 Quinn — Under Contract 633 Proctor — Under Contract 623 Proctor — Applicant owns the property The application for forgivable loan funds will assist in the acquisition and demolition of 620 Quinn. Total acquisition and demolition costs are estimated to be $84,600. Analysis The goal of the HRA Blighted Properties Commercial /Industrial forgivable loan program is to stimulate private sector investment and help spur new construction, create and retain employment opportunities and promote the sale and redevelopment of structurally substandard properties. A Blighted Properties Commercial /Industrial forgivable loan is required to meet the following guidelines and staff analysis is shown in Bold, alongside the applied policy: i0 W I R I D 6 Y 4A UR 1. The project results in the sale and /or redevelopment of properties deemed structurally substandard. Structurally substandard shall mean containing defects in structural elements or a combination of deficiencies in essential utilities and facilities, lighting and ventilation, fire protection, including adequate egress, layout and condition of interior partitions, or similar factors, which defects or deficiencies are of sufficient total significance to justify substantial renovation or clearance. The city building official conducted a site visit of the property summarizing the building code review performed on the subject property on February 22, 2017. The city Building Official deemed the dwelling as inhabitable and in a state of total disrepair which meets the criteria outlined in the policy. Photos are attached. 2. The minimum wage for a job to be considered a new or retained job shall be the greater of $15 /hour or 150% of the state or federal minimum wage, whichever is greater, exclusive of benefits. The company is proposing the creation of 5 FT with base hourly wages ranging from $16 -$28 per hour, exclusive of benefits. The average hourly wage not inclusive of benefits is $23.20 per hour. The average hourly wages of the retained jobs meet or exceed the minimum business subsidy requirements of at least $15 /hr. 3. The project will result in an increase in tax base, the project can demonstrate that investment of public dollars induces private funds and the project provides higher wage levels to the community or will add value to current workforce skills. A total of $75,000 in total public investment will result in over $1,300,000 in private capital investment accounting for more than 7,216 sf of property redevelopment and will increase the total annual property tax revenue by approximately $10,518. The applicant will create 5 FTE to Elk River paying between $16 -$28 /hour. Summary The applicant is eligible for the HRA Blighted Properties Commercial/ Industrial forgivable loan in the amount $75,000, meeting the definition of structurally substandard, wage goals, and job criteria requirements and the proposed fund uses are eligible expenses. Financial Impact If this loan meets the goals of the city and HRA, the loan funds could be funded from the HRA Blighted Properties Commercial /Industrial fund account, which has a balance of $150,000. Attachments • Blighted Properties Commercial /Industrial Application (March 6, 2017) • Letter to the city postponing application review (Apri120, 2017) • Resolution • Loan Agreement • Promissory Note • Mortgage • Personal Guarantee — Ken Beaudry • Entity Guarantee • Environmental Indemnification Agreement ELK RIVER HOUSING AND REDEVELOPMENT AUTHORITY FORVIABLE COMM ERCIALIINDUSTRIAL LOAN APPLICATION I. CONTACT INFORMATION Legal Name of Business: l ruck Shop, Inc. Project Site Address: G3Quinn. F _629 -.Quinn. 633 Proctor, 623 Proctor (parcels) City / State / Zip Elk River-Minnesota 55330 Contact Person(s) Annie Deckert Business Phone 763 -568 -9498 Check One: proprietor Corporation Partnership Federal ID # 81- 5431748 State ID ## 491256 11. NATURE OF LOAN REQUEST Does your project involve the redevelopment of structurally substandard property? X Yes No Amount Requested: $ 75,000 'Total Project Cost: 5-111-4 S 1� 1 00 Project tinieline: We plan to begin the project in the Spring, and hope to finish th project by November 1, 2017. Please give a brief sutnmaty of your business and its products or senxice: Beaudry Oil & Propane is a local, family owned business that h s been in the petroleum business since 1981. Founded by Ken and Carrie Be udry, it began with one truck and one employee, today Beaudry Oil employs over 50 full time employees. In 1987, the company started delivering propane, and over the years, has added lubricant products, their own brand of diesel and oil, and propane cylinder exchange. Today, Beaudry Oil is a leading fuel company that delivers millions of gallons of petroleum across the state of MN. Blighted Properties Forgivable Commercial /industrial Load Fund :application page 9 of 16 Truck Shop is a division of Beaudry Oil, and is 100% owned and operated by Ken Beaudry. Established on February 20, 2017, this business will provide minor repair for Beaudry Oil & Propane fleet (not open to the public), which includes oil changes, replacing tires, changing brakes, minor service, light maintenance, cleaning and detailing, Beaudry Oil, Truck Shop and their employees is a company that believes in using their resources to support and impact the local community. They participate in local events, sit on a variety of local committees and boards (i.e.: Elk River Area Chamber of Commerce) and support local organizations such as Timber Bay, Young Life, Three Rivers Community Foundation, CAER, MN Teen and Adult Challenge, Fellowship of Christian Athletes and more. Please give a brief surninary of the project acid how it complies to the criteria for approval of the blighted properties forgivable commercial /itrdustrial loan program; Mr. Beaudry is proposing a redevelopment project on four sites across from Beaudry Oil on CR 1/ Proctor: • 634 Quinn (owns) • 620 Quinn • 633 Proctor • 623 Proctor (owns) Pending application approval, Mr. Beaudry intends to acquire the two remaining properties; he has purchase agreements pending for both properties. He intends to build an approximately 7,216 sf facility to operate a light maintenance facility for his existing fleet (Beaudry Oil). The facility will be used for minor repair for Beaudry Oil & Propane fleet (not open to the public), which includes oil changes, replacing tires, changing brakes, minor service, light maintenance, cleaning and detailing. There will be no heavy motor overhauls or outside storage. Approximately 224 sf will be used for office, and there will be approximately 1,600 sf of mezzanine for storage on the northern quarter of the building. There will be three overhead doors on the west end of the building, and three on the east. The proposed facility will be a block building, and approximately 20' -22' high. This project meets the criteria of the loan program in the following ways: The redevelopment of four, existing non - conforming residential homes; three which are substandard Blighted Properties Forgivabic Coamnercia] /lna,lusiri,tl Loan Fund Application Page 10 of 16 • The creation of a minimum of five, full -time permanent jobs for local citizens, with base hourly wages ranging from $16- $28 /hr. • New jobs provide higher wage levels to the community & will add value to current workforce skills • Average hourly wage (w /o benefits) of $23.20/hr; with benefits is $27.20/hr • The injection of approximately $1,300,000 in private investment to revitalize a highly visible site along CR1 in close proximity to US HWY 10 • The tax base will more than double; current taxes on the four parcels $6,982/yr • Estimated taxes upon project completion will be $17,500/yr Please describe how this loan will impact your project: Total project cost is estimated to be approximately $1.287M. The forgivable loan program is necessary to help offset increased costs of the project due to acquisition, demolition and site clean -up. Please see attached letter from Michelle Anderson, Branch President of MidWestOne Bank, who states "the forgivable loan program is very important to maize this project feasible due to the anticipated equity gap. " This loan will also ensure the redevelopment an area built in the early 1930's, increasing the total property's tax base by nearly $11,000 /yr. III. FINANCING Project Costs Land Site improvements (Excav/foundatlon, surrey, storm water ) Buildings (attach plans & costs) Moving Expenses Professional Fees Other (contingencies ) $ 360,000 $ 253,850 $ 618.260 $ 5.000 $ 25,000 $ 25.000 Total Costs $ 13287400 Blighted Properties Forgivable Commercial /Industrial Loan Kind _Application [gage I1 of 16 Proposed Sources of Financin SOURCE NAME ANIOUNl' Bank Loan MidWestOne Bank $ 950,000 Bank Loan $ Other Private funds $ Applicant Contribution $ 262,100 Other $ Fed Grant /Loan $ State Grant /Lean $ HRA Blighted $ 75,000 Properties Forgivable Commercial /Industrial Loan Program Tax Increment Financing $ Tax Abatement % Total Financing s 1,287 100 Collateral Assignments Lien. Description of Collateral Position To Bank 1 Real Estate 1 st To Bank 2 To Private Sources To Other Sources To State To HRA Micro Loan HRA Blighted Properties Forgivable C/I loan Real Estate 2nd Value of Collateral Book Value Cost Existing LICE Blighted Properties Forgivable Commercial /Industrial Loun Rand .-Application Page, 12 of 16 Land $ $ 360,000.00 $ Buildings $ $ 872300.00 $ Machinery & Equip. $ $ $ Other $ $ Other $ $ $ IV, JOB & WAGE GOALS How many employees do you currently have? 0 Guidelines require a minunum of one job created for every $15,000 requested. Jobs to be Created�" Please provide the following information on iobs i7ou ext)ecr to cregre .whin 2 -vwnr job Title Number of Jobs Average Hourly Wa e Annual _.Salary Are the Jobs Permanent or Temporary? Expected Hiring Date Service Manager 1 $28.00 Permanent w /in 2 years Tech /Mechanic 3 $24.00 Permanent w /in 2 years Detailer 1 $16.00 Permanent w/ in 2 years *Dourly wage is base wage; average hourly value of benefits is an additional $4 /1-ir Program Objectives, (Check all that apply) —X— The project contributes to the fulfillment of the city's approved and adopted housing and redevelopment authority and /or redevelopment plans. The project prevents or eliminates slums and blight. ^Z, The project increases the local tax base. The project brings a structure into compliance with an existing building code violation. Blighted Properties rorovable Commercial /Industrial Lean fund Application Page 13 of 16 VI. ATTACHMENTS CHECK LIST Please attach the following: X A) Written Business Plan: 1. Description of Business 2. Ownership 3. Management 4. Date Established 5. Products /Services 6, Future Plans X B) Financial Statements for Past Two Years K C) Financial Projections for Two Years X D) Resume of Owner /Management E) Personal Financial Statements of Proprietor, Partners, Guarantors F) Letter of Commitment from Applicant Pledging to Complete During die Proposed Project Duration G) Letter of Commiu -lent from the Other Sources of Financing, Stating Terms and Conditions of their Participation in Project x H) Application Fee of $2,000 X I) Certificate of Good Standing YI. AGREEMENT 1 / We certify that all information provided in this application is true and correct to the hest of my /our knowledge. I / We authorize the City of Elk River g and Redevelopment Authority to check credit references and verify financial and Pt her ' formation.. I / We agree to provide any additional informatioi ma he reques b t l APPLICANTSIGNATE (1 BY DA Blighted Properties Forgivable Commercial /Industrial Loan fund Application Page 15 of 16 Business Record Details Minnesota Business Name Truck Shop, Inc. Business Type MN Statute Business Corporation (Domestic) 302A File Number Home Jurisdiction 935576600027 Minnesota Filing Date Status 2/20/2017 Active/ In Good Standing Renewal Due Date Registered Office Address 12/31/2018 630 Proctor Avenue Elk River, MN 55330 USA Number of Shares Registered Agent(s) 1000 (Optional) None provided Filing History Filing History Select the items) you would like to order: Order Selected Copies Filing Date Filing 2/20/2017 Original Filing - Business Corporation (Domestic) (Business Name: Truck Shop, Inc.) O 2017 Office of the Minnesota Secretary of State - Terms & Conditions Effective Date Business Record Details >) Minnesota Business Name Truck Shop, Inc. Business Type MN Statute Business Corporation (Domestic) 302A File Number Horne Jurisdiction 935576600027 Minnesota Filing Date Status 2/20/2017 Active / In Good Standing Renewal Due Date Registered Office Address 12/31/2018 630 Proctor Avenue Elk River, MN 55330 USA Number of Shares Registered Agent(s) 1000 (Optional) None provided Filing History Filing History Select the item(s) you would like to order: order selected copies Filing Date Filing 2/20/2017 Original Filing - Business Corporation (Domestic) (Business Name: Truck Shop, Inc.) © 2017 Office of the Minnesota Secretary of State - Terms & Conditions Effective Date MidWestOnc Bank TM March 6, 2017 City of Elk River 13065 Orono Pkwy Elk River, MN 55330 RE: Ken Beaudry and Truck Shop LLC To whom it may concern: MidWestOne Bank has had a banking relationship with Ken Beaudry, Beaudry Oil and other related entities for numerous years. While the ownership entity for this project is new, it is anticipated that the primary source of revenue for the entity will come from related companies particularly Beaudry Oil. Based on our analysis of past financial performance, Ken Beaudry and Beaudry Oil demonstrate the ability to service debt repayment requirements necessary to support the building project proposed in the application with the City of Elk River. It is anticipated that the loan will be $950,000 with the final loan amount calculated based off of the lesser of 80% of appraised value or cost. The loan will be amortized over 20 years. Although Mr. Beaudry demonstrates the ability to service debt payments, the forgivable loan program is very important to make this project feasible due to the anticipated equity gap. This letter is only an assessment of Ken Beaudry to service debt outlined in the application and is not a commitment to Lend from MidWestOne Bank. Please contact me if you have any additional questions. Regards, C't Michelle Anderson Branch President MidWestOne Bank Elk River Office 763 - 274 -3210 manderson @midwestone.com MidWestOne.com • (800) 247 -4418 €Hots Member FDIC to TRUCK SHOP, INC. 630 Proctor Avenue Elk River, MN 55330 February 23, 2017 Elk River Economic Development Authority Amanda Othoudt, Economic Development Director 13065 Orono Parkway Elk River, MN 55330 RE: Letter of Commitment — Truck Shop Redevelopment Project Dear Ms. Othoudt, This letter is my official pledge of commitment to begin our proposed redevelopment project no later than May 31, 2017. Our proposed project is located on the following properties: • 634 Quinn • 620 Quinn s 633 Proctor • 623 Proctor We plan to finish our project no later than November 1, 2017. If you have any questions or need additional information, please do not hesitate to contact Annie Deckert, Decklan Group, at 763- 568 -9498. I appreciate your time. Owner of Truck Shop, Inc. & Beaudry Oil QECKLAN • • a 620 Quinn Ave 1 message Ruprecht, Bob <BRuprecht @elkrivermn.gov> To: "Othoudt, Amanda" <AOthoudt @elkdvermn.gov> Cc: "Annie Deckert (annie @decklangroup.com)" <annie @decklangroup.com> To whom it may concern, Annie Deckert <annie @decklangroup.com> Thu, Feb 23, 2017 at 1:22 PM I inspected the property and buildings located at 620 Quinn Ave. NW in Elk River, Minn. On 2/22/2017 I have deemed the dwelling as uninhabitable and in a state of total disrepair. Thank You, Bob R.. Bob Ruprecht I Building Official 763.635.1066 w 1763.635.1090 f 13065 Orono Parkway I Elk River I MN 155330 I+ iv °,�I t'1'1lFIEI li Elk" � aAru +E Rer J ya J 0 Y, 'Y jol V. 1p _ 4OW- 1 Awe IV, 4Cr 40! .i a �• ee r` . r y. _ , s. 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"ll Al 12 METRO GENERAL SERVICES INC. L1TIg 1TY & EXCAVATING CONTRACTOR 5790 Quam Ave Ne St Michael, MN 55376 Estimate Date Estimate # 3/10/2017 1528 Name 1 Address Albrecht Building & Remodeling PO Box 636 Elk River, MN 55330 Project 620 Quinn St Elk Ri... Description Qty Rate Total 620 Quinn Street Elk River METROGENERALSERVICESt`,GM... www.metrogeneralservice.com Pre demo sewer and water disconnect at curb location Demo, remove and dispose of existing 24'x 36' house, 12'x 16' shed and 12'x 8' shed Total Machine, Labor and Disposal 9,500.00 9.500.00 Permit as Required by the City 100.00 100.00 * * * * * * * * * ** *Abatement not included in bid at this �otal $9.600.00 Quote does not include De- Watering or exchange of unstable soils if encountered Phone # Fax # E -mail Web Site 763.428.2938 763- 428 -2968 METROGENERALSERVICESt`,GM... www.metrogeneralservice.com NAME ESTIMATE PSA 1mriSRE PREP D.- Fee $15.0mm 2 Pml e Mm 3 S ke On 110 m 4 Sewer Dr n WOO s e Tell $i.w e Bvldi P -1 "A" 00 7 Storm wda con n ant .m 8 EN.—., 311.9m.m @ .00 10 Subtotal S147m0.00 12 _ l2 E %CAV1FOlINpATIpY 13 OilmoM 10 m0A0 14 Baas amewa Sx 500.00 15 Fin to Foanaal'm f7 Om AO 10 Damo S2 Om.m 1] O ib2 18 Fewda0m m SmA0 19 $0.00 lv 3x.1. Fil _ 43,W,D0 21 Sip lance tl.WDM 22 01—Tie $0.00 z3 Ineawa - laald. 13 m0.00 24 Cmcreb -0el wore 389l50.m 25 Sub td4 28 27 CONSTIMATERUIL 23 Lamb- S125mA0 29 Tru— SM. m0A0 3p Wn9wrs S F�Gi Dona 32 Sm.00 33 Rh Jl wan ewctaw $173 600A0 34 Fran' hterba .Om.m 35 F 4 1 Sm 38 From' !—M S- 37 From f0A0 38 Rwfi malenal S286m,m 39 _ Roof gii.QM.W 40 41 42 SMing SM.nA.xes S I Labor SOAO AO SOHO 43 - P -n@ w .m 44 Gurtm /tlreh a fan 52,WOA0 4 rig RemmeB wo" 48 Fiw 5- 47 FOP' manwl - mataal - msn 5- 49 FN mm - m 1- 1 -bermt OREFI - b krst -- EA- 52 FricFStene- htaier bamnt OREF1 53 Erc taw- Irttaior mein 54 - . Stain D- 55 $17,saI.w m Sub 1nIN 5283 500 G0 57 58 MECHAn11CAL- IIOONUP'S 50 ORFFI W well Da0h S. 01 du Ges f#ook -a Fee Om A0 02 E1.1- Fbok.a Fae $7, mA0 IT/Ag $17,Wzo 04 Plambi $I*_wo00 fiIi Eleelric $17,50000 NS Se- erdwaEer Se,Ww 07 So l- 50 INTFi11OR FINISH 09 htl -Alb- 57 500.m PO F11mdCabb.'Sv�.Saa�d 5- 71 InsWelion Om,m 72 D,y Well m6.m 73 D Wall -Lffi -oral. 373TSOM 75 Wwd 18 Finish S90m.m Ti Reil lrlbor 76 5 Y rm Y 79 Cabhala -Abw 80 Cebhets- Insiffii 5- 51 Cabheb- Assem. 3- T A.l 84 Ceunler T ,4 th, 5- 85 Inbrlor Pahe Ifni 10 m E—d, Mil w .m 80 Cw—. Tia - floral 50.50 87 Cea k TOeW I- 96 Caemc TisbeOJxhaxa € 89 Ceremk Tb i 00 Ceremk nb lobar -Burr 6 91 Caem�c Ob lobar -ba 02 Ceremk Ob bber -whirl S- 9(1 C -Mlox 81 Ww0 -?fbv L 05 Mimas -Ailwv g8 Si -a Dmr -Allow 86 boon -ASaw S- m 100 Sub tabl $47,2W W 101 E%TERfORIUwDSCAPE 102 A p l $7 m0.0o 103 heel —I 2600.00 10a BEck 4.0 5- 105 Lard ba I—b, 312.500.0. 100 Sotl a seetl 53.000.10 107 5 m A etm o00,m 105 Rald,,N Walls 3- 100 Sab 1019 11C LOTILOIWIADMM _ 111 Chen a 250000 512 Mralla+— 3200m.m AL ants US " 154_ Insurerlce S29.t10 115 Pr a;1 Mn ant 3 OmA0 110 Ti3e & Remdln R. t17 Lwal Fan 50.00 118 W— $3 WOm 119 AG." —t "MOM, 520 Lard CSSar. Cpst 50.00 t 1 122 Swid.i sae son_m 120 124 Cmbeetrr P SUB TOTAL PURCHASE ACBEEMENT This PURCHASE AGREEMENT (the "Agreement ") is entered into and effective on this l I 1 day of November, 2016 (the "Effective Date ") by and between NORTHERN' LIGHTS INVESTMENTS. LLC. a Minnesota limited liability company, whose business address is 13792 247h Avenue NW, Zimmerman. MN, 55398 ( "Seller" or the "Seller'). and NEW RESOURCES. LLC, a Minnesota limited liability company, whose business address is 630 Proctor Avenue, Eli: River. MN. 55330 ("Buyer" or the "Buyer"). Seller and Buyer are sometimes jointly referred to in this Agreement as the 'Parties.' BACKGROUND FACTS: A. The Seller is the fee owner of all right, title and interest in and to that certain real property consisting of approximately .5 acres, with the street address, 620 Quinn Avenue NW, Elk River, MN. 55330, Property ID Number: 75- 403 -0010, Sherburne County, State of Minnesota, and more specifically and legally described in Exhibit "A" to this Agreement, which is incorporated in this Agreement by this reference, together with all easements, rights, tenements, hereditaments, and appurtenances benefitting or belonging to such real property, all buildings, structures and other improvements erected or placed on such real property, and all other property and interests as may be included in this Agreement (collectively referred to in this Agreement as the "Real Property "). B. The Buyer has offered to purchase the Real Property from the Seller on the terms and conditions set forth in this Agreement, and the Seller has accepted the Buyer's offer. Therefore. the Parties intend for the Buyer to purchase the Real Property from Seller according to the terms of this Agreement. In consideration of the promises, representations and warranties in this Agreement and other good and valuable consideration mutually exchanged, the receipt and sufficiency of which the Parties each acknowledge. the Parties, intending to be legally bound, agree as follows: AGREEMENT: 1. 1puMh&M and Salo gf the ftl er . Subject to the terms and conditions set forth in this Agreement, at Closing, Seller shall sell, transfer and convey to the Buyer, and the Buyer shall purchase from the Seller, all of the Seller's right, title and interest in and to the Real Property free and clear of any and all liens, encumbrances, claims or interests of whatever nature as of the Closing Date, except as may be agreed upon in writing by Buyer. 2. purchase Prig. Subject to the terms and conditions set forth in this Agreement, the total ,purchase price for the Real Property of SEVENTY FIVE THOUSAND AND 00 /100 DOLLARS_ ($75,000.00) (the "Purchase Price") shall be paid by the Buyer to Seller in cash, as follows: 2.1. Earnest Money. An earnest money deposit in the amount of One Thousand Dollars ($1000,00) shall be delivered to Seller at 13792 247`h Ave NW, Zimmerman, MN 55398 no later than two (2) business days after the Effective Date. If this Agreement is terminated by Buyer for any reason as provided in Sections 4. 5 or 6 of this Agreement, the Earnest Money shall be refunded in its entirety to Buyer. 2.2. Purchase_Pricc DAIggge. The balance of the Purchase Price in the amount of Seventy four and 001100 Dollars ($74,000.00) shall be paid in cash at Closing. Page I of 16 4 Beaudry QIL & PRQPAfME 630 Proctor Ave NW — Elk River, MN 55330 April 20, 2017 City of Elk River 13065 Orono Parkway Elk River, MN 55330 RE: Truck Shop — Proposed Project To Whom It May Concern: EMAILED: JFEMRITE @ELKRIVERMN.GOV ZCARLTON @ELKRIVERMN.GOV AOTHOUDT @ELKRIVERMN.GOV This letter is my official notice that I would like to move forward with consideration of my redevelopment project immediately west of Beaudry Oil on CR 1 /Proctor as proposed, and I, or a representative on my behalf, will be in attendance at the following upcoming meetings: • April 25, 2017 — Planning Commission Meeting • May 1, 2017 — HRA Meeting • May 15, 2017 - City Council Meeting I have no issues with the conditions as outlined in the Planning and Zoning staff reports. While I have every intent to continue working with Elk River City Staff on drafting a master plan for the block acceptable to all parties involved, moving forward with the current approval process will provide me with the option to execute this project as originally proposed, should we not reach an acceptable alternative. Per discussion with Mr. Carlton on April 18, 2017, my understanding is that I have two years from the date of final project approval to construct the project, and there is no harm in me obtaining approval. To date, I have spent considerable time and financial resources on this project ($40,000 +). Putting this project on hold is not only stifling my business growth and job creation, but is putting me in a position with many unanswered questions, lost revenue and uncertainties. The purpose of this letter is to outline my expectations and points of future discussion as we continue delaying our project to work with the city on an alternative plan. To continue these discussions, the following items need to be addressed: • We need to break ground no later than October 1, 2017 • An approved CR1 /Proctor transportation redevelopment plan • The proposed regional retention pond and road connecting Proctor and Quinn need to be constructed prior to project completion • All future applicable city application fees and escrows for the project waived • The $75,000 HRA Rehabilitation Forgivable loan needs to be approved 4 Beaudry QIL & PRQPAfME 630 Proctor Ave NW — Elk River, MN 55330 • Who's responsible for increased project costs due to city championed project redesign? Please work directly with Annie Deckert, Decklan Group, as it relates to updated project information, applicable meetings, and in obtaining information about my project. I appreciate your time and efforts put into my proposed project and the overall redevelopment of the block. Thankyou Respectfully, Kenneth Beaudry, Owner of Truck Shop HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF ELK RIVER COUNTY OF SHERBURNE STATE OF MINNESOTA RESOLUTION NO. RESOLUTION APPROVING LOAN AGREEMENT AND RELATED DOCUMENTS (TRUCK SHOP, INC. PROJECT) WHEREAS, the Board of Commissioners (the "Board ") of the Housing and Redevelopment Authority in and for the City of Elk River (the "HRA ") has received a proposal from Truck Shop, Inc., or an affiliate thereof (the `Borrower ") that the HRA assist in financing the Borrower's acquisition of certain real property (the "Development Property ") in the City of Elk River, Minnesota (the "City"), removal of existing substandard buildings and the construction of a new light maintenance facility with related office and storage space to be located on the Development Property by providing a loan to the Borrower in an amount of up to $75,000 (the "Loan ") pursuant to the HRA's Blighted Properties Forgivable Commercial /Industrial Loan Program (the "Program "). WHEREAS, the HRA has caused to be prepared a Loan Agreement (the "Loan Agreement ") with the Borrower setting forth, among other things, the terms and conditions under which the HRA will make the loan, a copy of which is on file with the Executive Director. NOW THEREFORE, BE IT RESOLVED by the Board of Commissioners of the Housing and Redevelopment Authority in and for the City of Elk River as follows: 1.01. Subject to a determination by the City that the Development Property satisfies the conditions necessary to create a redevelopment tax increment financing district in accordance with Minnesota Statutes, Section 469.174, subdivision 10, the Loan Agreement as presented to the HRA, together with all related documents necessary in connection therewith, including without limitation, a Promissory Note from the Borrower evidencing the Loan, a subordinate mortgage, an entity guaranty from Beaudry Oil and Service, Inc., or an affiliate thereof, and a personal guaranty from Kenneth J. Beaudry (all as defined in and described in the Loan Agreement) (collectively, the "Loan Documents ") are hereby in all respects approved, in substantially the form on file with the City's Economic Development Director; and the President and Executive Director are hereby authorized and directed to execute the Loan Agreement and any Loan Documents to which the HRA is a party on behalf of the HRA and to carry out, on behalf of the HRA, the HRA's obligations thereunder. 1.02. The approval hereby given to the Loan Documents includes approval of such additional details therein as may be necessary and appropriate and such modifications thereof, deletions therefrom and additions thereto as may be necessary and appropriate and approved by legal counsel to the HRA and by the President and Executive Director prior to executing said documents; and said officers are hereby authorized to approve said changes on behalf of the HRA. The execution of any instrument by the President and Executive Director shall be conclusive evidence of the approval of such document in accordance with the terms hereof. In the event of absence or disability of said officers, any of the documents authorized by this Resolution to be executed may be executed without further act or authorization of the Board by any duly designated acting official, or by such other officer or officers of the Board as, in the opinion of the City Attorney, may act in their behalf. 498530v2 JSB ELI 85-13 Approved by the Board of Commissioners of the Housing and Redevelopment Authority in and for the City of Elk River this 1 st day of May, 2017. President ATTEST: Executive Director 498530v2 JSB ELI 85-13 LOAN AGREEMENT (Blighted Properties Forgivable Commercial /Industrial Loan) THIS LOAN AGREEMENT ( "Agreement ") is made effective as of May , 2017, by and between TRUCK SHOP, INC., a Minnesota corporation (`Borrower "), and the HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR 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 Blighted Properties Forgivable Commercial /Industrial Program loan in the principal amount of $75,000.00 to finance a portion of Borrower's acquisition of certain real property in the City of Elk River, Minnesota (the "City "), removal of existing substandard buildings and the construction of a new light maintenance facility with related office and storage space (the "Project ") to be located on at 623 Quinn Avenue, 620 Quinn Avenue, 633 Proctor Avenue, and 623 Proctor Avenue in the City (the "Loan Property "). B. Lender is willing to make such loan to Borrower in the principal amount of $75,000.00 (the "Loan"), subject to all of the terms and conditions of this Agreement. C. Contemporaneously with the execution hereof, Borrower is delivering to Lender the following security documents: (i) A Promissory Note ( "Note ") effective as of the date herewith made by Borrower and payable to the order of Lender, in the original principal amount of $75,000.00. (ii) The personal guaranty of Kenneth J. Beaudry, the of Borrower (the "Personal Guaranty "); (iii) A Mortgage and Assignment of Rents and Security Agreement and Fixture Financing Statement ( "Mortgage "). The Mortgage is of even date herewith, is executed by Borrower, as mortgagor, in favor of Lender, as mortgagee, and covers the Loan Property as well as a security interest in certain other property described therein; and (iv) An entity guaranty (the "Entity Guaranty ") of Beaudry Oil and Service, Inc. (the "Entity Guarantor "). 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 loan in the principal amount of Seventy -Five Thousand and No /100s Dollars ($75,000.00) (the "Loan") to be advanced in a single disbursement as hereinafter provided, the Loan to be evidenced by the Note and secured by the Personal Guaranty, the Mortgage, the 498527v1 EL185 -51 Entity Guaranty, and any other security document required under this Agreement. The Loan proceeds will be used only towards the cost of Borrower's acquisition of the Loan Property and demolition of existing substandard buildings located the Loan Property. 2. Mortgage and Security Interest. The Borrower has provided Lender a second priority mortgage in the Loan Property owned by the Borrower. 3. Title Insurance. ( "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 ensure that the Mortgage constitutes a second priority lien upon Borrower's interest in the Loan Property as contemplated by this Agreement, subject only to a mortgage in favor of MidWestOne Bank in the amount of $ (the "First Lien Mortgage "). Borrower agrees to promptly and fully observe and comply with the reasonable requirements of Title and Lender with respect to the title, the Mortgage, disbursements of funds and such other reasonable requirements as Title may make. 4. Documents to be Delivered. Borrower covenants and agrees to immediately cause the compliance with the following conditions: (a) Note. Deliver to Lender the Note. (b) Personal Guaranty. Deliver to Lender the Personal Guaranty. (c) Entity Guaranty. Deliver to Lender the Entity Guaranty. (d) Mortgage. Deliver to Lender the Mortgage, together with evidence that the Mortgage has been or will be duly filed for record. (e) Borrower Organizational Documents and Resolutions. Deliver to Lender copies of the (i) articles of incorporation for Borrower certified by the Minnesota Secretary of State, (ii) certificate of good standing for Borrower issued by the Minnesota Secretary of State; (iii) Borrower's bylaws; and (iv) certified 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. (f) Entity Guarantor Organizational Documents and Resolutions. Deliver to Lender copies of the (i) articles of incorporation for Entity Guarantor certified by the Minnesota Secretary of State, (ii) certificate of good standing for Entity Guarantor issued by the Minnesota Secretary of State; (iii) Entity Guarantor's bylaws; and (iv) certified resolutions of Entity Guarantor authorizing the execution and delivery of the Entity Guaranty, and any other document to be executed by Entity Guarantor pursuant to this Agreement. (g) Insurance. Deliver to Lender: (i) a certificate or policy for all insurance required under the terms hereof to be maintained by Borrower; and (ii) evidence that no 2 498527v1 EL185 -51 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. (h) Compliance with Laws, Etc. Deliver to Lender such evidence as Lender may require as to the compliance of the Loan Property with: (i) all applicable laws, codes, rules, regulations and ordinances, including, without limitation, those relative to environmental protection, protection of wetlands, building and zoning matters and the Americans with Disabilities Act; and (ii) the requirements of any restrictive covenants, conditions and restrictions; conditional use permit or planned unit development applicable to the Loan Property. (i) 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 paragraph (i), 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. 0) Program Fee. Deliver to Lender the program fee of $2,000; the Lender acknowledges that the Borrower has previously paid the Lender's program fee. (k) 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. (1) Project Cost and Source of Funds Certificate. Deliver to Lender a sworn certificate detailing costs and sources of funds to be utilized for the Project ( "Project Cost Certificate "), in a form acceptable to Lender, verified on oath by a authorized representative of Borrower showing an itemized breakdown of. (i) the source and amount of all Project funds; and (ii) of the total cost of the Project. Not less than 50% of the Project funds must come from a source other than the Loan proceeds. Borrower shall deliver to Lender lien waivers, receipts for payment and other evidence of payment acceptable to Lender with respect to any such portion of costs and charges incurred to the date of the Project Cost Certificate. (m) Blighted Condition. Deliver to the Lender evidence that at least one building on the Loan Property is structurally substandard as established by Minnesota Statutes, Section 117.025, subdivision 7. Lender may waive any of the above requirements in its sole discretion. 3 498527v1 EL185 -51 5. Disbursement of Loan. Upon receipt by Lender of all of the items required pursuant to Section 4 above in the form and condition required therein and confirmation from Title that Title is prepared to issue the mortgagee's title insurance policy as required herein, Lender agrees to disburse the Loan proceeds to Borrower. 6. Access to Loan Property. Lender and its respective representatives shall have at all reasonable times the right to enter and have free access to the Loan Property and the right to inspect the Loan Property. 7. Books and Records. Borrower agrees to maintain accurate and complete books, accounts and records in regard to the Loan Property in a manner reasonably acceptable to Lender. Lender, acting solely through its municipal or financial advisor, shall have the right to inspect, examine and copy all such books and records of the Borrower and the Entity Guarantor and Borrower and the Entity Guarantor shall, at Lender's request, furnish such information solely to the Lender's municipal or finance advisor, as may reasonably be demanded. The Borrower and the Entity Guarantor will not be required to provide its books and records directly to the Lender. 8. Encumbrances and Transfer. Other than the First Lien Mortgage, Borrower agrees not to sell, transfer, lease or convey the Loan Property or any part of it, or any interest therein, or encumber the Loan Property or any part of it, in any manner, without written consent of Lender which consent may be granted or withheld in the sole discretion of Lender. This requirement shall apply to each and every sale, transfer, lease or conveyance, whether voluntary or involuntary and whether or not Lender has consented to any such prior sale, transfer lease or conveyance. 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. 9. Agreement. Time of Essence Time is of the essence in the performance of this 10. Assignability. Borrower shall not assign this Agreement without written consent of Lender, which consent may be withheld, conditioned or delayed in Lender's sole discretion. Lender may freely assign or otherwise transfer (including by participation) all or any part of its interest in the Loan or any or all of the Loan documents, in Lender's sole discretion. 11. Miscellaneous Covenants of Borrower. Borrower covenants and agrees with Lender that, without cost to Lender, Borrower will or will cause Entity Guarantor to: (a) Performance of Conditions. Promptly keep, perform and comply with all of the terms, covenants and conditions to be kept and performed by Borrower, as required by the City and any other governmental body having jurisdiction over 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 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 4 498527v1 EL185 -51 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 Borrower or Entity Guarantor's businesses. (b) Amendment, Etc. of Documents. Not amend, cancel, terminate, supplement or waive any of the material terms, covenants and conditions of any permit or agreement issued or made by the City or any other governmental body having jurisdiction over the Loan Property, or any other contracts obtained or held by Borrower and /or Entity Guarantor in connection with any contracts, documents or agreements referred to herein without the prior written approval of Lender. (c) Performance of Note etc. Without limiting the foregoing, keep and perform all of the terms, covenants, conditions and requirements of the Note, the Mortgage, and this Agreement. (d) Insurance. During the term of this Agreement, Borrower shall procure and maintain or cause to be procured and maintained at its sole expense, casualty insurance, public liability insurance and such other types of insurance as are reasonably required by Lender from time to time, including without limitation the coverages expressly required by the Mortgage, with coverages and in amounts normally held by owners of property similar to the Loan Property (as improved) 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. Pay at closing, or within 30 days of written notice from the Lender, all loan charges including, but not limited to: (i) Lender's attorneys' fees; (ii) title insurance fees, costs and premiums; and (iii) filing fees of any instruments required under this Agreement. (f) Default Notices. Provide Lender with a copy of any default notice received by the Borrower or the Entity Guarantor pursuant to any documents related to any financing secured by the Loan Property, promptly after receipt of the same. (g) Continual Operation. At all times while any portion of the Loan remains outstanding, Borrower will: (i) maintain its status as a for profit entity; (ii) maintain a positive net worth; and (iii) will operate its business from the Loan Property in a first class manner. 12. Warranties. Borrower represents and warrants to Lender the following: (a) The Borrower 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 5 498527v1 EL185 -51 within the powers of the Borrower and the Entity Guarantor and have been duly authorized by all necessary company action on the part of the Borrower and the Entity Guarantor. This Agreement and the Note, Mortgage, and any other instruments required hereunder have been duly executed and delivered and are the legal, valid and binding obligations of the Borrower and the Entity Guarantor enforceable in accordance with their respective terms. (c) No litigation, tax claims or governmental proceedings are pending or threatened against the Borrower, the Entity Guarantor or the Loan Property, and no judgment or order of any court or administrative agency is outstanding against the Borrower, the Entity Guarantor or the Loan Property which would have a material adverse effect on Borrower, the Entity Guarantor or the Loan Property. (d) Borrower and the Entity Guarantor have filed all tax returns (federal and state) required to be filed for all prior years and paid all taxes shown thereon to be due, including interest and penalties. Borrower and the Entity Guarantor will file all such returns and pay all such taxes for the current and future years. (e) All information, financial or other, which has been submitted by Borrower, the personal guarantor, and the Entity Guarantor in connection with the Loan is true, accurate and complete in all material respects. (f) Entity Guarantor is under common ownership with the Borrower. (g) Borrower is a "small business" as defined by the U.S. Small Business Administration. 13. Indemnification. Borrower agrees to indemnify Lender and hold it harmless against all loss, liability, expense, or damages including but not limited to attorneys' fees, which may arise by reason of the assertion of any lien against the Loan Property. 14. Defaults. Each of the following shall constitute an Event of Default: (a) If Borrower abandons the Loan Property. (b) Bankruptcy, reorganization, assignment, insolvency or liquidation proceedings, or other proceedings for relief under any applicable bankruptcy law or other law for relief of debtors are instituted by or against Borrower and, if such proceedings are instituted against Borrower, an order, judgment or decree, without the consent of Borrower appointing a trustee or receiver for Borrower or any part of its property or approving a petition under the bankruptcy laws of the United States or any similar laws of any state or other competent jurisdiction, shall have remained in force undischarged or unstayed for a period of 30 days. 6 498527v1 EL185 -51 (c) Any judgment, attachment, garnishment or other similar process is entered against Borrower or against any property or assets of Borrower and is not released, satisfied or discharged or bonded to Lender's satisfaction within 30 days of entry. (d) Any of the terms, covenants or conditions of any permit or other agreement issued or made by the City or other governmental body having jurisdiction over the Loan Property are not complied with within the time required thereby or are terminated or modified by the City or such other governmental body and Borrower has not taken the necessary steps to correct or cure the same within 30 days after written notice is given by Lender. (e) Any mechanic's or material supplier's lien is filed, against the Loan Property and is not released, satisfied or discharged or bonded to Lender's satisfaction. (f) A transfer which violates by Section 8 hereof, Encumbrances and Transfer, occurs. (g) Borrower: (i) fails to pay when due any amount due under this Agreement, the Note, or any other documents listed in Section 4; (ii) fails to perform any other obligation to be performed under this Agreement, the Note, the Mortgage or any other document executed by Borrower pursuant to this Agreement; or (iii) fails to pay any amount or perform any obligation under any other note, mortgage or other agreement now or hereafter made by Borrower in favor of or with Lender or otherwise now or hereafter held by Lender or Bank, and such failure continues beyond any applicable cure period. (h) Any representation or warranty by Borrower contained herein or in the Note, the Mortgage, or any other instrument required hereunder is false or untrue in any material respect when made. (i) A default under the Entity Guaranty, the Mortgage, the Personal Guaranty, or beyond any applicable notice and cure period. 15. Remedies. Upon the occurrence of an Event of Default, Lender, at its option, shall, in addition to any other remedies which it might be entitled to by law, have the right to: (a) Perform such other acts or deeds which reasonably may be necessary to cure any default existing under this Agreement, and to this end, it is hereby agreed as follows: (i) All sums expended by Lender in effectuating its rights under paragraphs (ii) and (iii) of this Section shall be deemed to have been advanced under this Agreement and to be secured by any security document required under this Agreement as security for the Loan. 7 498527v1 EL185 -51 (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 prosecute and defend all actions or proceedings in connection with the Loan Property and do any and every act which Borrower might do in its own behalf, (B) to perform each of the terms, covenants and conditions to be kept and performed by Borrower under any contracts and /or leases obtained or held by Borrower in connection with the operation of the Loan Property and any other contracts; (C) without limiting the foregoing, to perform each of the terms, covenants and conditions to be kept or performed by Borrower under this Agreement and any other instrument required under this Agreement; and (D) to do all things that Lender reasonably deems necessary or advisable for the purpose of carrying out the powers enumerated in (A), (B), (C) and (D) of this paragraph (ii); (iii) The powers herein granted Lender shall be deemed to be powers coupled with an interest and the same are irrevocable; (b) cancel this Agreement and not advance any further amounts hereunder; (c) bring appropriate action to enforce such performance and the correction of such Event of Default; (d) declare the entire unpaid principal of the Note and all accrued interest thereon immediately due and payable without notice; (e) foreclose the Mortgage or any security instrument referred to in this Agreement and /or exercise any other rights or remedies it may have under the Entity Guaranty, the Personal Guaranty, the Mortgage, and any other security instruments. 16. Default under Note. 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 Truck Shop, Inc. c/o Beaudry Oil and Service, Inc. 630 Proctor Avenue Elk River, MN 55330 Attention: Kenneth J. Beaudry 8 498527v1 EL185 -51 If to Lender: Housing and Redevelopment Authority in and for the City of Elk River 13065 Orono Parkway Elk River, Minnesota 55330 Attn: Executive Director 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 10 days' notice in the manner provided above. 18. Headings. The headings used in this Agreement are for convenience only and do not define, limit or construe the contents of this Agreement. 19. Bindings on Successors and Assigns. Subject to the limitations on transfer contained in this Agreement, this Agreement shall be binding upon and inure to the benefit of the successors and assigns of the parties hereto. 20. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of Minnesota, without giving effect to any choice or conflict of law provision or rule. 21. Counterparts. This Agreement may be executed in two (2) or more counterparts, each of which shall be an original and all of which shall constitute the same agreement. 22. Entire Agreement. This Agreement, the Note, the 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. 23. Fees and Expenses. Borrower agrees to pay to Lender immediately upon demand all costs and expenses, including, without limitation, all attorneys' fees, incurred by Lender in connection with the enforcement of the Lender's rights and /or the collection of any amounts which become due to Lender under this Agreement, the Note, the 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. 24. Business Subsidy and Repayment Requirements. (a) In order to satisfy the provisions of Minnesota Statutes, Section 116J.994, subdivision 2 (the "Business Subsidies Act ") and the Lender's Business Subsidy Policy, the Borrower acknowledges and agrees that the amount of the "Business Subsidy" 9 498527v1 EL185 -51 granted to the Borrower under this Agreement is the amount of the loan, which is $75,000, and that the Business Subsidy is needed because the Project is not sufficiently feasible for the Borrower to undertake without the Business Subsidy. The public purpose of the Business Subsidy is to cause the redevelopment of certain property, increase the tax base in the City and stimulate the creation of jobs. In consideration of the Business Subsidy provided for the Borrower's Project, the Borrower has agreed to meet the following goals (the "Goals "): the Borrower shall create 5 full -time equivalent jobs at the Loan Property at an hourly wage, exclusive of benefits, equal to the greater of $16.00 per hour or 150% of the state or federal minimum wage, whichever is greater (the "Jobs "), by the 2 -year anniversary of the Benefit Date (as defined in Minnesota Statutes, Section 116J.993. (b) If none of the Goals are met, the Borrower agrees to repay all of the Business Subsidy to the City, plus interest ( "Interest ") set at the greater of 2.00% per annum or the implicit price deflator defined in Minnesota Statutes Section 275.70, subdivision 3, accruing from and after the Benefit Date, compounded semiannually. If the Goals are met in part, the Borrower agrees to repay a portion of the Business Subsidy (plus Interest) determined by multiplying the Business Subsidy by a fraction, the numerator of which is the number of Jobs in the Goals which were not created at the wage level set forth above and the denominator of which is 5 (i.e. number of Jobs set forth in the Goals). (c) The Borrower agrees to: (i) report its progress on achieving the Goals to the City until the later of the date the Goals are met or two years from the Benefit Date, or, if the Goals are not met, until the date the Business Subsidy is repaid, (ii) include in the report the information required in Section 116J.994, subdivision 7 of the Business Subsidies Act on forms developed by the Minnesota Department of Employment and Economic Development, and (iii) send completed reports to the City. The Borrower agrees to file these reports no later than March 1 of each year commencing March 1, 2017, and within 30 days after the deadline for meeting the Goals. The City agrees that if it does not receive the reports, it will mail the Borrower a warning within one week of the required filing date. If within 14 days of the post marked date of the warning the reports are not made, the Borrower agrees to pay to the City a penalty of $100 for each subsequent day until the report is filed up to a maximum of $1,000. (d) The Borrower agrees that it will continue operations in the City and maintain the Jobs for at least 5 years after the Benefit Date. (e) Other than the loan provided pursuant to this Agreement, there are no other state or local government agencies providing financial assistance for the project. (f) There is no parent corporation of the Entity Guarantor or the Borrower. [Signature Pages follow] 10 498527v1 EL185 -51 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. TRUCK SHOP, INC. By: Its: S -1 498527v1 EL185 -51 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. HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF ELK RIVER WIN Name: Its: President By: Name: Its: Executive Director S -2 498527v1 EL185 -51 PROMISSORY NOTE (Blighted Properties Forgivable Commercial /Industrial Loan) May , 2017 Amount: $75,000.00 Interest: 2.00% Maturity: May , 2022 FOR VALUE RECEIVED, the undersigned, TRUCK SHOP, INC., a Minnesota corporation (`Borrower "), promises to pay to the order of the HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR 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 , 2022 ( "Maturity Date "), the principal sum of Seventy -Five Thousand and 00 /100 Dollars ($75,000.00), together with interest on any and all amounts remaining unpaid thereon from time to time from the date hereof (computed on the basis of actual days elapsed in a year of 360 days) at a fixed interest rate of two percent (2.00 %) per annum. This Note is made pursuant to a Loan Agreement, between Borrower and Lender, of even date herewith ( "Loan Agreement ") which provides for the payment of a portion of the cost of acquisition of certain real property, removal of existing substandard buildings and the construction of a new light maintenance facility with related office and storage space on certain Loan Property (as defined in the Loan Agreement) in the City of Elk River, Minnesota (the "Project "). All capitalized terms which are not otherwise defined herein shall have the meanings set forth in the Loan Agreement. Except as provided in the following paragraph, the principal of and accrued interest on this Note shall be due and payable on May , 2022 (the "Note Maturity Date "); provided, however that the Note is subject to repayment prior to the Note Maturity Date in accordance with Section 24 of the Loan Agreement. If, as of the Note Maturity Date (a) no Event of Default exists under the Loan Agreement, (b) the Borrower has acquired the Loan Property and completed the Project (as evidenced by a certificate of occupancy from the City), and (c) the Borrower has created 5 new full time equivalent jobs in the City of Elk River, Minnesota (the "City ") at the Loan Property at the greater of $16.00 per hour or 150% of state or federal minimum wage, whichever is greater, exclusive of benefits, (the "Jobs ") and maintained the Jobs in the City through the Note Maturity Date, then the principal of and interest on this Note shall be deemed paid in full on the Note Maturity Date. This Note may be prepaid by the Borrower at any time. This Note is secured by, among other things a Mortgage and Assignment of Rents and Security Agreement and Fixture Financing Statement, a Personal Guaranty made by Kenneth J. 498722v1 EL185 -51 Beaudry, and that certain Entity Guaranty made by Beaudry Oil and Service, Inc., all of which are made to Lender of even date herewith (collectively, the "Security Documents "). All of the terms and conditions contained in the Security Documents which are to be kept and performed by Borrower are hereby made a part of this Note to the same extent and with the same force and effect as if they were fully set forth herein; and Borrower covenants and agrees to keep and perform them, or cause them to be kept and performed, strictly in accordance with their terms. All sums payable to the Lender under this Note shall be paid in immediately available funds. The Borrower promises to pay all costs in connection with the enforcement of this Note, including but not limited to, those costs, expenses and attorneys' fees of Lender whether or not suit is filed with respect thereto and whether or not such cost or expense is paid or incurred or to be paid or incurred prior to or after the entry of judgment or for the pursuance of, or defense of, any litigation, appellate, bankruptcy or insolvency proceeding. Presentment, notice of dishonor and protest are hereby waived by all makers, sureties, guarantors and endorsers hereof. This Note shall be binding upon Borrower, its successors and assigns. The remedies of Lender, as provided herein and in the Loan Agreement and the Security Documents, shall be cumulative and concurrent and may be pursued singly, successively or together, at the sole discretion of Lender, and may be exercised as often as occasion therefor shall occur; and the failure to exercise any such right or remedy shall in no event be construed as a waiver or release thereof. Time is of the essence hereof. This Note shall be governed by and be construed under the laws of the State of Minnesota, without regard to principles of conflicts of law. [Signature Page Follows] 2 498722v1 EL185 -51 IN WITNESS WHEREOF, the undersigned has caused this Note to be effective as of the day and year first above written. TRUCK SHOP, INC., a Minnesota corporation By: Its: S -1 498722v1 EL185 -51 MORTGAGE AND ASSIGNMENT OF RENTS AND SECURITY AGREEMENT AND FIXTURE FINANCING STATEMENT (Blighted Properties Forgivable Commercial /Industrial Loan) This Mortgage and Assignment of Rents and Security Agreement and Fixture Financing Statement ( "Mortgage ") is made as of May , 2017, by TRUCK STOP, INC., a Minnesota corporation ( "Mortgagor "), in favor of the HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR 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 $75,000.00 OF PRINCIPAL INDEBTEDNESS, TOGETHER WITH ALL INTEREST ACCRUING THEREON AND ANY AMOUNTS WHICH MAY BE ADVANCED BY MORTGAGEE IN PROTECTION OF THE MORTGAGED PREMISES OR THE LIEN OF THIS MORTGAGE. RECTTALS A. Mortgagor has executed and delivered to Mortgagee a Promissory Note effective as of the date hereof in the principal amount of $75,000.00 and bearing interest at the rate set forth therein, with principal being due and payable as set forth therein and with all principal and interest, if not sooner paid or forgiven, being due and payable on May , 2022 (the Promissory Note as the same may be renewed, extended, replaced, modified or amended is herein called the "Note "). The proceeds of the Note are being utilized to pay a portion of the costs of the acquisition of real property, demolition of existing substandard buildings and the construction of a new light maintenance facility on the Mortgaged Property (as defined below). B. Contemporaneous herewith, Mortgagor has entered into that certain loan agreement (the "Loan Agreement ") setting forth the terms and conditions of Mortgagor and Lender's obligations with relation to this loan facility. 498526v1 EL185 -51 C. As a condition of providing the loan pursuant to the Loan Agreement, Lender required that Mortgagor's obligations under the Loan Agreement be secured by this Mortgage. NOW THEREFORE, in consideration of the Recitals and for the purpose of securing the payment and performance of all of Mortgagor's obligations under the Loan Agreement (collectively "Obligations "); and to secure the performance of all covenants, conditions and agreements herein and in the Loan Agreement, Mortgagor does hereby mortgage, grant, bargain, sell, release and convey unto Mortgagee, with power of sale, forever all of Mortgagor's right, title and interest in all the tracts or parcels of land lying and being in Sherburne County, Minnesota, legally described in Exhibit A hereto, (hereinafter the "Land "), whether now owned or hereafter acquired, together with: (i) all building materials, supplies and equipment now or hereafter located on the Land and suitable or intended to be incorporated in any building, structure, or other improvement located or to be erected on the Land; and (ii) all of the buildings, structures and other improvements now standing or at any time hereafter constructed or placed upon the Land; and (iii) all heating, plumbing and lighting apparatus, motors, engines, and machinery, electrical equipment, incinerator apparatus, air conditioning equipment, water and gas apparatus, pipes, faucets, and all other fixtures of every description which are now or may hereafter be placed or used upon the Land or in any building or improvement now or hereafter located thereon; and (iv) all additions, accessions, increases, parts, fittings, accessories, replacements, substitutions, betterments, repairs and proceeds to any and all of the foregoing; and (v) all hereditaments, easements, appurtenances, estates, rents, issues, profits, condemnation awards, proceeds of policies of insurance and other rights and interests now or hereafter belonging or in any way pertaining to the Land or to any building or improvement now or hereafter located thereon; and (vi) all leases or other occupancy agreements now or hereafter in effect in any way appertaining to the Land or to any building or improvement now or hereafter located thereon, including, without limitation, all cash and security deposits, advance rentals and deposits or payments of a similar nature ( "Leases "), and all Rents (as herein defined) (all of the foregoing, together with the Land, hereinafter being referred to as the "Property" or "Mortgaged Property"), TO HAVE AND TO HOLD the Mortgaged Property unto Mortgagee forever; PROVIDED, NEVERTHELESS, that this Mortgage is given upon the express condition that if Mortgagor shall cause to be paid and performed all of the Obligations, and shall also keep and perform all and singular the covenants herein contained on the part of Mortgagor to be kept and performed, then the Mortgage and the estate hereby granted shall cease and be and become void and shall be released of record at the expense of Mortgagor; otherwise this Mortgage shall be and remain in full force and effect. MORTGAGOR REPRESENTS, WARRANTS AND COVENANTS to and with Mortgagee that Mortgagor has good right and full power and authority to execute this Mortgage and to mortgage the Mortgaged Property; that the Mortgaged Property is free from all liens and encumbrances except a mortgage in favor of MidWestOne Bank in the amount of $ (the "First Lien Mortgage ") and those other certain permitted encumbrances identified in Exhibit B hereto (the "Permitted Encumbrances "); that Mortgagee shall quietly enjoy and possess the Mortgaged Property; that Mortgagor will warrant and defend the title to the Mortgaged Property 2 498526v1 EL185 -51 against all claims, whether now existing or hereafter arising. The covenants and warranties of this paragraph shall survive foreclosure of this Mortgage and shall run with the Land. AND IT IS FURTHER COVENANTED AND AGREED AS FOLLOWS: ARTICLE ONE GENERAL COVENANTS, AGREEMENTS, WARRANTIES 1.1. Payment of Obligations, Observance of Covenants. Mortgagor will duly pay and perform its Obligations and will perform all other agreements and covenants by Mortgagor to be performed hereunder. 1.2. Payment of Impositions. Mortgagor agrees to pay, before a penalty might attach for nonpayment thereof, all taxes, assessments, water and sewer charges, and other fees, taxes and charges of whatsoever nature levied upon or assessed or placed against the Mortgaged Property (collectively "Impositions "). Mortgagor will likewise pay all taxes, assessments and other charges, levied upon or assessed, placed or made against, or measured by, this Mortgage, or the recordation hereof, or the Obligations, provided that Mortgagor shall not be obliged to pay such tax, assessment or charge if such payment would be contrary to law or would result in the payment of an usurious rate of interest on the Obligations. Mortgagor shall promptly furnish to Mortgagee all notices received by Mortgagor of amounts due under this Section and upon Mortgagee's request, shall deliver proper receipts evidencing the payment of such amounts. In the event of a judicial decree or legislative enactment after the date of this Mortgage, providing that any such imposition may not be lawfully paid by Mortgagor, or in the event that the payment of any such imposition by Mortgagor would result in the payment of a usurious rate of interest on the Obligations, the Obligations, together with interest, shall become immediately due and payable, or, at Mortgagee's option, Mortgagee may pay any amount or portion of such Imposition as renders the Obligations unlawful or usurious, in which event Mortgagor shall concurrently therewith pay the remaining lawful and non - usurious portion or balance of said Imposition. 1.3. Payment of Operating Costs, Prior Mortgages and Liens. Mortgagor agrees that it will pay, or cause to be paid, all operating costs and expenses of the Mortgaged Property; keep the Mortgaged Property free from mechanics' and material suppliers' and other liens, subject to Mortgagor's right to contest in good faith as set forth in Section 1.4 hereof, will keep the Mortgaged Property free from levy, execution or attachment and will immediately pay when due all indebtedness which may be secured by mortgage, lien or charge on the Mortgaged Property and upon request will exhibit to Mortgagee satisfactory evidence of such payment and discharge. 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 3 498526v1 EL185 -51 involuntary lien within 30 days after the same shall have been filed, shall have given such reasonable security as may be demanded by Mortgagee to ensure such payments and any penalties and interest that may accrue thereon and prevent any sale or forfeiture of the Mortgaged Property by reason of such nonpayment. Any such contest shall be prosecuted with due diligence and Mortgagor shall promptly after final determination thereof pay the amount of any such levy, lien or Imposition so determined, together with all interest and penalties, which may be payable in connection therewith. Notwithstanding the provisions of this Section, Mortgagor shall, and Mortgagee may (but shall have no obligation to), pay any such levy, lien or Imposition notwithstanding such contest if in the reasonable opinion of Mortgagee, the Mortgaged Property is in jeopardy or in danger of being forfeited or foreclosed. 1.5. Maintenance and Repairs, Inventory. Mortgagor agrees that it will keep and maintain (or cause to be kept and maintained) the Mortgaged Property in good condition and repair, free from any waste or misuse, and will comply with all requirements of law, municipal ordinances and regulations, restrictions and covenants affecting the Mortgaged Property and its use, and will promptly repair or restore any buildings, improvements or structures now or hereafter on the Mortgaged Property which may become damaged or destroyed. Mortgagor further agrees that without the prior consent of Mortgagee it will not remove from the Mortgaged Property any fixtures or any personal property that is included in the Mortgaged Property unless the same is immediately replaced with like fixtures or personal property of at least equal value, or is otherwise removable under Section 6.1 hereof, or expand any improvements on the Mortgaged Property, erect any new improvements or make any material alterations in any improvements which will materially alter the basic structure, materially and adversely affect the market value or materially change the existing architectural character of the Mortgaged Property. Mortgagor agrees that it will complete within a reasonable time any buildings now or at any time in the process of erection on the Mortgaged Property. Mortgagor agrees not to acquiesce in any rezoning classification, modification or restriction affecting the Mortgaged Property without Mortgagee's prior written consent. Mortgagor agrees that it will not abandon the Mortgaged Property. Upon request of Mortgagee, Mortgagor shall deliver to Mortgagee an inventory in detail reasonably acceptable to Mortgagee of any personal property owned by Mortgagor that is included in the Mortgaged Property pursuant to the terms hereof together with a certification by Mortgagor that said inventory is a true and complete schedule of the personal property to be included in the Mortgaged Property pursuant to the terms hereof. Such inventory shall list any conditional sales contracts and other title retention arrangements to which such personal property may be subject. 1.6. Insurance. (a) So long as the Obligations remain unpaid, Mortgagor shall, at its own cost, maintain or cause to be maintained with insurers of recognized responsibility acceptable to Mortgagee the following insurance: (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 4 498526v1 EL185 -51 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 coverage; and (iv) such other forms of insurance in such minimum amounts as Mortgagee may reasonably require or as may be required by law. Mortgagor shall pay or cause to be paid all premiums on insurance required hereunder by making payment directly to the insurer. Mortgagee shall have the right to hold the policies and renewals thereof, and Mortgagor shall promptly furnish to Mortgagee all such policies, renewals thereof, renewal notices and all paid - premium receipts received by it. All policies of insurance and any and all refunds of unearned premiums are hereby assigned to Mortgagee as additional security for the payment of the Obligations secured hereby. In the event of foreclosure of this Mortgage, all right, title and interest of Mortgagor in and to any insurance policies then in force shall pass to the purchaser at the foreclosure sale. (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 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 mortgagee under the First Lien Mortgage, which has priority over this Mortgage, Mortgagee is authorized and empowered to settle, 5 498526v1 EL185 -51 collect and receive all fire and hazard insurance proceeds, to apply such proceeds to all expenses (including reasonable attorneys' fees) reasonably incurred by Mortgagee in collecting the same and, at Mortgagee's option and in its sole discretion, apply the balance of said proceeds ( "Net Proceeds ") to payment of the Obligations or make the Net Proceeds available for the repair and restoration of the Mortgaged Property; provided, however, Mortgagor may settle claims without Mortgagee's consent if the loss is less than $5,000.00 and no Event of Default exists at the time of settlement. Mortgagor shall apply any such proceeds to the repair and restoration of the Mortgaged Property. So long as no Event of Default exists, any settlement of a fire and hazard insurance claim of more than $5,000.00 shall require the consent of Mortgagor, which consent will not be unreasonably withheld. (d) If Mortgagee elects to apply the Net Proceeds to repair and restoration of the Mortgaged Property (i) the Net Proceeds shall be held by Mortgagee and at Mortgagee's election may be disbursed either by Mortgagee or a disbursing agent selected by Mortgagee and paid by Mortgagor, (ii) upon Mortgagee's request prior to disbursement of any Net Proceeds or thereafter, from time to time, Mortgagor will deposit with Mortgagee such amounts in excess of remaining Net Proceeds as Mortgagee reasonably determines is required to complete the repair and restoration, (iii) the Net Proceeds and any funds deposited by Mortgagor shall be held and disbursed in accordance with sound construction loan disbursement practices, including, but not limited to, approval of the plans and specifications, appraisal, its other conditions for disbursement of draw requests and inspection of the work, and such other reasonable conditions as Mortgagee may impose and (iv) any Net Proceeds not so applied to repair and restoration shall be applied to the payment of the Obligations. If an Event of Default occurs prior to full disbursement, any undisbursed portion of the Net Proceeds and any funds deposited by Mortgagor with Mortgagee may at Mortgagee's option be applied to the Obligations. 1.7. Inspection. Mortgagee, or its agents, shall have the right to enter upon the Mortgaged Property during ordinary business hours for the purposes of inspecting the Mortgaged Property or any part thereof. Mortgagee shall have no duty, however, to make such inspection. Mortgagee, or its agents, shall also have the right during ordinary business hours to examine the books and records of Mortgagor pertaining to the Mortgaged Property and to make extracts therefrom and copies thereof. The parties agree that Mortgagee's right to inspect the books and records of Mortgagor, as described in this provision, relates solely to the Mortgaged Property. 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 6 498526v1 EL185 -51 Mortgaged Property, and the insurance, sale or condemnation proceeds which are paid to Mortgagee are not sufficient to pay for such restoration, Mortgagee may nevertheless effect the restoration. Any amounts disbursed or costs incurred by Mortgagee pursuant to this Section, including interest and reasonable attorney's fees, shall become additional Obligations of Mortgagor secured by this Mortgage. All amounts disbursed or costs incurred by Mortgagee pursuant to this paragraph shall be payable upon demand, and shall bear interest from the date of disbursement or incurrence at the rate set forth in the Note unless payment of interest at such rate would be contrary to law, in which event such amounts shall bear interest at the highest rate permitted by law. Mortgagee shall, at its option, be subrogated to any encumbrance, lien, claim or demand, and to all the rights and securities for the payment thereof, paid or discharged with the principal sum secured hereby or by Mortgagee under the provisions hereof, and any such subrogation rights shall be additional and cumulative security for this Mortgage. Nothing contained in this Section shall require Mortgagee to incur any expense or do any act hereunder, and Mortgagee shall not be liable to Mortgagor for any damages or claims arising out of action taken by Mortgagee pursuant to this paragraph. 1.9. Hazardous Materials. Mortgagor hereby represents and warrants to Mortgagee that the Mortgaged Property has not at any time been used for storage, transfer, transportation or disposal of hazardous substances, hazardous wastes, pollutants, contaminants or similar substances (collectively "Hazardous Substances "), or for the discharge of the same into the environment in violation of any law, regulation, or judicial or administrative order or judgment; and the Mortgaged Property is not contaminated by, and does not contain, any Hazardous Substances. Mortgagor will not use or permit the use of the Mortgaged Property for such purposes. Mortgagor will fully indemnify Mortgagee and defend Mortgagee against any claims, losses, damages, actions, costs and expenses of any kind, including without limitation, court costs and reasonable attorneys' fees, in connection with any Hazardous Substances now or hereafter located on the Mortgaged Property or any other violation of any federal, state or local environmental statute, ordinance, rule or regulation ( "Environmental Laws "). This indemnity shall not apply to the extent that the willful act or omission of the Mortgagee contributes to the actual or threatened discharge, dispersal, release, storage, treatment, generation, disposal or escape of the Hazardous Substances. The indemnity provisions of this Section shall survive the foreclosure or other termination of this Mortgage. Without limiting the generality of the foregoing, Mortgagor agrees that upon the discovery of a release or threatened release of Hazardous Substances on or from the Mortgaged Property, it will promptly, diligently and without cost to Mortgagee, proceed to remediate all contamination 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: 7 498526v1 EL185 -51 (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 will, upon timely presentation to Mortgagee by Mortgagor of the bills therefor, pay the Charges from such deposits. In the event the deposits on hand shall not be sufficient to pay all of the Charges when the same shall become due from time to time, or the prior deposits shall be less than the currently estimated monthly amounts, then Mortgagor shall pay to Mortgagee on demand any amount necessary to make up the deficiency. The excess of any such deposits shall be returned to Mortgagor or credited towards subsequent Charges, at the discretion of Mortgagee. If an Event of Default shall occur under the terms of this Mortgage, Mortgagee may, at its option, without being required so to do, apply any deposits on hand to the Obligations, in such order and manner as Mortgagee may elect. When the Obligations have been fully paid, any remaining deposits shall be returned to Mortgagor as its interest may appear. All deposits are hereby pledged as additional security for the Obligations, shall be held for the purposes for which made as herein provided, may be held by Mortgagee and may be commingled with other funds of Mortgagee, shall be held without any allowance of interest thereon, and shall not be subject to the decision or control of Mortgagor. Mortgagee shall not be liable for any act or omission made or taken in good faith. In making any payments, Mortgagee may rely on any statement, bill or estimate procured from or issued by the payee without inquiry into the validity or accuracy of the same. If the taxes shown in the tax statement shall be levied on property more extensive than the Mortgaged Property, Mortgagee shall be under no duty to seek a tax division or apportionment of the tax bill, and any payment of taxes based on a larger parcel shall be paid by Mortgagor, and Mortgagor shall expeditiously cause a tax subdivision to be made. 1.11. Compliance with Code. Mortgagor covenants that when completed the Mortgaged Property shall comply with all applicable restrictions, conditions, codes, ordinances, regulations and laws of the City of Elk River (the "City ") and other governmental bodies having jurisdiction over the Mortgaged Property, including, without limitation, the Americans with Disabilities Act and those related to environmental protection. Mortgagor has NOT commenced construction of the Improvements. 8 498526v1 EL185 -51 ARTICLE TWO EVENTS OF DEFAULT Each of the following occurrences shall constitute an Event of Default hereunder: 2.1. Failure to pay. Mortgagor's failure to pay any amount due under the Loan Agreement or the Note or any other amount required to be paid by Mortgagor hereunder when due. 2.2. Other Performance Failure. The Mortgagor's failure to duly observe or perform any of the other terms, conditions, covenants or agreements required to be observed or performed by Mortgagor hereunder and the continuation of such failure for a period of 30 days after Mortgagee gives Mortgagor written notice of such failure. 2.3. Breach of Warranty of Title. Subject to Mortgagor's right to contest in good faith as set forth in Section 1.4 hereof, the breach of any warranty of title or any other warranty made by Mortgagor hereunder. 2.4. Misrepresentation. The making of any material misstatement in any financial statement or report submitted to Mortgagee by or on behalf of Mortgagor. 2.5. Foreclosure. The institution of a foreclosure or other enforcement proceedings by the holder of any other lien on the Mortgaged Property (without hereby implying Mortgagee's consent to any mortgage or other lien). 2.6. Sale of Property. The sale, assignment, conveyance, mortgage, encumbrance, lease or transfer o£ (i) Mortgagor's interest in the Mortgaged Property or any part thereof, or any interest therein; or (ii) any transfer in ownership or control of Mortgagor, without the prior written consent of Mortgagee, which consent may be granted or withheld by Mortgagee at its sole discretion. 2.7. Breach of Prior Mortgages, Other Agreements, etc. Any default or breach under the First Lien Mortgage, any other note, mortgage or other obligation of Mortgagor or Borrower now held or hereafter acquired by Mortgagee or City, or any other failure to comply with the terms and conditions thereof and the continuance thereof beyond any applicable notice and /or cure period contained therein. 9 498526v1 EL185 -51 ARTICLE THREE ACCELERATION AND FORECLOSURE, OTHER REMEDIES Upon any Event of Default, Mortgagee may, at its option, exercise one or more of the following rights and remedies (and any other rights and remedies available to it): 3.1. Acceleration. Mortgagee may declare immediately due and payable all unmatured Obligations secured by this Mortgage, and the same shall thereupon be immediately due and payable, without notice or demand. 3.2. UCC Remedies. Mortgagee shall have and may exercise with respect to all fixtures and any personal property included in the Mortgaged Property, all the rights and remedies accorded upon default to a secured party under the Uniform Commercial Code, as in effect in the State of Minnesota. 3.3. Foreclosure, Action or Advertisement. Mortgagee may (and is hereby authorized and empowered to) foreclose this Mortgage by action or advertisement, pursuant to the statutes of the State of Minnesota in such case made and provided, power being expressly granted to sell the Mortgaged Property at public auction and convey the same to the purchaser to the full extent of Mortgagor's interest and, out of the proceeds arising from such sale, to pay all Obligations secured hereby with interest, and all legal costs and charges of such foreclosure and the maximum attorneys' fees permitted by law, which costs, charges and fees Mortgagor agrees to pay. Any real estate or interest or estate sold hereunder may be sold in one parcel, as an entirety, or in such parcels and in such manner or order as Mortgagee, in its sole discretion, may elect. In case of any sale of the Mortgaged Property pursuant to any judgment or decree of any court or at public auction or otherwise in connection with the enforcement of any of the terms of this Mortgage, Mortgagee, its successors and assigns, may become the purchaser, and for the purpose of making settlement for or payment of the purchase price, shall be entitled to deliver over and use any sum then due under the Loan Agreement and any claims for interest accrued and unpaid thereon, together with all other sums, with interest, advanced and unpaid hereunder, and all statutory charges for such foreclosure including maximum attorney's fees allowed by law in order that there may be credited as paid on the purchase price the sum then due under the Note and all other sums, with interest, advanced and unpaid hereunder, and all charges and expenses of such foreclosure including maximum attorneys' fees allowed by law. 3.4. Receiver. Mortgagee shall be entitled as a matter of right without notice and without giving bond and without regard to the solvency or insolvency of Mortgagor, or waste of the Mortgaged Property or adequacy of the security of the Mortgaged Property, to apply for the appointment of a receiver, in accordance with the statutes and law made and provided. The receiver shall collect the rents, and all other income of any kind; manage the Mortgaged Property so to prevent waste; execute leases within or beyond the period of receivership, pay all expenses for normal maintenance of the Mortgaged Property and perform the terms of this Mortgage and apply the rents, issues and profits as permitted by Minnesota Statutes, Section 576.25 in the following order to (i) payment of the reasonable fees of said receiver, (ii) application of tenant security deposits as required by Minnesota Statutes Section 504B.178, (iii) payment when due of 10 498526v1 EL185 -51 prior or current real estate taxes or special assessments with respect to the Mortgaged Property or, if this Mortgage so requires, to the periodic escrow for the payment thereof, (iv) the payment when due of premiums for insurance of the type required by this Mortgage or, if this Mortgage so requires, to the periodic escrow for the payment thereof, and (v) as further provided in any Assignment of Rents executed by Mortgagor as further security for the Obligations (whether included in this Mortgage or separate instrument), including but not limited to applying the same to the costs and expenses of the receivership, including reasonable attorneys' fees, to the repayment of the Obligations and to the operation, maintenance, upkeep and repair of the Mortgaged Property, including payment of taxes and payments of premiums of insurance. Mortgagor does hereby irrevocably consent to such appointment. 3.5. Specific Performance. Mortgagee may bring suit for specific performance of any covenant or warranty hereunder. 3.6. Forbearance and Other Rights of Mortgagee. Any delay by Mortgagee in exercising any right or remedy hereunder, or otherwise afforded by law or equity, shall not be a waiver of or preclude the exercise of such right or remedy or any other right or remedy hereunder or at law or in equity. The failure of Mortgagee to exercise any option to accelerate maturity of the Obligations secured by the Mortgage, the forbearance by Mortgagee before or after the exercise of such option, or the withdrawal or abandonment of proceedings provided for by this Mortgage shall not be a waiver of the right to exercise such option or to accelerate the maturity of such Obligations by reason of any past, present or future event which would permit acceleration. The procurement of insurance or the payment of taxes or other liens or charges by Mortgagee shall not be a waiver of Mortgagee's right to accelerate the maturity of the Obligations. Mortgagee's receipt of any awards, proceeds or damages shall not operate to cure or waive default by Mortgagor. Mortgagee may at any time, without notice, release any person liable for payment of any Obligations, extend the time or agree to alter the terms of payment of any of the Obligations, accept additional security of any kind, release any plat or map of the Mortgaged Property or the creation of any easement thereon or any covenants restricting use or occupancy thereof, or agree to alter or amend the terms of this Mortgage in any way. No such release, modification, addition or change shall affect the liability of any person other than the person so released, for payment of any Obligations, nor affect the priority and lien status of this Mortgage upon any property not so released. 11 498526v1 EL185 -51 ARTICLE FOUR ASSIGNMENT OF RENTS 4.1. Assi ng ment. As security in addition to the lien of this Mortgage upon the Property, Mortgagor hereby grants, transfers and assigns to Mortgagee all of the right, title and interest of Mortgagor in and to all Leases and all rents, income, profits, revenues, royalties, bonuses, rights, accounts, contract rights, general intangibles and benefits (all of which are sometimes hereinafter referred to as "Rents "), now or hereafter accruing or owing by reason of a Lease of any or all of the Property. 4.2. Covenants of Performance. To protect the security of this Assignment, Mortgagor warrants, covenants and agrees: (a) to faithfully abide by, perform and discharge each and every obligation, covenant and agreement under any Leases to be performed by Mortgagor thereunder; to give prompt written notice to Mortgagee of any notice of default on the part of Mortgagor with respect to any Lease received from a tenant thereunder; to enforce or secure short of termination of any Lease the performance of each and every obligation, covenant, condition and agreement of the Leases by the tenants thereunder to be performed; not to borrow against, pledge or assign any of the Rents, or anticipate the Rents; not to waive, excuse, condone or in any manner release or discharge any tenant thereunder of or from the obligations, covenants, conditions and agreements to be performed under the Lease or to permit the tenant to assign its interest in the Lease unless required to do so by the terms of the Lease; not to terminate the Leases or accept a surrender thereof or a discharge of the tenant unless required to do so by the terms of the Lease; not to consent to a subordination of the interest of the tenant thereunder to any party other than Mortgagee and then only if specifically required to do so by Mortgagee; (b) at Mortgagor's sole cost and expense, to appear in and defend any action or proceeding arising under, growing out of or in any manner connected with the Leases or the obligations, duties or liabilities of Mortgagor and tenants thereunder, and to pay all costs and expenses of Mortgagee, including attorneys' fees in a reasonable sum, in any such action or proceeding in which Mortgagee may appear or with respect to which it may incur costs; (c) that Mortgagor has the full right and title to assign the Rents; that at the date of this Mortgage there exist no Leases which now or in the future affect the Mortgaged Property which have not been disclosed to Mortgagee in writing; and that there is no outstanding assignment or pledge of the Leases or Rents; and (d) to furnish to Mortgagee, at Mortgagee's written request, a complete list of all Leases and security deposits made thereunder as to any part of the Mortgaged Property, showing the type of lease, the name of the tenant, the monthly rental, the date to which paid, the term of the Lease, the date of occupancy, and the date of expiration and any and every special premium, concession or inducement granted to the tenant. 12 498526v1 EL185 -51 4.3. Assignment Absolute. This Assignment is absolute and is effective immediately. Notwithstanding the foregoing, until an Event of Default, as defined in ARTICLE TWO above, has occurred, Mortgagor may receive, collect and enjoy the Rents. Upon or at any time after an Event of Default has occurred, Mortgagee may at its option, without notice: (a) in the name, place and stead of Mortgagor (i) enter upon, manage and operate the Mortgaged Property, or retain the services of an independent contractor to manage and operate the same, (ii) make, enforce, modify and accept surrender of the Leases, (iii) obtain or evict tenants, demand, collect, sue for, receive and give acquittances for, fix or modify Rents and enforce all rights of Mortgagor under the Leases, and (iv) perform any and all other acts that may be necessary or proper to protect the security of this Assignment; provided always, however, that until the end of any redemption period available to Mortgagor after any foreclosure of this Mortgage Mortgagee shall continue to deal with the Leases on the Property in a reasonable businesslike manner, recognizing and protecting Mortgagor's continuing rights during such period to retake possession and control of the Mortgaged Property upon paying the appropriate redemption price, and to resume the management of such Leases; (b) give or require Mortgagor to give notice to any and all tenants under the Leases authorizing and directing the tenants to pay all Rents due under the Leases directly to Mortgagee; and (c) apply for, and Mortgagor hereby consents to, the appointment of a receiver of the Mortgaged Property. 4.4. Application of Rents. (a) All Rents collected by Mortgagee, or by a receiver, shall be held and applied by Mortgagee in its reasonable discretion, in accordance with applicable law, including, without limitation to: (i) payment of all reasonable fees of the receiver, if any, approved by the court; (ii) the repayment when due of all tenant security deposits pursuant to the provisions of Minnesota Statutes Section 504B.178; (iii) payment of all delinquent or current real estate taxes and special assessments payable with respect to the Property or, if this Mortgage so requires, to the periodic escrow for the payment thereof, (iv) payment of all premiums then due for the insurance required by the provisions of this Mortgage or, if this Mortgage so requires, to the periodic escrow for the payment thereof, (v) payment of expenses incurred for normal maintenance of the Mortgaged Property. (b) Any amounts remaining after such application shall be applied as follows: (i) if received prior to any foreclosure sale of the Mortgaged Property to Mortgagee for payment of the indebtedness secured by this Mortgage, but no such payment made after acceleration of the indebtedness shall affect such acceleration; and 13 498526v1 EL185 -51 (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. ffect. The rights and powers of Mortgagee under this Assignment and the application of the Rents shall continue and remain in full force and effect both before and after commencement of any action or procedure to foreclose this Mortgage, after any foreclosure sale of Mortgagor's interest in the Property in connection with the foreclosure of this Mortgage, and until expiration of the period of redemption from any such foreclosure sale, whether or not any deficiency from the unpaid balance of the Obligations exists after such foreclosure sale. 4.6. Mortgagee Not Obligated. Mortgagee shall not be obligated by this Assignment for the control, care, management or repair of the Mortgaged Property, nor for the carrying out of any of the terms and conditions of the Leases; nor shall this Assignment operate to make Mortgagee responsible or liable for any waste committed on the Mortgaged Property by the tenants or any other party, or for any dangerous or defective condition of the Mortgaged Property, or for any violation of Environmental Laws or for any negligence in the management, upkeep, repair or control of the Mortgaged Property resulting in any loss or any injury or death to any person. 4.7. Hold Harmless. Mortgagor shall and does agree to indemnify and to hold Mortgagee harmless of and from any and all liability, loss or damage which it may or might incur under or by reason of this Assignment, and of and from any and all claims and demands whatsoever which may be asserted against it by reason of any alleged obligations or undertakings on its part to perform or discharge any of the terms, covenants or agreements contained in the Leases; provided, however, that such indemnification shall not apply if the same arises out of Leases intentionally breached by Mortgagee which were made by Mortgagor in the ordinary course of managing the Mortgaged Property and prior to the time Mortgagee obtained the right to possess and manage the Mortgaged Property, or if the same arises out of the negligent or willful act of Mortgagee in operating and using the Mortgaged Property. Should Mortgagee incur any such liability, loss or damage under any Lease or by reason of this Assignment, or in the defense of any such claims or demands, the amount thereof, including costs, expenses, and reasonable attorneys' fees, shall be secured hereby and Mortgagor shall reimburse Mortgagee therefor immediately upon demand. Mortgagee shall give Mortgagor notice of any such claim 14 498526v1 EL185 -51 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 498526v1 EL185 -51 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 First Lien Mortgage, which have priority over this Mortgage, Mortgagor hereby assigns, transfers, and sets over to Mortgagee the entire proceeds of any award or payment which becomes payable by reason of any taking of or damage to the Mortgaged Property, or any part or appurtenance thereof, either temporarily or permanently, in or by condemnation or other eminent domain proceedings or by reason of sale under threat thereof, or in anticipation of the exercise of the right of condemnation or other eminent domain proceedings. Mortgagor will file or prosecute in good faith and with due diligence what would otherwise be its claim in any such award or payment and cause the same to be collected and paid over to Mortgagee, and Mortgagor irrevocably authorizes and empowers Mortgagee, which power is coupled with an interest and is irrevocable, in the name of Mortgagor or otherwise, in the event that Mortgagor fails to do so, to file and prosecute any such claim and to collect, receipt for and retain the same. The proceeds of the award or payment, after deducting all reasonable costs, attorneys' fees and other expenses which may have been incurred by Mortgagee in collection thereof, at the sole discretion of Mortgagee, may be released to Mortgagor, applied to restoration of the Mortgaged Property or applied to the payment of any part of the Obligations, in such order of application as Mortgagee may determine. If proceeds are made available to be applied to restoration, they shall be held and disbursed in accordance with Paragraph 1.6(d) hereof. ARTICLE SIX UNIFORM COMMERCIAL CODE 6.1. Security Interest. This Mortgage shall constitute a security agreement as defined in the Uniform Commercial Code with respect to, and Mortgagor hereby grants Mortgagee a security interest in, all of fixtures and any personal property included in the Mortgaged Property and substitutions therefor and proceeds thereof. Mortgagor hereby authorizes Mortgagee to file one or more financing statements, covering such fixtures and personal property (in a form satisfactory to Mortgagee) which Mortgagee may reasonably consider necessary or appropriate to perfect its security interest. Mortgagor also authorizes Mortgagee to file amendments to financing statements, and terminations of financing statements filed by other secured parties, all with respect to all fixtures and personal property included in the Mortgaged Property, in such form and substance as Mortgagee, in its reasonable discretion, may determine. Mortgagor will pay to Mortgagee, on demand, the amount of any and all costs and expenses (including reasonable attorneys' fees and legal expenses) paid or incurred by Mortgagee in connection with the exercise of any right or remedy referred to in this Section. In any instance where Mortgagor in its sound discretion determines that any item subject to a security interest under this Mortgage has become: (i) inadequate, obsolete, worn out, or (ii) unsuitable, undesirable or unnecessary for 16 498526v1 EL185 -51 the operation of the Mortgaged Property, Mortgagor may, at its expense, remove and dispose of it and substitute and install other items not necessarily having the same function, provided, that such removal and substitution shall not impair the operating utility and unity of the Mortgaged Property. With respect to items which are a part of the Mortgaged Property, all items substituted for such items shall become a part of the Mortgaged Property and subject to the lien of this Mortgage. Any amounts received or allowed Mortgagor upon the sale or other disposition of the removed items of property shall be applied against the cost of acquisition and installation of the substituted items. Nothing herein contained shall be construed to prevent any tenant or subtenant from removing from the Mortgaged Property trade fixtures, furniture and equipment installed by it and removable by tenant under its terms of any one or more of the Leases, on the condition, however, that Mortgagor shall assure the repair of any and all damages to the Mortgaged Property resulting from or caused by the removal thereof. Mortgagee acknowledges that no items of personal property are included in the Mortgaged Property. 6.2. Fixture Filing. From the date of its recording, this Mortgage shall be effective as a financing statement with respect to all goods constituting part of the Mortgaged Property which are or are to become fixtures related to the real estate described herein. For this purpose, the following information is set forth: (a) Name and Address of Mortgagor: Truck Shop, Inc. c/o Beaudry Oil and Service, Inc. 630 Proctor Avenue Elk River, MN 55330 Attention: Kenneth J. Beaudry (b) Name and address of Secured Party: Housing and Redevelopment Authority in and for the City of Elk River 13065 Orono Parkway Elk River, MN 55330 Attention: Executive Director (c) This document covers goods which are or are to become fixtures. (d) The real estate to which such fixtures are or are to be attached is that described in Exhibit A attached hereto. 17 498526v1 EL185 -51 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: Truck Shop, Inc. c/o Beaudry Oil and Service, Inc. 630 Proctor Avenue Elk River, MN 55330 Attention: Kenneth J. Beaudry 7.4. Governing Law, Severability. This Mortgage shall be governed by the laws of the State of Minnesota. In the event that any provision or clause of this Mortgage conflicts with applicable law, such conflict shall not affect other provisions of this Mortgage which can be given effect without conflicting provisions and to this end the provisions of this Mortgage are declared to be severable. 7.5. Counterparts. This Mortgage may be executed in any number of counterparts, each of which shall be an original but all of which together shall constitute one instrument. 7.6. Waiver of Appraisement, Homestead, Marshaling. Mortgagor hereby waives the benefit of any homestead, appraisement, evaluation, stay and extension laws now or hereinafter in force. Mortgagor hereby waives any rights available with respect to marshaling of assets so as to require the separate sales of any portion of the Mortgaged Property or to require Mortgagee to exhaust its remedies against a specific portion of the Mortgaged Property before proceeding against the other. 7.7. Subsequent Agreements. Any agreement hereafter made by Mortgagor and Mortgagee pursuant to this Mortgage shall be superior to the rights of the holder of any intervening lien or encumbrance. [Signature Page follows] 18 498526v1 EL185 -51 Signature Page to Mortgage IN WITNESS WHEREOF, Mortgagor has caused this Mortgage to be duly executed as of the day and year first written. TRUCK SHOP, INC., a Minnesota corporation STATE OF MINNESOTA ) ss. COUNTY OF ) Its: The foregoing instrument was acknowledged before me on , 2017, by , the , of Truck Shop, Inc., a Minnesota corporation, on behalf of the corporation. Notary Public My Commission Expires: This Instrument was drafted by: Kennedy & Graven, Chartered (JSB) 470 U.S. Bank Plaza 200 South Sixth Street Minneapolis, Minnesota 55402 Telephone: (612) 337 -9300 S -1 498526v1 EL185 -51 EXHIBIT A Legal Description A -1 498526v1 EL185 -51 EXHIBIT B Permitted Encumbrances B -2 498526v1 EL185 -51 PERSONAL GUARANTY (Blighted Properties Forgivable Commercial /Industrial Loan — Kenneth J. Beaudry) May , 2017 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 HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF ELK RIVER (the "Lender ") to or for the account of TRUCK SHOP, INC. (the `Borrower "), the undersigned absolutely and unconditionally guarantees to the Lender the full and prompt payment when due, whether at maturity (unless forgiven by its terms) or earlier by reason of acceleration or otherwise, of any and all indebtedness, obligations and liabilities of the Borrower (and any and all successors of the Borrower) to the Lender, now or hereafter existing, absolute or contingent, independent, joint, several or joint and several, secured or unsecured, due or to become due, contractual or tortious, liquidated or unliquidated, arising by assignment or otherwise, including without limitation all indebtedness, obligations and liabilities owed by the Borrower (and any and all successors of the Borrower) as a member of any partnership, syndicate, association or other group, and whether incurred by the Borrower (or any successor of the Borrower) as principal, surety, endorser, guarantor, accommodation party or otherwise (collectively, the "Indebtedness "); and the undersigned agrees to pay on demand all of the Lender's fees, costs, expenses and reasonable attorneys' fees in connection with the Indebtedness, any security therefor, and this guaranty, plus interest on such amounts at the highest rate then applicable to any of the Indebtedness. The Lender may at any time and from time to time, without consent of or notice to the undersigned, without incurring responsibility to the undersigned, without releasing, impairing or affecting the liability of the undersigned hereunder, upon or without any terms or conditions, and in whole or in part: (1) sell, pledge, surrender, compromise, settle, release, renew, subordinate, extend, alter, substitute, exchange, change, modify or otherwise dispose of or deal with in any manner and in any order any Indebtedness, any evidence thereof, or any security or other guaranty therefor; (2) accept any security for, or other guarantors of, any Indebtedness; (3) fail, neglect or omit to obtain, realize upon or protect any Indebtedness or any security therefor, to exercise any lien upon or right to any money, credit or property toward the liquidation of the Indebtedness, or to exercise any other right against the Borrower, the undersigned, any other guarantor or any other person; and (4) apply any payments and credits to the Indebtedness in any manner and in any order. No act, omission or thing, except full payment and discharge of the Indebtedness, which but for this provision could act as a release or impairment of the liability of the undersigned hereunder, shall in any way release, impair or otherwise affect the liability of the undersigned hereunder, and the undersigned waives any and all defenses of the Borrower pertaining to the Indebtedness, any evidence thereof, and any security therefor, except the defense of discharge by payment. The failure of any person or persons to sign this or any other guaranty shall not release, impair or affect the liability of the undersigned hereunder. This guaranty is a primary obligation of the undersigned and the Lender shall not be required to first resort for payment of the Indebtedness to the Borrower or any other person, their properties or 498664v1 EL185 -51 estates, or any security or other rights or remedies whatsoever. The undersigned shall be and remain liable for any deficiency remaining after foreclosure of any mortgage or security interest securing the Indebtedness, whether or not the liability of the Borrower or any other person for such deficiency is discharged pursuant to statute, judicial decision or otherwise. The liability of the undersigned under this guaranty is in addition to and shall be cumulative with all other liabilities of the undersigned to the Lender, as guarantor or otherwise, without any limitation as to amount, unless the writing evidencing or creating such other liability specifically provides to the contrary. If any payment applied by the Lender to the Indebtedness is thereafter set aside, recovered, rescinded or required to be returned for any reason (including without limitation the bankruptcy, insolvency or reorganization of the Borrower or any other person), the Indebtedness to which such payment was applied shall for the purposes of this guaranty be deemed to have continued in existence, notwithstanding such application, and this guaranty shall be enforceable as to such Indebtedness as fully as if such application had never been made. The undersigned waives: (1) notice of acceptance of this guaranty and of the creation and existence of the Indebtedness; (2) presentment, demand for payment, notice of dishonor, notice of nonpayment, and protest of any instrument evidencing the Indebtedness; and (3) all other demands and notices to the undersigned or any other person and all other actions to establish the liability of the undersigned hereunder. The undersigned consents to the personal jurisdiction of the state and federal courts located in the State of Minnesota in connection with any controversy related to this guaranty, waives any argument that venue in such forums is not convenient, and agrees that any litigation initiated by the undersigned against the Lender in connection with this guaranty shall be venued in either the District Court of Sherburne County, Minnesota, or the United States District Court, District of Minnesota. All property of the undersigned, now or hereafter in the possession, control or custody of or in transit to the Lender for any purpose, including without limitation the balance of every account of the undersigned with and each claim of the undersigned against the Lender, shall be subject to a lien and security interest in favor of the Lender, as security for all liabilities of the undersigned to the Lender, and shall be subject to be set off against any and all such liabilities, and the Lender may at any time and from time to time at its option and without notice appropriate and apply any such property toward the payment of any and all such liabilities. The undersigned agrees to promptly provide the Lender from time to time with financial statements of the undersigned, in form and substance acceptable to the Lender, at least once every 12 months and as otherwise requested by the Lender. The undersigned agrees to promptly provide the Lender from time to time with such other information respecting the condition (financial and otherwise), business and property of the undersigned as the Lender may request, in form and substance acceptable to the Lender. The undersigned waives all claims, rights and remedies which the undersigned may now have or hereafter acquire against any person at any time now or hereafter liable to payment of any of the Indebtedness and as to any collateral security, including but not limited to all claims, rights and remedies of contribution, indemnification, exoneration, reimbursement, recourse and subrogation, whether or not such claim, right or remedy arises in equity, under contract, by 2 498664v1 EL185 -51 statute, under common law or otherwise, whether or not the Indebtedness has been fully paid, and all payments and recoveries under this guaranty shall be considered equity investments by the undersigned in the Borrower; provided, nothing contained in this guaranty shall deprive the undersigned of any claim, right or remedy, after the Indebtedness has been fully paid, against any person other than the Borrower. No delay or failure by the Lender in exercising any right, and no partial or single exercise thereof shall constitute a waiver thereof. No waiver of any rights hereunder, and no modification or amendment of this guaranty shall be effective unless the same is in writing duly executed by the Lender, and each such waiver, if any, shall apply only with respect to the specific instance involved and shall not impair or affect the rights of the Lender or the provisions of this guaranty in any other respect at any other time. This guaranty shall continue until written notice of revocation of this guaranty, executed by the undersigned, has been received by the Lender; provided, no revocation of this guaranty shall affect in any manner any liability of the undersigned under this guaranty with respect to Indebtedness arising before the Lender receives such written notice of revocation, and the sole effect of revocation of this guaranty shall be to exclude from this guaranty Indebtedness thereafter arising which is unconnected with Indebtedness theretofore arising or transactions theretofore entered into. Any invalidity or unenforceability of any provision or application of this guaranty shall not affect other lawful provisions and applications hereof and to this end the provisions of this guaranty are declared to be severable. This guaranty shall bind the undersigned and the heirs, representatives, successors and assigns of the undersigned, and of each of them respectively, and shall benefit the Lender, its successors and assigns. This guaranty shall be governed by and construed in accordance with the laws of the State of Minnesota. The undersigned acknowledges and agrees that the Lender is making a loan to the Borrower to assist in financing a portion of the Borrower's acquisition of certain real property (the "Development Property ") in the City of Elk River, Minnesota, removal of existing substandard buildings and construction of the Borrower's new light maintenance facility with related office and storage space located on the Development Property (the "Project "), and the Project will materially financially benefit the undersigned and, therefore, the undersigned's obligations under this Guaranty are proper, valid and enforceable. 3 498664v1 EL185 -51 THE UNDERSIGNED REPRESENTS, CERTIFIES, WARRANTS AND AGREES THAT THE UNDERSIGNED HAS READ ALL OF THIS GUARANTY AND UNDERSTANDS ALL OF THE PROVISIONS OF THIS GUARANTY. THE UNDERSIGNED ALSO AGREES THAT COMPLIANCE BY THE LENDER WITH THE EXPRESS PROVISIONS OF THIS GUARANTY SHALL CONSTITUTE GOOD FAITH AND SHALL BE CONSIDERED REASONABLE FOR ALL PURPOSES. Kenneth J. Beaudry S -1 498664v1 EL185 -51 ENTITY GUARANTY (Blighted Properties Forgivable Commercial/Industrial Loan) May , 2017 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 HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF ELK RIVER (the "Lender ") to or for the account of TRUCK SHOP, INC. (the `Borrower "), BEAUDRY OIL AND SERVICE, INC. (the "Entity Guarantor ") absolutely and unconditionally guarantees to the Lender the full and prompt payment when due, whether at maturity (unless forgiven by its terms) or earlier by reason of acceleration, or otherwise, of any and all indebtedness, obligations and liabilities of the Borrower (and any and all successors of the Borrower) to the Lender, now or hereafter existing, absolute or contingent, independent, joint, several or joint and several, secured or unsecured, due or to become due, contractual or tortious, liquidated or unliquidated, arising by assignment or otherwise, including without limitation all indebtedness, obligations and liabilities owed by the Borrower (and any and all successors of the Borrower) as a member of any partnership, syndicate, association or other group, and whether incurred by the Borrower (or any successor of the Borrower) as principal, surety, endorser, guarantor, accommodation party or otherwise (collectively, the "Indebtedness "); and the Entity Guarantor 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 Entity Guarantor, without incurring responsibility to the Entity Guarantor, without releasing, impairing or affecting the liability of the Entity Guarantor hereunder, upon or without any terms or conditions, and in whole or in part: (1) sell, pledge, surrender, compromise, settle, release, renew, subordinate, extend, alter, substitute, exchange, change, modify or otherwise dispose of or deal with in any manner and in any order any Indebtedness, any evidence thereof, or any security or other guaranty therefor; (2) accept any security for, or other guarantors of, any Indebtedness; (3) fail, neglect or omit to obtain, realize upon or protect any Indebtedness or any security therefor, to exercise any lien upon or right to any money, credit or property toward the liquidation of the Indebtedness, or to exercise any other right against the Borrower, the Entity Guarantor, 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 Entity Guarantor hereunder, shall in any way release, impair or otherwise affect the liability of the Entity Guarantor hereunder, and the Entity Guarantor 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 Entity Guarantor hereunder. This guaranty is a primary obligation of the Entity Guarantor 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 1 498665v1 EL185 -51 whatsoever. The Entity Guarantor 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 Entity Guarantor under this guaranty is in addition to and shall be cumulative with all other liabilities of the Entity Guarantor 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 Entity Guarantor waives: (1) notice of acceptance of this guaranty and of the creation and existence of the Indebtedness; (2) presentment, demand for payment, notice of dishonor, notice of nonpayment, and protest of any instrument evidencing the Indebtedness; and (3) all other demands and notices to the Entity Guarantor or any other person and all other actions to establish the liability of the Entity Guarantor hereunder. The Entity Guarantor consents to the personal jurisdiction of the state and federal courts located in the State of Minnesota in connection with any controversy related to this guaranty, waives any argument that venue in such forums is not convenient, and agrees that any litigation initiated by the Entity Guarantor 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 Entity Guarantor, 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 Entity Guarantor with and each claim of the Entity Guarantor against the Lender, shall be subject to a lien and security interest in favor of the Lender, as security for all liabilities of the Entity Guarantor 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 Entity Guarantor agrees to promptly provide the Lender from time to time with financial statements of the Entity Guarantor, in form and substance acceptable to the Lender, at least once every 12 months and as otherwise requested by the Lender. The Entity Guarantor agrees to promptly provide the Lender from time to time with such other information respecting the condition (financial and otherwise), business and property of the Entity Guarantor as the Lender may request, in form and substance acceptable to the Lender. The Entity Guarantor waives all claims, rights and remedies which the Entity Guarantor 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 2 498665v1 EL185 -51 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 Entity Guarantor in the Borrower; provided, nothing contained in this guaranty shall deprive the Entity Guarantor 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 Entity Guarantor, has been received by the Lender; provided, no revocation of this guaranty shall affect in any manner any liability of the Entity Guarantor under this guaranty with respect to Indebtedness arising before the Lender receives such written notice of revocation, and the sole effect of revocation of this guaranty shall be to exclude from this guaranty Indebtedness thereafter arising which is unconnected with Indebtedness theretofore arising or transactions theretofore entered into. Any invalidity or unenforceability of any provision or application of this guaranty shall not affect other lawful provisions and applications hereof and to this end the provisions of this guaranty are declared to be severable. This guaranty shall bind the Entity Guarantor and the representatives, successors and assigns of the Entity Guarantor, and of each of them respectively, and shall benefit the Lender, its successors and assigns. This guaranty shall be governed by and construed in accordance with the laws of the State of Minnesota. The Entity Guarantor is an affiliate of the Borrower. The undersigned acknowledges and agrees that the Lender is making a loan to the Borrower to assist in financing a portion of the cost of the Borrower's acquisition of certain real property (the "Development Property ") in the City of Elk River, Minnesota (the "City "), removal of existing substandard buildings and construction of the Borrower's new light maintenance facility with related office and storage space located on the Development Property (the "Project "). The Entity Guarantor acknowledges and agrees that the Project will benefit the Entity Guarantor and, therefore, the Entity Guarantor's obligations under this Guaranty are proper, valid and enforceable_ This Guaranty has been approved by the board of directors of the Entity Guarantor. 3 498665v1 EL185 -51 THE ENTITY GUARANTOR REPRESENTS, CERTIFIES, WARRANTS AND AGREES THAT THE UNDERSIGNED REPRESENTATIVE OF THE ENTITY GUARANTOR HAS READ ALL OF THIS GUARANTY AND UNDERSTANDS ALL OF THE PROVISIONS OF THIS GUARANTY. THE ENTITY GUARANTOR ALSO AGREES THAT COMPLIANCE BY THE LENDER WITH THE EXPRESS PROVISIONS OF THIS GUARANTY SHALL CONSTITUTE GOOD FAITH AND SHALL BE CONSIDERED REASONABLE FOR ALL PURPOSES. BEAUDRY OIL AND SERVICE, INC., a Minnesota corporation By: Its: S -1 498665v1 EL185 -51 ENVIRONMENTAL INDEMNIFICATION AGREEMENT THIS AGREEMENT is made as of the day of May, 2017, by TRUCK SHOP, INC., a Minnesota corporation (`Borrower ") and HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF ELK RIVER, a public body corporate and politic of the State of Minnesota ( "Lender "). RECITALS A. Lender has agreed to lend to Borrower the sum of up to $75,000.00 (the "Loan ") B. The Loan is secured by, among other things, an Mortgage and Assignment of Rents and Security Agreement and Fixture Financing Statement dated even herewith (the "Mortgage ") pertaining to certain land described in the Mortgage and improvements thereon (collectively, the "Property") owned by Borrower and located in Sherburne County, Minnesota. C. Lender has refused to make the Loan to Borrower unless this Agreement is executed and delivered by Borrower. AGREEMENT NOW, THEREFORE, in consideration of Lender's agreement to make the Loan to Borrower, Borrower hereby warrants and represents to, and covenants and agrees with, Lender as follows: 1. Definitions. As used in this Agreement, the following terms shall have the following meanings: (a) "Environmental Regulation" means a Law relating to the environment and /or to human health or safety, or governing, regulating or pertaining to the generation, treatment, storage, handling, transportation, use or disposal of any Hazardous Substance. (b) "Hazardous Substance" means any substance or material defined in or governed or regulated by any Environmental Regulation as a dangerous, toxic or hazardous pollutant, contaminant, chemical, waste, material or substance, and also expressly includes urea - formaldehyde, polychlorinated biphenyls, dioxin, radon, lead -based 498528v1 JSB EL185 -51 paint, asbestos, asbestos containing materials, nuclear fuel or waste, radioactive materials, explosives, carcinogens and petroleum products, including but not limited to crude oil or any fraction thereof, natural gas, natural gas liquids, gasoline and synthetic gas, and any other waste, material, substance, pollutant or contaminant the presence of which on, in, about or under the Property would subject the owner or operator thereof to any damages, penalties, fines or liabilities under any applicable Environmental Regulation. (c) "Law" means any federal, state or local law, statute, code, ordinance, rule, regulation or requirement. 2. Warranties and Representations. Borrower warrants and represents to Lender that to Borrower's knowledge, and except as otherwise described in documents identified on Exhibit A attached hereto: (a) There is not located on, in, about or under the Property any Hazardous Substances except for Hazardous Substances of the type ordinarily used, stored or manufactured in connection with the operation of the Property as it is presently operated, and such existing Hazardous Substances have been and are used, stored and manufactured in compliance with all Environmental Regulations. (b) The Property is not presently used, and has not in the past been used, as a landfill, dump, disposal facility or gasoline station, or for industrial, manufacturing or military purposes, or for the storage, generation, production, manufacture, processing, treatment, disposal, handling, transportation or deposit of any Hazardous Substances. (c) There has not in the past been, and no present threat now exists of, a spill, discharge, emission or release of a Hazardous Substance in, upon, under, over or from the Property or from any other property which would have an impact on the Property. (d) The Property is in compliance with, and there are no past or present investigations, administrative proceedings, litigation, regulatory hearings or other actions completed, proposed, threatened or pending, alleging noncompliance with or violation of, any Environmental Regulations respecting the Property, or relating to any required environmental permits covering the Property. (e) Borrower has disclosed to Lender all reports and investigations commissioned by or in the possession or control of Borrower and relating to Hazardous Substances and the Property. (f) There are not now, nor have there ever been, any above ground or underground storage tanks located in or under the Property. All storage tanks identified on Exhibit A have been registered and /or permitted as required by Environmental Regulations, and evidence of such registration and /or permitting has been given to Lender. There are no wells on or under the Property, except as identified on Exhibit A 2 498528v1 JSB EL185 -51 3. Covenants and Agreements. Borrower covenants and agrees as follows: (a) Except for substances normally used for maintenance or operation of the Property which are used, stored and disposed of in accordance with all applicable Environmental Regulations and except as identified on Exhibit A, Borrower shall not, nor shall it permit others to, place, store, locate, generate, produce, create, process, treat, handle, transport, incorporate, discharge, emit, spill, release, deposit or dispose of any Hazardous Substance in, upon, under, over or from the Property. Borrower shall cause all Hazardous Substances found on or under the Property, which are not permitted under the foregoing sentence, to be properly removed therefrom and properly disposed of at Borrower's cost and expense. Borrower shall not install or permit to be installed any underground storage tank on or under the Property. Borrower shall give written notice to Lender prior to a change in the operations on the Property. (b) In the event that (i) Lender reasonably believes that a violation of an Environmental Regulation may have occurred in connection with the Property; (ii) Lender receives notice from Borrower or otherwise has knowledge that an event described in subparagraph 3(d) has occurred; (iii) Lender reasonably believes that a representation or warranty of Borrower in Section 2 was untrue in any material respect when made or has become untrue in any material respect; (iv) Lender receives notice from Borrower or otherwise has knowledge of a change in operations on the Property and Lender reasonably believes that the new operations may entail the presence of more or different Hazardous Substances on the Property; or (v) Lender reasonably believes that Hazardous Substances are present on the Property which were not previously known by Lender to be present on the Property; then, in any such event, Borrower shall at its cost obtain and deliver to Lender an environmental review, audit, assessment and /or report relating to the Property or shall have any previously delivered materials updated and /or amplified, by an engineer or scientist selected by Borrower and acceptable to Lender; if Borrower fails to do so within 45 days after such request is made, Lender shall have the right to do so, in which event Borrower shall reimburse Lender for the cost incurred by Lender in doing so within 10 days following demand therefor by Lender. (c) Borrower shall, promptly after obtaining actual knowledge thereof, give notice to Lender of. (i) any activity in violation of any applicable Environmental Regulations relating to the Property, (ii) any governmental or regulatory actions instituted or threatened under any Environmental Regulations affecting the Property, (iii) all claims made or threatened by any third party against Borrower or the Property relating to any Hazardous Substance or a violation of any Environmental Regulations, (iv) discovery by Borrower of any occurrence or condition on or under the Property or on or under any real property adjoining or in the vicinity of the Property which could subject Borrower, Lender or the Property to a claim under any Environmental Regulations. Any such notice shall include copies of any written materials received by Borrower. 3 498528v1 JSB EL185 -51 (d) Any investigation or any remedial or corrective action taken with respect to the Property shall be done under the supervision of a qualified consultant, engineer or scientist acceptable to Lender who shall, at Borrower's cost and at the completion of such investigation or action, provide a written report of such investigation or action to Lender. Borrower shall also provide Lender with a copy of any interim reports prepared in connection with any such investigation or action. (e) If the Property has, or is suspected to have, asbestos or asbestos containing materials ( "ACM ") which, due to its condition or location or due to any planned building renovation or demolition, is recommended to be abated by repair, encapsulation, removal or other action, Borrower shall promptly carry out the recommended abatement action. If the recommended abatement includes removal of ACM, Borrower shall cause the same to be removed and disposed of offsite by a licensed and experienced asbestos removal contractor, all in accordance with Environmental Regulations. Upon completion of the recommended abatement action, Borrower shall deliver to Lender a certificate, signed by an officer of Borrower and the consultant overseeing the abatement action, certifying to Lender that the work has been completed in compliance with all applicable laws, ordinances, codes and regulations (including without limitation those regarding notification, removal and disposal) and that no airborne fibers beyond permissible exposure limits remain on site. (f) After an Event of Default (as defined in the Loan Agreement between the Borrower and the Lender dated an even date herewith), Lender shall have the right, after 10 days' prior written notice to Borrower, to have an environmental review, audit, assessment, testing program and /or report with respect to the Property performed or prepared by an environmental engineering firm selected by Lender. Borrower shall provide reasonable access to the Property to such environmental engineering firm during normal business hours to conduct such review. Borrower shall reimburse Lender for the cost incurred for each such action within 10 days following demand therefor by Lender. 4. Indemnity. The Borrower shall indemnify Lender, any participant of Lender, its and their directors, commissioners, officers, employees, agents, contractors, licensees, invitees, and the respective heirs, legal representatives, successors and assigns of all such persons and parties (hereinafter collectively referred to as "Indemnified Parties ") against, shall hold the Indemnified Parties harmless from, and shall reimburse the Indemnified Parties for, any and all loss, damage, liability, cost and expense directly or indirectly incurred by the Indemnified Parties, including reasonable attorneys' and consultants' fees, resulting from: (a) the presence or discovery of any Hazardous Substance in, upon, under or over, or emanating from, the Property, whether or not the Borrower is responsible therefor, and whether or not it was placed, located, deposited or released by the Borrower, or (b) any violation of any Environmental Regulation, or both (a) and (b). Borrower agrees that the Indemnified Parties shall have no responsibility for, and Borrower hereby releases the Indemnified Parties from responsibility for, damage or injury to human health, property, the environment or natural resources caused by Hazardous Substances and for abatement, clean-up, detoxification, removal or disposal of, or otherwise with respect to, Hazardous Substances. The indemnity contained in this Section 4 shall be deemed continuing 4 498528v1 JSB EL185 -51 for the benefit of the Indemnified Parties, including any purchaser at a foreclosure or other sale under Mortgage, any transferee of the title from Lender, and any subsequent owner of the Property, and shall survive the satisfaction or release of the Mortgage, any foreclosure of or other sale under the Mortgage and /or any acquisition of title to the Property or any part thereof by Lender, or anyone claiming by, through or under Lender, by deed in lieu of foreclosure or otherwise, and also shall survive the repayment or any other satisfaction of the Loan. Notwithstanding the foregoing, the indemnity contained in this Section 4 shall not apply with respect to any loss, damage, liability, cost or expense which Borrower proves by a preponderance of the evidence was caused solely by or resulted solely from any act or omission of any person, other than the Borrower or an agent, employee, invitee, guarantor, or contractor of the Borrower, which occurred after Lender or anyone claiming by, through or under Lender acquired title to the Property by foreclosure of Mortgage or deed in lieu of foreclosure or otherwise and control of the Property. Any amounts covered by the foregoing indemnification shall bear interest from the date incurred at the rate set forth in the promissory note evidencing the Loan, and shall be payable on demand. Borrower agrees that its obligations under this Agreement are separate from, independent of, and in addition to its obligations, if any, under the Mortgage and other documents which secure the Loan. 5. Liability. The liability of Borrower under this Agreement shall not be subject to any limitations on liability set forth any document evidencing or securing the Loan. Without limitation, the obligations and liability of Borrower under this Agreement shall in no way be waived, released, discharged, reduced, mitigated or otherwise affected by Lender's making of the Loan with knowledge of the matters described in documents identified on Exhibit A attached hereto, or of the presence of any Hazardous Substance on, in, about or under the Property or any property adjoining or in the vicinity of the Property, or of any violation of any Environmental Regulation or any condition or state of facts or circumstances which with notice or lapse of time or both might ripen into such a violation, or by any neglect, delay or forbearance of Lender in demanding, requiring or enforcing payment or performance of the obligations and liability of Borrower hereunder, or by the receivership, bankruptcy, insolvency or dissolution of Borrower or any affiliate thereof. No action or proceeding brought or instituted under this Agreement, and no recovery made as a result thereof, shall be a bar or a defense to any further action or proceeding under any other agreement. Borrower shall reimburse Lender and the other Indemnified Parties for all attorneys' fees and expenses incurred in connection with the enforcement of the Indemnified Parties' rights under this Agreement, including those incurred in any case, action, proceeding or claim under the Federal Bankruptcy Code or any successor statute. 6. Notices. Any notice or other communication to any party in connection with this Agreement shall be in writing and shall be sent in accordance with the provisions of the Loan Agreement. 7. Governing Law and Construction. The validity, construction and enforceability of this Agreement shall be governed by the laws of the State of Minnesota, without giving effect to conflict of laws or principles thereof, but giving effect to federal laws of the United States applicable to national banks. Whenever possible, each provision of this Agreement and any other statement, instrument or transaction contemplated hereby or relating hereto, shall be interpreted in such manner as to be effective and valid under such applicable law, but, if any 5 498528v1 JSB EL185 -51 provision of this Agreement or any other statement, instrument or transaction contemplated hereby or relating hereto shall be held to be prohibited or invalid under such applicable law, such provision shall be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Agreement or any other statement, instrument or transaction contemplated hereby or relating hereto. 8. Consent to Jurisdiction. At the option of Lender, this Agreement may be enforced in any Federal Court or State Court sitting in Sherburne County, Minnesota; and Borrower consents to the jurisdiction and venue of any such Court and waives any argument that venue in such forums is not convenient. In the event Borrower commences any action in another jurisdiction or venue under any tort or contract theory arising directly or indirectly from the relationship created by this Agreement, Lender at its option shall be entitled to have the case transferred to one of the jurisdictions and venues above - described, or if such transfer cannot be accomplished under applicable law, to have such case dismissed without prejudice. 9. Waiver of Jury Trial. Borrower and Lender irrevocably waive any and all right to trial by jury in any legal proceeding arising out of or relating to this Agreement or any of the Loan documents (as that term is used in the Loan Agreement) or the transactions contemplated hereby or thereby. 10. Binding Effect; Gender. This Agreement shall inure to the benefit of Lender, and the Indemnified Parties, and shall bind Borrower and Borrower's heirs; executors, administrators, personal representatives, legal representatives, successors and assigns. The obligations of Borrower under this Agreement shall be enforceable in all events against Borrower, its heirs, executors, administrators, personal representatives, legal representatives, successors and assigns, and each of them, jointly and severally, and shall be enforceable, in the event of the death of an Borrower, as a claim against his or her estate or otherwise against the representatives of his or her estate, the heirs -at -law, the devisees and beneficiaries of the total estate and each of them. The use of any gender herein shall include all other genders. 11. Counterparts. This Agreement may be executed in any number of counterparts, each executed counterpart constituting an original, but all together only one agreement. [signature pages follow] 6 498528v1 JSB EL185 -51 IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written. BORROWER TRUCK SHOP, INC. By: Its: STATE OF MINNESOTA ) ss. COUNTY OF ) The foregoing instrument was acknowledged before me on , 2017, by , the , respectively, of Truck Shop, Inc., a Minnesota corporation, on behalf of the corporation. Notary Public My Commission Expires: S -1 498528v1 JSB EL185 -51 LENDER: HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF ELK RIVER Its: President By: Its: Executive Director STATE OF MINNESOTA ) ss. COUNTY OF ) The foregoing instrument was acknowledged before me on , 2017, by , the President, and , the Executive Director, of the Housing and Redevelopment Authority in and for the City of Elk River, a public body corporate and politic of the State of Minnesota, on behalf of the corporation. Notary Public My Commission Expires: This Instrument was drafted by: Kennedy & Graven, Chartered (JSB) 470 U.S. Bank Plaza 200 South Sixth Street Minneapolis, Minnesota 55402 Telephone: (612) 337 -9300 S -2 498528v1 JSB EL185 -51 EXHIBIT A Environmental Disclosure Documents [Borrower to insert] A -1 498528v1 JSB EL185 -51