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6.5. EDSR 08-20-2018 The Elk River Vision A welcoming community with revolutionary and spirited resourcefulness, exceptional service, and community engagement that encourages and inspires prosperity Request for Action To Economic Development Authority Item Number 6.5 Agenda Section General Business Meeting Date August 20, 2018 Prepared by Amanda Othoudt, EDD Item Description Energy Efficiency Microloan Application for Ralphie’s Minnoco Reviewed by Cal Portner, City Administrator Reviewed by Action Requested Consider the adoption of a resolution approving a Jobs Incentive Microloan. The EDA may approve, approve with conditions, or deny the request to the City Council. The City Council will review the recommendations and formally act on the request at their regular meeting later this evening. Background/Discussion Ralphie’s Minnoco is a self-service gas station operating in a 3,000 square foot facility at 13374 U.S. Highway 10. The gas station emphasizes food service, fuel, inside sales, U-Haul rental, and propane sales. Owner Brian Brehmer plans to use the loan to finance energy efficiency lighting to the property and the space leased to Mama D's Deli. Mr. Brehmer is requesting a $19,175 Energy Efficiency Microloan to defray the cost of new LED lights and improve perception of the gas station. He indicated a gas station image is a large determinant of its success and improving the lighting and outward appearance will increase business. Ralphie’s received a $74,999 Energy Efficiency Microloan in 2013. They are current on their payments and are scheduled to pay off the remaining balance of $41,104.35 on September 1, 2023. The EDA attorney stated fund disbursement for new expenditures should be structured as a new loan rather than a modification of the first loan because it is a new project. If approved, the EDA could subsequently consolidate the loans into one payment. The Joint Finance Committee reviewed the application at their July 31, 2018, meeting and recommended approval of the application. The terms of the microloan are as follows: Ralphie’s Minnoco  Amount requested: $19,175  Rate requested: Fixed at 3%  Equity proposed: 10%  Term: 5-year amortization  The EDA will maintain a subordinate position on the mortgage at 13374 U.S. Highway 10 by amending and restating the mortgage, entity guarantee and a personal guarantee. Financial Impact The balance of the Microloan Fund account is $740,058.96. The loan request of $19,175 is proposed to be amortized over 5 years at 3 percent interest. Funds in this account continue to revolve and payments are received regularly. Attachments  Resolution  Loan Documents  Joint Finance Committee Meeting Packet (July 31, 2018) 534126v1 JSB EL185-57 ECONOMIC DEVELOPMENT AUTHORITY OF THE CITY OF ELK RIVER COUNTY OF SHERBURNE STATE OF MINNESOTA RESOLUTION NO. 2018-_________ RESOLUTION APPROVING LOAN AGREEMENT AND RELATED DOCUMENTS (ALAN ARNOLD CORPORATION / RALPHIE’S MINNOCO ENERGY PROJECT) WHEREAS, the Board of Commissioners (the “Board”) of the Economic Development Authority of the City of Elk River (the “EDA”) has received a proposal from Alan Arnold Corporation (the “Borrower”), for a second loan to assist the Borrower with energy efficiency improvements to a building (the “Property”) located at 13374 U.S. Highway 10, Elk River, Minnesota (the “City”). WHEREAS, on September 10, 2013, the EDA provided a loan to the Borrower pursuant to the EDA Energy Efficiency Improvement Program (the “Program”), in the amount of $74,999 (the “Original Loan”) pursuant to an Energy Efficiency Improvement Program Loan Agreement, dated September 10, 2013 (the “Original Loan Agreement”), between the Borrower and the EDA. The Original Loan was secured by (i) a Promissory Note, dated September 10, 2013, from the Borrower to the EDA; (ii) a Security Agreement, dated September 10, 2013, from Borrower to the Lender providing a security interest in certain equipment purchased with the proceeds of the Original Loan; (iii) a Personal Guaranty, dated September 10, 2013, from Brian Brehmer to the EDA; (iv) a Personal Guaranty, dated September 10, 2013, from Nancy Brehmer to the EDA; (v) a Personal Guaranty, dated September 10, 2013, from Allen Meyer; (iv) a Corporate Guaranty, dated September 10, 2013, from Yankee Doodle Enterprises, LLC to the EDA; and (vii) a Mortgage and Assignment of Rents and Security Agreement and Fixture Financing Statement, dated September 10, 2013, from the Corporate Guaranty to the EDA. The current outstanding principal balance of the Original Loan is $40,482.91. WHEREAS, the Borrower has requested an additional loan in the amount of $19,175.00 (the “New Loan”) pursuant to the Program. Proceeds of the New Loan will be used by the Borrower to increase energy efficiency of the Property by purchasing new interior and exterior lights. In total, the outstanding principal of the Original Loan and New Loan (together, the “Loan”) will be $59,657.91. WHEREAS, the EDA has caused to be prepared an Amended and Restated Loan Agreement (the “Loan Agreement”) with the Borrower setting forth, among other things, the terms and conditions under which the EDA will make the Loan, a copy of which is on file with the Executive Director. The Loan Agreement amends and restates the Original Loan Agreement to provide for the issuance of the New Loan. NOW THEREFORE, BE IT RESOLVED by the Board of Commissioners of the Economic Development Authority of the City of Elk River as follows: 1.01. The Loan Agreement as presented to the EDA, together with all related documents necessary in connection therewith, including without limitation, an Amended and Restated Promissory Note from the Borrower evidencing the Loan, an Amended and Restated Mortgage and Assignment 534126v1 JSB EL185-57 of Rents and Security Agreement and Fixture Financing Statement, from the corporate guarantor to the EDA, personal guaranties from Allen Meyer, Brian Brehmer, Nancy Brehmer, and an entity guaranty from Yankee Doodle Enterprises, LLC (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 EDA is a party on behalf of the EDA and to carry out, on behalf of the EDA, the EDA’s obligations thereunder. 1.02. The approval hereby given to the Loan Documents includes deviation from the Program requirements as set forth in the Loan Documents and includes approval of such additional details therein as may be necessary and appropriate and such modifications thereof, deletions therefrom and additions thereto as may be necessary and appropriate and approved by legal counsel to the EDA and by the President and Executive Director prior to executing said documents; and said officers are hereby authorized to approve said changes on behalf of the EDA. The execution of any instrument by the President and Executive Director shall be conclusive evidence of the approval of such document in accordance with the terms hereof. In the event of absence or disability of said officers, any of the documents authorized by this Resolution to be executed may be executed without further act or authorization of the Board by any duly designated acting official, or by such other officer or officers of the Board as, in the opinion of the City Attorney, may act in their behalf. 534126v1 JSB EL185-57 Approved by the Board of Commissioners of the Economic Development Authority of the City of Elk River this 20th day of August, 2018. President ATTEST: Executive Director AMENDED AND RESTATED ENERGY EFFICIENCY IMPROVEMENT PROGRAM LOAN AGREEMENT THIS AMENDED AND RESTATED ENERGY EFFICIENCY IMPROVEMENT PROGRAM LOAN AGREEMENT (the “Agreement") is made effective as of __________, 2018 (the “Closing Date”), by and between ALAN ARNOLD CORPORATION, a Minnesota corporation ("Borrower"), and the ECONOMIC DEVELOPMENT AUTHORITY OF THE CITY OF ELK RIVER, a public body corporate and politic of the State of Minnesota ("Lender"), and amends and restates in all respects the Loan Agreement, dated September 10, 2013 (the “Original Loan Agreement”), by and between the Borrower and the Lender. RECITALS A. On September 10, 2013, the EDA provided a loan to the Borrower pursuant to the EDA Energy Efficiency Improvement Program, in the amount of Seventy-Four Thousand Nine Hundred Ninety-Nine and No/100s Dollars ($74,999.00) (the “Original Loan”) of which Forty Thousand and Four Hundred Eighty-Two and 91/100s Dollars ($40,482.91) is currently outstanding. The Original Loan was secured by a Promissory Note, dated September 10, 2013 (the “Original Promissory Note”), from Borrower to the Lender, a Security Agreement, dated September 10, 2013 (the “Security Agreement”), from the Borrower to the Lender providing a security interest in certain equipment financed with the proceeds of the Original Loan, and Guaranty Agreements, each dated September 10, 2013 (together, the “Original Guaranties”), from Brian Brehmer, Nancy Brehmer, Allen Meyer and Yankee Doodle Enterprises, LLC. B. To complete the Improvements described herein, the Borrower has requested an additional loan in the principal amount of $19,175.00 from the Lender, pursuant to the EDA Energy Efficiency Improvement Program (the “New Loan”, and together with the Original Loan, the “Loan”). C. The Borrower and the Lender desire to amend and restated the Original Loan Agreement to provide the New Loan to the Borrower subject to the terms and conditions of this Agreement. D. On the date in the principal amount of the Loan is Fifty-Nine Thousand Six Hundred and Fifty-Eight and 91/100s Dollars ($59,657.91). E. Contemporaneously with the execution hereof, Borrower is executing and delivering to Lender the following security documents: (i) An Amended and Restated Promissory Note effective as of the date herewith ("Note") made by Borrower and payable to the order of Lender which amends and restated the Original Promissory Note and secures the Loan; 533940v3 GAF EL185-57 -2- (ii) Personal Guaranties of Brian Brehmer, Nancy Brehmer and Allen Meyer (the “Personal Guaranties”), owners of Yankee Doodle Enterprises, LLC (“Corporate Guarantor”), owner of the real property commonly known as 13374 U.S. Highway 10, Elk River, Sherburne County, Minnesota as legally described in the Mortgage (the "Loan Property"); (iii) A Corporate Guaranty of Corporate Guarantor, dated the date herewith (the “Corporate Guaranty”, and together with the Personal Guaranties, the “Guaranties”); and (iv) An Amended and Restated Mortgage, Assignment of Rents, Security Agreement and Fixture Financing Statement, dated the date hereof ("Mortgage"), from the Corporate Guarantor to the EDA amending and restating the Mortgage, Assignment of Rents, Security Agreement and Fixture Financing Statement securing the Corporate Guaranty, dated September 10, 2013 (the “Original Mortgage”), by the Corporate Guarantor in favor of the Lender to reflect the New Loan. The Mortgage provides a security interest in the Loan Property as security for the Corporate Guaranty. NOW, THEREFORE, in consideration of the mutual covenants hereinafter contained, it is hereby agreed as follows: 1. Amount and Purpose of New Loan. Borrower agrees to take and Lender agrees to make the New Loan in the principal amount of Nineteen Thousand One Hundred Seventy-Five and No/100s Dollars ($19,175.00) to be advanced in a single disbursement as hereinafter provided. The proceeds of the New Loan may only be used to construct approved Improvements (as defined below). 2. Construction of Improvements. For the purposes of this Agreement, the term “Loan Property” means the real estate described in the Mortgage together with all improvements now located or hereafter placed thereon by Borrower. Borrower agrees to use the proceeds of the New Loan (and Corporate Guarantor approves) to improve as a part of the Loan Property (“Project”) consisting generally of renovations to and equipping of the building located at 13374 U.S. Highway 10, Elk River, Minnesota, substantially in accordance with plans and specifications which have been provided to Lender. The improvements will consist of: certain improvements which are intended to increase the energy efficiency of the Loan Property, as specifically set forth on Exhibit A (the “Improvements”). Borrower covenants that when completed, the Improvements shall comply with all applicable restrictions, conditions, codes, ordinances, regulations and laws of the City of Elk River (“City”) and all other governmental bodies having jurisdiction over the Loan Property, including, without limitation, the all municipal sign ordinances, the Americans with Disabilities Act and those related to environmental protection. 533940v3 GAF EL185-57 -3- Borrower agrees to commence construction of the Improvements promptly after the Closing Date and to carry on continuously, diligently and with reasonable dispatch the construction of the Improvements to full and final completion. The proceeds of the Original Loan financed the construction of certain other energy efficiency improvements to the Loan Property. 3. Borrower’s Deliverables. Borrower covenants and agrees to immediately cause the compliance with the following conditions, which full and timely compliance is a condition precedent to Lender’s obligations under this Agreement: (a) Note. Deliver to Lender the Note. (b) Security Agreement. Deliver to Lender the Security Agreement. The Security Agreement was executed in connection with the Original Loan and remains in full force and effect. (c) Guaranties. Deliver to Lender the Guaranties. (d) Mortgage. Deliver to Lender the Mortgage, together with evidence that the Mortgage has been or will be duly filed for record. (e) Organizational Documents and Resolutions - Borrower. Deliver to Lender copies of: (i) the Articles of Incorporation for Borrower, certified by the Minnesota Secretary of State, (ii) a certificate of good standing for Borrower issued by the Minnesota Secretary of State; (iii) the bylaws for Borrower; and (iv) a certified copy of resolutions of Borrower authorizing the execution and delivery of this Agreement, the Note, the Security Agreement, and any other document to be executed by Borrower pursuant to this Agreement. (f) Insurance. Deliver to Lender: (i) a certificate or policy for all insurance required, under the terms hereof or of the Mortgage, to be maintained by Borrower; and (ii) evidence that no part of the Loan Property is located in an area designated as being a flood plain or flood hazard area as defined by the Flood Hazard Boundary Map published by the Federal Insurance Administration. (g) Compliance With Laws, Etc. Deliver to Lender such evidence as Lender may require as to the compliance of the Loan Property and the Improvements with: (i) all applicable laws, codes, rules, regulations and ordinances, including, without limitation, those relative to environmental protection, protection of wetlands, building and zoning matters and the Americans with Disabilities Act; and (ii) the requirements of any restrictive covenants, conditions and restrictions; conditional use permit and/or planned unit development applicable to the Loan Property. 533940v3 GAF EL185-57 -4- (h) Hazardous Substances. Deliver to Lender evidence acceptable to Lender, that: (i) the Loan Property has not knowingly been used as a hazardous waste storage facility or burial site; (ii) the soil is believed to be free from hazardous waste, hazardous substances, pollutants and contaminants; and (iii) no known hazardous waste, hazardous substance, pollutant or contaminant has been used in the construction or use of any building or other improvement on the Loan Property. For purposes of this subparagraph, the terms "hazardous waste," "hazardous substances," “pollutants” and "contaminants" shall include, but not be limited to, polychlorinated biphenyls (PCBs), asbestos, petroleum products and any other chemical or substance determined to be a hazard to human health or the environment. (i) Contractors. All contractors and subcontractors must be bonded, insured and licensed to do business in the State of Minnesota and be of good repute. Lender reserves the right to reject any contractor or subcontractor that does not meet the requirement of the previous sentence. (j) Source of Funds Certificate. Deliver to Lender a sworn source of funds certificate ("Source of Funds Certificate"), in a form acceptable to Lender, verified on oath by a manager of Borrower showing an itemized breakdown of: (i) the source and amount of all Project funds; and (ii) of the total cost of the Improvements, including, without limitation, the cost of constructing the Improvements, any special assessments, soft costs and all other costs and charges to be paid from the Loan proceeds and/or other Project funds or necessary to complete the Improvements. 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 Source of Funds Certificate. (k) EDA Review & Rebates. Deliver to Lender copies of the list of rebates related to the approved Improvements. Borrower shall work with Lender to accomplish any post-Closing inspections of the Improvements. The post- completion inspection of the Improvements will be considered timely if it occurs on or before the thirtieth (30th) day after issuance of the Certificate of Occupancy for the Loan Property. (l) Program Fee. Deliver to Lender the program fee of $2,000.00. (m) Lease. Deliver to Lender a lease for the Loan Property by and between Corporate Guarantor, as landlord, and Borrower, as Tenant. Lender may waive any of the above requirements in its sole discretion. 4. Disbursement of Loan. Upon receipt by Lender of the items required pursuant to paragraph 4 above, the Lender shall disburse the proceeds of the New Loan to the Borrower. 533940v3 GAF EL185-57 -5- 5. Rebates. Pursuant to the Energy Efficiency Improvement Program, Lender expects to receive certain rebates (the “Rebates”) relating to the energy efficiency improvements made by Borrower to the Loan Property. By executing this Agreement, Borrower assigns and Lender assumes all right and title to proceeds from any Rebate arising from the Improvements. Borrower will execute any documentation reasonably necessary to effectuate such assignment and will otherwise assist Lender in a timely manner to obtain any available Rebate. All proceeds of the Rebates received by Lender will be applied to the outstanding principal balance of this Note as set forth therein. 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 Project and the Loan Property and the right to inspect all work done, labor performed and material furnished in connection therewith. 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 and its representatives shall have the right to inspect, examine and copy all such books and records of Borrower and Borrower shall, at Lender's request, furnish such information as Lender may reasonably demand. 8. Encumbrances and Transfer. Borrower agrees not to sell, transfer, lease or convey its interest in the Loan Property or any part thereof, or any interest therein, or further encumber the Loan Property or any part thereof, 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, conveyance or encumbrance, whether voluntary or involuntary and whether or not Lender has consented to any such prior sale, transfer, lease, conveyance or encumbrance. 9. Time of Essence. Time is of the essence in the performance of this Agreement. 10. Assignability. Borrower shall not assign this Agreement or all or any part of any Advances to be made hereunder without written consent of Lender, which consent may be 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 costs to Lender, Borrower will: (a) Performance of Conditions. Promptly keep, perform and comply with all of the terms, covenants and conditions to be kept and performed by Borrower, as required by the City and any other governmental body having jurisdiction over the Loan Property as a condition of platting, rezoning or developing the Loan Property; keep unimpaired the rights of Borrower under any 533940v3 GAF EL185-57 -6- permit or agreement issued or made by the City or other governmental body having jurisdiction over the Loan Property and the Construction Contracts and any other contracts obtained or held by Borrower in connection with the construction or operation of the Improvements; and to enforce the prompt performance of all of the terms, covenants and conditions to be kept and performed by the City or other governmental body having jurisdiction over the Loan Property, respectively, under any permits or agreements issued or made by the City or such other governmental bodies, or by any design professional, the general contractor and any other contractors under all contracts obtained or held by Borrower in connection with construction or operation of the Improvements. (b) Amendment, Etc. of Documents. Not amend, cancel, terminate, supplement or waive any of the material terms, covenants and conditions of any permit or agreement issued or made by the City or any other governmental body having jurisdiction over the Loan Property, or any other contracts obtained or held by Borrower in connection with the construction or operation of the Improvements or any contracts, documents or agreements referred to herein without the prior written approval of Lender. Borrower will provide to Lender complete documentation concerning any change made to the Project. (c) Performance of Note, Security Agreement, Etc. Without limiting the foregoing, keep and perform all of the terms, covenants, conditions and requirements of the Note, the Security Agreement, and this Agreement. (d) Insurance. During the term of the Mortgage, Borrower shall procure and maintain or cause Corporate Guarantor to procure and maintain at each party’s 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, insuring Lender and Borrower with coverages, in amounts and with companies satisfactory to Lender. The policy or policies or duly executed certificate or certificates for such insurance and renewals or replacements thereof shall be deposited with Lender. (e) Pay Charges. Immediately pay all loan charges including, but not limited to: (i) Lender’s reasonable attorneys’ fees up to Five Thousand and No/100 ($5,000.00) Dollars for the preparation of the Loan documents; (ii) title insurance fees, costs and premiums; (iii) mortgage registration taxes and filing fees of the Mortgage and any other instruments required under this Agreement. (f) Copies of Plans, Contracts, etc. Furnish Lender from time to time as reasonably requested by Lender, copies of the any plans and specification and any contracts relating to the Improvements, together with estimated costs of such Improvements. (g) Title. Except as specifically set forth herein, as of the Closing Date Borrower owns a fee title interest in the Loan Property and owns or within 533940v3 GAF EL185-57 -7- sixty (60) days after the Closing Date will own all of the fixtures, trade fixtures, equipment, personal property and inventory located upon the Loan Property (along with the Loan Property, collectively, the “Collateral”) “free and clear,” that Lender will have a “first position” lien in the Collateral. (h) Program Covenants. 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 from the Loan Property. 12. Warranties. Borrower represents and warrants to Lender the following: (a) The Borrower is a corporation duly formed, validly existing and in good standing under the laws of the State of Minnesota. (b) The making and performance of this Agreement and the execution and delivery of the Note, the Mortgage and any other instrument required hereunder are within the powers of the Borrower and have been duly authorized by all necessary company action on the part of the Borrower. This Agreement and the Note, the Mortgage and any other instruments required hereunder have been duly executed and delivered and are the legal, valid and binding obligations of the Borrower enforceable in accordance with their respective terms. (c) No litigation, tax claims or governmental proceedings are pending or threatened against the Borrower or the Loan Property, and no judgment or order of any court or administrative agency is outstanding against the Borrower or the Loan Property which would have a material adverse effect on Borrower or the Loan Property. (d) Borrower has filed all tax returns (federal and state) required to be filed for all prior years and paid all taxes shown thereon to be due, including interest and penalties. Borrower will file all such returns and pay all such taxes for the current and future years. (e) All information, financial or other, which has been submitted by Borrower and Guarantors in connection with the Loan is true, accurate and complete in all material respects. 13. Indemnification. Borrower agrees to indemnify Lender and save it harmless against all loss, liability, expense, or damages including but not limited to attorneys fees, which may arise by reason of the assertion of any lien against the Loan Property. 14. Defaults. Each of the following shall constitute an Event of Default: 533940v3 GAF EL185-57 -8- (a) Borrower abandons the Loan Property, work on construction of the Improvements is halted or the Improvements are not constructed in accordance with this Agreement. (b) Bankruptcy, reorganization, assignment, insolvency or liquidation proceedings, or other proceedings for relief under any applicable bankruptcy law or other law for relief of debtors are instituted by or against Borrower and, if such proceedings are instituted against Borrower, an order, judgment or decree, without the consent of Borrower appointing a trustee or receiver for Borrower or any part of its property or approving a petition under the bankruptcy laws of the United States or any similar laws of any state or other competent jurisdiction, shall have remained in force undischarged or unstayed for a period of thirty (30) days. (c) Any judgment, attachment, garnishment or other similar process is entered against Borrower or against any property or assets of Borrower and is not released, satisfied or discharged or bonded to Lender’s satisfaction within thirty (30) days of entry. (d) Borrower fails to commence or complete construction of the Improvements within the time designated in this Agreement. (e) Any of the terms, covenants or conditions of any permit or other agreement issued or made by the City or other governmental body having jurisdiction over the Loan Property, including, but not limited to, those relating to the cost of or time for installation of the Improvements, are not complied with within the time required thereby or are terminated or modified by the City or such other governmental body and Borrower has not taken the necessary steps to correct or cure the same within thirty (30) days after written notice is given by Lender. (f) Any mechanic's or material supplier's lien is filed against the Loan Property and is not released, satisfied or discharged or bonded to Lender's satisfaction, subject, however, to Borrower's right to contest the same in accordance with the provisions of the Mortgage and applicable law. (g) A transfer which violates by Paragraph 11 hereof, occurs. (h) Borrower: (i) fails to pay any amount due under this Agreement, the Note, or the Security Agreement; or (ii) fails to perform any other obligation to be performed under this Agreement, the Note, the Security Agreement, or any other document executed by Borrower pursuant to this Agreement and such failure continues beyond any applicable cure period. 533940v3 GAF EL185-57 -9- (i) Any representation or warranty by Borrower contained herein or in the Note, the Security Agreement or any other instrument required hereunder is false or untrue in any material respect when made. (j) Borrower defaults in the payment or performance of anything by it to be paid or performed under any note, mortgage or other agreement now or hereafter made by Borrower in favor of or with Lender or otherwise now or hereafter held by Lender and as to defaults other than in the payment of a sum when due, the continuance thereof beyond any notice and/or cure period contained therein. Upon the occurrence of an Event of Default, Lender, at its option, shall, in addition to any other remedies which it might be entitled to by law, have the right to: (1) To refrain from making advances under this Agreement; (2) To enter into possession of the Loan Property and perform any and all work and labor necessary to complete the Improvements substantially as required under this Agreement and to do all things necessary or incidental thereto; (3) To perform such other acts or deeds which reasonably may be necessary to cure any default existing under this Agreement, and to this end, it is hereby agreed as follows: (i) All sums expended by Lender in effectuating its rights under Subparagraphs (2) and (3) of this Paragraph shall be deemed to have been advanced under this Agreement and to be secured by the Security Agreement and any other security document required under this Agreement as security for the Loan. (ii) Borrower hereby constitutes and appoints Lender its true and lawful attorney-in-fact with full power of substitution either in the name of Lender or in the name of Borrower or in the name of both, for the following purposes: (a) to complete the Improvements or cause the same to be completed; to use the plans and specifications; to make such additions, changes and corrections in the plans and specifications as Lender reasonably shall deem necessary or desirable; to collect and use any funds of Borrower; to use any funds which may remain unadvanced under this Agreement; to employ such contractors, subcontractors, agents, design professionals and inspectors and enter into such contracts and arrangements as Lender reasonably deems necessary for such purposes; to pay, settle or compromise all existing bills and claims which may be liens against the Loan Property or as may be necessary or reasonably desirable for the completion of the 533940v3 GAF EL185-57 -10- Improvements or clearance of title; to execute all applications and certificates in the name of Borrower; to prosecute and defend all actions or proceedings in connection with the construction of the Improvements on, or any other matter relating to, the Loan Property and do any and every act which Borrower might do in its own behalf; (b) to enforce by any means that Lender then reasonably deems necessary or advisable, all of the terms, covenants and conditions of any permit or agreement issued by the City or any other governmental body having jurisdiction over the Loan Property or the construction contracts or any other contracts obtained or held by Borrower in connection with the construction of and any other contracts; (c) to perform each of the terms, covenants and conditions to be kept and performed by Borrower under any permit or authorization issued by the City or any other governmental body having jurisdiction over the Loan Property or the construction contracts or any other contracts and/or leases obtained or held by Borrower in connection with the construction or operation of the Improvements, and any other contracts; (d) without limiting the foregoing to perform each of the terms, covenants and conditions to be kept or performed by Borrower under this Agreement, the Security Agreement and any other instrument required under this Agreement; and (e) to do all things that Lender reasonably deems necessary or advisable for the purpose of carrying out the powers enumerated in (a), (b), (c) and (d) of this Subparagraph (ii); (iii) The powers herein granted Lender shall be deemed to be powers coupled with an interest and the same are irrevocable; (4) cancel this Agreement; (5) bring appropriate action to enforce such performance and the correction of such Event of Default; (6) declare the entire unpaid principal of the Note and all accrued interest thereon immediately due and payable without notice; (7) exercise and enforce any rights under the Security Agreement, the Guaranties, the Mortgage and any other security instrument referred to in this Agreement and/or exercise any other rights or remedies it may have under the Security Agreement and such other security instrument. 15. Default under Note and Security Agreement. The failure by Borrower to keep or perform any of the terms, covenants and conditions to be kept or performed by it under this Agreement shall constitute a default under the Note, the Security Agreement and any other security instrument held by Lender in connection with the Loan. 533940v3 GAF EL185-57 -11- 16. 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: Alan Arnold Corporation 13374 U.S. Highway 10 Elk River, Minnesota 55330 Attention: Brian Brehmer If to Lender: Economic Development Authority of the City of Elk River 13065 Orono Parkway Elk River, Minnesota 55330 Attention: Director of Economic Development or addressed to any such party at such other address as such party shall hereafter furnish by notice to the other party. Any notice delivered personally to Borrower shall be delivered to an officer of Borrower, and any notice delivered personally to Lender shall be delivered to an officer of Lender at the address for Lender for the mailing of notices. Either party may change its address for the giving of notices by giving the other party at least ten (10) days notice in the manner provided above. 17. Headings. The headings used in this Agreement are for convenience only and do not define, limit or construe the contents of this Agreement. 18. 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. 19. 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. 20. 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. 21. 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. 533940v3 GAF EL185-57 -12- 22. Fees and Expenses. Borrower agrees to pay to Lender immediately upon demand all costs and expenses, including, without limitation, all attorneys fees, incurred by Lender in connection with the enforcement of the Lender’s rights and/or the collection of any amounts which become due to Lender under this Agreement, the Note, the Mortgage or the other documents executed in connection herewith; and the prosecution or defense of any action in any way related to this Agreement, the Note, the Mortgage or the other documents executed in connection herewith. [Signature Pages follow] 533940v3 GAF EL185-57 -13- 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. ALAN ARNOLD CORPORATION, a Minnesota limited liability company By: ______________________ Name: Brian Brehmer Its: President 533940v3 GAF EL185-57 -14- Signature Page to Loan Agreement IN TESTIMONY WHEREOF, each of the parties hereto has caused these presents to be effective as of the day and year first above written. ECONOMIC DEVELOPMENT AUTHORITY OF THE CITY OF ELK RIVER By: ______________________________ Name: ______________________ Its: _________________________ And By: ______________________________ Name: ______________________ Its: _________________________ 533940v3 GAF EL185-57 -15- EXHIBIT A Improvements and Rebates Installation of LED lights in interior building Installation of soffit lights on the exterior of the building AMENDED AND RESTATED ENERGY EFFICIENCY IMPROVEMENT PROGRAM LOAN AGREEMENT THIS AMENDED AND RESTATED ENERGY EFFICIENCY IMPROVEMENT PROGRAM LOAN AGREEMENT (the “Agreement") is made effective as of __________, 2018 (the “Closing Date”), by and between ALAN ARNOLD CORPORATION, a Minnesota corporation ("Borrower"), and the ECONOMIC DEVELOPMENT AUTHORITY OF THE CITY OF ELK RIVER, a public body corporate and politic of the State of Minnesota ("Lender"), and amends and restates in all respects the Loan Agreement, dated September 10, 2013 (the “Original Loan Agreement”), by and between the Borrower and the Lender. RECITALS A. On September 10, 2013, the EDA provided a loan to the Borrower pursuant to the EDA Energy Efficiency Improvement Program, in the amount of Seventy-Four Thousand Nine Hundred Ninety-Nine and No/100s Dollars ($74,999.00) (the “Original Loan”) of which Forty Thousand and Four Hundred Eighty-Two and 91/100s Dollars ($40,482.91) is currently outstanding. The Original Loan was secured by a Promissory Note, dated September 10, 2013 (the “Original Promissory Note”), from Borrower to the Lender, a Security Agreement, dated September 10, 2013 (the “Security Agreement”), from the Borrower to the Lender providing a security interest in certain equipment financed with the proceeds of the Original Loan, and Guaranty Agreements, each dated September 10, 2013 (together, the “Original Guaranties”), from Brian Brehmer, Nancy Brehmer, Allen Meyer and Yankee Doodle Enterprises, LLC. B. To complete the Improvements described herein, the Borrower has requested an additional loan in the principal amount of $19,175.00 from the Lender, pursuant to the EDA Energy Efficiency Improvement Program (the “New Loan”, and together with the Original Loan, the “Loan”). C. The Borrower and the Lender desire to amend and restated the Original Loan Agreement to provide the New Loan to the Borrower subject to the terms and conditions of this Agreement. D. On the date in the principal amount of the Loan is Fifty-Nine Thousand Six Hundred and Fifty-Eight and 91/100s Dollars ($59,657.91). E. Contemporaneously with the execution hereof, Borrower is executing and delivering to Lender the following security documents: (i) An Amended and Restated Promissory Note effective as of the date herewith ("Note") made by Borrower and payable to the order of Lender which amends and restated the Original Promissory Note and secures the Loan; 533940v3 GAF EL185-57533940v3 GAF EL185-57 -2- (ii) Personal Guaranties of Brian Brehmer, Nancy Brehmer and Allen Meyer (the “Personal Guaranties”), owners of Yankee Doodle Enterprises, LLC (“Corporate Guarantor”), owner of the real property commonly known as 13374 U.S. Highway 10, Elk River, Sherburne County, Minnesota as legally described in the Mortgage (the "Loan Property"); (iii) A Corporate Guaranty of Corporate Guarantor, dated the date herewith (the “Corporate Guaranty”, and together with the Personal Guaranties, the “Guaranties”); and (iv) An Amended and Restated Mortgage, Assignment of Rents, Security Agreement and Fixture Financing Statement, dated the date hereof ("Mortgage"), from the Corporate Guarantor to the EDA amending and restating the Mortgage, Assignment of Rents, Security Agreement and Fixture Financing Statement securing the Corporate Guaranty, dated September 10, 2013 (the “Original Mortgage”), by the Corporate Guarantor in favor of the Lender to reflect the New Loan. The Mortgage provides a security interest in the Loan Property as security for the Corporate Guaranty. NOW, THEREFORE, in consideration of the mutual covenants hereinafter contained, it is hereby agreed as follows: 1. Amount and Purpose of New Loan. Borrower agrees to take and Lender agrees to make the New Loan in the principal amount of Nineteen Thousand One Hundred Seventy-Five and No/100s Dollars ($19,175.00) to be advanced in a single disbursement as hereinafter provided. The proceeds of the New Loan may only be used to construct approved Improvements (as defined below). 2. Construction of Improvements. For the purposes of this Agreement, the term “Loan Property” means the real estate described in the Mortgage together with all improvements now located or hereafter placed thereon by Borrower. Borrower agrees to use the proceeds of the New Loan (and Corporate Guarantor approves) to improve as a part of the Loan Property (“Project”) consisting generally of renovations to and equipping of the building located at 13374 U.S. Highway 10, Elk River, Minnesota, substantially in accordance with plans and specifications which have been provided to Lender. The improvements will consist of: certain improvements which are intended to increase the energy efficiency of the Loan Property, as specifically set forth on Exhibit A (the “Improvements”). Borrower covenants that when completed, the Improvements shall comply with all applicable restrictions, conditions, codes, ordinances, regulations and laws of the City of Elk River (“City”) and all other governmental bodies having jurisdiction over the Loan Property, including, without limitation, the all municipal sign ordinances, the Americans with Disabilities Act and those related to environmental protection. 533940v3 GAF EL185-57533940v3 GAF EL185-57 -3- Borrower agrees to commence construction of the Improvements promptly after the Closing Date and to carry on continuously, diligently and with reasonable dispatch the construction of the Improvements to full and final completion. The proceeds of the Original Loan financed the construction of certain other energy efficiency improvements to the Loan Property. 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 insure that the Mortgage constitutes a lien upon Corporate Guarantor’s interest in the Loan Property, , as contemplated by this Agreement. 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. Borrower’s Deliverables. Borrower covenants and agrees to immediately cause the compliance with the following conditions, which full and timely compliance is a condition precedent to Lender’s obligations under this Agreement: (a) Note. Deliver to Lender the Note. (b) Security Agreement. Deliver to Lender the Security Agreement. The Security Agreement was executed in connection with the Original Loan and remains in full force and effect. (c) Guaranties. Deliver to Lender the Guaranties. (d) Mortgage. Deliver to Lender the Mortgage, together with evidence that the Mortgage has been or will be duly filed for record. (e) Title Insurance Policy. Deliver to Lender a Mortgagee's title insurance policy ("Title Policy"), from Title issued to Lender in the amount of the Note with respect to the Mortgage and insuring that the Mortgage is a lien on the Loan Property free and clear of all mechanic's liens, materialmen's liens, taxes, special assessments, rights of parties in possession; (f) Organizational Documents and Resolutions - Borrower. Deliver to Lender copies of: (i) the Articles of Incorporation for Borrower, certified by the Minnesota Secretary of State, (ii) a certificate of good standing for Borrower issued by the Minnesota Secretary of State; (iii) the bylaws for Borrower; and (iv) a certified copy of resolutions of Borrower authorizing the execution and delivery of this Agreement, the Note, the Security Agreement, and any other document to be executed by Borrower pursuant to this Agreement. (gf) Insurance. Deliver to Lender: (i) a certificate or policy for all insurance required, under the terms hereof or of the Mortgage, to be maintained by Borrower; and (ii) evidence that no part of the Loan Property is located in an 533940v3 GAF EL185-57533940v3 GAF EL185-57 -4- 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. (hg) Compliance With Laws, Etc. Deliver to Lender such evidence as Lender may require as to the compliance of the Loan Property and the Improvements with: (i) all applicable laws, codes, rules, regulations and ordinances, including, without limitation, those relative to environmental protection, protection of wetlands, building and zoning matters and the Americans with Disabilities Act; and (ii) the requirements of any restrictive covenants, conditions and restrictions; conditional use permit and/or planned unit development applicable to the Loan Property. (ih) Hazardous Substances. Deliver to Lender evidence acceptable to Lender, that: (i) the Loan Property has not knowingly been used as a hazardous waste storage facility or burial site; (ii) the soil is believed to be free from hazardous waste, hazardous substances, pollutants and contaminants; and (iii) no known hazardous waste, hazardous substance, pollutant or contaminant has been used in the construction or use of any building or other improvement on the Loan Property. For purposes of this subparagraph, the terms "hazardous waste," "hazardous substances," “pollutants” and "contaminants" shall include, but not be limited to, polychlorinated biphenyls (PCBs), asbestos, petroleum products and any other chemical or substance determined to be a hazard to human health or the environment. (j) 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. (ki) Contractors. All contractors and subcontractors must be bonded, insured and licensed to do business in the State of Minnesota and be of good repute. Lender reserves the right to reject any contractor or subcontractor that does not meet the requirement of the previous sentence. (lj) Source of Funds Certificate. Deliver to Lender a sworn source of funds certificate ("Source of Funds Certificate"), in a form acceptable to Lender, verified on oath by a manager of Borrower showing an itemized breakdown of: (i) the source and amount of all Project funds; and (ii) of the total cost of the Improvements, including, without limitation, the cost of constructing the Improvements, any special assessments, soft costs and all other costs and charges to be paid from the Loan proceeds and/or other Project funds or necessary to complete the Improvements. 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 Source of Funds Certificate. (mk) EDA Review & Rebates. Deliver to Lender copies of the list of rebates related to the approved Improvements. Borrower shall work with Lender 533940v3 GAF EL185-57533940v3 GAF EL185-57 -5- to accomplish any post-Closing inspections of the Improvements. The post- completion inspection of the Improvements will be considered timely if it occurs on or before the thirtieth (30th) day after issuance of the Certificate of Occupancy for the Loan Property. (nl) Program Fee. Deliver to Lender the program fee of $2,000.00. (om) Lease. Deliver to Lender a lease for the Loan Property by and between Corporate Guarantor, as landlord, and Borrower, as Tenant. Lender may waive any of the above requirements in its sole discretion. 5.4. Disbursement of Loan. Upon receipt by Lender of the items required pursuant to paragraph 4 above, the Lender shall disburse the proceeds of the New Loan to the Borrower. 6.5. Rebates. Pursuant to the Energy Efficiency Improvement Program, Lender expects to receive certain rebates (the “Rebates”) relating to the energy efficiency improvements made by Borrower to the Loan Property. By executing this Agreement, Borrower assigns and Lender assumes all right and title to proceeds from any Rebate arising from the Improvements. Borrower will execute any documentation reasonably necessary to effectuate such assignment and will otherwise assist Lender in a timely manner to obtain any available Rebate. All proceeds of the Rebates received by Lender will be applied to the outstanding principal balance of this Note as set forth therein. 7.6. 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 Project and the Loan Property and the right to inspect all work done, labor performed and material furnished in connection therewith. 8.7. 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 and its representatives shall have the right to inspect, examine and copy all such books and records of Borrower and Borrower shall, at Lender's request, furnish such information as Lender may reasonably demand. 9.8. Encumbrances and Transfer. Borrower agrees not to sell, transfer, lease or convey its interest in the Loan Property or any part thereof, or any interest therein, or further encumber the Loan Property or any part thereof, 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, conveyance or encumbrance, whether voluntary or involuntary and whether or not Lender has consented to any such prior sale, transfer, lease, conveyance or encumbrance. 10.9. Time of Essence. Time is of the essence in the performance of this Agreement. 533940v3 GAF EL185-57533940v3 GAF EL185-57 -6- 11.10. Assignability. Borrower shall not assign this Agreement or all or any part of any Advances to be made hereunder without written consent of Lender, which consent may be withheld, conditioned or delayed in Lender’s sole discretion. Lender may freely assign or otherwise transfer (including by participation) all or any part of its interest in the Loan or any or all of the Loan documents, in Lender’s sole discretion. 12.11. Miscellaneous Covenants of Borrower. Borrower covenants and agrees with Lender that, without costs to Lender, Borrower will: (a) Performance of Conditions. Promptly keep, perform and comply with all of the terms, covenants and conditions to be kept and performed by Borrower, as required by the City and any other governmental body having jurisdiction over the Loan Property as a condition of platting, rezoning or developing the Loan Property; keep unimpaired the rights of Borrower under any permit or agreement issued or made by the City or other governmental body having jurisdiction over the Loan Property and the Construction Contracts and any other contracts obtained or held by Borrower in connection with the construction or operation of the Improvements; and to enforce the prompt performance of all of the terms, covenants and conditions to be kept and performed by the City or other governmental body having jurisdiction over the Loan Property, respectively, under any permits or agreements issued or made by the City or such other governmental bodies, or by any design professional, the general contractor and any other contractors under all contracts obtained or held by Borrower in connection with construction or operation of the Improvements. (b) Amendment, Etc. of Documents. Not amend, cancel, terminate, supplement or waive any of the material terms, covenants and conditions of any permit or agreement issued or made by the City or any other governmental body having jurisdiction over the Loan Property, or any other contracts obtained or held by Borrower in connection with the construction or operation of the Improvements or any contracts, documents or agreements referred to herein without the prior written approval of Lender. Borrower will provide to Lender complete documentation concerning any change made to the Project. (c) Performance of Note, Security Agreement, Etc. Without limiting the foregoing, keep and perform all of the terms, covenants, conditions and requirements of the Note, the Security Agreement, and this Agreement. (d) Insurance. During the term of the Mortgage, Borrower shall procure and maintain or cause Corporate Guarantor to procure and maintain at each party’s 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, insuring Lender and Borrower with coverages, in amounts and with companies satisfactory to Lender. The policy or policies or duly executed certificate or 533940v3 GAF EL185-57533940v3 GAF EL185-57 -7- certificates for such insurance and renewals or replacements thereof shall be deposited with Lender. (e) Pay Charges. Immediately pay all loan charges including, but not limited to: (i) Lender’s reasonable attorneys’ fees up to Five Thousand and No/100 ($5,000.00) Dollars for the preparation of the Loan documents; (ii) title insurance fees, costs and premiums; (iii) mortgage registration taxes and filing fees of the Mortgage and any other instruments required under this Agreement. (f) Copies of Plans, Contracts, etc. Furnish Lender from time to time as reasonably requested by Lender, copies of the any plans and specification and any contracts relating to the Improvements, together with estimated costs of such Improvements. (g) Title. Except as specifically set forth herein, as of the Closing Date Borrower owns a fee title interest in the Loan Property and owns or within sixty (60) days after the Closing Date will own all of the fixtures, trade fixtures, equipment, personal property and inventory located upon the Loan Property (along with the Loan Property, collectively, the “Collateral”) “free and clear,” that Lender will have a “first position” lien in the Collateral. (h) Program Covenants. 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 from the Loan Property. 13.12. Warranties. Borrower represents and warrants to Lender the following: (a) The Borrower is a corporation duly formed, validly existing and in good standing under the laws of the State of Minnesota. (b) The making and performance of this Agreement and the execution and delivery of the Note, the Mortgage and any other instrument required hereunder are within the powers of the Borrower and have been duly authorized by all necessary company action on the part of the Borrower. This Agreement and the Note, the Mortgage and any other instruments required hereunder have been duly executed and delivered and are the legal, valid and binding obligations of the Borrower enforceable in accordance with their respective terms. (c) No litigation, tax claims or governmental proceedings are pending or threatened against the Borrower or the Loan Property, and no judgment or order of any court or administrative agency is outstanding against the Borrower or the Loan Property which would have a material adverse effect on Borrower or the Loan Property. (d) Borrower has filed all tax returns (federal and state) required to be filed for all prior years and paid all taxes shown thereon to be due, including 533940v3 GAF EL185-57533940v3 GAF EL185-57 -8- interest and penalties. Borrower will file all such returns and pay all such taxes for the current and future years. (e) All information, financial or other, which has been submitted by Borrower and Guarantors in connection with the Loan is true, accurate and complete in all material respects. 14.13. Indemnification. Borrower agrees to indemnify Lender and save it harmless against all loss, liability, expense, or damages including but not limited to attorneys fees, which may arise by reason of the assertion of any lien against the Loan Property. 15.14. Defaults. Each of the following shall constitute an Event of Default: (a) Borrower abandons the Loan Property, work on construction of the Improvements is halted or the Improvements are not constructed in accordance with this Agreement. (b) Bankruptcy, reorganization, assignment, insolvency or liquidation proceedings, or other proceedings for relief under any applicable bankruptcy law or other law for relief of debtors are instituted by or against Borrower and, if such proceedings are instituted against Borrower, an order, judgment or decree, without the consent of Borrower appointing a trustee or receiver for Borrower or any part of its property or approving a petition under the bankruptcy laws of the United States or any similar laws of any state or other competent jurisdiction, shall have remained in force undischarged or unstayed for a period of thirty (30) days. (c) Any judgment, attachment, garnishment or other similar process is entered against Borrower or against any property or assets of Borrower and is not released, satisfied or discharged or bonded to Lender’s satisfaction within thirty (30) days of entry. (d) Borrower fails to commence or complete construction of the Improvements within the time designated in this Agreement. (e) Any of the terms, covenants or conditions of any permit or other agreement issued or made by the City or other governmental body having jurisdiction over the Loan Property, including, but not limited to, those relating to the cost of or time for installation of the Improvements, are not complied with within the time required thereby or are terminated or modified by the City or such other governmental body and Borrower has not taken the necessary steps to correct or cure the same within thirty (30) days after written notice is given by Lender. 533940v3 GAF EL185-57533940v3 GAF EL185-57 -9- (f) Any mechanic's or material supplier's lien is filed against the Loan Property and is not released, satisfied or discharged or bonded to Lender's satisfaction, subject, however, to Borrower's right to contest the same in accordance with the provisions of the Mortgage and applicable law. (g) A transfer which violates by Paragraph 11 hereof, occurs. (h) Borrower: (i) fails to pay any amount due under this Agreement, the Note, or the Security Agreement; or (ii) fails to perform any other obligation to be performed under this Agreement, the Note, the Security Agreement, or any other document executed by Borrower pursuant to this Agreement and such failure continues beyond any applicable cure period. (i) Any representation or warranty by Borrower contained herein or in the Note, the Security Agreement or any other instrument required hereunder is false or untrue in any material respect when made. (j) Borrower defaults in the payment or performance of anything by it to be paid or performed under any note, mortgage or other agreement now or hereafter made by Borrower in favor of or with Lender or otherwise now or hereafter held by Lender and as to defaults other than in the payment of a sum when due, the continuance thereof beyond any notice and/or cure period contained therein. Upon the occurrence of an Event of Default, Lender, at its option, shall, in addition to any other remedies which it might be entitled to by law, have the right to: (1) To refrain from making advances under this Agreement; (2) To enter into possession of the Loan Property and perform any and all work and labor necessary to complete the Improvements substantially as required under this Agreement and to do all things necessary or incidental thereto; (3) To perform such other acts or deeds which reasonably may be necessary to cure any default existing under this Agreement, and to this end, it is hereby agreed as follows: (i) All sums expended by Lender in effectuating its rights under Subparagraphs (2) and (3) of this Paragraph shall be deemed to have been advanced under this Agreement and to be secured by the Security Agreement and any other security document required under this Agreement as security for the Loan. (ii) Borrower hereby constitutes and appoints Lender its true and lawful attorney-in-fact with full power of substitution either in the 533940v3 GAF EL185-57533940v3 GAF EL185-57 -10- name of Lender or in the name of Borrower or in the name of both, for the following purposes: (a) to complete the Improvements or cause the same to be completed; to use the plans and specifications; to make such additions, changes and corrections in the plans and specifications as Lender reasonably shall deem necessary or desirable; to collect and use any funds of Borrower; to use any funds which may remain unadvanced under this Agreement; to employ such contractors, subcontractors, agents, design professionals and inspectors and enter into such contracts and arrangements as Lender reasonably deems necessary for such purposes; to pay, settle or compromise all existing bills and claims which may be liens against the Loan Property or as may be necessary or reasonably desirable for the completion of the Improvements or clearance of title; to execute all applications and certificates in the name of Borrower; to prosecute and defend all actions or proceedings in connection with the construction of the Improvements on, or any other matter relating to, the Loan Property and do any and every act which Borrower might do in its own behalf; (b) to enforce by any means that Lender then reasonably deems necessary or advisable, all of the terms, covenants and conditions of any permit or agreement issued by the City or any other governmental body having jurisdiction over the Loan Property or the construction contracts or any other contracts obtained or held by Borrower in connection with the construction of and any other contracts; (c) to perform each of the terms, covenants and conditions to be kept and performed by Borrower under any permit or authorization issued by the City or any other governmental body having jurisdiction over the Loan Property or the construction contracts or any other contracts and/or leases obtained or held by Borrower in connection with the construction or operation of the Improvements, and any other contracts; (d) without limiting the foregoing to perform each of the terms, covenants and conditions to be kept or performed by Borrower under this Agreement, the Security Agreement and any other instrument required under this Agreement; and (e) to do all things that Lender reasonably deems necessary or advisable for the purpose of carrying out the powers enumerated in (a), (b), (c) and (d) of this Subparagraph (ii); (iii) The powers herein granted Lender shall be deemed to be powers coupled with an interest and the same are irrevocable; (4) cancel this Agreement; (5) bring appropriate action to enforce such performance and the correction of such Event of Default; 533940v3 GAF EL185-57533940v3 GAF EL185-57 -11- (6) declare the entire unpaid principal of the Note and all accrued interest thereon immediately due and payable without notice; (7) exercise and enforce any rights under the Security Agreement, the Guaranties, the Mortgage and any other security instrument referred to in this Agreement and/or exercise any other rights or remedies it may have under the Security Agreement and such other security instrument. 16.15. Default under Note and Security Agreement. The failure by Borrower to keep or perform any of the terms, covenants and conditions to be kept or performed by it under this Agreement shall constitute a default under the Note, the Security Agreement and any other security instrument held by Lender in connection with the Loan. 17.16. 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: Alan Arnold Corporation 13374 U.S. Highway 10 Elk River, Minnesota 55330 Attention: Brian Brehmer If to Lender: Economic Development Authority of the City of Elk River 13065 Orono Parkway Elk River, Minnesota 55330 Attention: Director of Economic Development or addressed to any such party at such other address as such party shall hereafter furnish by notice to the other party. Any notice delivered personally to Borrower shall be delivered to an officer of Borrower, and any notice delivered personally to Lender shall be delivered to an officer of Lender at the address for Lender for the mailing of notices. Either party may change its address for the giving of notices by giving the other party at least ten (10) days notice in the manner provided above. 18.17. Headings. The headings used in this Agreement are for convenience only and do not define, limit or construe the contents of this Agreement. 19.18. 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. 533940v3 GAF EL185-57533940v3 GAF EL185-57 -12- 20.19. 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. 21.20. 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. 22.21. 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. 23.22. Fees and Expenses. Borrower agrees to pay to Lender immediately upon demand all costs and expenses, including, without limitation, all attorneys fees, incurred by Lender in connection with the enforcement of the Lender’s rights and/or the collection of any amounts which become due to Lender under this Agreement, the Note, the Mortgage or the other documents executed in connection herewith; and the prosecution or defense of any action in any way related to this Agreement, the Note, the Mortgage or the other documents executed in connection herewith. [Signature Pages follow] 533940v3 GAF EL185-57533940v3 GAF EL185-57 -13- 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. ALAN ARNOLD CORPORATION, a Minnesota limited liability company By: ______________________ Name: Brian Brehmer Its: President 533940v3 GAF EL185-57533940v3 GAF EL185-57 -14- Signature Page to Loan Agreement IN TESTIMONY WHEREOF, each of the parties hereto has caused these presents to be effective as of the day and year first above written. ECONOMIC DEVELOPMENT AUTHORITY OF THE CITY OF ELK RIVER By: ______________________________ Name: ______________________ Its: _________________________ And By: ______________________________ Name: ______________________ Its: _________________________ 533940v3 GAF EL185-57533940v3 GAF EL185-57 -15- EXHIBIT A Improvements and Rebates Installation of LED lights in interior building Installation of soffit lights on the exterior of the building Document comparison by Workshare Compare on Thursday, August 16, 2018 10:00:22 AM Input: Document 1 ID PowerDocs://DOCSOPEN/533940/2 Description DOCSOPEN-#533940-v2- Elk_River_EDA_Ralphie's_Energy_AMENDED_&_RESTATED_LOAN_AGREEMENT Document 2 ID PowerDocs://DOCSOPEN/533940/3 Description DOCSOPEN-#533940-v3- Elk_River_EDA_Ralphie's_Energy_AMENDED_&_RESTATED_LOAN_AGREEMENT Rendering set Standard Legend: Insertion Deletion Moved from Moved to Style change Format change Moved deletion Inserted cell Deleted cell Moved cell Split/Merged cell Padding cell Statistics: Count Insertions 29 Deletions 34 Moved from 0 Moved to 0 Style change 0 Format changed 0 Total changes 63 A-1 533955v3 GAF EL185-57 AMENDED AND RESTATED MORTGAGE AND ASSIGNMENT OF RENTS AND SECURITY AGREEMENT AND FIXTURE FINANCING STATEMENT This Amended and Restated Mortgage and Assignment of Rents and Security Agreement and Fixture Financing Statement (“Mortgage”) is made as of ___________, by YANKEE DOODLE ENTERPRISES, LLC, a Minnesota corporation (“Mortgagor”), in favor of the ECONOMIC DEVELOPMENT AUTHORITY OF THE CITY OF ELK RIVER, a public body corporate and politic of the State of Minnesota (“Mortgagee”). THE MAXIMUM AMOUNT SECURED BY THIS MORTGAGE IS $59,658.00 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. This Mortgages alters an existing mortgage by providing for an increase in the amount of debt secured by the Original Mortgage and therefore shall be taxed based upon the increase in the amount of the debt secured by this Mortgage in the amount of $19,175.00. This Amended and Restated Mortgage is an “amendment” as defined in Minnesota Statutes, Section 287.01, subdivision 2, and as such it does not secure an increased amount of debt, other than as set forth above. RECITALS A. The Mortgagor executed and delivered the Mortgage and Assignment of Rents and Security Agreement and Fixture Financing Statement, dated September 10, 2013 (the “Original Mortgage”) to secure its obligations as the guarantor under the Corporate Guaranty, dated September 10, 2013 (the “Original Guarantor”) as the guarantor of a loan made by the Mortgagee to Alan Arnold Corporation (the “Borrower”) in the amount of $74,999 (the “Original Loan”) pursuant to an Energy Efficiency Improvement Program Loan Agreement, dated September 10, 2013 (the “Original Loan Agreement”). The Original Loan is currently outstanding in the principal amount of $40,482.91. B. The Original Mortgage was filed on September 18, 2013 as Document Number 49208 in the Office of the County Recorder of Sherburne County, Minnesota and was amended by a First Amendment to Mortgage and Assignment of Rents and Security Agreement and Fixture Financing Statement, dated ________, 2017 and filed as Document Number ___ in the Office of the County Recorder of Sherburne County, Minnesota., C. The Mortgagor proposes to amend and restate the Original Mortgage in order to secure additional debt by delivering the Mortgage securing indebtedness in the principal amount of $59,657.91 to reflect that reflect that the Mortgagee is providing an additional loan in the 533955v3 GAF EL185-57 amount of $19.175.00 (the “New Loan”, and together with the Original Loan, the “Loan”) to the Borrower pursuant to an Amended and Restated Energy Efficiency Improvement Program Loan Agreement, dated the date hereof, between the Borrower and the Mortgagee. The Loan will be secured by an Amended and Restated Promissory Note, dated the date hereof (the “Note”), from the Borrower to the Mortgagee the balance of the Note being due and payable in full on ____________ (the “Maturity Date”). The Note is secured by, among other items, a Corporate Guaranty, from the Mortgagor to the Mortgagee. As a condition of making the New Loan, the Mortgagee required that the Mortgagor deliver this Mortgage to secure the Corporate Guaranty. . D. Mortgage registration tax was previously paid in connection with the Original Mortgage with respect to a mortgage lien in the aggregate amount of $74,999 and currently outstanding in the amount of $40,482.91 and the Original Mortgage is being amended and restated in its entirety by the terms of this Mortgage with respect to a mortgage lien in the aggregate amount of $59,657.91. The principal amount secured by this Mortgage has increased by $19,175 upon which mortgage registration tax is due and owing. 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 Corporate Guaranty (collectively “Obligations”); and to secure the performance of all covenants, conditions and agreements herein and in the Corporate Guaranty, Mortgagor does hereby mortgage, grant, bargain, sell, release and convey unto Mortgagee, with power of sale, forever all of Mortgagor’s right, title and interest in all the tracts or parcels of land lying and being in Sherburne County, Minnesota, legally described in Exhibit A hereto, (hereinafter the “Land”), whether now owned or hereafter acquired, together with: (i) all building materials, supplies and equipment now or hereafter located on the Land and suitable or intended to be incorporated in any building, structure, or other improvement located or to be erected on the Land; and (ii) all of the buildings, structures and other improvements now standing or at any time hereafter constructed or placed upon the Land; and (iii) all heating, plumbing and lighting apparatus, motors, engines, and machinery, electrical equipment, incinerator apparatus, air conditioning equipment, water and gas apparatus, pipes, faucets, and all other fixtures of every description which are now or may hereafter be placed or used upon the Land or in any building or improvement now or hereafter located thereon; and (iv) all equipment purchased with the Loan proceeds, as set forth on Exhibit A to the Loan Agreement, as updated from time to time (collectively, the “Equipment”); and (v) all additions, accessions, increases, parts, fittings, accessories, replacements, substitutions, betterments, repairs and proceeds to any and all of the foregoing; and (vi) all hereditaments, easements, appurtenances, estates, rents, issues, profits, condemnation awards, proceeds of policies of insurance and other rights and interests now or hereafter belonging or in any way pertaining to the Land or to any building or improvement now or hereafter located thereon; and (vii) all leases or other occupancy agreements now or hereafter in effect in any way appertaining to the Land or to any building or improvement now or hereafter located thereon, including, without limitation, all cash and security deposits, advance rentals and deposits or payments of a similar nature (“Leases”), and all Rents (as herein defined) (all of the foregoing, together with the Land, hereinafter being referred to as the “Property” or “Mortgaged Property”), TO HAVE AND TO HOLD the Mortgaged Property unto Mortgagee forever; 533955v3 GAF EL185-57 PROVIDED, NEVERTHELESS, That this Mortgage is given upon the express condition that if Mortgagor or Borrower 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 or Borrower; otherwise this Mortgage shall be and remain in full force and effect. MORTGAGOR REPRESENTS, WARRANTS AND COVENANTS to and with Mortgagee; that it has good right and full power and authority to execute this Mortgage and to mortgage the Mortgaged Property; that the Mortgaged Property is free from all liens and encumbrances; that Mortgagee shall quietly enjoy and possess the Mortgaged Property; that Mortgagor will warrant and defend the title to the Mortgaged Property against all claims, whether now existing or hereafter arising. The covenants and warranties of this paragraph shall survive foreclosure of this Mortgage and shall run with the Land. AND IT IS FURTHER COVENANTED AND AGREED AS FOLLOWS: ARTICLE ONE GENERAL COVENANTS, AGREEMENTS, WARRANTIES 1.1 Payment of Obligations; Observance of Covenants. Mortgagor will duly pay and perform its Obligations and will perform or cause to be performed 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 533955v3 GAF EL185-57 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 involuntary lien within (30) days after the same shall have been filed, shall have given such reasonable security as may be demanded by Mortgagee to insure such payments and any penalties and interest that may accrue thereon and prevent any sale or forfeiture of the Mortgaged Property by reason of such nonpayment. Any such contest shall be prosecuted with due diligence and Mortgagor shall promptly after final determination thereof pay the amount of any such levy, lien or Imposition so determined, together with all interest and penalties, which may be payable in connection therewith. Notwithstanding the provisions of this Section, Mortgagor shall, and Mortgagee may, pay any such levy, lien or Imposition notwithstanding such contest if in the reasonable opinion of Mortgagee, the Mortgaged Property is in jeopardy or in danger of being forfeited or foreclosed. 1.5 Maintenance and Repairs; Inventory. Mortgagor agrees that it will keep and maintain (or cause to be kept and maintained) the Mortgaged Property (including, without limitation, the Equipment) in good condition and repair, free from any waste or misuse, and will comply with all requirements of law, municipal ordinances and regulations, restrictions and covenants affecting the Mortgaged Property and its use, and will promptly repair or restore any buildings, improvements or structures now or hereafter on the Mortgaged Property which may become damaged or destroyed. Mortgagor further agrees that without the prior consent of Mortgagee it will not remove from the Mortgaged Property any or all of the Equipment or any fixtures or any personal property that is included in the Mortgaged Property unless the same is immediately replaced with like fixtures or personal property of at least equal value, or is otherwise removable under Section 6.1 hereof; or expand any improvements on the Mortgaged Property, erect any new improvements or make any material alterations in any improvements which will materially alter the basic structure, materially and adversely affect the market value or materially change the existing architectural character of the Mortgaged Property. Mortgagor agrees that it will complete within a reasonable time any buildings now or at any time in the process of erection on the Mortgaged Property. Mortgagor agrees not to acquiesce in any rezoning classification, modification or restriction affecting the Mortgaged Property without Mortgagee’s prior written consent. Mortgagor agrees that it will not abandon the Mortgaged Property. Upon request of Mortgagee, Mortgagor shall deliver to Mortgagee an inventory in detail reasonably acceptable to Mortgagee of any personal property owned by Mortgagor that is included in the Mortgaged Property pursuant to the terms hereof together with a certification by Mortgagor that said inventory is a true and complete schedule of the personal property to be included in the Mortgaged Property pursuant to the terms hereof. Such inventory shall list any conditional sales contracts and other title retention arrangements to which such personal property may be subject. 533955v3 GAF EL185-57 1.6 Insurance. (a) So long as the Obligations remains unpaid, Mortgagor shall, at its own cost or by and through tenants of the Mortgaged Property, maintain or cause to be maintained with insurers of recognized responsibility acceptable to Mortgagee the following insurance: (i) hazard and fire insurance on the improvements now existing or hereafter constructed on the Land insuring against loss by fire, hazards included in the term “extended coverage,” loss by vandalism or malicious mischief, and such other hazards, casualties and contingencies as may be required by Mortgagee, on the basis of replacement cost without a coinsurance clause, in an amount equal to the full replacement cost thereof (without deduction for depreciation) or such additional amounts and for such periods as may be required by Mortgagee; (ii) comprehensive general public liability insurance covering the liability of Mortgagor against claims for bodily injury, death or property damage occurring on or about the Mortgaged Property in such minimum amounts and limits as Mortgagee may require but in no event, less than $2,000,000.00 combined single limit per occurrence and naming Mortgagee as an additional insured; (iii) insurance covering the Mortgaged Property against loss or damage by explosion, rupture or bursting of steam boilers, steam pipes, steam turbines, steam engines or pressure vessels or fly wheels located on or a part of the Mortgaged Property and providing for full repair and full replacement cost coverages; (iv) Intentionally Omitted; and (v) such other forms of insurance in such minimum amounts as Mortgagee may reasonably require or as may be required by law. Mortgagor shall pay or cause to be paid all premiums on insurance required hereunder by making payment directly to the insurer. Mortgagee shall have the right to hold the policies and renewals thereof, and Mortgagor shall promptly furnish to Mortgagee all such policies, renewals thereof, renewal notices and all paid-premium receipts received by it. All policies of insurance and any and all refunds of unearned premiums are hereby assigned to Mortgagee as additional security for the payment of the 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 reasonably acceptable to Mortgagee, shall provide for at least thirty (30) days’ 533955v3 GAF EL185-57 prior written notice of cancellation, termination or modification thereof to Mortgagee, shall permit Mortgagee to make premium payments to prevent cancellation, and shall provide that no act or negligence of Mortgagor or of any occupant of the Mortgaged Property, and no occupancy or use of the Mortgaged Property for purposes more hazardous than permitted by the terms of the policy, will affect the validity or enforceability of such insurance as against Mortgagee. In the event of loss under such insurance Mortgagor shall give prompt notice to the insurance carrier and Mortgagee; Mortgagor shall duly make proof of loss, and shall immediately furnish to Mortgagee a copy of such proof of loss. (c) Mortgagee is authorized and empowered to settle, collect and receive all fire and hazard insurance proceeds, to apply such proceeds to all expenses (including reasonable attorneys’ fees) reasonably incurred by Mortgagee in collecting the same and, at Mortgagee’s option and in its sole discretion, apply the balance of said proceeds (“Net Proceeds”) to payment of the 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 533955v3 GAF EL185-57 therefrom and copies thereof. The parties agree that Mortgagee’s right to inspect the books and records of Mortgagor, as described in this provision, relates solely to the Mortgaged Property. 1.8 Protection of Mortgagee’s Security. If Mortgagor fails to perform any of the covenants and agreements contained in this Mortgage and such failure shall continue beyond any applicable notice and cure period contained in Article Two hereof or if any action or proceeding is commenced which does or may adversely affect the Mortgaged Property or the interest of Mortgagor or Mortgagee therein, or the title of Mortgagor thereto, then Mortgagee, at Mortgagee’s option, may perform such covenants and agreements, defend against such action or proceeding, or otherwise act as Mortgagee deems necessary to protect its interest. In the event that, after damage to or destruction of the Mortgaged Property or condemnation of a portion of the Mortgaged Property or a sale under threat thereof, the proceeds are used to restore the Mortgaged Property, and the insurance, sale or condemnation proceeds which are paid to Mortgagee are not sufficient to pay for such restoration, Mortgagee may nevertheless effect the restoration. Any amounts disbursed or costs incurred by Mortgagee pursuant to this Section, including interest and reasonable attorney’s fees, shall become additional 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 to the best of Mortgagor’s knowledge, 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 533955v3 GAF EL185-57 Property, it will promptly, diligently and without cost to Mortgagee, proceed to remediate all contamination in accordance with all applicable laws, ordinances, rules and regulations, and the requirements of all governmental authorities having jurisdiction, and otherwise to the satisfaction of Mortgagee. A failure to do so shall constitute a default by Mortgagor under this Mortgage. 1.10 Escrows. Upon the request of Mortgagee after the occurrence of an Event of Default (whether or not such Event of Default is subsequently cured), Mortgagor shall deposit with Mortgagee, on the first day of each and every month, commencing with the date the first payment shall be due on the Note which is after the date of such request, a deposit to pay the Impositions and insurance premiums (collectively “Charges”) in an amount equal to: (a) One-twelfth (1/12) of the Impositions next to become due upon the Mortgaged Property; provided, however, that, in the case of the first such deposit, there shall be deposited in addition an amount as estimated by Mortgagee which, when added to monthly deposits to be made thereafter as provided for herein, shall assure that there will be sufficient funds on deposit to pay the Impositions as they come due; plus (b) One-twelfth (1/12) of the annual premiums on each policy of insurance required to be maintained hereunder; provided that with the first such deposit there shall be deposited, in addition, an amount equal to one-twelfth (1/12) of such annual insurance premiums multiplied by the number of months elapsed between the date premiums on each policy are last paid to and including the date of deposit. The amount of such deposits shall be based upon Mortgagee’s reasonable estimate as to the amount of Impositions and premiums of insurance next to be payable. Mortgagee 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 has been fully paid, any remaining deposits shall be returned to Mortgagor as its interest may appear. All deposits are hereby pledged as additional security for the 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. 533955v3 GAF EL185-57 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 Corporate Guaranty or any other amount required to be paid by Mortgagor hereunder when due. 2.2 Other Performance Failure. The Mortgagor’s failure duly to observe or perform any of the other terms, conditions, covenants or agreements required to be observed or performed by Mortgagor hereunder, in the Corporate Guaranty and the continuation of such failure for a period of thirty (30) days after Mortgagee gives Mortgagor written notice of such failure. 2.3 Breach of Warranty of Title. Subject to Mortgagor’s right to contest in good faith as set forth in Section 1.4 hereof, the breach of any warranty of title or any other warranty made by Mortgagor hereunder. 2.4 Misrepresentation. The making of any material misstatement in any financial statement or report submitted to Mortgagee by or on behalf of Mortgagor. 2.5 Foreclosure. The foreclosure or other enforcement proceedings by the holder of any other lien on the Mortgaged Property (without hereby implying Mortgagee’s consent to any mortgage or other lien). 2.6 Sale of Property. The sale, assignment, conveyance, mortgage, encumbrance, lease or transfer of: (i) Mortgagor’s interest in the Mortgaged Property or any part thereof, or any interest therein; or (ii) any transfer in ownership or control of Mortgagor, without the prior written consent of Mortgagee, which consent may be granted or withheld by Mortgagee at its sole discretion. 2.9 Breach of Other Agreements, etc. Any default or breach under any other note, mortgage or other obligation of Mortgagor now held or hereafter acquired by Mortgagee, or any other failure to comply with the terms and conditions thereof and the continuance thereof beyond any applicable notice and/or cure period contained therein. ARTICLE THREE ACCELERATION AND FORECLOSURE; OTHER REMEDIES Upon any Event of Default, Mortgagee may, at its option, exercise one or more of the following rights and remedies (and any other rights and remedies available to it): 3.1 Acceleration. Mortgagee may declare immediately due and payable all unmatured Obligations secured by this Mortgage, and the same shall thereupon be immediately due and payable, without notice or demand. 533955v3 GAF EL185-57 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 Corporate Guaranty and any claims for interest accrued and unpaid thereon, together with all other sums, with interest, advanced and unpaid hereunder, and all statutory charges for such foreclosure including maximum attorney’s fees allowed by law in order that there may be credited as paid on the purchase price the sum then due under the Note and all other sums, with interest, advanced and unpaid hereunder, and all charges and expenses of such foreclosure including maximum attorney’s fees allowed by law. 3.4 Receiver. Mortgagee shall be entitled as a matter of right without notice and without giving bond and without regard to the solvency or insolvency of Mortgagor, or waste of the Mortgaged Property or adequacy of the security of the Mortgaged Property, to apply for the appointment of a receiver, in accordance with the statutes and law made and provided. The receiver shall collect the rents, and all other income of any kind; manage the Mortgaged Property so to prevent waste; execute leases within or beyond the period of receivership, pay all expenses for normal maintenance of the Mortgaged Property and perform the terms of this Mortgage and apply the rents, issues and profits in its reasonable discretion to (i) payment of the reasonable fees of said receiver, (ii) application of tenant security deposits as required by Minnesota Statutes § 504B.178, (iii) payment when due of prior or current real estate taxes or special assessments with respect to the Mortgaged Property or, if this Mortgage so requires, to the periodic escrow for the payment thereof, (iv) the payment when due of premiums for insurance of the type required by this Mortgage or, if this Mortgage so requires, to the periodic escrow for the payment thereof; and (v) as further provided in any Assignment of Rents executed by Mortgagor as further security for the 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 attorney’s 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. 533955v3 GAF EL185-57 3.5 Specific Performance. Mortgagee may bring suit for specific performance of any covenant or warranty hereunder. 3.6 Forbearance and Other Rights of Mortgagee. Any delay by Mortgagee in exercising any right or remedy hereunder, or otherwise afforded by law or equity, shall not be a waiver of or preclude the exercise of such right or remedy or any other right or remedy hereunder or at law or in equity. The failure of Mortgagee to exercise any option to accelerate maturity of the Obligations secured by the Mortgage, the forbearance by Mortgagee before or after the exercise of such option, or the withdrawal or abandonment of proceedings provided for by this Mortgage shall not be a waiver of the right to exercise such option or to accelerate the maturity of such Obligations by reason of any past, present or future event which would permit acceleration. The procurement of insurance or the payment of taxes or other liens or charges by Mortgagee shall not be a waiver of Mortgagee’s right to accelerate the maturity of the Obligations. Mortgagee’s receipt of any awards, proceeds or damages shall not operate to cure or waive default by Mortgagor. Mortgagee may at any time, without notice, release any person liable for payment of any Obligations, extend the time or agree to alter the terms of payment of any of the Obligations, accept additional security of any kind, release any plat or map of the Mortgaged Property or the creation of any easement thereon or any covenants restricting use or occupancy thereof, or agree to alter or amend the terms of this Mortgage in any way. No such release, modification, addition or change shall affect the liability of any person other than the person so released, for payment of any Obligations, nor affect the priority and first lien status of this Mortgage upon any property not so released. ARTICLE FOUR ASSIGNMENT OF RENTS 4.1 Assignment. As security in addition to the lien of this Mortgage upon the Property, Mortgagor hereby grants, transfers and assigns to Mortgagee all of the right, title and interest of Mortgagor in and to all Leases and all rents, income, profits, revenues, royalties, bonuses, rights, accounts, contract rights, general intangibles and benefits (all of which are sometimes hereinafter referred to as “Rents”), now or hereafter accruing or owing by reason of a Lease of any or all of the Property. 4.2 Covenants of Performance. To protect the security of this Assignment, Mortgagor warrants, covenants and agrees: (a) to faithfully abide by, perform and discharge each and every obligation, covenant and agreement under any Leases to be performed by Mortgagor thereunder; to give prompt written notice to Mortgagee of any notice of default on the part of Mortgagor with respect to any Lease received from a tenant thereunder; to enforce or secure short of termination of any Lease the performance of each and every obligation, covenant, condition and agreement of the Leases by the tenants thereunder to be performed; not to borrow against, pledge or assign any of the Rents, or anticipate the Rents; not to waive, excuse, condone or in any manner release or discharge any tenant thereunder of or from the obligations, covenants, conditions and agreements to be performed under the 533955v3 GAF EL185-57 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. 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 which remains uncured after any applicable notice and opportunity to cure, 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; 533955v3 GAF EL185-57 (b) give or require Mortgagor to give notice to any and all tenants under the Leases authorizing and directing the tenants to pay all Rents due under the Leases directly to Mortgagee; and (c) apply for, and Mortgagor hereby consents to, the appointment of a receiver of the Mortgaged Property. 4.4 Application of Rents. (a) All Rents collected by Mortgagee, or by a receiver, shall be held and applied by Mortgagee in its reasonable discretion, in accordance with applicable law, including, without limitation to: (i) payment of all reasonable fees of the receiver, if any, approved by the court; (ii) the repayment when due of all tenant security deposits pursuant to the provisions of Minnesota Statutes § 504B.178; (iii) payment of all delinquent or current real estate taxes and special assessments payable with respect to the Property or, if this Mortgage so requires, to the periodic escrow for the payment thereof; (iv) payment of all premiums then due for the insurance required by the provisions of this Mortgage or, if this Mortgage so requires, to the periodic escrow for the payment thereof; (v) payment of expenses incurred for normal maintenance of the Mortgaged Property. (b) Any amounts remaining after such application shall be applied as follows: (i) if received prior to any foreclosure sale of the Mortgaged Property to Mortgagee for payment of the indebtedness secured by this Mortgage, but no such payment made after acceleration of the indebtedness shall affect such acceleration; and (ii) if received during or with respect to a period after a foreclosure sale of the Mortgaged Property: (1) if the purchaser at the foreclosure sale is not Mortgagee, first to Mortgagee to the extent of any deficiency of the sale proceeds to repay the indebtedness secured by this Mortgage, second to the purchaser as a credit to the redemption price, but if the Mortgaged Property is not redeemed, then to the purchaser of the Mortgaged Property; (2) if the purchaser at the foreclosure sale is Mortgagee, first to Mortgagee to the extent of any deficiency of the sale proceeds to repay the indebtedness secured by this Mortgage and the balance to be retained by Mortgagee as a credit to the redemption price, but if the Mortgaged Property is not redeemed, then to Mortgagee, whether or not such deficiency exists. 4.5 Continuing Effect. The rights and powers of Mortgagee under this Assignment and the application of the Rents shall continue and remain in full force and effect both before and after commencement of any action or procedure to foreclose this Mortgage, after any foreclosure sale of Mortgagor’s interest in the Property in connection with the foreclosure of this Mortgage, 533955v3 GAF EL185-57 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 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 533955v3 GAF EL185-57 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.” 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. 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, the Equipment and all of fixtures and any personal property included in the Mortgaged Property and substitutions therefor and proceeds thereof. Mortgagor hereby authorizes Mortgagee to file one or more financing statements, covering such fixtures and personal property (in a form satisfactory to Mortgagee) which Mortgagee may reasonably consider necessary or appropriate to perfect its security interest. Mortgagor also authorizes Mortgagee to file amendments to financing statements, and terminations of financing statements filed by other secured parties, all with respect to all fixtures and personal property included in the Mortgaged Property, in such form and substance as Mortgagee, in its reasonable discretion, may determine. Mortgagor will pay to Mortgagee, on demand, the amount of any and all costs and 533955v3 GAF EL185-57 expenses (including reasonable attorneys’ fees and legal expenses) paid or incurred by Mortgagee in connection with the exercise of any right or remedy referred to in this Section. In any instance where Mortgagor in its sound discretion determines that any item subject to a security interest under this Mortgage has become: (i) inadequate, obsolete, worn out, or (ii) unsuitable, undesirable or unnecessary for the operation of the Mortgaged Property, Mortgagor may, at its expense, remove and dispose of it and substitute and install other items not necessarily having the same function, provided, that such removal and substitution shall not impair the operating utility and unity of the Mortgaged Property. The foregoing notwithstanding, any Equipment that is replaced pursuant to the foregoing sentence must be replaced with new equipment of substantially similar function and value, unless Mortgagee consents otherwise. In any such case, Mortgagor shall promptly inform Mortgagee of such replacement and shall provide Mortgagee with any information Mortgagee reasonably requires to secure its interest in such replacement Equipment. With respect to items which are a part of the Mortgaged Property, all items substituted for such items shall become a part of the Mortgaged Property and subject to the lien of this Mortgage. Any amounts received or allowed Mortgagor upon the sale or other disposition of the removed items of property shall be applied against the cost of acquisition and installation of the substituted items. Nothing herein contained shall be construed to prevent any tenant or subtenant from removing from the Mortgaged Property trade fixtures, furniture and equipment installed by it and removable by tenant under its terms of any one or more of the Leases, on the condition, however, that Mortgagor shall assure the repair of any and all damages to the Mortgaged Property resulting from or caused by the removal thereof. Mortgagee acknowledges that no items of personal property are included in the Mortgaged Property. 6.2 Fixture Filing. From the date of its recording, this Mortgage shall be effective as a financing statement with respect to all goods constituting part of the Mortgaged Property which are or are to become fixtures related to the real estate described herein. For this purpose, the following information is set forth: (a) Name and Address of Debtors: Yankee Doodle Enterprises, LLC 13374 U.S. Highway 10 Elk River, Minnesota Attn: Chief Manager Organization I.D. Number: ___________ (b) Name and address of Secured Party: Economic Development Authority of the City of Elk River 13065 Orono Parkway Elk River, MN 55330 Attn: Director of Economic Development (c) This document covers goods which are or are to become fixtures. 533955v3 GAF EL185-57 (d) The real estate to which such fixtures are or are to be attached is that described in Exhibit A attached hereto. The owner of such real estate is Debtor. ARTICLE SEVEN MISCELLANEOUS 7.1 Mortgagee’s Remedies Cumulative. All remedies of Mortgagee are distinct and cumulative to any other right or remedy under this Mortgage or afforded by law or equity, and may be exercised concurrently or independently, as often as the occasion therefore arises. 7.2 Successors and Assigns Bound; Captions. The covenants and agreements herein contained shall bind, and the rights hereunder shall inure to, the respective heirs, legal representatives, successors and assigns of Mortgagee and Mortgagor. The captions and headings of the Sections of this Mortgage are for convenience only and are not to be used to interpret or define the provisions hereof. 7.3 Notices. Any notice from Mortgagee to Mortgagor under this Mortgage shall be deemed to have been given by Mortgagee and received by Mortgagor, when delivered personally to an officer of Mortgagor or three (3) days after the date it is mailed by certified mail addressed as follows: Yankee Doodle Enterprises, LLC 13374 U.S. Highway 10 Elk River, Minnesota Attn: Brian Brehmer 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. 533955v3 GAF EL185-57 7.7 Subsequent Agreements. Any agreement hereafter made by Mortgagor and Mortgagee pursuant to this Mortgage shall be superior to the rights of the holder of any intervening lien or encumbrance. 7.8 Construction Mortgage. This Mortgage secures an obligation incurred for the construction of an improvement on land and is a construction mortgage. 533955v3 GAF EL185-57 Signature Page to Mortgage IN WITNESS WHEREOF, Mortgagor has caused this Mortgage to be duly executed as of the day and year first written. YANKEE DOODLE ENTERPRISES, LLC, a Minnesota limited liability company By: ________________________ Nancy Brehmer Its: Chief Financial Manager STATE OF MINNESOTA ) ) ss. COUNTY OF HENNEPIN ) The foregoing instrument was acknowledged before me on ___________ ____, 2018, by Nancy Brehmer, the Chief Financial Manager of ALAN ARNOLD CORPORATION, a Minnesota limited liability company, on behalf of the limited liability company. ____________________________ Notary Public My Commission Expires: THIS INSTRUMENT DRAFTED BY: Kennedy & Graven, Chartered 470 US Bank Plaza 200 South Sixth Street Minneapolis, MN 55402 (612) 337-9300 533955v3 GAF EL185-57 EXHIBIT A LEGAL DESCRIPTION Lot 1, Block 1, YANKEE DOODLE CROSSING, according to the recorded plat thereof, on file in the offices of the County Recorder and Registrar of Titles in and for Sherburne County, Minnesota. A-21 533955v3 GAF EL185-57 493503v1 JSB EL185-13 FIRST AMENDMENT TO MORTGAGE AND ASSIGNMENT OF RENTS AND SECUIRTY AGREEMENT AND FIXTURE FINANCING STATEMENT THIS AMENDMENT is made as of January __, 2017, between Yankee Doodle Enterprises, LLC (the “Mortgagor”) and the Economic Development Authority of the City of Elk River, Minnesota, as mortgagee (the “Mortgagee”). RECITALS A. Mortgagor, for the benefit of Mortgagee, has executed and delivered that certain Mortgage, Security Agreement, Fixture Financing Statement and Assignment of Leases and Rents, dated September 10, 2013, and filed on September 18, 2013 as Document Number 49208 in the Office of the County Recorder of Sherburne County, Minnesota (the “Mortgage”). B. To (i) reflect that certain real property subject to the Mortgage will be sold and released from the Mortgage and certain other real property will be added to the lien of the Mortgage and (ii) to allow certain easements over the mortgaged property as permitted encumbrances, the Mortgagor has requested and Mortgagee has agreed to amend the Mortgage as provided herein. C. This is a mortgage amendment as defined in Minnesota Statutes, Section 287.01, Subdivision 2, and as such it does not secure a new or an increased amount of debt. Minn. Stat. 287.05, Subd. 8. Mortgage registry tax was paid with respect to the indebtedness secured by the Mortgage on the date of recording. NOW, THEREFORE, for good and valuable consideration, the receipt and adequacy of which is hereby acknowledged, the parties hereto agree as follows: 1. Recitals. The above recitals are true and correct as of the date hereof and constitute a part of this Amendment. 2. Terms. All capitalized terms used herein shall have the meaning ascribed to them in the Mortgage unless otherwise specifically defined herein. 2 493503v1 JSB EL185-13 3. Amendments. (a) Exhibit A is amended to read as set forth in Exhibit A attached hereto. (b) Exhibit B is amended to read as set forth in Exhibit B attached hereto. 4. Existing Provisions. Except as herein amended, all terms and provisions of the Mortgage, as originally executed as September 10, 2013, shall remain in full force and effect. 5. Governing Law. This Amendment shall be governed by and construed in accordance with the laws of the State of Minnesota. 6. Execution Counterparts. This Amendment may be simultaneously executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument. (The remainder of this page is intentionally left blank.) S-1 493503v1 JSB EL185-13 IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed the date first above written. MORTGAGOR: YANKEE DOODLE ENTERPRISES, LLC By Its Chief Financial Manager STATE OF MINNESOTA ) ) COUNTY OF ________ ) The foregoing instrument was acknowledged before me this ____ day of _____, 2017, by ___________________, the Chief Financial Manager of Yankee Doodle Enterprises, LLC, a Minnesota limited liability company, on behalf of said limited liability company. _______________________________ Notary Public S-2 493503v1 JSB EL185-13 MORTGAGEE: ECONOMIC DEVELOPMENT AUTHORITY OF THE CITY OF ELK RIVER, MINNESOTA By____________________________ Its: President By____________________________ Its: Executive Director STATE OF MINNESOTA ) ) ss. COUNTY OF ________ ) The foregoing instrument was acknowledged before me this ___ day of __________, 2017, by ______________________, the President and __________________, the Executive Director of Economic Development Authority of the City of Elk River, Minnesota, a public body corporate and politic, on behalf of the public body. _______________________________ Notary Public This instrument drafted by: Kennedy & Graven, Chartered (JSB) 470 U.S. Bank Plaza 200 South Sixth Street Minneapolis, Minnesota 55402 A-1 493503v1 JSB EL185-13 EXHIBIT A LEGAL DESCRIPTION [Need Updated Legal Description] B-1 493503v1 JSB EL185-13 EXHIBIT B PERMITTED ENCUMBRANCES [Need updated permitted encumbrances] 1 PERSONAL GUARANTY (Brian Brehmer) Elk River, Minnesota ________________, 2018 FOR VALUABLE CONSIDERATION, the receipt and sufficiency of which is hereby acknowledged, and in consideration of and to induce financial accommodations of any kind, with or without security, given or to be given or continued at any time and from time to time by the ECONOMIC DEVELOPMENT AUTHORITY OF THE CITY OF ELK RIVER (hereinafter called the "Lender") to or for the account of ALAN ARNOLD CORPORATION (hereinafter called the "Borrower"), the undersigned absolutely and unconditionally guarantees to the Lender the full and prompt payment when due, whether at maturity or earlier by reason of acceleration or otherwise, of any and all indebtedness, obligations and liabilities of the Borrower (and any and all successors of the Borrower) to the Lender, now or hereafter existing, absolute or contingent, independent, joint, several or joint and several, secured or unsecured, due or to become due, contractual or tortious, liquidated or unliquidated, arising by assignment or otherwise, including without limitation all indebtedness, obligations and liabilities owed by the Borrower (and any and all successors of the Borrower) as a member of any partnership, syndicate, association or other group, and whether incurred by the Borrower (or any successor of the Borrower) as principal, surety, endorser, guarantor, accommodation party or otherwise (hereinafter collectively referred to as the "Indebtedness"), 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. All capitalized terms not otherwise defined herein shall have the meanings set forth in the Amended and Restated Energy Efficiency Improvement Program Loan Agreement, dated the date hereof, by and between the Borrower and the Lender. 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 the manner set forth in the Note. No act, omission or thing, except full payment and discharge of the Indebtedness, which but for this provision could act as a release or impairment of the liability of the undersigned hereunder, shall in any way release, impair or otherwise affect the liability of the undersigned hereunder, and the undersigned waives any and all defenses of the Borrower pertaining to the Indebtedness, any evidence thereof, and any security therefor, except the defense of discharge by payment. The failure of any person or persons to sign this or any other guaranty shall not release, impair or affect the liability of the undersigned hereunder. This guaranty is a primary obligation of the undersigned and the Lender shall not be required to first resort for payment of the Indebtedness to the Borrower or any other person, their properties or estates, or any security or other rights or remedies whatsoever. The undersigned shall be and remain liable for any deficiency remaining after foreclosure of any mortgage or security interest securing the Indebtedness, whether or not the liability of the Borrower or any other person for such deficiency is discharged pursuant to statute, judicial decision or otherwise. 2 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 agree that any litigation initiated by the undersigned against the Lender in connection with this guaranty shall be venued in either the District Court of Sherburne County, Minnesota, or the United States District Court, District of Minnesota. 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 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. Except as to the Borrower’s environmental indemnity obligations which survive the termination of the Loan Agreement, this guaranty shall continue until the Indebtedness is paid in full or 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 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 REPRESENTS, CERTIFIES, WARRANTS AND AGREES THAT THE 3 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. ________________________________ Brian Brehmer 1 PERSONAL GUARANTY (Nancy Brehmer) Elk River, Minnesota ______________, 2018 FOR VALUABLE CONSIDERATION, the receipt and sufficiency of which is hereby acknowledged, and in consideration of and to induce financial accommodations of any kind, with or without security, given or to be given or continued at any time and from time to time by the ECONOMIC DEVELOPMENT AUTHORITY OF THE CITY OF ELK RIVER (hereinafter called the "Lender") to or for the account of ALAN ARNOLD CORPORATION (hereinafter called the "Borrower"), the undersigned absolutely and unconditionally guarantees to the Lender the full and prompt payment when due, whether at maturity or earlier by reason of acceleration or otherwise, of any and all indebtedness, obligations and liabilities of the Borrower (and any and all successors of the Borrower) to the Lender, now or hereafter existing, absolute or contingent, independent, joint, several or joint and several, secured or unsecured, due or to become due, contractual or tortious, liquidated or unliquidated, arising by assignment or otherwise, including without limitation all indebtedness, obligations and liabilities owed by the Borrower (and any and all successors of the Borrower) as a member of any partnership, syndicate, association or other group, and whether incurred by the Borrower (or any successor of the Borrower) as principal, surety, endorser, guarantor, accommodation party or otherwise (hereinafter collectively referred to as the "Indebtedness"), 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. All capitalized terms not otherwise defined herein shall have the meanings set forth in the Amended and Restated Energy Efficiency Improvement Program Loan Agreement, dated the date hereof, by and between the Borrower and the Lender. 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 the manner set forth in the Note. No act, omission or thing, except full payment and discharge of the Indebtedness, which but for this provision could act as a release or impairment of the liability of the undersigned hereunder, shall in any way release, impair or otherwise affect the liability of the undersigned hereunder, and the undersigned waives any and all defenses of the Borrower pertaining to the Indebtedness, any evidence thereof, and any security therefor, except the defense of discharge by payment. The failure of any person or persons to sign this or any other guaranty shall not release, impair or affect the liability of the undersigned hereunder. This guaranty is a primary obligation of the undersigned and the Lender shall not be required to first resort for payment of the Indebtedness to the Borrower or any other person, their properties or estates, or any security or other rights or remedies whatsoever. The undersigned shall be and remain liable for any deficiency remaining after foreclosure of any mortgage or security interest securing the Indebtedness, whether or not the liability of the Borrower or any other person for such deficiency is discharged pursuant to statute, judicial decision or otherwise. 2 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 agree that any litigation initiated by the undersigned against the Lender in connection with this guaranty shall be venued in either the District Court of Sherburne County, Minnesota, or the United States District Court, District of Minnesota. 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 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. Except as to the Borrower’s environmental indemnity obligations which survive the termination of the Loan Agreement, this guaranty shall continue until the Indebtedness is paid in full or 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 shall benefit the Lender, its successors and assigns. This guaranty shall be governed by and construed in accordance with the laws of the State of Minnesota. The undersigned is a member of Yankee Doodle Enterprises, LLC, a Minnesota limited liability company (“Corporate Guarantor”), the owner of the real property commonly known as 13374 U.S. Highway 10, Elk River, Minnesota (the “Property”). Borrower is the tenant of the Property, pursuant to 3 a written lease with Corporate Guarantor. The undersigned acknowledges and agrees that the Indebtedness is being utilized by Borrower to make permanent and valuable improvements to the Property, the ownership of which improvements will revert to Corporate Guarantor upon the expiration of the Lease and therefore, the undersigned’s obligations under this Guaranty are proper, valid and enforceable. 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. ________________________________ Nancy Brehmer 1 PERSONAL GUARANTY (Allen Meyer) Elk River, Minnesota ______________, 2018 FOR VALUABLE CONSIDERATION, the receipt and sufficiency of which is hereby acknowledged, and in consideration of and to induce financial accommodations of any kind, with or without security, given or to be given or continued at any time and from time to time by the ECONOMIC DEVELOPMENT AUTHORITY OF THE CITY OF ELK RIVER (hereinafter called the "Lender") to or for the account of ALAN ARNOLD CORPORATION (hereinafter called the "Borrower"), the undersigned absolutely and unconditionally guarantees to the Lender the full and prompt payment when due, whether at maturity or earlier by reason of acceleration or otherwise, of any and all indebtedness, obligations and liabilities of the Borrower (and any and all successors of the Borrower) to the Lender, now or hereafter existing, absolute or contingent, independent, joint, several or joint and several, secured or unsecured, due or to become due, contractual or tortious, liquidated or unliquidated, arising by assignment or otherwise, including without limitation all indebtedness, obligations and liabilities owed by the Borrower (and any and all successors of the Borrower) as a member of any partnership, syndicate, association or other group, and whether incurred by the Borrower (or any successor of the Borrower) as principal, surety, endorser, guarantor, accommodation party or otherwise (hereinafter collectively referred to as the "Indebtedness"), 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. All capitalized terms not otherwise defined herein shall have the meanings set forth in the Amended and Restated Energy Efficiency Improvement Program Loan Agreement, dated the date hereof, by and between the Borrower and the Lender. 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 the manner set forth in the Note. No act, omission or thing, except full payment and discharge of the Indebtedness, which but for this provision could act as a release or impairment of the liability of the undersigned hereunder, shall in any way release, impair or otherwise affect the liability of the undersigned hereunder, and the undersigned waives any and all defenses of the Borrower pertaining to the Indebtedness, any evidence thereof, and any security therefor, except the defense of discharge by payment. The failure of any person or persons to sign this or any other guaranty shall not release, impair or affect the liability of the undersigned hereunder. This guaranty is a primary obligation of the undersigned and the Lender shall not be required to first resort for payment of the Indebtedness to the Borrower or any other person, their properties or estates, or any security or other rights or remedies whatsoever. The undersigned shall be and remain liable for any deficiency remaining after foreclosure of any mortgage or security interest securing the Indebtedness, whether or not the liability of the Borrower or any other person for such deficiency is discharged pursuant to statute, judicial decision or otherwise. 2 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 agree that any litigation initiated by the undersigned against the Lender in connection with this guaranty shall be venued in either the District Court of Sherburne County, Minnesota, or the United States District Court, District of Minnesota. 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 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. Except as to the Borrower’s environmental indemnity obligations which survive the termination of the Loan Agreement, this guaranty shall continue until the Indebtedness is paid in full or 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 shall benefit the Lender, its successors and assigns. This guaranty shall be governed by and construed in accordance with the laws of the State of Minnesota. The undersigned is a member of Yankee Doodle Enterprises, LLC, a Minnesota limited liability company (“Corporate Guarantor”), the owner of the real property commonly known as 13374 U.S. Highway 10, Elk River, Minnesota (the “Property”). Borrower is the tenant of the Property, pursuant to 3 a written lease with Corporate Guarantor. The undersigned acknowledges and agrees that the Indebtedness is being utilized by Borrower to make permanent and valuable improvements to the Property, the ownership of which improvements will revert to Corporate Guarantor upon the expiration of the Lease and therefore, the undersigned’s obligations under this Guaranty are proper, valid and enforceable. 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. ________________________________ Allen Meyer 1 ENTITY GUARANTY Elk River, Minnesota ___________, 2018 FOR VALUABLE CONSIDERATION, the receipt and sufficiency of which is hereby acknowledged, and in consideration of and to induce financial accommodations of any kind, with or without security, given or to be given or continued at any time and from time to time by the ECONOMIC DEVELOPMENT AUTHORITY OF THE CITY OF ELK RIVER (hereinafter called the "Lender") to or for the account of ALAN ARNOLD CORPORATION (hereinafter collectively called the "Borrower"), the undersigned absolutely and unconditionally guarantees to the Lender the full and prompt payment when due, whether at maturity or earlier by reason of acceleration or otherwise, of any and all indebtedness, obligations and liabilities of the Borrower (and any and all successors of the Borrower) to the Lender, now or hereafter existing, absolute or contingent, independent, joint, several or joint and several, secured or unsecured, due or to become due, contractual or tortious, liquidated or unliquidated, arising by assignment or otherwise, including without limitation all indebtedness, obligations and liabilities owed by the Borrower (and any and all successors of the Borrower) as a member of any partnership, syndicate, association or other group, and whether incurred by the Borrower (or any successor of the Borrower) as principal, surety, endorser, guarantor, accommodation party or otherwise (hereinafter collectively referred to as the "Indebtedness"); and the undersigned agrees to pay on demand all of the Lender's fees, costs, expenses and reasonable attorneys' fees in connection with the Indebtedness, any security therefor, and this guaranty, plus interest on such amounts at the highest rate then applicable to any of the Indebtedness. All capitalized terms not otherwise defined herein shall have the meanings set forth in the Amended and Restated Energy Efficiency Improvement Program Loan Agreement, dated the date hereof, by and between the Borrower and the Lender. 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 estates, or any security or other rights or remedies whatsoever. The undersigned shall be and remain liable for any deficiency remaining after foreclosure of any mortgage or security interest securing the Indebtedness, whether or not the liability of the Borrower or any other person for such deficiency is discharged pursuant to statute, judicial decision or otherwise. The liability of the undersigned under this guaranty is joint and several and is in addition to and shall be cumulative with all other liabilities of the undersigned to the Lender, as guarantor or otherwise, without any limitation as to amount, unless the writing evidencing or creating such other liability 2 specifically provides to the contrary. If any payment applied by the Lender to the Indebtedness is thereafter set aside, recovered, rescinded or required to be returned for any reason (including without limitation the bankruptcy, insolvency or reorganization of the Borrower or any other person), the Indebtedness to which such payment was applied shall for the purposes of this guaranty be deemed to have continued in existence, notwithstanding such application, and this guaranty shall be enforceable as to such Indebtedness as fully as if such application had never been made. The undersigned waive: (1) notice of acceptance of this guaranty and of the creation and existence of the Indebtedness; (2) presentment, demand for payment, notice of dishonor, notice of nonpayment, and protest of any instrument evidencing the Indebtedness; and (3) all other demands and notices to the undersigned or any other person and all other actions to establish the liability of the undersigned hereunder. The undersigned consent to the personal jurisdiction of the state and federal courts located in the State of Minnesota in connection with any controversy related to this guaranty, waive any argument that venue in such forums is not convenient, and agree that any litigation initiated by the undersigned against the Lender .in connection with this guaranty shall be venued in either the District Court of Sherburne County, Minnesota, or the United States District Court, District of Minnesota. All property of the undersigned, now or hereafter in the possession, control or custody of or in transit to the Lender for any purpose, including without limitation the balance of every account of the undersigned with and each claim of the undersigned against the Lender, shall be subject to a lien and security interest in favor of the Lender, as security for all liabilities of the undersigned to the Lender, and shall be subject to be set off against any and all such liabilities, and the Lender may at any time and from time to time at its option and without notice appropriate and apply any such property toward the payment of any and all such liabilities. The undersigned agree to promptly provide the Lender from time to time with financial statements of the undersigned, in form and substance acceptable to the Lender, at least once every 12 months and as otherwise requested by the Lender. The undersigned agree to promptly provide the Lender from time to time with such other information respecting the condition (financial and otherwise), business and property of the undersigned as the Lender may request, in form and substance acceptable to the Lender. The undersigned waive all claims, rights and remedies which the undersigned may now have or hereafter acquire against any person at any time now or hereafter liable to payment of any of the Indebtedness and as to any collateral security, including but not limited to all claims, rights and remedies of contribution, indemnification, exoneration, reimbursement, recourse and subrogation, whether or not such claim, right or remedy arises in equity, under contract, by statute, under common law or otherwise, whether or not the Indebtedness has been fully paid, and all payments and recoveries under this guaranty shall be considered equity investments by the undersigned in the Borrower; provided, nothing contained in this guaranty shall deprive the undersigned of any claim, right or remedy, after the Indebtedness has been fully paid, against any person other than the Borrower. No delay or failure by the Lender in exercising any right, and no partial or single exercise thereof shall constitute a waiver thereof. No waiver of any rights hereunder, and no modification or amendment of this guaranty shall be effective unless the same is in writing duly executed by the Lender, and each such waiver, if any, shall apply only with respect to the specific instance involved and shall not impair or affect the rights of the Lender or the provisions of this guaranty in any other respect at any other time. This guaranty shall continue until written notice of revocation of this guaranty, executed by the undersigned, has been received by the Lender; provided, no revocation of this guaranty shall affect in any manner any liability of the undersigned under this guaranty with respect to Indebtedness arising before the Lender receives such written notice of revocation, and the sole effect of revocation of this guaranty shall be- to exclude from this guaranty Indebtedness thereafter arising which is unconnected with Indebtedness theretofore arising or transactions theretofore entered into. 3 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 is the owner of the real property commonly known as 13374 U.S. Highway 10, Elk River, Minnesota (the "Property"). Borrower is the tenant of the Property, pursuant to a written lease with the undersigned. The undersigned acknowledges and agrees that the Indebtedness is being utilized by Borrower to make permanent and valuable improvements to the Property, the ownership of which improvements will revert to Corporate Guarantor upon the expiration of the Lease and therefore, the undersigned's obligations under this Guaranty are proper, valid and enforceable. The undersigned's obligations hereunder are secured by that certain. Mortgage and Assignment of Rents and Security Agreement and Fixture Filing made by the undersigned to Lender of even date herewith. THE UNDERSIGNED REPRESENT, CERTIFY, WARRANT AND AGREE THAT THE UNDERSIGNED HAVE READ ALL OF THIS GUARANTY AND UNDERSTAND ALL OF THE PROVISIONS OF THIS GUARANTY. THE UNDERSIGNED ALSO AGREE THAT COMPLIANCE BY THE LENDER WITH THE EXPRESS PROVISIONS OF THIS GUARANTY SHALL CONSTITUTE GOOD FAITH AND SHALL BE CONSIDERED REASONABLE FOR ALL PURPOSES. YANKEE DOODLE ENTERPRISES, LLC, a Minnesota limited liability company By: __________________ Name: Nancy Brehmer Its: Chief Financial Manager 533959v3 GAF EL185-57 AMENDED AND RESTATED PROMISSORY NOTE Original Principal Amount Amended and Restated Principal Amount Original Issue Date Amended and Restated Date $74,999.00 $59,657.91 September 10, 2013 _______, 2018 FOR VALUE RECEIVED, the undersigned, ALAN ARNOLD CORPORATION, a Minnesota corporation (“Borrower”), promises to pay to the order of Economic Development Authority of the City of Elk River, a public body corporate and politic of the State of Minnesota (“Lender”), at 13065 Orono Parkway, Elk River, Minnesota 55330, or such other place as the Lender or any other holder of this note may designate in writing, on or before September 1, 2023 (“Maturity Date”), the principal sum of Fifty-Nine Thousand Six Hundred and Fifty-Seven and 91/100s Dollars ($59,657.91), or so much thereof as may have been advanced by the Lender to the Borrower (the “Principal Balance”). Original Note Balance. A portion of the outstanding Principal Balance in the amount of $40,482.91 (the “Original Note Balance”) shall accrue interest at a fixed interest rate of 2.00% per annum. The Borrower shall be obligated to make monthly installments (“Original Note Monthly Installment”) in the amount of Seven Hundred Twenty-four and 20/100 Dollars ($724.20), which Monthly Installment shall commence on October 1, 2013, and continue on the first (1st) day of each and every month thereafter until the Maturity Date, when all unpaid principal and interest on the Original Note Balance shall be payable in full. New Note Balance. A portion of the outstanding Principal Balance in the amount of $19,175.00 (the “New Note Balance”) shall accrue interest at a fixed interest rate of 3.00% per annum. The Borrower shall be obligated to make monthly installments (“New Note Monthly Installment”) in the amount of Three Hundred Forty-three and 65/100 ($343.65), which Monthly Installment shall commence on October 1, 2018, and continue on the first (1st) day of each and every month thereafter until the Maturity Date, when all unpaid principal and interest shall be payable in full. This Note replaces and supersedes in all respects the Note issued on September 10, 2013, and this Note is the “Note” referred to in the Amended and Restated Energy Efficiency Improvement Program Loan Agreement, of even date herewith (the “Loan Agreement”), between Borrower and Lender. The Note is made to secure the Loan made pursuant to the Loan Agreement and is secured by, among other things, those certain Personal Guaranties, each dated the date herewith, made by Brian Brehmer, Nancy Brehmer and Allen Meyer to the Lender, and that certain Corporate Guaranty, dated the date herewith, made by Yankee Doodle Enterprises, LLC to the Lender. All of the terms and conditions contained in the Loan Agreement which are to be kept and performed by 533959v3 GAF EL185-57 -2- Borrower are hereby made a part of this note to the same extent and with the same force and effect as if they were fully set forth herein; and Borrower covenants and agrees to keep and perform them, or cause them to be kept and performed, strictly in accordance with their terms. If the Lender, or any other holder of this note, has not received the full amount of any Original Note Monthly Installment or New Note Monthly Installment provided for in this note, by the end of seven (7) calendar days after the date it is due, Borrower shall pay a late charge fee to the Lender, or any other holder of this note. The amount of the late charge fee shall be eight percent (8.00%) of the overdue Original Note Monthly Installment or New Note Monthly Installment. The Borrower shall pay this late charge fee on demand, however, collection of the late charge fee shall not be deemed a waiver of the Lender’s right to declare an Event of Default and exercise its rights and remedies as provided for in the Loan Agreement. Each Original Note Monthly Installment, New Note Monthly Installment and other payments made under this note shall be applied as follows: (i) first, to be applied against and pay interest which has accrued and remains unpaid on the date the payment is received; then (ii) to be applied against and pay unpaid late charges and any other charges, including attorneys' fees and protective advances; and then (iii) all remaining amounts, if any, shall be applied against and reduce the then outstanding principal balance of this note. If an Event of Default shall occur hereunder or under the Loan Agreement and any cure period provided for in the Loan Agreement or the Mortgage has expired, the Borrower agrees to pay a default rate of interest equal to ten percent (10.00%) per annum as the applicable interest rate of this note, and the entire principal amount outstanding, accrued interest and any other charges due hereon shall at once become due and payable at the option of the Lender or the holder hereof. Any failure of the Lender to exercise its right to increase the interest rate by the default rate of interest set forth above or its option to accelerate this note at any time shall not constitute a waiver of the right to exercise the same right to increase the interest rate or accelerate at any subsequent time. Notwithstanding anything contained herein to the contrary, the default rate of interest hereon shall never exceed the highest rate permitted by law. The Borrower may prepay the principal under this note at any time and from time to time, in whole or in part, without premium or penalty. No partial prepayment shall postpone the due date of any Original Note Monthly Installment or New Note Monthly Installment or reduce the amount of any such Original Note Monthly Installment or New Note Monthly Installment unless the Lender agrees otherwise in writing. All sums payable to the Lender under this note shall be paid in immediately available funds. The Borrower promises to pay all costs in connection with the enforcement of this note, including but not limited to, those costs, expenses and attorneys' fees of Lender whether or not suit is filed with respect thereto and whether or not such cost or expense is 533959v3 GAF EL185-57 -3- 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, 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. IN WITNESS WHEREOF, the undersigned has caused this note to be effective as of the day and year first above written. ALAN ARNOLD CORPORATION, a Minnesota corporation ______________________________ By: Brian Brehmer Its: President 533959v23 GAF EL185-57 AMENDED AND RESTATED PROMISSORY NOTE Original Principal Amount Amended and Restated Principal Amount Original Issue Date Amended and Restated Date $74,999.00 $59,657.91 September 10, 2013 _______, 2018 FOR VALUE RECEIVED, the undersigned, ALAN ARNOLD CORPORATION, a Minnesota corporation (“Borrower”), promises to pay to the order of Economic Development Authority of the City of Elk River, a public body corporate and politic of the State of Minnesota (“Lender”), at 13065 Orono Parkway, Elk River, Minnesota 55330, or such other place as the Lender or any other holder of this note may designate in writing, on or before __________September 1, 20__2023 (“Maturity Date”), the principal sum of Fifty-Nine Thousand Six Hundred and Fifty-Seven and 91/100s Dollars ($59,657.91), or so much thereof as may have been advanced by the Lender to the Borrower (the “Principal Balance”). Original Note Balance. A portion of the outstanding Principal Balance in the amount of $40,482.91 (the “Original Note Balance”) shall accrue interest at a fixed interest rate of 2.00% per annum. The Borrower shall be obligated to make monthly installments (“Original Note Monthly Installment”) in the amount of Seven Hundred Twenty-four and 20/100 Dollars ($724.20), which Monthly Installment shall commence on October 1, 2013, and continue on the first (1st) day of each and every month thereafter until September 1, 2023 (the “Original Notethe Maturity Date”), when all unpaid principal and interest on the Original Note Balance shall be payable in full. New Note Balance. A portion of the outstanding Principal Balance in the amount of $19,175.00 (the “New Note Balance”) shall accrue interest at a fixed interest rate of 3.00% per annum. The Borrower shall be obligated to make monthly installments (“New Note Monthly Installment”) in the amount of __________________________ ($_____________Three Hundred Forty-three and 65/100 ($343.65), which Monthly Installment shall commence on October 1, 2018, and continue on the first (1st) day of each and every month thereafter until ____________ (the “New Note Maturity Date”), when all unpaid principal and interest shall be payable in full. This Note replaces and supersedes in all respects the Note issued on September 10, 2013, and this Note is the “Note” referred to in the Amended and Restated Energy Efficiency Improvement Program Loan Agreement, of even date herewith (the “Loan Agreement”), between Borrower and Lender. The Note is made to secure the Loan made pursuant to the Loan Agreement and is secured by, among other things, those certain Personal Guaranties, each dated the date herewith, made by Brian Brehmer, Nancy Brehmer and Allen Meyer to the Lender, and that certain Corporate Guaranty, dated the date herewith, made by Yankee Doodle Enterprises, LLC to the Lender. All of the terms 533959v23 GAF EL185-57 -2- and conditions contained in the Loan Agreement which are to be kept and performed by Borrower are hereby made a part of this note to the same extent and with the same force and effect as if they were fully set forth herein; and Borrower covenants and agrees to keep and perform them, or cause them to be kept and performed, strictly in accordance with their terms. If the Lender, or any other holder of this note, has not received the full amount of any Original Note Monthly Installment or New Note Monthly Installment provided for in this note, by the end of seven (7) calendar days after the date it is due, Borrower shall pay a late charge fee to the Lender, or any other holder of this note. The amount of the late charge fee shall be eight percent (8.00%) of the overdue Original Note Monthly Installment or New Note Monthly Installment. The Borrower shall pay this late charge fee on demand, however, collection of the late charge fee shall not be deemed a waiver of the Lender’s right to declare an Event of Default and exercise its rights and remedies as provided for in the Loan Agreement. Each Original Note Monthly Installment, New Note Monthly Installment and other payments made under this note shall be applied as follows: (i) first, to be applied against and pay interest which has accrued and remains unpaid on the date the payment is received; then (ii) to be applied against and pay unpaid late charges and any other charges, including attorneys' fees and protective advances; and then (iii) all remaining amounts, if any, shall be applied against and reduce the then outstanding principal balance of this note. If an Event of Default shall occur hereunder or under the Loan Agreement and any cure period provided for in the Loan Agreement or the Mortgage has expired, the Borrower agrees to pay a default rate of interest equal to ten percent (10.00%) per annum as the applicable interest rate of this note, and the entire principal amount outstanding, accrued interest and any other charges due hereon shall at once become due and payable at the option of the Lender or the holder hereof. Any failure of the Lender to exercise its right to increase the interest rate by the default rate of interest set forth above or its option to accelerate this note at any time shall not constitute a waiver of the right to exercise the same right to increase the interest rate or accelerate at any subsequent time. Notwithstanding anything contained herein to the contrary, the default rate of interest hereon shall never exceed the highest rate permitted by law. The Borrower may prepay the principal under this note at any time and from time to time, in whole or in part, without premium or penalty. No partial prepayment shall postpone the due date of any Original Note Monthly Installment or New Note Monthly Installment or reduce the amount of any such Original Note Monthly Installment or New Note Monthly Installment unless the Lender agrees otherwise in writing. All sums payable to the Lender under this note shall be paid in immediately available funds. The Borrower promises to pay all costs in connection with the enforcement of this note, including but not limited to, those costs, expenses and attorneys' fees of Lender 533959v23 GAF EL185-57 -3- 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, 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. IN WITNESS WHEREOF, the undersigned has caused this note to be effective as of the day and year first above written. ALAN ARNOLD CORPORATION, a Minnesota corporation ______________________________ By: Brian Brehmer Its: President Document comparison by Workshare Compare on Thursday, August 16, 2018 10:00:34 AM Input: Document 1 ID PowerDocs://DOCSOPEN/533959/2 Description DOCSOPEN-#533959-v2- Elk_River_EDA_Ralphie's_Energy_PROMISSORY_NOTE- -ALAN_ARNOLD_CORPORATION Document 2 ID PowerDocs://DOCSOPEN/533959/3 Description DOCSOPEN-#533959-v3- Elk_River_EDA_Ralphie's_Energy_PROMISSORY_NOTE- -ALAN_ARNOLD_CORPORATION Rendering set Standard Legend: Insertion Deletion Moved from Moved to Style change Format change Moved deletion Inserted cell Deleted cell Moved cell Split/Merged cell Padding cell Statistics: Count Insertions 6 Deletions 10 Moved from 0 Moved to 0 Style change 0 Format changed 0 Total changes 16 Meeting of the Joint Finance Committee AGENDA Tuesday, July 31, 2018 7:30 a.m. Elk River City Hall Upper Town Conference Room 1. CALL MEETING TO ORDER 2. CONSIDER AGENDA 3. CONSENT AGENDA Considered to be routine and noncontroversial by the Economic Development Finance Committee and will be approved by one motion. There will be no separate discussion of these items unless a Committee member, staff member, or citizen so requests, in which case the item will be removed from the consent agenda and considered under the regular agenda. 3.1 June 26, 2018, Minutes 3.2 Revolving Loan Fund Balance Report 4. GENERAL BUSINESS 4.1 Energy Efficiency Microloan Application for Ralphie’s Minnoco 5. ANNOUNCEMENTS 6. ADJOURNMENT Meeting Protocol No sidebar discussions No interruptions State your concern Ensure you understand Don’t take things personally Adhere to time limits Come prepared Ensure all are heard Meeting of the Elk River Joint Finance Committee Held at Elk River City Hall Tuesday, June 26, 2018 Members Present: Larry Toth, Ryan Hardin, Jim Gromberg, Bryan Provo, Rhonda Magnussen Members Absent: Nate Ovall, Chad Vitzthum, Michelle Eder, Dan Tveite Staff Present: Amanda Othoudt, Economic Development Others Present: Jeff Orluck, Orluck Industries, Inc. 1. Call Meeting to Order Pursuant to due call and notice thereof, the meeting of the Elk River Joint Finance Committee was called to order at 7:40 a.m. 2. Consider Agenda Motion by Gromberg and seconded by Hardin to approve the June 26, 2018, Joint Finance Committee agenda. Motion carried 5-0. 3. Consent Agenda Motion by Gromberg and seconded by Provo to approve the June 26, 2018 Joint Finance Committee consent agenda: 3.1. January 30, 2018 Joint Finance Committee meeting minutes. 3.2. Revolving Loan Fund Balance report. Motion carried 5-0. 4.1 Jobs Incentive Microloan Application for Orluck Industries, Inc. Ms. Othoudt presented the staff report. Members discussed various aspects of the application. Motion by Provo and seconded by Magnussen to recommend approval of the Jobs Incentive Microloan Application for Orluck Industries, Inc. as outlined in the staff report. Motion carried 5-0 all in favor. 5.1 Announcements There were no announcements. 6. Adjournment There being no further business, Mr. Gromberg adjourned the meeting at 8:27 a.m. Minutes prepared by Amanda Othoudt. _____________________ Tina Allard City Clerk ___________________ Amanda Othoudt Economic Development Director ELK RIVER ECONOMIC DEVELOPMENT AUTHORITY MICRO LOANS Current Current 7/25/18 Loan Loan Interest Term Monthly Principal Borrower Date Amount Rate (Months)Payment Outstanding Current Die Concepts 6/3/2016 $185,200 2.00%60 $936.90 $169,145.14 Y Heritage Millwork 12/22/2016 $100,000 3.00%60 $965.61 $86,916.66 Y Patriot Converting 5/5/2016 $200,000 3.00%60 $3,593.74 $116,914.76 Y Preferred Powder 10/1/2013 $100,000 3.00%60 $967.61 $56,227.61 Y Ralphies 9/10/2013 $74,999 3.00%120 $724.20 $41,104.35 Y TOTAL MICRO LOANS $470,308.52 Micro Loan Fund 240 Distinctive Iron 3/3/2015 $126,000 2.03%60 $874.72 $99,343.50 Y Scott Morrell LLC 8/6/2015 $200,000 2.00%60 $1,011.77 175,522.41 Y Orluck 7/17/2018 $200,000 3.00%84 $2,642.66 200,000.00 $474,865.91 DEED Jobs Incentive Loan Fund 242 Fund Cash Balances 7/25/18: Micro Loan Fund - 240 $738,369.15 State DEED Jobs Incentive - 242 $228,906.14 The Elk River Vision A welcoming community with revolutionary and spirited resourcefulness, exceptional service, and community engagement that encourages and inspires prosperity Request for Action To Joint Finance Committee Item Number 4.1 Agenda Section General Meeting Date July 31, 2018 Prepared by Amanda Othoudt, EDD Item Description Review Energy Efficiency Microloan Application for Ralphie’s Minnoco Reviewed by Cal Portner, City Administrator Reviewed by Action Requested Consider and provide a recommendation regarding an Energy Efficiency Microloan Application for Ralphie’s Minnoco. The Finance Committee may recommend approval, approval with conditions, or denial of the request. Background/Discussion Ralphie’s Minnoco is a self-service gas station operating in a 3,000 square foot facility at 13374 U.S. Highway 10. The gas station emphasizes food service, fuel, inside sales, U-Haul rental, and propane sales. Owner Brian Brehmer plans to use the loan to finance energy efficiency lighting to the property and the space leased to Mama D's Deli. Mr. Brehmer has extensive experience in managing gas stations and has owned Ralphie's since July 1, 2013. He previously managed the Otsego F&F Food Mart for 19 years. He also worked as the Retail Operations Manager for Adium Oil, an independent oil company operating six convenience stores. Mr. Brehmer is requesting a $19,175 Energy Efficiency Microloan to defray the cost of new LED canopy lights and improve perception of the gas station. He indicated a gas station image is a large determinant of its success and improving the lighting and outward appearance will increase business. Tom Sagstetter, ERMU Conservation and Key Accounts Manager, indicated they have exhausted all of their 2018 rebate dollars. As such, this request can only be structured as a direct loan from the city. Ralphie’s received a $74,999 Energy Efficiency Microloan in 2013. They are current on their payments and are scheduled to pay off the remaining balance of $41,104.35 on September 1, 2023. The EDA attorney stated fund disbursement for new expenditures should be structured as a new loan rather than a modification of the first loan because it is a new project. If approved, the EDA could subsequently consolidate the loans into one payment. The borrower would make one payment and comply with one set of loan terms and documents. In addition to the financial criteria that must be considered, the Finance Committee must also consider to what degree the applicant satisfies the criteria set forth in the Microloan Fund policies outlined below: N:\Departments\Community Development\Economic Development\EDA\Administrative\Agenda\EDA Finance Committee Agenda Packets\2018\July 31, 2018\4.1 sr Ralphies Minnoco - Energy Efficiency Loan.docx Micro Loan Criteria- Energy Efficiency Improvement Program • Max. Loan Amount: $74,999 • Interest rate: Fixed at 3% • Equity: 10% or more of project • Term: The maximum maturity date will be determined by the useful life of the improvement and the energy payback achieved. For projects that have a shorter length of payback (2-5) years as calculated according to energy savings, the loans will have an initial maturity of up to 5 years from the date of closing. Longer-life improvements (6-15 years) may apply for a longer maturity of up to 10 years. • The loans will be secured by personal and corporate guarantees and if applicable a lien on equipment financed and subordinate mortgage on the property. • Exempt from job creation and wage goals because the loan amount does not exceed $150,000 and does not qualify as a business subsidy by state law. Ralphie’s Minnoco • Amount requested: $19,175 • Rate requested: Fixed at 3% • Equity proposed: 10% • Term: 5-year amortization • The EDA will maintain a subordinate position on the mortgage at 13374 U.S. Highway 10 by amending and restating the mortgage, entity guarantee and a personal guarantee. The EDA will consider the Finance Committee’s recommendation at their August 20, 2018, meeting. Financial Impact The Microloan Fund has a current cash balance of $738,369.15 with $537,038.15 in notes receivable. Attachments  Microloan Application and Supporting Information  Corporate and Personal Financial Documents (distributed at the meeting)  2013 Loan Documents