4.5. SR 09-16-2019 EOty1� ,.,�� Request for Action
River
To Item Number
Mayor and City Council 4.5
Agenda Section Meeting Date Prepared by
Consent September 16, 2019 Amanda Othoudt,EDD
Item Description Reviewed by
Industrial Incentive Nlicroloan for Distinctive Iron, Cal Portner, City Administrator
LLC Reviewed by
Action Requested
Approve,by motion, a resolution approving the Industrial Incentive 1Vlicroloan and authorize the
execution of the microloan documents for Distinctive Iron,LLC
Background/Discussion
Distinctive Iron,LLC,located at 19128 Industrial Blvd NW, submitted an application for a$100,000
Industrial Incentive 1Vlicroloan. They are a woman-owned and operated company that designs, fabricates and
installs structural and miscellaneous steel products. They propose to purchase property located at 15970
Jarvis Street NW,renovate the existing building and construct a 4,680 sf indoor paint facility.
They would invest$1,529,480 to purchase,renovate and construct the new facility, and retain 14 FT and 2
PT jobs. They anticipate 5 more FT jobs over the next two years. The project will add approximately
$135,000 in taxable value and increase taxes by about$4,944 annually.
The Joint Finance Committee reviewed the application,financials and supporting information and
determined the fundamental policy goals are met. They will be required to meet the requirements of the city's
Business Subsidy Policy for the creation of new jobs, as well as a 5-year location requirement.
The EDA acted on their request at their meeting earlier this evening.
Financial Impact
The applicant has an existing city loan with a balance of approximately$89,338.20. They request the loan
be refinanced with the new request for a total of$189,338.20. The Committee recommended the request
which will be amortized over 20 years at 3%with a 5-year balloon payment. The EDA will retain a 2nd
position on all equipment and real estate. In addition, the loan will be secured with a personal guarantee.
The Industrial Incentive 1Vlicroloan Fund account balance is $955,487.04. Fund account is $955,487.04.
Funds in this account continue to revolve and payments are received regularly.
Attachments
■ EDA Staff Report with Attachments (September 16,2019)
■ Resolution
The Elk River Vision
A PehoMing community 2a itb revolutionary and spirited resourcefulness, exceptional POWERED By
service, and community engagement that encourages and inspires prosperity INAWRE1
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
7.1
Agenda Section
General Business
Meeting Date
September 16, 2019
Prepared by
Amanda Othoudt, EDD
Item Description
Industrial Incentive Microloan Application for
Distinctive Iron, LLC
Reviewed by
Cal Portner, City Administrator
Reviewed by
Action Requested
Approve, by motion, a resolution approving the Industrial Incentive Microloan. The EDA may
recommend approval, approval with conditions, or denial of the request to the City Council.
The Council will review the recommendation and formally act on the request at their regular meeting.
Background/Discussion
Distinctive Iron, LLC, located at 19128 Industrial Blvd NW, submitted an application for a $100,000
Industrial Incentive Microloan. They are a woman-owned and operated company that designs, fabricates and
installs structural and miscellaneous steel products. They propose to purchase property located at 15970
Jarvis St. NW, renovate the existing building and construct a 4,680 sf indoor paint facility.
They would invest $1,529,480 to purchase, renovate and construct the new facility, and retain 14 FT and 2
PT jobs. They anticipate 5 more FT jobs over the next two years. The project will add approximately
$135,000 in taxable value and increase taxes by about $4,944 annually.
The Joint Finance Committee reviewed the application, financials and supporting information and
determined the fundamental policy goals are met. They will be required to meet the requirements of the city’s
Business Subsidy Policy for the creation of new jobs, as well as a 5-year location requirement.
Financial Impact
The applicant has an existing city loan with a balance of approximately $89,338.20. They request the loan
be refinanced with the new request for a total of $189,338.20. The Committee recommended the request
which will be amortized over 20 years at 3% with a 5-year balloon payment. The EDA will retain a 2nd
position on all equipment and real estate. In addition, the loan will be secured with a personal guarantee.
The Microloan Fund account balance is $955,487.04.
Attachments
Joint Finance Committee Meeting Packet (August 27, 2019)
Resolution
Loan Documents
Meeting
of the
Joint Finance
Committee
AGENDA
Tuesday, August 27, 2019
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 25, 2019, Minutes
3.2 Revolving Loan Fund Balance Report
4. GENERAL BUSINESS
4.1 Microloan Application for Distinctive Iron
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 25, 2019
Members Present: Larry Toth, Ryan Hardin, Chad Vitzthum, Michelle Eder and Nate Ovall
Members Absent: Jim Gromberg, Rhonda Magnussen, and Dan Tveite
Staff Present: Amanda Othoudt, Economic Development and Colleen Eddy, Economic
Development Specialist
Others Present: None
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 7:35 a.m.
2. Consider Agenda
Motion by Eder and seconded by Vitzthum to approve the June 25, 2019, Joint
Finance Committee agenda.
Motion carried 5-0.
3. Consent Agenda
Motion by Vitzthum and seconded by Eder to approve the June 25, 2019 Joint
Finance Committee consent agenda:
3.1. July 31, 2018 Joint Finance Committee meeting minutes
3.2. Revolving Loan Fund Balance report
Motion carried 5-0.
4.1 Microloan Essentials Discussion
Ms. Othoudt presented the staff report. Members discussed the credit memo and
corresponding forms. Member Ovall made a recommendation for Ms. Othoudt to
refine the forms to meet the EDA’s needs. The committee will review the forms at a
future meeting.
5.1 Announcements
Member Hardin questioned where the Ethanol Technology debt collection process was at.
Ms. Othoudt confirmed that the case was finalized in 2018.
6. Adjournment
There being no further business, Mr. Toth adjourned the meeting at 8:30 a.m.
Minutes prepared by Colleen Eddy.
_____________________
Tina Allard
City Clerk
___________________
Amanda Othoudt
Economic Development Director
ELK RIVER ECONOMIC DEVELOPMENT AUTHORITY
MICRO LOANS
Current Current 8/16/19
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 $160,545.25 Y
Heritage Millwork 12/22/2016 $100,000 3.00%60 $965.61 $77,038.73 Y
Patriot Converting 5/5/2016 $200,000 3.00%60 $3,593.74 $0.00
Ralphies#1 9/10/2013 $74,999 3.00%120 $724.20 $32,903.56 Y
Ralphies#2 8/28/2018 $19,175 3.00%60 $343.65 $15,871.18 Y
TOTAL MICRO LOANS $286,358.72 Micro Loan Fund 240
Distinctive Iron 3/3/2015 $126,000 2.03%60 $874.72 $90,060.73 Y
Scott Morrell LLC 8/6/2015 $200,000 2.00%60 $1,011.77 166,078.32 Y
Orluck 7/17/2018 $200,000 3.00%84 $2,642.66 171,723.74 Y
$427,862.79 DEED Jobs Incentive Loan Fund 242
Fund Cash Balances 08/16/19:
Micro Loan Fund - 240 $950,516.68
State DEED Jobs Incentive - 242 $84,303.89
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 Meeting
Item Number
4.1
Agenda Section
General Business
Meeting Date
August 27, 2019
Prepared by
Amanda Othoudt, ED Director
Item Description
Distinctive Iron, LLC Jobs Incentive Microloan
Application Review
Reviewed by
Cal Portner, City Administrator
Reviewed by
Action Requested
Consider and provide recommendation to the EDA on the following Jobs Incentive Microloan
application for Distinctive Iron, LLC. The Joint Finance Committee may recommend approval, approval
with conditions, or denial of the request.
Background/Discussion
The city received an application from Distinctive Iron, LLC requesting a $100,000 Jobs Incentive
Microloan.
The Jobs Incentive Microloan Program goal is to encourage the growth of new jobs and the retention of
existing jobs. The company currently employs 14 FT and 2 PT with an average hourly wage of
$18.80/hr., has outgrown their leased space on Industrial Blvd in Elk River, and intends to relocate their
operation to 15970 Jarvis Street NW, Elk River.
Analysis
Purpose: To assist existing businesses with expansion and attract new businesses to the city whose local
operations will expand the city’s economy through job retention and creation and maintain/
grow the city’s tax base. The purpose of the Jobs Incentive Program is to encourage the
creation of quality, high-paying jobs within the city.
Distinctive Iron, LLC will retain 14 FT and 2 PT paying an average of $18.80/hour,
exclusive of benefits. They plan to create 5 FT jobs paying an average hourly wage of
$18.80.
Amount: Up to $200,000 of secondary financing not to exceed 20% of the project cost.
The total project cost is $1,530,000. The requested amount is 6.5% of the total project
cost, which is less than the 20% maximum allowed.
Equity: Must have private-sector commitments for 50% of the project cost. Borrower must provide
10% or more of project financing.
The applicant indicated they will provide $116,000 as equity contribution to the
project. In addition, Distinctive Iron will be purchasing $35,000 of new equipment.
The total contribution represents approximately 9.9% of project equity, just under the
10% requirement.
N:\Departments\Community Development\Economic Development\EDA\Administrative\Agenda\EDA Finance Committee Agenda
Packets\2019\08272019\4.1 sr Distinctive Iron Job Incentive Microloan Request.docx
Criteria: Borrower must create one new full-time job for each $20,000 loaned, retain one new full-time
job for each $10,000 loaned, or combination of retainage and creation to meet the
requirements. All new jobs must be created within two years and retained for the period of the
loan. Said jobs must pay greater of $15.00 per hour or 150% of state or federal minimum wage,
exclusive of benefits required by law. Any loans shall meet the city of Elk River Business
Subsidy Policy for the creation of new jobs, as well as a 5-year location requirement.
Creating 5 FT jobs in Elk River accounts for a loan amount up to $100,000 and retaining
14 FT jobs accounts for $140,000. By policy, the applicant is eligible for a $240,000 loan.
The maximum loan available per the city’s policy is $200,000.
Summary
The applicant is eligible for a maximum loan of $200,000 per the city’s policy, meeting the equity, wage,
and job criteria requirements and the proposed fund uses are eligible expenses. However, the applicant has
an existing loan with the city with a balance of approximately $90,060. The applicant has requested the old
loan to be refinanced with the new request of $100,000 for a total of approximately $190,060. This amount
may be adjusted based upon principle and interest payments received. The project scored 36/50 points,
representing a highly desirable project.
Terms
Staff is proposing to roll the existing loan balance of $90,060 into the new loan of a $100,000 for a total
of $190,060. The loan will be amortized over 20 years at 3% with a 5-year balloon payment. The EDA
will retain a 2nd position on the equipment and real estate, and in addition the loan will be secured with a
personal guarantee.
Financial Impact
If the committee agrees this loan meets the goals of the city and EDA, the loan funds could be funded
from the City Microloan Fund account, which has a balance of $950,516.68
Attachments
Microloan Application
Scoring Worksheet
Company Information
Commitment Letter from the Bank of Elk River
Commitment Letter from Applicant
City Microloan – Additional Information
Company Financials (confidential, available at the meeting)
1. Business overview and company history and ownership - include organizational structure,
parent Company and any affiliates
Distinctive Iron, LLC is a woman owned and operated company that designs, fabricates and
installs structural and miscellaneous steel products. The company is owned 60% by Cynthia
Hemmer and 40% by her son, Steven Hemmer. The company was started in a 2,400 square
foot pole building at their residence. The business grew very quickly, and they added 2,800
square feet to the pole building. When they outgrew that space, they purchased a 13,000
square foot industrial building located at 19128 Industrial Blvd NW, Elk River in March
2015. Hemmer Companies LLC was formed in 2011 for the purpose of owning and leasing
real estate, specifically to Distinctive Iron. The Hemmer’s are eager to take their business to
the next level.
With over 30 years of experience, Distinctive Iron prides themselves in exceeding customer’s
expectations in design, fabrication and project management in a quality-driven environment
at a competitive price. Recent projects include the expansion of Alliance Machine (Elk
River), UMA Precision Machining (Zimmerman), P&F Machine, along with several Schools
which include Blaine and Ramsey Elementary Schools, Guardian Angels (Ostego), Nystrom
& Associates, the proposed Elk River Multipurpose Facility, McPherson Constriction,
Halco, North Dakota Steel Building, Babinski Properties in Sioux Falls South Dakota – two-
story balcony decking for renovating old apartment buildings.
2. Product or industry outlook for the project
Manufacturing, growth of manufacturing as a whole to the economy. Respond to the
customer base and grow MN
The United States structural steel industry supplied fabricated and erected structural steel
framing for over 10,000 buildings, bridges and industrial facilities through a network of
producers, service centers, steel fabricators and erectors in 2017 down substantially from a
peak of nearly 15,000 in 2006 and 2007. The decrease in market volume was the result of a
downturn in overall construction activity. Total industry employment in 2017 was estimated
to be in excess of 200,000 individuals in 2,300 firms down approximately 15% from 2006.
Total industry revenue in 2017 was estimated to be in excess of 20 billion dollars. It is
anticipated that industry employment and revenue will expand by four percent during 2018
based on the current 2018 growth rate of non-residential construction.
Structural Steel: An Industry Overview, American Institute of Steel Construction, August 2018
3. Total projected sales for the project both inside and outside of Minnesota – Exhibit 5
2014: $3.6M
2015: $4.4M
2016: $4.8M
2017: $8.8M
2018: $11M
2019: $12M
2020: $12.5M
2021: $13M
Products shipped to South Dakota, North Dakota, Iowa, and Minnesota
Jobs and Fabrication conducted in Minnesota and North Dakota and South Dakota
4. Estimated sales to Minnesota customers that replace purchases from outside Minnesota
With the new expansion, Distinctive Iron will obtain estimated sales around $2 million. We
believe that these sales would have gone to one of our competitors in Wisconsin, Iowa, or in
the Dakotas if we didn’t move forward with the expansion.
5. Markets (local, statewide, national, and international) along with their respective percentage
to total sales and the customers served.
Distinctive Iron serves the local market as well as the upper Midwest. Products are
manufactured at their Elk River facility, and installed onsite. Opportunities in North Dakota
presented itself to expand our submarket.
Local: Represents 80% of the work. Upper Midwest market share represents 20% of work.
There is an opportunity in Fargo, ND to expand our market and design and construct steel
products for facilities in that submarket. Sites have been considered in Fargo if the
expansion doesn’t move forward.
6. Philanthropic or other ways in which the business contributes or will contribute to
Minnesota
Distinctive Iron holds various professional association certifications, are proud sponsors of
the Special Olympics, Susan G. Komen Breast Cancer Foundation and Eric Applen
Children’s Cancer Fund. The business prides itself in contributions to the local community
through hiring local and patronizing local businesses. Elk River Chamber of Commerce,
Workforce Development Committee, Active Members of Minnesota Subcontractors
Association (MSA), Association of Women Contractors (AWC), and Distinctive Iron
contributed $500 and $1500 Scholarships to the Anoka Tech Foundation, and the Elk River
High School.
7. Attach three years of historical financials (Profit & Loss/Balance Sheets/Income
Statement/Cash Flow Statement) and financial projections: Exhibit 3,4
PART B – Project Description.
8. Provide details for the project for which funds are being requested. Discuss topics such as
square footage increase, lease vs ownership, new construction vs renovation or leasehold
improvements, etc.
Distinctive Iron is a growing metal design and fabrication business. They are currently
located at 19128 Industrial Blvd NW, Elk River. Distinctive Iron proposes to purchase
property located at 15970 Jarvis Street NW, Elk River. In addition to the purchase of the
building, they plan to renovate the existing building onsite, and construct a 4,680 sf. indoor
paint facility.
Distinctive Iron will be investing $1,529,480 to purchase, renovate and construct the new
facility, and retain 14 full-time and 2 part-time jobs within the city. We anticipate the growth
of 5 more full time jobs over the next two years. This project will add approximately
$135,000 in taxable value to the county and increase taxes by about $4,944 annually. The
business prides itself in contributions to the local community through hiring local and
patronizing local businesses.
Distinctive Iron is requesting $100,000 from the city as gap financing, which will support
Distinctive Iron’s investment in Elk River. The funds requested from the city would help
with the site prep and construction of the new building.
9. Explain why funding is necessary for this project to move forward (e.g., financing gaps, lack
of collateral, potential non-Minnesota locations). If available, please provide further
documentation that demonstrates these reasons.
Funding is necessary to close the gap for loan vs improvements and train and support new
hires for the increased production opportunity. We are considering outstate sites in Fargo,
ND to be close to business. Without gap financing for this project by the city, state and
county, Distinctive Iron would not be able to expand their operations in Minnesota.
10. Describe how the project will strengthen and/or diversify the local or Minnesota economy.
Distinctive Iron is the first manufacturing project expansion in 2019 for Elk River. The
project will help strengthen our local economy and it is anticipated that this project will
result in spin-off development of neighboring properties.
By being approved for the funding, we will be able to strengthen our workforce by
constructing the new facility, and having the ability to store materials outdoors. In addition,
the funding will assist us with hiring additional employees and have a safe workplace to
perform duties for production of our product. We believe this area we are moving too will
provide extra dollars to the local economy by way of municipal taxes, purchasing of local
supplies, hiring of new employees in the area, if possible or working with the local staffing
firms to fill positions temporarily.
11. Describe any local government assistance for the project (e.g., city loan, abatement, TIF,
etc,) and comment on dollar amounts and/or general information on any city projects
related to this project.
The City of Elk River and Sherburne County are jointly participating as gap lenders in this
project. We have requested a $100,000 microloan from the city and a $90,000 microloan
from Sherburne County to cover the gap in financing needs. By providing financing gap,
growth can happen at their new facility.
12. Attach line-item construction cost estimates for real property improvements for the project
- Exhibit 11
13. If available, attach a commitment letter from each financing source (ie Financial
Institutions), including a letter of commitment for any business equity -- Exhibit 8
PART C – Business Competitors.
14. Identify the competitors of the business within local community (city and county), the
adjacent counties, and in the state of Minnesota. Include:
a. The name of each major competitor and the location of each competitor by city
i. Linco Iron Erection, Inc. – St. Michael – Steel Fabrication
ii. Superior Iron, LLC – Elk River – Fab Steel, Capacity is smaller than DI
iii. Twin City Wire & Fabrication – Focus is on public sector work.
iv. Industrial Steel Fabricators – Minneapolis – Niche manufacturing company
specializing in custom flex manufacturing.
v. Astro Engineering and manufacturing aluminum and special metal
manufacturing
vi. Briese Iron Works, Inc. – Rochester – Structural Steel Detailing
vii. CMF – Willmar - Provides steel packages to contractors for multi-story
commercial buildings, retail locations, manufacturing facilities, hospitals, worship
center, schools, condominiums, and sports facilities.
viii. M&M Structures – Winsted – Provides a full-service structural steel design and
fabrication company
15. How the products or services are different than the business’
Distinctive Iron provides custom steel fabrication, and installation of their finished product.
Distinctive Iron works primarily with raw steel.
16. How the competitive markets are different from the business’
Distinctive Iron provides excellent customer service, which equates to a total project
relationship. Their company evolved from ornamental steel fabrication to specializing in
structural steel fabrication.
PART D – Detailed job & wage information.
2. If applicable, provide quarterly payroll reports from the last year for current permanent full-time
employees who will be located at the project site - Exhibit 1, 2
3. For new full-time permanent employees, complete the form on Page 5 of this application or
attach a listing of jobs that includes the information from the form on Page 5. – Exhibit 12
**Exhibits Available at the Meeting
611673v2EL185-30
ECONOMIC DEVELOPMENT AUTHORITY
OF THE CITY OF ELK RIVER
COUNTY OF SHERBURNE
STATE OF MINNESOTA
RESOLUTION NO. _________
RESOLUTION APPROVING AN AMENDED AND RESTATED LOAN AGREEMENT
AND RELATED DOCUMENTS
(DISTINCTIVE IRON PROJECT)
WHEREAS, on February 17, 2015, the Economic Development Authority of the City of
Elk River (the “EDA”) provided a loan to Hemmer Companies L.L.C., a Minnesota limited
liability company (the “Borrower”), pursuant to the EDA’s Microloan Program (the “Program”)
in the amount of $126,000.00 (the “Original Loan”) pursuant to a Loan Agreement, dated
February 17, 2015 (the “Original Loan Agreement”), between the Borrower and the EDA.
WHEREAS, the Original Loan was secured by (i) a Promissory Note, dated February 17,
2015 (the “Original Promissory Note”), from Borrower to the EDA; (ii) a Security Agreement,
dated February 17, 2015 (the “Original Security Agreement”), from Distinctive Iron, LLC (the
“Entity Guarantor”), in favor of the EDA providing the EDA with a security interest in certain
equipment (the “Equipment”) owned by Distinctive Iron, LLC (the “Entity Guarantor”); (iii) a
Mortgage and Assignment of Rents and Security Agreement and Fixture Financing Statement
(the “Original Mortgage”), executed by Borrower, in favor of EDA, covering property located in
the City of Elk River, Minnesota (the “City”); (iv) a Personal Guaranty, dated February 17, 2015,
from Cynthia Mae Hemmer & Steven Michael Hemmer (the “Original Personal Guaranties); and
(v) an Entity Guaranty, dated February 17, 2015 (the “Original Entity Guaranty” and together
with the Original Personal Guaranties, the “Original Guaranties”), from the Entity Guarantor.
The current outstanding principal balance of the Original Loan is $89,338.20.
WHEREAS, the Board of Commissioners (the “Board”) of the EDA has received a
request from the Borrower that the EDA provide an additional loan to the Borrower in the
amount of $100,000.00 (the “New Loan”) pursuant to the Program in order to assist in financing
the acquisition, renovation and equipping of a new facility in the City in connection with the
expansion of its current business in the City.
WHEREAS, the Borrower has proposed that the Borrower and the EDA enter into an
Amended and Restated Loan Agreement (the “Amended and Restated Loan Agreement”) and
related documents in connection with the New Loan. In total, the outstanding principal of the
Original Loan and the New Loan (together, the “Loan”) will be $189,338.20.
WHEREAS, the EDA has caused to be prepared the Amended and Restated Loan
Agreement 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 Amended and
Restated 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:
611673v2EL185-30
Section 1. Business Subsidy.
1.01. The Loan constitutes a business subsidy within the meaning of Minnesota Statutes,
Section 116J.993 to 116J.995, as amended (the “Business Subsidy Act”), and the Loan Agreement
includes a “business subsidy agreement” as required under the Business Subsidy Act.
1.02. The City has adopted a Business Subsidy Policy (the “Subsidy Policy”), which sets
the general criteria for all types of subsidies granted by the EDA, all as required under the Business
Subsidy Act.
Section 2. Approval of Documents.
2.01. The Amended and Restated Loan Agreement as presented to the EDA, together with
all related documents necessary in connection therewith, including without limitation the following:
(i) an Amended and Restated Promissory Note from the Borrower evidencing the Loan, (ii) a
Mortgage and Assignment of Rents and Security Agreement and Fixture Financing Statement
providing the EDA with a second position lien on the Borrower’s new facility; (iii) an Amended
and Restated Security Agreement providing a subordinate security interest in certain equipment of
the Entity Guarantor; (iv) an Amended and Restated Entity Guaranty from Distinctive Iron, LLC,
and (v) an Amended and Restated Personal Guaranty from Cynthia Mae Hemmer and Steven
Michael Hemmer, (all as defined in and described in the Amended and Restated Loan Agreement)
(collectively, the “Loan Documents”) are hereby in all respects approved, in substantially the form
on file with the City’s Economic Development Director; and the President and Executive Director
are hereby authorized and directed to execute the Amended and Restated Loan Agreement and any
Loan Documents to which it is a party on behalf of the EDA and to carry out, on behalf of the EDA,
the EDA’s obligations thereunder.
2.02. The approval hereby given to the Loan Documents includes approval of such
additional details therein as may be necessary and appropriate and such modifications thereof,
deletions therefrom and additions thereto as may be necessary and appropriate and approved by
legal counsel to the EDA and by the President and Executive Director prior to executing said
documents; and said officers are hereby authorized to approve said changes on behalf of the EDA.
The execution of any instrument by the President and Executive Director shall be conclusive
evidence of the approval of such document in accordance with the terms hereof. In the event of
absence or disability of said officers, any of the documents authorized by this Resolution to be
executed may be executed without further act or authorization of the Board by any duly designated
acting official, or by such other officer or officers of the Board as, in the opinion of the City
Attorney, may act in their behalf.
611673v2EL185-30
Approved by the Board of Commissioners of the Economic Development Authority of the
City of Elk River this 16th day of September, 2019.
President
ATTEST:
Executive Director
1
611366v1EL185-30
AMENDED AND RESTATED LOAN AGREEMENT
(Microloan)
THIS AMENDED AND RESTATED LOAN AGREEMENT (the “Agreement”) is made
effective as of ___________, 2019, by and between HEMMER COMPANIES L.L.C., a
Minnesota limited liability company (“Borrower”), and the ECONOMIC DEVELOPMENT
AUTHORITY OF THE CITY OF ELK RIVER, a public body corporate and politic of the State
of Minnesota (“Lender”), and amends and restated in all respects the Loan Agreement, dated
February 17, 2015 (the “Original Loan Agreement”), by and between the Borrower and the
Lender.
RECITALS
A. On February 17, 2015, the Lender provided to the Borrower a microloan under its
Microloan Program, in the principal amount of $126,000.00.
B. Lender was willing to make such mortgage loan to Borrower in the principal
amount of $126,000.00 (the “Original Loan”), of which $89,338.20 is currently outstanding.
C. The loan was secured by a Promissory Note, dated February 17, 2015 (the
“Original Promissory Note”), from Borrower to the Lender; a Security Agreement, dated
February 17, 2015 (the “Original Security Agreement”), from Distinctive Iron, LLC (the “Entity
Guarantor”), in favor of Lender, as secured party, providing a security interest in certain
equipment currently owned or hereafter acquired (the “Equipment”) by Distinctive Iron, LLC
(the “Entity Guarantor”); a Mortgage and Assignment of Rents and Security Agreement and
Fixture Financing Statement (the “Original Mortgage”), executed by Borrower, as mortgagor, in
favor of Lender, as mortgagee, and covering property situated in Sherburne County, Minnesota
legally described as Lot 5 and the east 80 feet of lot 4, Block 2, Elk River Industrial Park,
according to the plat thereof on file and of record in Sherburne County, State of Minnesota as
well as a security interest in certain other property described therein; and Guaranty Agreements,
each dated February 17, 2015, from Cynthia Mae Hemmer & Steven Michael Hemmer (the
“Original Personal Guaranties) and Distinctive Iron, LLC (the “Original Entity Guaranty,” and
together with the Original Personal Guaranties, the “Original Guaranties”).
D. To complete the Improvements described herein, the Borrower has requested an
additional loan in the principal amount of $100,000 from the Lender, pursuant to its Microloan
Program (the “New Loan,” and together with the Original Loan, the “Loan”).
E. The Borrower and the Lender desire to amend and restate the Original Loan
Agreement to provide the New Loan to the Borrower subject to the terms and conditions of this
Agreement.
F. As of the date hereof, the principal amount of the Loan is $189,338.20.
G. Contemporaneously with the execution hereof, Borrower is delivering to Lender
the following fully executed security documents:
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i. An Amended and Restated Promissory Note effective on the date herewith
(the “Note”) made by Borrower and payable to the order of Lender, which amends and
restates the Original Promissory Note and secures the Loan;
ii. Amended and Restated Personal Guaranty of Cynthia Mae Hemmer &
Steven Michael Hemmer (the “Personal Guaranties”);
iii. An Amended and Restated Entity Guaranty of the Entity Guarantor, dated
on the date herewith (the “Entity Guaranty,” and together with the Personal Guaranties,
the “Guaranties”);
iv. An Amended and Restated Security Agreement, dated the date hereof (the
"Security Agreement"), from the Entity Guarantor to the Lender amending and restating
the Original Security Agreement;
v. A Mortgage and Assignment of Rents and Security Agreement and Fixture
Financing Statement, dated the date hereof (the "Mortgage"), from the Borrower, as
mortgagor, in favor of Lender, as mortgagee, and covering property situated in Sherburne
County, Minnesota legally described in Exhibit A to the Mortgage (the “Loan Property”).
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 a New Loan in the principal amount of One Hundred Thousand Dollars ($100,000.00)
(together, with the outstanding principal amount of the Original Loan, the “Loan”) to be
advanced in a single disbursement as hereinafter provided. The Loan will be evidenced by the
Note and secured by the Security Agreement, the Guaranties, the Mortgage and any other
security document required under this Agreement. The Loan proceeds will be used only towards
the cost of renovation of the Loan Property and Borrower’s purchase of equipment to be used at
the Loan Property (the “Improvements”). The Borrower shall commence construction of the
Improvements by December 31, 2019 and complete construction thereof by December 31, 2020.
2. Equipment and Security Interest. The Entity Guarantor has provided Lender a
preliminary list of the Equipment that shall be subject to the Security Agreement, which is
attached as Exhibit A. The Security Agreement provides Lender with a first priority security
interest in the Equipment.
3. Title Insurance. _____________ (“Title”) is designated as the title insurer with
respect to this Agreement. Title will insure Lender against loss or damage on account of
mechanic’s liens upon or unmarketability of the title to the Loan Property, and will ensure that
the Mortgage constitutes a second priority lien upon Borrower’s interest in the Loan Property as
contemplated by this Agreement, subject only to a mortgage in favor of The Bank of Elk River
in the amount of $_______________ (the “First Lien Mortgage”). Borrower agrees to promptly
and fully observe and comply with the reasonable requirements of Title and Lender with respect
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to the title, the Mortgage, disbursements of funds and such other reasonable requirements as
Title may make.
4. Documents to be Delivered. Borrower covenants and agrees to immediately
cause the compliance with the following conditions:
(a) Note. Deliver to Lender the Note.
(b) Security Agreement. Deliver to Lender the Security Agreement.
(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) Notice and Cure Agreement. Deliver to Lender the Consent and Notice
and Cure Agreement, with respect to the First Lien Mortgage.
(f) Title Insurance Policy. Deliver to Lender a Mortgagee’s title insurance
policy (“Title Policy”), from Title issued to Lender in the amount of $189,338.20 with
respect to the Mortgage and insuring that the Mortgage is a second priority lien on the
Loan Property free and clear of mechanic’s liens, materialmen’s liens, taxes, special
assessments, rights of parties in possession, other than (i) the First Lien Mortgage and (ii)
the rights of tenants as tenants only under existing leases, and questions of title and
survey approved in writing by Lender.
(g) Environmental Indemnification Agreement. Deliver to Lender the
Environmental Indemnification Agreement, dated as of the date hereof, from the Entity
Guarantor to the Lender.
(h) Organizational Documents and Resolutions. Deliver to Lender copies of
the (i) articles of organization for Borrower certified by the Minnesota Secretary of State,
(ii) certificate of good standing for Borrower issued by the Minnesota Secretary of State;
(iii) Borrower’s member control agreement; and (iv) certified resolutions of Borrower
authorizing the execution and delivery of this Agreement, the Note, the Mortgage and
any other document to be executed by Borrower pursuant to this Agreement.
(i) Organizational Documents and Resolutions. Deliver to Lender copies of
the (i) articles of organization for Entity Guarantor certified by the Minnesota Secretary of
State, (ii) certificate of good standing for Entity Guarantor issued by the Minnesota
Secretary of State; (iii) Entity Guarantor’s member control agreement; and (iv) certified
resolutions of Entity Guarantor authorizing the execution and delivery of the Entity
Guaranty, the Security Agreement and any other document to be executed by Entity
Guarantor pursuant to this Agreement.
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(j) Insurance. Deliver to Lender: (i) a certificate or policy for all insurance
required, under the terms hereof to be maintained by Borrower; and (ii) evidence that no
part of the Loan Property is located in an area designated as being a flood plain or flood
hazard area as defined by the Flood Hazard Boundary Map published by the Federal
Insurance Administration.
(k) Compliance with Laws, Etc. Deliver to Lender such evidence as Lender
may require as to the compliance of the Loan Property with: (i) all applicable laws,
codes, rules, regulations and ordinances, including, without limitation, those relative to
environmental protection, protection of wetlands, building and zoning matters and the
Americans with Disabilities Act; and (ii) the requirements of any restrictive covenants,
conditions and restrictions; conditional use permit or planned unit development
applicable to the Loan Property.
(l) Hazardous Substances. Deliver to Lender evidence acceptable to Lender,
that: (i) the Loan Property has not been used as a hazardous waste storage facility or
burial site; (ii) the soil is free from hazardous waste, hazardous substances, pollutants and
contaminants; and (iii) no hazardous waste, hazardous substance, pollutant or
contaminant has been used in the construction or use of any building or other
improvement on the Loan Property. For purposes of this subparagraph, the terms
“hazardous waste,” “hazardous substances,” “pollutants” and “contaminants” shall
include, but not be limited to, polychlorinated biphenyls (PCBs), asbestos, petroleum
products and any other chemical or substance determined to be a hazard to human health
or the environment.
(m) Lease. Deliver to Lender a copy of the lease agreement for the use of the
Loan Property, executed no later than the date of this Agreement, by and between
Borrower, as landlord, and Entity Guarantor, as tenant (the “Lease”).
(n) Program Fee. Deliver to Lender the processing fee of $2,000; the Lender
acknowledges that the Borrower has previously paid the Lender’s program fee.
Lender may waive any of the above requirements in its sole discretion.
5. Omitted.
6. Disbursement of Loan. Upon receipt by Lender of all of the items required
pursuant to Section 4 above, the Lender shall disburse the proceeds of the New Loan to the
Borrower.
7. Access to Loan Property. Lender and its respective representatives shall have at
all reasonable times the right to enter and have free access to the Loan Property and the right to
inspect the Loan Property.
8. Books and Records. Borrower agrees to maintain accurate and complete books,
accounts and records in regard to the Loan Property in a manner reasonably acceptable to
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Lender. Lender and its representatives shall have the right to inspect, examine and copy all such
books and records of Borrower and Borrower shall, at Lender’s request, furnish such information
as Lender may reasonably demand. Borrower shall also ensure that Entity Guarantor maintains
accurate and complete books, accounts, and records in regard to the Equipment in a manner
reasonably acceptable to Lender. Lender and its representatives shall have the right to inspect,
examine and copy all such books and records of Entity Guarantor and Entity Guarantor shall, at
Lender’s request, furnish such information as Lender may reasonably demand.
9. Encumbrances and Transfer. Other than the First Lien Mortgage and the Lease to
the Entity Guarantor, Borrower agrees not to sell, transfer, lease or convey the Loan Property or
any part of it, or any interest therein, or encumber the Loan Property or any part of it, in any
manner, without written consent of Lender which consent may be granted or withheld in the sole
discretion of Lender. This requirement shall apply to each and every sale, transfer, lease or
conveyance, whether voluntary or involuntary and whether or not Lender has consented to any
such prior sale, transfer lease or conveyance. The Entity Guarantor has agreed, pursuant to the
Security Agreement, not to sell, transfer, lease or convey the Equipment or any part of it, or any
interest therein, or encumber the Equipment or any part of it, in any manner, without the written
consent of Lender which consent may be granted or withheld in the sole discretion of Lender.
This requirement shall apply to each and every sale, transfer, lease or conveyance, whether
voluntary or involuntary and whether or not Lender has consented to any such prior sale, transfer
lease or conveyance.
10. Time of Essence. Time is of the essence in the performance of this
Agreement.
11. Assignability. Borrower shall not assign this Agreement without written consent
of Lender, which consent may be withheld, conditioned or delayed in Lender’s sole discretion.
Lender may freely assign or otherwise transfer (including by participation) all or any part of its
interest in the Loan or any or all of the Loan documents, in Lender’s sole discretion.
12. Miscellaneous Covenants of Borrower. Borrower covenants and agrees with
Lender that, without cost to Lender, Borrower will or will cause Entity Guarantor to:
(a) Performance of Conditions. Promptly keep, perform and comply with all
of the terms, covenants and conditions to be kept and performed by Borrower and/or
Entity Guarantor, as required by the City of Elk River (the “City”) and any other
governmental body having jurisdiction over the Loan Property; keep unimpaired the
rights of Borrower and/or Entity Guarantor under any permit or agreement issued or
made by the City or other governmental body having jurisdiction over the Loan Property;
and to enforce the prompt performance of all of the terms, covenants and conditions to be
kept and performed by the City or other governmental body having jurisdiction over the
Loan Property, respectively, under any permits or agreements issued or made by the City
or such other governmental bodies, and any contractors under all contracts obtained or
held by Borrower and/or Entity Guarantor in connection with construction or operation of
the Borrower or Entity Guarantor’s businesses.
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(b) Amendment, Etc. of Documents. Not amend, cancel, terminate,
supplement or waive any of the material terms, covenants and conditions of any permit or
agreement issued or made by the City or any other governmental body having jurisdiction
over the Loan Property, or any other contracts obtained or held by Borrower and/or
Entity Guarantor in connection with any contracts, documents or agreements referred to
herein without the prior written approval of Lender.
(c) Performance of Note, Security Agreement, etc. Without limiting the
foregoing, keep and perform all of the terms, covenants, conditions and requirements of
the Note, the Security Agreement, the Mortgage, and this Agreement.
(d) Insurance. During the term of this Agreement, Borrower shall procure and
maintain or cause to be procured and maintained at its sole expense, casualty insurance,
public liability insurance and such other types of insurance as are reasonably required by
Lender from time to time, including, without limitation, the coverages expressly required
of Entity Guarantor by the Mortgage, insuring Lender and Borrower with coverages, in
amounts and with companies satisfactory to Lender. The policy or policies or duly
executed certificate or certificates for such insurance and renewals or replacements
thereof shall be deposited with Lender.
(e) Pay Charges. Immediately pay all loan charges including, but not limited
to: (i) Lender’s attorneys’ fees; (ii) title insurance fees, costs and premiums; (iii)
mortgage registration taxes and filing fees of the Mortgage and any other instruments
required under this Agreement within 15 days of the Lender providing notice to the
Borrower of its costs.
(f) Default Notices. Provide Lender with a copy of any default notice
received pursuant to the First Lien Mortgage documents or any governmental authority
(to the extent that such notice is sent by a party other than Lender), promptly after receipt
of the same.
(g) Continual Operation. At all times while any portion of the Loan remains
outstanding, Borrower will: (i) maintain its status as a for profit entity; (ii) maintain a
positive net worth; and (iii) will operate its business from the Loan Property in a first
class manner.
(h) Title to Equipment. Borrower represents that Entity Guarantor owns or
will own all of the Equipment “free and clear,” that Lender will have a “first priority”
lien in the Equipment pursuant to the Security Agreement and that no other party has any
right, title or interest in the Equipment.
13. Warranties. Borrower represents and warrants to Lender the following:
(a) The Borrower is limited liability company duly formed, validly existing
and in good standing under the laws of the State of Minnesota.
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(b) The making and performance of this Agreement and the execution and
delivery of the Note, the Mortgage, the Security Agreement and any other instrument
required hereunder are within the powers of the Borrower and the Entity Guarantor and
have been duly authorized by all necessary company action on the part of the Borrower
and the Entity Guarantor. This Agreement and the Note, Mortgage, Security Agreement
and any other instruments required hereunder have been duly executed and delivered and
are the legal, valid and binding obligations of the Borrower and the Entity Guarantor
enforceable in accordance with their respective terms.
(c) No litigation, tax claims or governmental proceedings are pending or
threatened against the Borrower, the Entity Guarantor or the Loan Property, and no
judgment or order of any court or administrative agency is outstanding against the
Borrower, the Entity Guarantor or the Loan Property which would have a material
adverse effect on Borrower, the Entity Guarantor or the Loan Property.
(d) Borrower and the Entity Guarantor have filed all tax returns (federal and
state) required to be filed for all prior years and paid all taxes shown thereon to be due,
including interest and penalties. Borrower and the Entity Guarantor will file all such
returns and pay all such taxes for the current and future years.
(e) All information, financial or other, which has been submitted by
Borrower, the Guarantors in connection with the Loan is true, accurate and complete in
all material respects.
(f) Entity Guarantor is under common ownership.
14. Indemnification. Borrower agrees to indemnify Lender and save it harmless
against all loss, liability, expense, or damages including but not limited to attorneys’ fees, which
may arise by reason of the assertion of any lien against the Loan Property or the Equipment.
Borrower will indemnify and hold Lender harmless from any damages Lender may suffer or
incur from Borrower’s breach of its covenant in this Agreement.
15. Defaults. Each of the following shall constitute an Event of Default:
(a) If Borrower or Entity Guarantor abandons the Loan Property, work on the
construction of the Improvements is halted or the Improvements are not constructed in
accordance with the 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.
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(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) Any of the terms, covenants or conditions of any permit or other
agreement issued or made by the City or other governmental body having jurisdiction
over the Loan Property are not complied with within the time required thereby or are
terminated or modified by the City or such other governmental body and Borrower has
not taken or has not caused the Entity Guarantor to take the necessary steps to correct or
cure the same within thirty (30) days after written notice is given by Lender.
(e) Any mechanic’s or material supplier’s lien is filed, against the Loan
Property and is not released, satisfied or discharged or bonded to Lender’s satisfaction,
subject, however, to Borrower’s right to contest the same in accordance with the
provisions of the Security Agreement.
(f) A transfer which violates by Paragraph 9 hereof, Encumbrances and
Transfer, occurs.
(g) Borrower: (i) fails to pay any amount due under this Agreement, the Note,
the Mortgage Documents when due; (ii) fails to perform any other obligation to be
performed under this Agreement, the Note, the Mortgage, or any other document
executed by Borrower pursuant to this Agreement; or (iii) fails to pay any amount or
perform any obligation under any other note, mortgage or other agreement now or
hereafter made by Borrower in favor of or with Lender or otherwise now or hereafter
held by Lender or Bank, and such failure continues beyond any applicable cure period.
(h) Entity Guarantor fails to timely provide Lender any information necessary
for Lender to perfect its security interest in the Equipment.
(i) Any representation or warranty by Borrower contained herein or in the
Note, the Security Agreement, or any other instrument required hereunder is false or
untrue in any material respect when made.
(j) A default under the Lease, the Guaranties, or the Security Agreement
beyond any applicable notice and cure period.
Upon the occurrence of an Event of Default, Lender, at its option, shall, in addition to any other
remedies which it might be entitled to by law, have the right to:
(a) To enter into possession of the Loan Property;
(b) To perform such other acts or deeds which reasonably may be necessary to
cure any default existing under this Agreement, and to this end, it is hereby agreed as
follows:
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(i) All sums expended by Lender in effectuating its rights under
paragraphs (ii) and (iii) of this paragraph shall be deemed to have
been advanced under this Agreement and to be secured by the
Security Agreement and any other security document required under
this Agreement as security for the Loan.
(ii) Borrower hereby constitutes and appoints Lender its true and lawful
attorney-in-fact with full power of substitution either in the name of
Lender or in the name of Borrower or in the name of both, for the
following purposes: (a) to prosecute and defend all actions or
proceedings in connection with the Loan Property or the Equipment
and do any and every act which Borrower might do in its own
behalf; (b) to perform each of the terms, covenants and conditions to
be kept and performed by Borrower under any contracts and/or
leases obtained or held by Borrower in connection with the operation
of the Loan Property and any other contracts; (c) without limiting
the foregoing, to perform each of the terms, covenants and
conditions to be kept or performed by Borrower under this
Agreement, the Security Agreement and any other instrument
required under this Agreement; and (d) to do all things that Lender
reasonably deems necessary or advisable for the purpose of carrying
out the powers enumerated in (a), (b), (c) and (d) of this
Subparagraph (ii);
(iii) The powers herein granted Lender shall be deemed to be powers
coupled with an interest and the same are irrevocable;
(c) cancel this Agreement;
(d) bring appropriate action to enforce such performance and the correction of
such Event of Default;
(e) declare the entire unpaid principal of the Note and all accrued interest
thereon immediately due and payable without notice;
(f) exercise any remedies under the Guaranties, or the Security Agreement,
foreclose the Mortgage and any other security instrument referred to in this Agreement
and/or exercise any other rights or remedies it may have under the Guaranties, the
Security Agreement, the Mortgage and any other security instruments.
16. Default under Note and Security Agreement. The failure by Borrower to keep or
perform any of the terms, covenants and conditions to be kept or performed by it under this
Agreement shall constitute a default under the Note, the Security Agreement and any other
security instrument held by Lender in connection with the Loan.
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17. Notices. Any notices given hereunder shall be in writing and shall be deemed to
have been given when delivered personally or three (3) days after deposited in the United States
mail, registered, postage prepaid, addressed as follows:
If to Borrower:
Hemmer Companies L.L.C.
15970 Jarvis Street NW
Elk River, MN 55330
Attention: President
If to Lender:
Economic Development Authority of the City of Elk River
13065 Orono Parkway
Elk River, Minnesota 55330
Attn: Director of Economic Development
or addressed to any such party at such other address as such party shall hereafter furnish by
notice to the other party. Any notice delivered personally to Borrower shall be delivered to an
officer of Borrower, and any notice delivered personally to Lender shall be delivered to an
officer of Lender at the address for Lender for the mailing of notices. Either party may change its
address for the giving of notices by giving the other party at least ten (10) days’ notice in the
manner provided above.
18. Headings. The headings used in this Agreement are for convenience only and do
not define, limit or construe the contents of this Agreement.
19. Bindings on Successors and Assigns. Subject to the limitations on transfer
contained in this Agreement, this Agreement shall be binding upon and inure to the benefit of the
successors and assigns of the parties hereto.
20. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of Minnesota, without giving effect to any choice or conflict of law
provision or rule.
21. Counterparts. This Agreement may be executed in two (2) or more counterparts,
each of which shall be an original and all of which shall constitute the same agreement.
22. Entire Agreement. This Agreement, the Note, the Security Agreement and the
other documents executed by Borrower and/or Lender pursuant to this Agreement contain the
entire agreement between the parties with respect to the subject matter hereof and supersede all
prior understandings and agreements, both oral and written. This Agreement may be amended
only in a writing signed by the parties hereto.
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23. Fees and Expenses. Borrower agrees to pay to Lender immediately upon demand
all costs and expenses, including, without limitation, all attorneys’ fees, incurred by Lender in
connection with the enforcement of the Lender’s rights and/or the collection of any amounts
which become due to Lender under this Agreement, the Note, the Security Agreement or the
other documents executed in connection herewith; and the prosecution or defense of any action
in any way related to this Agreement, the Note, the Security Agreement or the other documents
executed in connection herewith.
24. Business Subsidies Act.
(a) In order to satisfy the provisions of Minnesota Statutes, Sections 116J.993
to 116J.995, as amended, (the “Business Subsidies Act”), the Borrower acknowledges
and agrees that the amount of the “Business Subsidy” granted to the Borrower under this
Agreement is the amount of the loan, which is $189,338.20, and that the Business
Subsidy is needed because the project is not sufficiently feasible for the Borrower to
undertake without the Business Subsidy. The public purpose of the Business Subsidy is
to develop manufacturing facilities, increase the tax base in the City, help an existing
business expand in the City, and stimulate the creation and retention of jobs. In
consideration of the Business Subsidy provided for the Borrower’s renovation and
acquisition of the Loan Property, the Borrower represents that pursuant to the terms of
the Lease, it will cause the Entity Guarantor to meet following goals (the “Goals”): (i) the
Entity Guarantor shall maintain 14 full-time equivalent jobs and relocate or create 5 full-
time equivalent jobs in Elk River, Minnesota, at the Loan Property at an hourly wage
equal to the greater of $17.00 exclusive of benefits per hour or 150% of the state or
federal minimum wage, whichever is greater, by the two (2) year anniversary of the date
of closing on the Loan; (ii) the Borrower shall maintain the jobs required in clause (i) for
at least 2 years following the creation or retention of all 19 jobs.
(b) If none of the Goals are met, the Borrower agree to repay all of the
Business Subsidy to the Lender, plus interest (“Interest”) set at the greater of 4% per
annum or the implicit price deflator defined in Minnesota Statutes Section 275.70,
subdivision 3, accruing from and after the date of closing on the Loan, compounded
semiannually. If the Goals are met in part, the Borrower agrees to repay a portion of the
Business Subsidy (plus Interest) determined by multiplying the Business Subsidy by a
fraction, the numerator of which is the number of jobs in the Goals which were not
created at the wage level set forth above and the denominator of which is 19 (i.e. number
of jobs set forth in the Goals).
(c) The Borrower agrees to: (i) report its progress on achieving the Goals to
the Lender until the later of the date the Goals are met, or, if the Goals are not met, until
the date the Business Subsidy is repaid, (ii) include in the report the information required
in Section 116J.994, subdivision 7 of the Business Subsidies Act on forms developed by
the Minnesota Department of Employment and Economic Development, and (iii) send
completed reports to the Lender. The Borrower agrees to file these reports no later than
March 1 of each year commencing March 1, 2020, and within 30 days after the deadline
for meeting the Goals. The Lender agrees that if it does not receive the reports, it will
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mail the Entity Guarantor and the Borrower a warning within one week of the required
filing date. If within 14 days of the post marked date of the warning the reports are not
made, the Borrower agrees to pay to the Lender a penalty of $100 for each subsequent
day until the report is filed up to a maximum of $1,000. If the Borrower or the Entity
Guarantor relocates operations outside of the City at any time prior to the maturity date of
the Note, the Lon shall be immediately due and payable.
(d) The Borrower agrees that, pursuant to the terms of the Lease, it will cause
the Entity Guarantor to continue operations in the City for at least five years after the date
of closing on the Loan.
(e) Other than the loan provided pursuant to this Agreement, there are no
other state or local government agencies providing financial assistance for the project.
(f) There is no parent corporation of the Entity Guarantor or the Borrower.
[Signature Pages follow]
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Signature Page to Loan Agreement
IN TESTIMONY WHEREOF, each of the parties hereto has caused these presents to be
effective as of the day and year first above written.
HEMMER COMPANIES L.L.C.
By:
Cynthia Mae Hemmer
Its: President
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Signature Page to Loan Agreement
IN TESTIMONY WHEREOF, each of the parties hereto has caused these presents to be
effective as of the day and year first above written.
ECONOMIC DEVELOPMENT AUTHORITY
OF THE CITY OF ELK RIVER
By:
Name:
Its: President
By:
Name:
Its: Executive Director
611366v1EL185-30
EXHIBIT A
Equipment List
Item Description Purchase Price Status
DI Paint Booth / Open face GFS Global Finishing Solutions $ 5,000.00 To be purchased
DI Air Make-up / Modine Model 130 $15,000.00 To be purchased
DI HVAC / Heaters (Qty 2) Modine 200K BTU $ 5,000.00 To be purchased
[Insert Additional Equipment]
611366v1EL185-30
611366v1EL185-30
611366v1EL185-30
1
611369v1EL185-30
AMENDED AND RESTATED SECURITY AGREEMENT
(Microloan)
This AMENDED AND RESTATED SECURITY AGREEMENT (“Agreement”) is made
to be effective as of ___________, 2019, by DISTINCTIVE IRON CO., LLC, a Minnesota
limited liability company (“Distinctive Iron”) and the ECONOMIC DEVELOPMENT
AUTHORITY OF THE CITY OF ELK RIVER (the “Secured Party”), which amends and
restates in all respects the Security Agreement, dated February 17, 2015 (the “Original Security
Agreement”), by and between the Borrower and the Lender.
AGREEMENT
In consideration of the above recitals, and the promises set forth in this Agreement, the
parties agree as follows:
1. OBLIGATIONS. “Obligations” means collectively each debt, liability and obligation of
every type and nature which Hemmer Companies L.L.C., a Minnesota limited liability
company (“Hemmer”) may now or at any time hereafter owe to Secured Party (including
without limitation the obligations created under the loan agreement (the “Loan
Agreement”) and the promissory note of Hemmer to Secured Party of even date herewith
and all amendments, replacements, restatements, and substitutions therefore), together
with Distinctive Iron’s obligations to Secured Party pursuant to the Entity Guaranty of
even date herewith, whether now existing or hereafter created or arising, and whether
direct or indirect, due or to become due, absolute or contingent, and the repayment or
performance of any of the foregoing if any such payment or performance is at any time
avoided, rescinded, set aside, or recovered from or repaid by Secured Party, in whole or
in part, in any bankruptcy, insolvency, or similar proceeding instituted by or against
Hemmer, Distinctive Iron or any guarantor of any Obligation, or otherwise, including but
not limited to all principal, interest, fees, expenses and other charges.
2. COLLATERAL. “Collateral” means collectively all of the following property of
Distinctive Iron, whether now owned or hereafter acquired and wherever located: (a)
equipment specified on the attached Exhibit A; (b) accessions, additions and
improvements to, replacements of, and substitutions for any of the foregoing; (c) all
products and proceeds of any of the foregoing; and (d) books, records and data in any
form relating to any of the foregoing.
3. SECURITY INTEREST. Distinctive Iron grants to Secured Party a security interest
(“Security Interest”) in the Collateral to secure the payment and performance of the
Obligations. The Security Interest continues in effect until this Agreement is terminated
in writing by Secured Party.
4. REPRESENTATIONS, WARRANTIES AND COVENANTS. Distinctive Iron
represents, warrants and agrees that:
4.1. Principal Office/Residence. Distinctive Iron’s chief executive office/residence is
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located at the address specified on the signature pages to this Agreement.
Distinctive Iron must give Secured Party written notice prior to any change in the
location of Distinctive Iron’s principal office/residence.
4.2. Organization; Authority. Distinctive Iron is a limited liability company, duly
organized, existing and in good standing under the laws of the state of its
organization and has full power and authority to enter into this Agreement.
Distinctive Iron’s state of organization/residence is Minnesota and its exact legal
name is as set forth on the signature page to this Agreement. Distinctive Iron will
not change its state of organization, form of organization or name without
Secured Party’s prior written consent.
4.3. Perfection of Security Interest. Distinctive Iron will execute and deliver, and
irrevocably appoints Secured Party (which appointment is coupled with an
interest) Distinctive Iron’s attorney-in-fact to execute and deliver in Distinctive
Iron’s name, all financing statements (including, but not limited to, amendments,
terminations and terminations of other security interests in any of the Collateral),
control agreements and other agreements which Secured Party may at any time
reasonably request in order to secure, protect, perfect, collect or enforce the
Security Interest, Distinctive Iron shall, at any time and from time to time, take
such steps as Secured Party may reasonably request for Secured Party: (i) to
obtain an acknowledgement, in form and substance reasonably satisfactory to
Secured Party, of any bailee having possession of any of the Collateral that such
bailee holds such Collateral for Secured Party; (ii) to obtain “control” of any
investment property, deposit accounts, letter-of-credit rights or electronic chattel
paper (as such terms are defined in the UCC, as hereinafter defined), with any
agreements establishing control to be in form and substance reasonably
satisfactory to Secured Party; and (iii) otherwise to ensure the continued
perfection and priority of the Security Interest in any of the Collateral and the
preservation of the rights of Secured Party therein.
4.4. Enforceability of Collateral. To the extent the Collateral consists of accounts,
instruments, documents, chattel paper, letter-of-credit rights, letters of credit or
general intangibles, the Collateral is enforceable in accordance with its terms, is
genuine, complies with applicable laws concerning form, content and manner of
preparation and execution, and all persons appearing to be obligated on the
Collateral have authority and capacity to contract and are in fact obligated as they
appear to be on the Collateral.
4.5. Title to Collateral. Distinctive Iron holds good and marketable title to the
Collateral free of all security interests and encumbrances. Distinctive Iron will
keep the Collateral free of all security interests and encumbrances except for the
Security Interest. Distinctive Iron will defend Secured Party’s rights in the
Collateral against the claims and demands of all other persons.
4.6. Collateral Location. Distinctive Iron will keep all tangible Collateral at 15970
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Jarvis Street NW, Elk River, Minnesota 55330.
4.7. Collateral Use. Distinctive Iron must use the Collateral only for business
purposes. Distinctive Iron must not use or keep any Collateral for any unlawful
purpose or in violation of any federal, state or local law, statute or ordinance.
4.8. Maintenance of Collateral. Distinctive Iron must maintain all tangible Collateral
in good condition and repair. Distinctive Iron must not commit or permit damage
to or destruction of any of the Collateral. Distinctive Iron must give Secured
Party prompt written notice of any material loss of or damage to any tangible
Collateral and of any other happening or event that materially affects the
existence, value or amount of the Collateral.
4.9. Disposition of Collateral. Distinctive Iron must not sell or otherwise dispose of
any Collateral or any interest in any Collateral without the prior written consent of
Secured Party, except that until the occurrence of an Event of Default (as defined
in Section 5 below), Distinctive Iron may sell any inventory constituting
Collateral in the ordinary course of Distinctive Iron’s business.
4.10. Taxes, Assessments and Liens. Distinctive Iron must promptly pay all taxes and
other governmental charges levied or assessed upon or against any Collateral.
4.11. Records; Access. Distinctive Iron must keep accurate and complete records
pertaining to the Collateral and to Distinctive Iron’s business and financial
condition and will submit to Secured Party all reports regarding the Collateral and
Distinctive Iron’s business and financial condition as and when Secured Party
may reasonably request. During normal business hours, Distinctive Iron must
permit Secured Party and its representatives to examine or inspect any Collateral,
wherever located, and to examine, inspect and copy Distinctive Iron’s books and
records relating to the Collateral and Distinctive Iron’s business and financial
condition.
4.12. Insurance. Distinctive Iron must keep all tangible Collateral insured against risks
of fire (including so-called extended coverage), theft and other risks and in such
amounts as Secured Party may reasonably request, with any loss payable to
Secured Party to the extent of its interest. Distinctive Iron assigns to Secured
Party all money due or to become due with respect to, and all other rights of
Distinctive Iron with respect to, all insurance concerning the Collateral and
Distinctive Iron directs the issuer of any such insurance to pay all such money
directly to Secured Party.
4.13. Collection Costs. Distinctive Iron must reimburse Secured Party on demand for
all costs of collection of any of the Obligations and all other expenses incurred by
Secured Party in connection with the perfection, protection, defense or
enforcement of the Security Interest and this Agreement, including all reasonable
attorneys’ fees incurred by Secured Party whether or not any litigation or
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bankruptcy or insolvency proceeding is commenced.
4.14. Financing Statements. Distinctive Iron authorizes Secured Party to file one or
more financing or continuation statements, and amendments thereto, relative to all
or any part of the Collateral without Distinctive Iron’s signature where permitted
by law, in each case in such form and substance as Secured Party may determine.
Distinctive Iron shall pay all filing, registration and recording fees and any taxes,
duties, imports, assessments and charges arising out of or in connection with the
execution and delivery of this Agreement, any agreement supplemental hereto,
any financing statements, and any instruments of further assurance.
5. EVENTS OF DEFAULT. Each of the following is an “Event of Default” under this
Agreement: (a) Hemmer or Distinctive Iron fails to pay any of the Obligations when due
and any applicable grace period lapses without cure by Hemmer or Distinctive Iron; (b)
Hemmer or Distinctive Iron fails to timely perform any other Obligation and any
applicable grace period lapses without cure by Hemmer or Distinctive Iron; (c) any
representation made by Distinctive Iron in this Agreement or in any financial statement
or report submitted by Hemmer or Distinctive Iron to Secured Party proves to have been
materially false or misleading when made; (d) Distinctive Iron or Hemmer ceases to
conduct its business; (e) Distinctive Iron or Hemmer is or becomes insolvent, however
defined; (f) Distinctive Iron or Hemmer voluntarily files, or has filed against it
involuntarily, a petition under the United States Bankruptcy Code; or (g) if Distinctive
Iron or Hemmer is dissolved or liquidated.
6. REMEDIES UPON EVENT OF DEFAULT. Upon the occurrence of an Event of
Default and at any time thereafter, Secured Party may exercise one or more of the
following rights and remedies: (a) declare any or all unmatured Obligations to be
immediately due and payable without presentment or any other notice or demand and
immediately enforce payment of any or all of the Obligations; (b) require Distinctive Iron
to make the Collateral available to Secured Party at a place to be designated by Secured
Party; (c) exercise and enforce any rights or remedies available upon default to a secured
party under the Uniform Commercial Code as amended from time to time (“UCC”), and,
if notice to Distinctive Iron of the intended disposition of Collateral or any other intended
action is required by law, such notice shall be commercially reasonable if given at least
ten (10) calendar days prior to the intended disposition or other action; and (d) exercise
and enforce any other rights or remedies available to Secured Party by law or agreement
against the Collateral, Distinctive Iron, Hemmer, or any other person or property. Secured
Party’s duty of care with respect to Collateral in its possession will be fulfilled if Secured
Party exercises reasonable care in physically safekeeping the Collateral or, in the case of
Collateral in the possession of a bailee or other third person, exercises reasonable care in
the selection of the bailee or other third person. Mere delay or failure to act will not
preclude the exercise or enforcement of any of Secured Party’s rights or remedies. All
rights and remedies of Secured Party are cumulative and may be exercised singularly or
concurrently, at Secured Party’s option.
7. MISCELLANEOUS. The following miscellaneous provisions are a part of this
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Agreement:
7.1. Definitions. Terms not otherwise defined in this Agreement shall have the
meanings ascribed to them, if any, under the UCC and such meanings shall
automatically change at the time that any amendment to the UCC, which changes
such meanings, shall become effective.
7.2. Notices. All notices under this Agreement must be in writing and will be deemed
given when delivered or placed in the United States mail, registered or certified,
postage prepaid, addressed to the respective party at the respective address set
forth below its signature on the signature page to this Agreement. Any party may
change its address for notices under this Agreement by giving written notice to
the other parties.
7.3. Amendments/Waivers. This Agreement may be waived, amended, modified or
terminated and the Security Interest may be released only in a writing signed by
Secured Party. Any waiver signed by Secured Party will be effective only in the
specific instance and for the specific purpose given.
7.4. Applicable Law. This Agreement is governed by the laws of the State of
Minnesota without regard to the conflict of law principles. If any provision of
this Agreement is held unlawful or unenforceable in any respect, such illegality or
unenforceability will not affect other provisions or applications that can be given
effect and this Agreement will be construed and enforced as if the unlawful or
unenforceable provision or application had never been contained in or prescribed
by this Agreement.
7.5. Caption Headings. Caption headings in this Agreement are for convenience
purposes only and are not to be used to interpret or define the provisions of this
Agreement.
7.6. Integration. This Agreement embodies the entire agreement and understanding
among the parties relative to subject matter hereof and supersedes all prior
agreements and understandings relating to such subject matter.
7.7. Successors and Assigns. This Agreement is binding upon and will inure to the
benefit of the parties and their successors and assigns.
7.8. Counterparts. This Agreement may be executed in several counterparts, each of
which will be an original, and all of which will constitute one and the same
instrument.
7.9 Amendment and Restatement. This Security Agreement replaces and supersedes
in all respects the Security Agreement signed on February 17, 2015.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first
written above.
DISTINCTIVE IRON:
DISTINCTIVE IRON, LLC,
a Minnesota limited liability company
By:
____________________
Address:
15970 Jarvis Street NW
Elk River, MN 55330
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SECURED PARTY:
ECONOMIC DEVELOPMENT
AUTHORITY OF THE CITY OF ELK
RIVER
By:
Its:
By:
Its:
Address:
13065 Orono Parkway
Elk River, MN 55330
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EXHIBIT A
List of Equipment
All of the following property of Distinctive Iron, whether now owned or hereafter acquired and
wherever located: (a) equipment specified below; (b) accessions, additions and improvements to,
replacements of, and substitutions for any of the foregoing; (c) all products and proceeds of any
of the foregoing; and (d) books, records and data in any form relating to any of the foregoing.
Item Description Purchase Price Status
DI Paint Booth / Open face GFS Global Finishing Solutions $ 5,000.00 Purchased
DI Air Make-up / Modine Model 130 $15,000.00 Purchased
DI HVAC / Heaters (Qty 2) Modine 200K BTU $ 5,000.00 Purchased
[insert additional equipment description]
A-1
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A-2
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A-3
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ENVIRONMENTAL INDEMNIFICATION AGREEMENT
THIS AGREEMENT is made as of the ___ day of ______, 2019, by HEMMER
COMPANIES L.L.C., a Minnesota limited liability company (the “Borrower”) and ECONOMIC
DEVELOPMENT AUTHORITY OF THE CITY OF ELK RIVER, a public body corporate and
politic of the State of Minnesota (“Lender”).
RECITALS
A. On February 17, 2015, the Lender provided to the Borrower a microloan under its
Microloan Program, in the principal amount of $126,000.00, of which $___________ is
currently outstanding (the “Original Loan”).
B. To finance the cost of renovation of the Property and Borrower’s purchase of
equipment to be used at the Property, the Borrower has requested an additional loan in the
principal amount of $100,000 from the Lender, pursuant to its Microloan Program (the “New
Loan,” and together with the Original Loan, the “Loan”).
C. The Loan is secured in part by an Mortgage and Assignment of Rents and
Security Agreement and Fixture Financing Statement dated even herewith (the “Mortgage”)
pertaining to certain land described in Exhibit A attached hereto (collectively, the “Property”)
owned by Borrower and located in Sherburne County, Minnesota.
D. Lender has refused to make the Loan to Borrower unless this Agreement is
executed and delivered by Borrower.
AGREEMENT
NOW, THEREFORE, in consideration of Lender’s agreement to make the Loan to
Borrower, Borrower hereby warrants and represents to, and covenants and agrees with, Lender as
follows:
1. Definitions. As used in this Agreement, the following terms shall have the
following meanings:
(a) “Environmental Regulation” means a Law relating to the environment and/or to
human health or safety, or governing, regulating or pertaining to the generation,
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treatment, storage, handling, transportation, use or disposal of any Hazardous
Substance.
(b) “Hazardous Substance” means any substance or material defined in or governed
or regulated by any Environmental Regulation as a dangerous, toxic or hazardous
pollutant, contaminant, chemical, waste, material or substance, and also expressly
includes urea-formaldehyde, polychlorinated biphenyls, dioxin, radon, lead-based
paint, asbestos, asbestos containing materials, nuclear fuel or waste, radioactive
materials, explosives, carcinogens and petroleum products, including but not
limited to crude oil or any fraction thereof, natural gas, natural gas liquids,
gasoline and synthetic gas, and any other waste, material, substance, pollutant or
contaminant the presence of which on, in, about or under the Property would
subject the owner or operator thereof to any damages, penalties, fines or liabilities
under any applicable Environmental Regulation.
(c) “Law” means any federal, state or local law, statute, code, ordinance, rule,
regulation or requirement.
2. Warranties and Representations. Borrower warrants and represents to Lender that
to Borrower’s knowledge, and except as otherwise described in documents identified on
Exhibit A attached hereto:
(a) There is not located on, in, about or under the Property any Hazardous Substances
except for Hazardous Substances of the type ordinarily used, stored or
manufactured in connection with the operation of the Property as it is presently
operated, and such existing Hazardous Substances have been and are used, stored
and manufactured in compliance with all Environmental Regulations.
(b) The Property is not presently used, and has not in the past been used, as a landfill,
dump, disposal facility or gasoline station, or for industrial, manufacturing or
military purposes, or for the storage, generation, production, manufacture,
processing, treatment, disposal, handling, transportation or deposit of any
Hazardous Substances.
(c) There has not in the past been, and no present threat now exists of, a spill,
discharge, emission or release of a Hazardous Substance in, upon, under, over or
from the Property or from any other property which would have an impact on the
Property.
(d) The Property is in compliance with, and there are no past or present
investigations, administrative proceedings, litigation, regulatory hearings or other
actions completed, proposed, threatened or pending, alleging noncompliance with
or violation of, any Environmental Regulations respecting the Property, or
relating to any required environmental permits covering the Property.
(e) Borrower has disclosed to Lender all reports and investigations commissioned by
or in the possession or control of Borrower and relating to Hazardous Substances
and the Property.
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(f) There are not now, nor have there ever been, any above ground or underground
storage tanks located in or under the Property. All storage tanks identified on
Exhibit A have been registered and/or permitted as required by Environmental
Regulations, and evidence of such registration and/or permitting has been given to
Lender. There are no wells on or under the Property, except as identified on
Exhibit A.
3. Covenants and Agreements. Borrower covenants and agrees as follows:
(a) Except for substances normally used for maintenance or operation of the Property
which are used, stored and disposed of in accordance with all applicable
Environmental Regulations and except as identified on Exhibit A, Borrower shall
not, nor shall it permit others to, place, store, locate, generate, produce, create,
process, treat, handle, transport, incorporate, discharge, emit, spill, release,
deposit or dispose of any Hazardous Substance in, upon, under, over or from the
Property. Borrower shall cause all Hazardous Substances found on or under the
Property, which are not permitted under the foregoing sentence, to be properly
removed therefrom and properly disposed of at Borrower’s cost and expense.
Borrower shall not install or permit to be installed any underground storage tank
on or under the Property. Borrower shall give written notice to Lender prior to a
change in the operations on the Property.
(b) In the event that (i) Lender reasonably believes that a violation of an
Environmental Regulation may have occurred in connection with the Property;
(ii) Lender receives notice from Borrower or otherwise has knowledge that an
event described in subparagraph 3(d) has occurred; (iii) Lender reasonably
believes that a representation or warranty of Borrower in Paragraph 2 was untrue
in any material respect when made or has become untrue in any material respect;
(iv) Lender receives notice from Borrower or otherwise has knowledge of a
change in operations on the Property and Lender reasonably believes that the new
operations may entail the presence of more or different Hazardous Substances on
the Property; or (v) Lender reasonably believes that Hazardous Substances are
present on the Property which were not previously known by Lender to be present
on the Property; then, in any such event, Borrower shall at its cost obtain and
deliver to Lender an environmental review, audit, assessment and/or report
relating to the Property or shall have any previously delivered materials updated
and/or amplified, by an engineer or scientist selected by Borrower and acceptable
to Lender; if Borrower fails to do so within forty-five (45) days after such request
is made, Lender shall have the right to do so, in which event Borrower shall
reimburse Lender for the cost incurred by Lender in doing so within ten (10) days
following demand therefor by Lender.
(c) Borrower shall, promptly after obtaining actual knowledge thereof, give notice to
Lender of: (i) any activity in violation of any applicable Environmental
Regulations relating to the Property, (ii) any governmental or regulatory actions
instituted or threatened under any Environmental Regulations affecting the
Property, (iii) all claims made or threatened by any third party against Borrower
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or the Property relating to any Hazardous Substance or a violation of any
Environmental Regulations, (iv) discovery by Borrower of any occurrence or
condition on or under the Property or on or under any real property adjoining or in
the vicinity of the Property which could subject Borrower, Lender or the Property
to a claim under any Environmental Regulations. Any such notice shall include
copies of any written materials received by Borrower.
(d) Any investigation or any remedial or corrective action taken with respect to the
Property shall be done under the supervision of a qualified consultant, engineer or
scientist acceptable to Lender who shall, at Borrower’s cost and at the completion
of such investigation or action, provide a written report of such investigation or
action to Lender. Borrower shall also provide Lender with a copy of any interim
reports prepared in connection with any such investigation or action.
(e) If the Property has, or is suspected to have, asbestos or asbestos containing
materials (“ACM”) which, due to its condition or location or due to any planned
building renovation or demolition, is recommended to be abated by repair,
encapsulation, removal or other action, Borrower shall promptly carry out the
recommended abatement action. If the recommended abatement includes removal
of ACM, Borrower shall cause the same to be removed and disposed of offsite by
a licensed and experienced asbestos removal contractor, all in accordance with
Environmental Regulations. Upon completion of the recommended abatement
action, Borrower shall deliver to Lender a certificate, signed by an officer of
Borrower and the consultant overseeing the abatement action, certifying to Lender
that the work has been completed in compliance with all applicable laws,
ordinances, codes and regulations (including without limitation those regarding
notification, removal and disposal) and that no airborne fibers beyond permissible
exposure limits remain on site.
(f) After an Event of Default (as defined in the Loan Agreement between the
Borrower and the Lender dated an even date herewith), Lender shall have the
right, after ten (10) days’ prior written notice to Borrower, to have an
environmental review, audit, assessment, testing program and/or report with
respect to the Property performed or prepared by an environmental engineering
firm selected by Lender. Borrower shall provide reasonable access to the
Property to such environmental engineering firm during normal business hours to
conduct such review. Borrower shall reimburse Lender for the cost incurred for
each such action within ten (10) days following demand therefor by Lender.
4. Indemnity. The Borrower shall indemnify Lender, any participant of Lender, its
and their directors, officers, employees, agents, contractors, licensees, invitees, and the
respective heirs, legal representatives, successors and assigns of all such persons and parties
(hereinafter collectively referred to as “Indemnified Parties”) against, shall hold the Indemnified
Parties harmless from, and shall reimburse the Indemnified Parties for, any and all loss, damage,
liability, cost and expense directly or indirectly incurred by the Indemnified Parties, including
reasonable attorneys’ and consultants’ fees, resulting from: (a) the presence or discovery of any
Hazardous Substance in, upon, under or over, or emanating from, the Property, whether or not
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611675v1EL185-30
the Borrower is responsible therefor, and whether or not it was placed, located, deposited or
released by the Borrower, or (b) any violation of any Environmental Regulation, or both (a) and
(b). Borrower agrees that the Indemnified Parties shall have no responsibility for, and Borrower
hereby releases the Indemnified Parties from responsibility for, damage or injury to human
health, property, the environment or natural resources caused by Hazardous Substances and for
abatement, clean-up, detoxification, removal or disposal of, or otherwise with respect to,
Hazardous Substances. The indemnity contained in this paragraph 4 shall be deemed continuing
for the benefit of the Indemnified Parties, including any purchaser at a foreclosure or other sale
under Mortgage, any transferee of the title from Lender, and any subsequent owner of the
Property, and shall survive the satisfaction or release of the Mortgage, any foreclosure of or other
sale under the Mortgage and/or any acquisition of title to the Property or any part thereof by
Lender, or anyone claiming by, through or under Lender, by deed in lieu of foreclosure or
otherwise, and also shall survive the repayment or any other satisfaction of the Loan.
Notwithstanding the foregoing, the indemnity contained in this paragraph 4 shall not apply with
respect to any loss, damage, liability, cost or expense which Borrower proves by a
preponderance of the evidence was caused solely by or resulted solely from any act or omission
of any person, other than the Borrower or an agent, employee, invitee, guarantor, or contractor of
the Borrower, which occurred after Lender or anyone claiming by, through or under Lender
acquired title to the Property by foreclosure of Mortgage or deed in lieu of foreclosure or
otherwise and control of the Property. Any amounts covered by the foregoing indemnification
shall bear interest from the date incurred at the rate set forth in the promissory note evidencing
the Loan, and shall be payable on demand. Borrower agrees that its obligations under this
Agreement are separate from, independent of, and in addition to its obligations, if any, under the
Mortgage and other documents which secure the Loan.
5. Liability. The liability of Borrower under this Agreement shall not be subject to
any limitations on liability set forth in the Mortgage or any other document evidencing or
securing the Loan. Without limitation, the obligations and liability of Borrower under this
Agreement shall in no way be waived, released, discharged, reduced, mitigated or otherwise
affected by Lender’s making of the Loan with knowledge of the matters described in documents
identified on Exhibit A attached hereto, or of the presence of any Hazardous Substance on, in,
about or under the Property or any property adjoining or in the vicinity of the Property, or of any
violation of any Environmental Regulation or any condition or state of facts or circumstances
which with notice or lapse of time or both might ripen into such a violation, or by any neglect,
delay or forbearance of Lender in demanding, requiring or enforcing payment or performance of
the obligations and liability of Borrower hereunder, or by the receivership, bankruptcy,
insolvency or dissolution of Borrower or any affiliate thereof. No action or proceeding brought
or instituted under this Agreement, and no recovery made as a result thereof, shall be a bar or a
defense to any further action or proceeding under any other agreement. Borrower shall
reimburse Lender and the other Indemnified Parties for all attorneys’ fees and expenses incurred
in connection with the enforcement of the Indemnified Parties’ rights under this Agreement,
including those incurred in any case, action, proceeding or claim under the Federal Bankruptcy
Code or any successor statute.
6. Notices. Any notice or other communication to any party in connection with this
Agreement shall be in writing and shall be sent in accordance with the provisions of the Loan
Agreement.
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7. Governing Law and Construction. The validity, construction and enforceability
of this Agreement shall be governed by the laws of the State of Minnesota, without giving effect
to conflict of laws or principles thereof, but giving effect to federal laws of the United States
applicable to national banks. Whenever possible, each provision of this Agreement and any
other statement, instrument or transaction contemplated hereby or relating hereto, shall be
interpreted in such manner as to be effective and valid under such applicable law, but, if any
provision of this Agreement or any other statement, instrument or transaction contemplated
hereby or relating hereto shall be held to be prohibited or invalid under such applicable law, such
provision shall be ineffective only to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this Agreement or
any other statement, instrument or transaction contemplated hereby or relating hereto.
8. Consent to Jurisdiction. At the option of Lender, this Agreement may be enforced
in any Federal Court or State Court sitting in Sherburne County, Minnesota; and Borrower
consents to the jurisdiction and venue of any such Court and waives any argument that venue in
such forums is not convenient. In the event Borrower commences any action in another
jurisdiction or venue under any tort or contract theory arising directly or indirectly from the
relationship created by this Agreement, Lender at its option shall be entitled to have the case
transferred to one of the jurisdictions and venues above-described, or if such transfer cannot be
accomplished under applicable law, to have such case dismissed without prejudice.
9. Waiver of Jury Trial. Borrower and Lender irrevocably waive any and all right to
trial by jury in any legal proceeding arising out of or relating to this Agreement or any of the
Loan documents (as that term is used in the Loan Agreement) or the transactions contemplated
hereby or thereby.
10. Binding Effect; Gender. This Agreement shall inure to the benefit of Lender, and
the Indemnified Parties, and shall bind Borrower and Borrower’s heirs; executors,
administrators, personal representatives, legal representatives, successors and assigns. The
obligations of Borrower under this Agreement shall be enforceable in all events against
Borrower, its heirs, executors, administrators, personal representatives, legal representatives,
successors and assigns, and each of them, jointly and severally, and shall be enforceable, in the
event of the death of an Borrower, as a claim against his or her estate or otherwise against the
representatives of his or her estate, the heirs-at-law, the devisees and beneficiaries of the total
estate and each of them. The use of any gender herein shall include all other genders.
11. Counterparts. This Agreement may be executed in any number of counterparts,
each executed counterpart constituting an original, but all together only one agreement.
[signature pages follow]
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I IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first
above written.
BORROWER
HEMMER COMPANIES L.L.C.
By:
Cynthia Mae Hemmer
Its: President
STATE OF MINNESOTA )
) ss.
COUNTY OF ________ )
The foregoing instrument was acknowledged before me on ______________, 2019, by Cynthia
Mae Hemmer, President of Hemmer Companies L.L.C., a Minnesota limited liability company, on behalf
of the limited liability company.
Notary Public
My Commission Expires:
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611675v1EL185-30
LENDER:
ECONOMIC DEVELOPMENT
AUTHORITY OF THE CITY OF ELK
RIVER
By:
Its: President
By:
Its: Executive Director
STATE OF MINNESOTA )
) ss.
COUNTY OF ________ )
The foregoing instrument was acknowledged before me on ______________, 2019, by
____________, the President, and ____________, the Executive Director, of the Economic
Development Authority of the City of Elk River, a public body corporate and politic of the State
of Minnesota, on behalf of the corporation.
Notary Public
My Commission Expires:
This Instrument was drafted by:
Kennedy & Graven, Chartered
470 U.S. Bank Plaza
200 South Sixth Street
Minneapolis, Minnesota 55402
Telephone: (612) 337-9300
611675v1EL185-30
EXHIBIT A [insert legal description]
1
456470v2 EL185-30
AMENDED AND RESTATED PERSONAL GUARANTY
(Microloan — Cynthia Mae Hemmer & Steven Michael Hemmer)
Elk River, Minnesota
_____________, 2019
FOR VALUABLE CONSIDERATION, the receipt and sufficiency of which is hereby
acknowledged, and in consideration of and to induce financial accommodations of any kind, with
or without security, given or to be given or continued at any time and from time to time by the
ECONOMIC DEVELOPMENT AUTHORITY OF THE CITY OF ELK RIVER (the “Lender”)
to or for the account of HEMMER COMPANIES L.L.C. (the “Borrower”), the undersigned,
jointly and severally, absolutely and unconditionally guarant y to the Lender the full and prompt
payment when due, whether at maturity or earlier by reason of acceleration or otherwise, of any
and all indebtedness, obligations and liabilities of the Borrower (and any and all successors of
the Borrower) to the Lender, now or hereafter existing, absolute or contingent, independent,
joint, several or joint and several, secured or unsecured, due or to become due, contractual or
tortious, liquidated or unliquidated, arising by assignment or otherwise, including without
limitation all indebtedness, obligations and liabilities owed by the Borrower (and any and all
successors of the Borrower) as a member of any partnership, syndicate, association or other
group, and whether incurred by the Borrower (or any successor of the Borrower) as principal,
surety, endorser, guarantor, accommodation party or otherwise (collectively, the
“Indebtedness”); and the undersigned, jointly and severally, agree to pay on demand all of the
Lender’s fees, costs, expenses and reasonable attorneys’ fees in connection with the
Indebtedness, any security therefor, and this guaranty, plus interest on such amounts at the
highest rate then applicable to any of the Indebtedness.
The Lender may at any time and from time to time, without consent of or notice to the
undersigned, without incurring responsibility to the undersigned, without releasing, impairing or
affecting the liability of the undersigned hereunder, upon or without any terms or conditions, and
in whole or in part: (1) sell, pledge, surrender, compromise, settle, release, renew, subordinate,
extend, alter, substitute, exchange, change, modify or otherwise dispose of or deal with in any
manner and in any order any Indebtedness, any evidence thereof, or any security or other
guaranty therefor; (2) accept any security for, or other guarantors of, any Indebtedness; (3) fail,
neglect or omit to obtain, realize upon or protect any Indebtedness or any security therefor, to
exercise any lien upon or right to any money, credit or property toward the liquidation of the
Indebtedness, or to exercise any other right against the Borrower, the undersigned, any other
guarantor or any other person; and (4) apply any payments and credits to the Indebtedness in any
manner and in any order. No act, omission or thing, except full payment and discharge of the
Indebtedness, which but for this provision could act as a release or impairment of the liability of
the undersigned hereunder, shall in any way release, impair or otherwise affect the liability of the
undersigned hereunder, and the undersigned waive any and all defenses of the Borrower
pertaining to the Indebtedness, any evidence thereof, and any security therefor, except the
defense of discharge by payment. The failure of any person or persons to sign this or any other
guaranty shall not release, impair or affect the liability of the undersigned hereunder. This
guaranty are primary obligations of the undersigned, jointly and severally, and the Lender shall
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456470v2 EL185-30
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, jointly and severally, for any deficiency remaining after
foreclosure of any mortgage or security interest securing the Indebtedness, whether or not the
liability of the Borrower or any other person for such deficiency is discharged pursuant to statute,
judicial decision or otherwise.
The liability of the undersigned under this guaranty is joint and several and is in addition
to and shall be cumulative with all other liabilities of the undersigned to the Lender, as guarantor
or otherwise, without any limitation as to amount, unless the writing evidencing or creating such
other liability specifically provides to the contrary. If any payment applied by the Lender to the
Indebtedness is thereafter set aside, recovered, rescinded or required to be returned for any
reason (including without limitation the bankruptcy, insolvency or reorganization of the
Borrower or any other person), the Indebtedness to which such payment was applied shall for the
purposes of this guaranty be deemed to have continued in existence, notwithstanding such
application, and this guaranty shall be enforceable as to such Indebtedness as fully as if such
application had never been made.
The undersigned waive: (1) notice of acceptance of this guaranty and of the creation and
existence of the Indebtedness; (2) presentment, demand for payment, notice of dishonor, notice
of nonpayment, and protest of any instrument evidencing the Indebtedness; and (3) all other
demands and notices to the undersigned or any other person and all other actions to establish the
liability of the undersigned hereunder. The undersigned consent to the personal jurisdiction of
the state and federal courts located in the State of Minnesota in connection with any controversy
related to this guaranty, waive any argument that venue in such forums is not convenient, and
agree that any litigation initiated by the undersigned against the Lender in connection with this
guaranty shall be venued in either the District Court of Sherburne County, Minnesota, or the
United States District Court, District of Minnesota.
All property of the undersigned, now or hereafter in the possession, control or custody of
or in transit to the Lender for any purpose, including without limitation the balance of every
account of the undersigned with and each claim of the undersigned against the Lender, shall be
subject to a lien and security interest in favor of the Lender, as security for all liabilities of the
undersigned to the Lender, and shall be subject to be set off against any and all such liabilities,
and the Lender may at any time and from time to time at its option and without notice
appropriate and apply any such property toward the payment of any and all such liabilities. The
undersigned agree to promptly provide the Lender from time to time with financial statements of
the undersigned, in form and substance acceptable to the Lender, at least once every 12 months
and as otherwise requested by the Lender. The undersigned agree to promptly provide the
Lender from time to time with such other information respecting the condition (financial and
otherwise), business and property of the undersigned as the Lender may request, in form and
substance acceptable to the Lender.
The undersigned waive all claims, rights and remedies which the undersigned may now
have or hereafter acquire against any person at any time now or hereafter liable to payment of
any of the Indebtedness and as to any collateral security, including but not limited to all claims,
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456470v2 EL185-30
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.
Any invalidity or unenforceability of any provision or application of this guaranty shall
not affect other lawful provisions and applications hereof and to this end the provisions of this
guaranty are declared to be severable. This guaranty shall bind the undersigned and the heirs,
representatives, successors and assigns of the undersigned, and of each of them respectively, and
shall benefit the Lender, its successors and assigns. This guaranty shall be governed by and
construed in accordance with the laws of the State of Minnesota.
The undersigned are the owners and members of the Borrower and the undersigned
acknowledge and agree that the Indebtedness is being utilized by the Borrower to improve the
real property located at 15970 Jarvis Street NW, Elk River, Sherburne County, Minnesota (the
“Property”) and to purchase equipment to be used at the Property, and such improvements and
equipment will materially financially benefit the undersigned and, therefore, the undersigneds’
obligations under this Guaranty are proper, valid and enforceable.
THE UNDERSIGNED REPRESENT, CERTIFY, WARRANT AND AGREE THAT
THE UNDERSIGNED HAVE READ ALL OF THIS GUARANTY AND UNDERSTAND ALL
OF THE PROVISIONS OF THIS GUARANTY. THE UNDERSIGNED ALSO AGREE THAT
COMPLIANCE BY THE LENDER WITH THE EXPRESS PROVISIONS OF THIS
GUARANTY SHALL CONSTITUTE GOOD FAITH AND SHALL BE CONSIDERED
REASONABLE FOR ALL PURPOSES.
Cynthia Mae Hemmer
____________________________________
Steven Michael Hemmer
Page 1 of 2
456759v2 MJM EL185-30
(Top 3 inches reserved for recording data)
CERTIFICATE AND REQUEST FOR NOTICE Minnesota Uniform Conveyancing Blanks
by Business Entity Form 60.6.2 (2006)
1. The name and mailing address of the person holding a lien or having a redeemable interest in real property
requesting notice is:
ECONOMIC DEVELOPMENT AUTHORITY OF THE CITY OF ELK RIVER, 13065 Orono Parkway, Elk River, MN 55330, Attn:
Director of Economic Development, (“Requesting Party”).
2. The redeemable interest or lien of the Requesting Party was created by the following instrument:
Mortgage, Assignment of Rents, Security Agreement, and Fixture Financing Statement dated ______ , 2019 and
(insert name of document/instrument) (month/day/year)
recorded on Document Number (or in Book of ,
(month/day/year)
Page ), in the Office of the County Recorder Registrar of Titles of Sherburne County, Minnesota.
(check the applicable boxes)
3. The Requesting Party has a redeemable interest in or lien upon real property in Sherburne County,
Minnesota, described as follows:
[Add legal description]
Check here if all or part of the described real property is Registered (Torrens)
4. The Requesting Party requests notice of any mortgage foreclosure by advertisement as provided in Minn. Stat.
580.032, subd. 1.
Page 2 of 2 Minnesota Uniform Conveyancing Blanks Form 60.6.2
456759v2 MJM EL185-30
5. The Requesting Party requests notice of any post-foreclosure sale reduction of the mortgagor’s redemption period for any
superior lien as provide in Minn. Stat. 582.032, subd. 3.
ECONOMIC DEVELOPMENT AUTHORITY OF THE
CITY OF ELK RIVER (name)
By: (signature)
Its: President (type of authority)
By: (signature)
Its: Executive Director (type of authority)
State of Minnesota, County of SHERBURNE
This instrument was acknowledged before me on , by (month/day/year) (name of authorized signer)
as President (type of authority)
and by (name of authorized signer)
as Executive Director of ECONOMIC DEVELOPMENT AUTHORITY OF THE CITY OF ELK RIVER . (type of authority) (name of party on behalf of whom the instrument was executed)
(Seal, if any)
(signature of notarial officer)
Title (and Rank):
My commission expires:
(month/day/year)
THIS INSTRUMENT WAS DRAFTED BY:
(insert name and address)
Kennedy & Graven Chartered (GAF)
200 S. Sixth St. #470
Minneapolis, MN 55402-1458
1
611612v1EL185-30
AMENDED AND RESTATED ENTITY GUARANTY
(Microloan)
Elk River, Minnesota
_____________, 2019
FOR VALUABLE CONSIDERATION, the receipt and sufficiency of which is hereby
acknowledged, and in consideration of and to induce financial accommodations of any kind, with
or without security, given or to be given or continued at any time and from time to time by the
ECONOMIC DEVELOPMENT AUTHORITY OF THE CITY OF ELK RIVER (the “Lender”)
to or for the account of HEMMER COMPANIES L.L.C. (the “Borrower”), the undersigned
absolutely and unconditionally guarantees to the Lender the full and prompt payment when due,
whether at maturity or earlier by reason of acceleration or otherwise, of any and all indebtedness,
obligations and liabilities of the Borrower (and any and all successors of the Borrower) to the
Lender, now or hereafter existing, absolute or contingent, independent, joint, several or joint and
several, secured or unsecured, due or to become due, contractual or tortious, liquidated or
unliquidated, arising by assignment or otherwise, including without limitation all indebtedness,
obligations and liabilities owed by the Borrower (and any and all successors of the Borrower) as
a member of any partnership, syndicate, association or other group, and whether incurred by the
Borrower (or any successor of the Borrower) as principal, surety, endorser, guarantor,
accommodation party or otherwise (collectively, the “Indebtedness”); and the undersigned agrees
to pay on demand all of the Lender’s fees, costs, expenses and reasonable attorneys’ fees in
connection with the Indebtedness, any security therefor, and this guaranty, plus interest on such
amounts at the highest rate then applicable to any of the Indebtedness.
The Lender may at any time and from time to time, without consent of or notice to the
undersigned, without incurring responsibility to the undersigned, without releasing, impairing or
affecting the liability of the undersigned hereunder, upon or without any terms or conditions, and
in whole or in part: (1) sell, pledge, surrender, compromise, settle, release, renew, subordinate,
extend, alter, substitute, exchange, change, modify or otherwise dispose of or deal with in any
manner and in any order any Indebtedness, any evidence thereof, or any security or other
guaranty therefor; (2) accept any security for, or other guarantors of, any Indebtedness; (3) fail,
neglect or omit to obtain, realize upon or protect any Indebtedness or any security therefor, to
exercise any lien upon or right to any money, credit or property toward the liquidation of the
Indebtedness, or to exercise any other right against the Borrower, the undersigned, any other
guarantor or any other person; and (4) apply any payments and credits to the Indebtedness in any
manner and in any order. No act, omission or thing, except full payment and discharge of the
Indebtedness, which but for this provision could act as a release or impairment of the liability of
the undersigned hereunder, shall in any way release, impair or otherwise affect the liability of the
undersigned hereunder, and the undersigned waives any and all defenses of the Borrower
pertaining to the Indebtedness, any evidence thereof, and any security therefor, except the
defense of discharge by payment. The failure of any person or persons to sign this or any other
guaranty shall not release, impair or affect the liability of the undersigned hereunder. This
guaranty is a primary obligation of the undersigned and the Lender shall not be required to first
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
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611612v1EL185-30
remain liable for any deficiency remaining after foreclosure of any mortgage or security interest
securing the Indebtedness, whether or not the liability of the Borrower or any other person for
such deficiency is discharged pursuant to statute, judicial decision or otherwise.
The liability of the undersigned under this guaranty is in addition to and shall be
cumulative with all other liabilities of the undersigned to the Lender, as guarantor or otherwise,
without any limitation as to amount, unless the writing evidencing or creating such other liability
specifically provides to the contrary. If any payment applied by the Lender to the Indebtedness
is thereafter set aside, recovered, rescinded or required to be returned for any reason (including
without limitation the bankruptcy, insolvency or reorganization of the Borrower or any other
person), the Indebtedness to which such payment was applied shall for the purposes of this
guaranty be deemed to have continued in existence, notwithstanding such application, and this
guaranty shall be enforceable as to such Indebtedness as fully as if such application had never
been made.
The undersigned waives: (1) notice of acceptance of this guaranty and of the creation and
existence of the Indebtedness; (2) presentment, demand for payment, notice of dishonor, notice
of nonpayment, and protest of any instrument evidencing the Indebtedness; and (3) all other
demands and notices to the undersigned or any other person and all other actions to establish the
liability of the undersigned hereunder. The undersigned consents to the personal jurisdiction of
the state and federal courts located in the State of Minnesota in connection with any controversy
related to this guaranty, waives any argument that venue in such forums is not convenient, and
agrees that any litigation initiated by the undersigned against the Lender in connection with this
guaranty shall be venued in either the District Court of Sherburne County, Minnesota, or the
United States District Court, District of Minnesota.
All property of the undersigned, now or hereafter in the possession, control or custody of
or in transit to the Lender for any purpose, including without limitation the balance of every
account of the undersigned with and each claim of the undersigned against the Lender, shall be
subject to a lien and security interest in favor of the Lender, as security for all liabilities of the
undersigned to the Lender, and shall be subject to be set off against any and all such liabilities,
and the Lender may at any time and from time to time at its option and without notice
appropriate and apply any such property toward the payment of any and all such liabilities. The
undersigned agrees to promptly provide the Lender from time to time with financial statements
of the undersigned, in form and substance acceptable to the Lender, at least once every 12
months and as otherwise requested by the Lender. The undersigned agrees to promptly provide
the Lender from time to time with such other information respecting the condition (financial and
otherwise), business and property of the undersigned as the Lender may request, in form and
substance acceptable to the Lender.
The undersigned waives all claims, rights and remedies which the undersigned may now
have or hereafter acquire against any person at any time now or hereafter liable to payment of
any of the Indebtedness and as to any collateral security, including but not limited to all claims,
rights and remedies of contribution, indemnification, exoneration, reimbursement, recourse and
subrogation, whether or not such claim, right or remedy arises in equity, under contract, by
statute, under common law or otherwise, whether or not the Indebtedness has been fully paid,
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611612v1EL185-30
and all payments and recoveries under this guaranty shall be considered equity investments by
the undersigned in the Borrower; provided, nothing contained in this guaranty shall deprive the
undersigned of any claim, right or remedy, after the Indebtedness has been fully paid, against any
person other than the Borrower. No delay or failure by the Lender in exercising any right, and
no partial or single exercise thereof shall constitute a waiver thereof. No waiver of any rights
hereunder, and no modification or amendment of this guaranty shall be effective unless the same
is in writing duly executed by the Lender, and each such waiver, if any, shall apply only with
respect to the specific instance involved and shall not impair or affect the rights of the Lender or
the provisions of this guaranty in any other respect at any other time. This guaranty shall
continue until written notice of revocation of this guaranty, executed by the undersigned, has
been received by the Lender; provided, no revocation of this guaranty shall affect in any manner
any liability of the undersigned under this guaranty with respect to Indebtedness arising before
the Lender receives such written notice of revocation, and the sole effect of revocation of this
guaranty shall be to exclude from this guaranty Indebtedness thereafter arising which is
unconnected with Indebtedness theretofore arising or transactions theretofore entered into.
Any invalidity or unenforceability of any provision or application of this guaranty shall
not affect other lawful provisions and applications hereof and to this end the provisions of this
guaranty are declared to be severable. This guaranty shall bind the undersigned and the
representatives, successors and assigns of the undersigned, and of each of them respectively, and
shall benefit the Lender, its successors and assigns. This guaranty shall be governed by and
construed in accordance with the laws of the State of Minnesota.
The undersigned is the occupant of the real property located at 15970 Jarvis Street NW,
Elk River, Sherburne County, Minnesota (the “Property”). Borrower is acquiring the Property
and will be leasing it to the undersigned pursuant to a certain lease agreement (the “Lease”).
Borrower and the undersigned are under common ownership. The undersigned acknowledges
and agrees that the Indebtedness is being utilized by Borrower to finance the cost of
improvements to the Property, and such improvements and equipment will support the
undersigned’s ability to fulfill its obligations under the Lease and, therefore, the undersigned’s
obligations under this Guaranty are proper, valid and enforceable. This Guaranty has been
approved by unanimous consent of the board of governors of the undersigned.
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611612v1EL185-30
THE UNDERSIGNED REPRESENTS, CERTIFIES, WARRANTS AND AGREES THAT THE
UNDERSIGNED HAS READ THIS ENTIRE 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.
DISTINCTIVE IRON, LLC,
a Minnesota limited liability company
By:
Cynthia Mae Hemmer, President
1
611368v1EL185-30
AMENDED AND RESTATED PROMISSORY NOTE
(Microloan)
Original Issue Date: March 3, 2015
Amended and Restated Date: ___________, 2019
Original Principal Amount: $126,000.00
Amended and Restated Amount: $189,338.20
Maturity: ____________, 2024
FOR VALUE RECEIVED, the undersigned, HEMMER COMPANIES L.L.C., a
Minnesota limited liability company (“Borrower”), promises to pay to the order of the
ECONOMIC DEVELOPMENT AUTHORITY OF THE CITY OF ELK RIVER, a public body
corporate and politic of the State of Minnesota (“Lender”), at 13065 Orono Parkway, Elk River,
Minnesota 55330, or such other place as the Lender or any other holder of this Note may
designate in writing, on or before _____________, 2024 (“Maturity Date”), the principal sum of
One Hundred Eighty Nine Thousand Three Hundred and Thirty-Eight Dollars and 20/100s
Dollars ($189,338.20), together with interest on any and all amounts remaining unpaid thereon
from time to time from the date hereof (computed on the basis of actual days elapsed in a year of
360 days) accruing interest at the rates set forth below.
This Note is made pursuant to an Amended and Restated Loan Agreement, between
Borrower and Lender, of even date herewith (“Loan Agreement”) which provides for both the
payment of the cost of acquisition and renovation of property and for the purchase of equipment.
Original Note Balance. A portion of the outstanding Principal Balance in the amount of
$89,338.20 (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 (each an “Original
Note Monthly Installment”) in the amount of Eight Hundred Seventy-Four and 71/100 Dollars
($874.71), which Original Note Monthly Installments shall commence on May 1, 2015, and
continue on the first (1st) day of each and every month thereafter until April 1, 2020 (the
“Original Note Maturity Date”), when all outstanding principal and accrued but unpaid interest
on the Original Note Balance shall be payable in full. The final payment shall be a balloon
payment in the amount of all outstanding principal and accrued but unpaid interest. One
Hundred Thousand One Hundred and 00/100 Dollars ($107,100.00) of the principal amount of
the original principal amount of the Original Note ($126,000.00) for improvements to real
property shall be amortized over a twenty (20) year period and the remaining Eighteen Thousand
Nine Hundred and 00/100 Dollars ($18,900.00) of the principal amount of the Original Note for
the purchase of equipment shall be amortized over a five (5) year period.
New Note Balance. A portion of the outstanding Principal Balance in the amount of
$100,000.00 (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 ________________, which New Note Monthly Installment shall
commence on __________, 2019, and continue on the first (1st) day of each and every monthly
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611368v1EL185-30
thereafter until the Maturity Date, when all unpaid principal and interest shall be payable in full.
The principal amount of the New Note will be amortized over a period of twenty (20) years.
This Note replaces and supersedes in all respects the Note issued on March 3, 2015, and
this Note is the “Note” referred to the Loan Agreement. The Note is made to secure the Loan
made pursuant to the Loan Agreement and is secured by, among other things, an Amended and
Restated Security Agreement (the “Security Agreement”) given by Distinctive Iron, LLC to
Lender, an Mortgage and Assignment of Rents and Security Agreement and Fixture Financing
Statement covering property owned by the Borrower (the “Mortgage”), the Personal Guaranties
made by Cynthia Mae Hemmer and Steven Michael Hemmer, and that certain Entity Guaranty
made by Distinctive Iron, LLC all of which are made to Lender (collectively, the “Security
Documents”). All of the terms and conditions contained in the Security Documents which are to
be kept and performed by Borrower are hereby made a part of this Note to the same extent and
with the same force and effect as if they were fully set forth herein; and Borrower covenants and
agrees to keep and perform them, or cause them to be kept and performed, strictly in accordance
with their terms.
The Note shall be immediately due and payable in full if the Borrower or the Entity
Guarantor relocates outside of the city of Elk River prior to the Maturity Date.
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 and the Security
Agreement.
Each Original Note Monthly Installment or 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 or any
Security Document and any cure period provided for in the Loan Agreement or such Security
Document has expired, the Borrower agrees to pay a default rate of interest equal to ten percent
(10.00%) per annum as the applicable interest rate of this Note, and the entire principal amount
outstanding, accrued interest and any other charges due hereon shall at once become due and
payable at the option of the Lender or the holder hereof. Any failure of the Lender to exercise its
right to increase the interest rate by the default rate of interest set forth above or its option to
accelerate this Note at any time shall not constitute a waiver of the right to exercise the same
right to increase the interest rate or accelerate at any subsequent time. Notwithstanding anything
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611368v1EL185-30
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 paid or incurred or to
be paid or incurred prior to or after the entry of judgment or for the pursuance of, or defense of,
any litigation, appellate, bankruptcy or insolvency proceeding.
Presentment, notice of dishonor and protest are hereby waived by all makers, sureties,
guarantors and endorsers hereof. This Note shall be binding upon Borrower, its successors and
assigns.
The remedies of Lender, as provided herein and in the Loan Agreement and the Security
Documents, shall be cumulative and concurrent and may be pursued singly, successively or
together, at the sole discretion of Lender, and may be exercised as often as occasion therefor
shall occur; and the failure to exercise any such right or remedy shall in no event be construed as
a waiver or release thereof.
Time is of the essence hereof.
This Note shall be governed by and be construed under the laws of the State of Minnesota,
without regard to principles of conflicts of law.
[Signature Page Follows]
S-1
611368v1EL185-30
IN WITNESS WHEREOF, the undersigned has caused this Note to be effective as of the
day and year first above written.
HEMMER COMPANIES L.L.C.
a Minnesota limited liability company
By:
Cynthia Mae Hemmer
Its: President
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MORTGAGE
AND
ASSIGNMENT OF RENTS
AND
SECURITY AGREEMENT
AND
FIXTURE FINANCING STATEMENT
(Microloan)
This Mortgage and Assignment of Rents and Security Agreement and Fixture Financing
Statement (“Mortgage”) is made as of ___________, 2019, by HEMMER COMPANIES L.L.C.,
a Minnesota limited liability company (“Mortgagor”), in favor of the ECONOMIC
DEVELOPMENT AUTHORITY OF THE CITY OF ELK RIVER, a public body corporate and
politic of the State of Minnesota (“Mortgagee”).
THE MAXIMUM AMOUNT SECURED BY THIS MORTGAGE IS $189,338.20 OF
PRINCIPAL INDEBTEDNESS, TOGETHER WITH ALL INTEREST ACCRUING
THEREON AND ANY AMOUNTS WHICH MAY BE ADVANCED BY MORTGAGEE IN
PROTECTION OF THE MORTGAGED PREMISES OR THE LIEN OF THIS MORTGAGE.
RECITALS
A. The Mortgagor executed and delivered the Mortgage and Assignment of Rents
and Security Agreement and Fixture Financing Statement, dated February 17, 2015, (the
“Original Mortgage”) to secure its obligations as the guarantor under the Entity Guaranty, dated
February 17, 2015 (the “Original Guarantor”) as the guarantor of a loan made by the Mortgagee
to the Mortgagor in the amount of $126,000 (the “Original Loan”) pursuant to a Loan
Agreement, dated February 17, 2015 (the “Original Loan Agreement”). The Original Loan is
currently outstanding in the principal amount of $89,338.20.
B. The Mortgagee is providing an additional loan to the Mortgagor in connection
with the relocation of Mortgagor’s business. The Mortgagee is providing an additional loan in
the amount of $100,000.00 (the “New Loan”, and together with the Original Loan, the “Loan”)
to the Borrower pursuant to an Amended and Restated Loan Agreement, dated the date hereof,
between the Mortgagor and the Mortgagee. The Loan will be secured by an Amended and
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Restated Promissory Note, dated the date hereof (the “Note”), from the Borrower to the
Mortgagee reflecting that the balance of the Note being is due and payable in full on
___________, 2024 (the “Maturity Date”). The Note is secured by, among other items, an Entity
Guaranty, from the Distinctive Iron, LLC to the Mortgagee. As a condition of making the New
Loan, the Mortgagee required that the Mortgagor deliver this Mortgage to secure the Entity
Guaranty. The proceeds of the Note are being utilized to pay the cost of improvements to the
Mortgaged property (as defined below) and to purchase equipment to be utilized at the
Mortgaged Property.
C. Mortgagor is the landlord under that certain unrecorded lease dated
_____________, 2019, with Distinctive Iron, LLC (the “Entity Guarantor”), as tenant, leasing a
portion of the Mortgaged Property to the Entity Guarantor.
D. As a condition of providing the loan pursuant to the Loan Agreement, Lender
required that the Mortgagor terminate the Original Mortgage and that Mortgagor’s obligations
under the Loan Agreement, the Note and any other documents related thereto be secured by this
Mortgage.
NOW THEREFORE, in consideration of the Recitals and for the purpose of securing the
payment and performance of all of Mortgagor’s obligations under the Note and the Loan
Agreement (collectively “Obligations”); and to secure the performance of all covenants,
conditions and agreements herein and in the Note and the Loan Agreement, Mortgagor does
hereby mortgage, grant, bargain, sell, release and convey unto Mortgagee, with power of sale,
forever all of Mortgagor’s right, title and interest in all the tracts or parcels of land lying and
being in Sherburne County, Minnesota, legally described in Exhibit A hereto, (hereinafter the
“Land”), whether now owned or hereafter acquired, together with: (i) all building materials,
supplies and equipment now or hereafter located on the Land and suitable or intended to be
incorporated in any building, structure, or other improvement located or to be erected on the
Land; and (ii) all of the buildings, structures and other improvements now standing or at any
time hereafter constructed or placed upon the Land; and (iii) all heating, plumbing and lighting
apparatus, motors, engines, and machinery, electrical equipment, incinerator apparatus, air
conditioning equipment, water and gas apparatus, pipes, faucets, and all other fixtures of every
description which are now or may hereafter be placed or used upon the Land or in any building
or improvement now or hereafter located thereon; and (iv) all additions, accessions, increases,
parts, fittings, accessories, replacements, substitutions, betterments, repairs and proceeds to any
and all of the foregoing; and (v) all hereditaments, easements, appurtenances, estates, rents,
issues, profits, condemnation awards, proceeds of policies of insurance and other rights and
interests now or hereafter belonging or in any way pertaining to the Land or to any building or
improvement now or hereafter located thereon; and (vi) all leases or other occupancy agreements
now or hereafter in effect in any way appertaining to the Land or to any building or improvement
now or hereafter located thereon, including, without limitation, all cash and security deposits,
advance rentals and deposits or payments of a similar nature (“Leases”), and all Rents (as herein
defined) (all of the foregoing, together with the Land, hereinafter being referred to as the
“Property” or “Mortgaged Property”),
TO HAVE AND TO HOLD the Mortgaged Property unto Mortgagee forever;
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PROVIDED, NEVERTHELESS, that this Mortgage is given upon the express condition
that if Mortgagor shall cause to be paid and performed all of the Obligations, and shall also keep
and perform all and singular the covenants herein contained on the part of Mortgagor to be kept
and performed, then the Mortgage and the estate hereby granted shall cease and be and become
void and shall be released of record at the expense of Mortgagor; otherwise this Mortgage shall
be and remain in full force and effect.
MORTGAGOR REPRESENTS, WARRANTS AND COVENANTS to and with
Mortgagee that Mortgagor has good right and full power and authority to execute this Mortgage
and to mortgage the Mortgaged Property; that the Mortgaged Property is free from all liens and
encumbrances except a mortgage in favor of The Bank of Elk River in the amount of
$______________ (the “First Lien Mortgage”) and those other certain permitted encumbrances
identified in Exhibit B hereto (the “Permitted Encumbrances”); that Mortgagee shall quietly
enjoy and possess the Mortgaged Property; that Mortgagor will warrant and defend the title to
the Mortgaged Property against all claims, whether now existing or hereafter arising. The
covenants and warranties of this paragraph shall survive foreclosure of this Mortgage and shall
run with the Land.
AND IT IS FURTHER COVENANTED AND AGREED AS FOLLOWS:
ARTICLE ONE
GENERAL COVENANTS, AGREEMENTS, WARRANTIES
1.1. Payment of Obligations; Observance of Covenants. Mortgagor will duly pay and
perform its Obligations and will perform all other agreements and covenants by Mortgagor to be
performed hereunder.
1.2. Payment of Impositions. Mortgagor agrees to pay, before a penalty might attach
for nonpayment thereof, all taxes, assessments, water and sewer charges, and other fees, taxes
and charges of whatsoever nature levied upon or assessed or placed against the Mortgaged
Property (collectively “Impositions”). Mortgagor will likewise pay all taxes, assessments and
other charges, levied upon or assessed, placed or made against, or measured by, this Mortgage,
or the recordation hereof, or the Obligations, provided that Mortgagor shall not be obliged to pay
such tax, assessment or charge if such payment would be contrary to law or would result in the
payment of an usurious rate of interest on the Obligations. Mortgagor shall promptly furnish to
Mortgagee all notices received by Mortgagor of amounts due under this Section and upon
Mortgagee’s request, shall deliver proper receipts evidencing the payment of such amounts. In
the event of a judicial decree or legislative enactment after the date of this Mortgage, providing
that any such imposition may not be lawfully paid by Mortgagor, or in the event that the payment
of any such imposition by Mortgagor would result in the payment of a usurious rate of interest
on the Obligations, the Obligations, together with interest, shall become immediately due and
payable, or, at Mortgagee’s option, Mortgagee may pay any amount or portion of such
Imposition as renders the Obligations unlawful or usurious, in which event Mortgagor shall
concurrently therewith pay the remaining lawful and non-usurious portion or balance of said
Imposition.
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1.3. Payment of Operating Costs; Prior Mortgages and Liens. Mortgagor agrees that it
will pay, or cause to be paid, all operating costs and expenses of the Mortgaged Property; keep
the Mortgaged Property free from mechanics’ and material suppliers’ and other liens, subject to
Mortgagor’s right to contest in good faith as set forth in Section 1.4 hereof; will keep the
Mortgaged Property free from levy, execution or attachment and will immediately pay when due
all indebtedness which may be secured by mortgage, lien or charge on the Mortgaged Property
and upon request will exhibit to Mortgagee satisfactory evidence of such payment and discharge.
1.4. Contest of Impositions, Liens and Levies. Mortgagor shall not be required to pay,
discharge or remove any Imposition, lien or levy so long as Mortgagor shall in good faith contest
the same or the validity thereof by appropriate legal proceedings which shall operate to prevent
the collection of the levy, lien or Imposition so contested and the sale of the Mortgaged Property,
or any part thereof to satisfy the same; provided, however, that Mortgagor, prior to the date such
levy, lien or Imposition is due and payable or, in the case of a mechanic’s lien or other
involuntary lien within (30) days after the same shall have been filed, shall have given such
reasonable security as may be demanded by Mortgagee to ensure such payments and any
penalties and interest that may accrue thereon and prevent any sale or forfeiture of the
Mortgaged Property by reason of such nonpayment. Any such contest shall be prosecuted with
due diligence and Mortgagor shall promptly after final determination thereof pay the amount of
any such levy, lien or Imposition so determined, together with all interest and penalties, which
may be payable in connection therewith. Notwithstanding the provisions of this Section,
Mortgagor shall, and Mortgagee may (but shall have no obligation to), pay any such levy, lien or
Imposition notwithstanding such contest if in the reasonable opinion of Mortgagee, the
Mortgaged Property is in jeopardy or in danger of being forfeited or foreclosed.
1.5. Maintenance and Repairs; Inventory. Mortgagor agrees that it will keep and
maintain (or cause to be kept and maintained) the Mortgaged Property in good condition and
repair, free from any waste or misuse, and will comply with all requirements of law, municipal
ordinances and regulations, restrictions and covenants affecting the Mortgaged Property and its
use, and will promptly repair or restore any buildings, improvements or structures now or
hereafter on the Mortgaged Property which may become damaged or destroyed. Mortgagor
further agrees that without the prior consent of Mortgagee it will not remove from the Mortgaged
Property any fixtures or any personal property that is included in the Mortgaged Property unless
the same is immediately replaced with like fixtures or personal property of at least equal value,
or is otherwise removable under Section 6.1 hereof; or expand any improvements on the
Mortgaged Property, erect any new improvements or make any material alterations in any
improvements which will materially alter the basic structure, materially and adversely affect the
market value or materially change the existing architectural character of the Mortgaged Property.
Mortgagor agrees that it will complete within a reasonable time any buildings now or at any time
in the process of erection on the Mortgaged Property. Mortgagor agrees not to acquiesce in any
rezoning classification, modification or restriction affecting the Mortgaged Property without
Mortgagee’s prior written consent. Mortgagor agrees that it will not abandon the Mortgaged
Property. Upon request of Mortgagee, Mortgagor shall deliver to Mortgagee an inventory in
detail reasonably acceptable to Mortgagee of any personal property owned by Mortgagor that is
included in the Mortgaged Property pursuant to the terms hereof together with a certification by
Mortgagor that said inventory is a true and complete schedule of the personal property to be
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included in the Mortgaged Property pursuant to the terms hereof. Such inventory shall list any
conditional sales contracts and other title retention arrangements to which such personal property
may be subject.
1.6. Insurance.
(a) So long as the Obligations remain unpaid, Mortgagor shall, at its own cost,
maintain or cause to be maintained with insurers of recognized responsibility acceptable
to Mortgagee the following insurance:
(i) hazard and fire insurance on the improvements now existing or
hereafter constructed on the Land insuring against loss by fire, hazards included
in the term “extended coverage,” loss by vandalism or malicious mischief, and
such other hazards, casualties and contingencies as may be required by
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 ex plosion, rupture or bursting of steam boilers, steam pipes, steam turbines,
steam engines or pressure vessels or fly wheels located on or a part of the
Mortgaged Property and providing for full repair and full replacement cost
coverage; and
(iv) such other forms of insurance in such minimum amounts as
Mortgagee may reasonably require or as may be required by law.
Mortgagor shall pay or cause to be paid all premiums on insurance required
hereunder by making payment directly to the insurer. Mortgagee shall have the
right to hold the policies and renewals thereof, and Mortgagor shall promptly
furnish to Mortgagee all such policies, renewals thereof, renewal notices and all
paid-premium receipts received by it. All policies of insurance and any and all
refunds of unearned premiums are hereby assigned to Mortgagee as additional
security for the payment of the Obligations secured hereby. In the event of
foreclosure of this Mortgage, all right, title and interest of Mortgagor in and to
any insurance policies then in force shall pass to the purchaser at the foreclosure
sale.
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(b) The policies of all such insurance shall have mortgagee and loss payable
provisions in favor of Mortgagee. All such insurance shall be in form acceptable to
Mortgagee, shall provide for at least thirty (30) days’ prior written notice of cancellation,
termination or modification thereof to Mortgagee, shall permit Mortgagee to make
premium payments to prevent cancellation, and shall provide that no act or negligence of
Mortgagor or of any occupant of the Mortgaged Property, and no occupancy or use of the
Mortgaged Property for purposes more hazardous than permitted by the terms of the
policy, will affect the validity or enforceability of such insurance as against Mortgagee.
In the event of loss under such insurance Mortgagor shall give prompt notice to the
insurance carrier and Mortgagee; Mortgagor shall duly make proof of loss, and shall
immediately furnish to Mortgagee a copy of such proof of loss.
(c) Subject to the rights of the mortgagee under the First Lien Mortgage
which has priority over this Mortgage, Mortgagee is authorized and empowered to settle,
collect and receive all fire and hazard insurance proceeds, to apply such proceeds to all
expenses (including reasonable attorneys’ fees) reasonably incurred by Mortgagee in
collecting the same and, at Mortgagee’s option and in its sole discretion, apply the
balance of said proceeds (“Net Proceeds”) to payment of the Obligations or make the Net
Proceeds available for the repair and restoration of the Mortgaged Property; provided,
however, Mortgagor may settle claims without Mortgagee’s consent if the loss is less
than $5,000.00 and no Event of Default exists at the time of settlement. Mortgagor shall
apply any such proceeds to the repair and restoration of the Mortgaged Property. So long
as no Event of Default exists, any settlement of a fire and hazard insurance claim of more
than $5,000.00 shall require the consent of Mortgagor, which consent will not be
unreasonably withheld.
(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.
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Mortgagee, or its agents, shall also have the right during ordinary business hours to examine the
books and records of Mortgagor pertaining to the Mortgaged Property and to make extracts
therefrom and copies thereof. The parties agree that Mortgagee’s right to inspect the books and
records of Mortgagor, as described in this provision, relates solely to the Mortgaged Property.
1.8. Protection of Mortgagee’s Security. If Mortgagor fails to perform any of the
covenants and agreements contained in this Mortgage and such failure shall continue beyond any
applicable notice and cure period contained in Article Two hereof or if any action or proceeding
is commenced which does or may adversely affect the Mortgaged Property or the interest of
Mortgagor or Mortgagee therein, or the title of Mortgagor thereto, then Mortgagee, at
Mortgagee’s option, may perform such covenants and agreements, defend against such action or
proceeding, or otherwise act as Mortgagee deems necessary to protect its interest. In the event
that, after damage to or destruction of the Mortgaged Property or condemnation of a portion of
the Mortgaged Property or a sale under threat thereof, the proceeds are used to restore the
Mortgaged Property, and the insurance, sale or condemnation proceeds which are paid to
Mortgagee are not sufficient to pay for such restoration, Mortgagee may nevertheless effect the
restoration. Any amounts disbursed or costs incurred by Mortgagee pursuant to this Section,
including interest and reasonable attorney’s fees, shall become additional Obligations of
Mortgagor secured by this Mortgage. All amounts disbursed or costs incurred by Mortgagee
pursuant to this paragraph shall be payable upon demand, and shall bear interest from the date of
disbursement or incurrence at the rate set forth in the Note unless payment of interest at such rate
would be contrary to law, in which event such amounts shall bear interest at the highest rate
permitted by law. Mortgagee shall, at its option, be subrogated to any encumbrance, lien, claim
or demand, and to all the rights and securities for the payment thereof, paid or discharged with
the principal sum secured hereby or by Mortgagee under the provisions hereof, and any such
subrogation rights shall be additional and cumulative security for this Mortgage. Nothing
contained in this Section shall require Mortgagee to incur any expense or do any act hereunder,
and Mortgagee shall not be liable to Mortgagor for any damages or claims arising out of action
taken by Mortgagee pursuant to this paragraph.
1.9. Hazardous Materials. Mortgagor hereby represents and warrants to Mortgagee
that the Mortgaged Property has not at any time been used for storage, transfer, transportation or
disposal of hazardous substances, hazardous wastes, pollutants, contaminants or similar
substances (collectively “Hazardous Substances”), or for the discharge of the same into the
environment in violation of any law, regulation, or judicial or administrative order or judgment;
and the Mortgaged Property is not contaminated by, and does not contain, any Hazardous
Substances. Mortgagor will not use or permit the use of the Mortgaged Property for such
purposes. Mortgagor will fully indemnify Mortgagee and defend Mortgagee against any claims,
losses, damages, actions, costs and expenses of any kind, including without limitation, court
costs and reasonable attorneys’ fees, in connection with any Hazardous Substances now or
hereafter located on the Mortgaged Property or any other violation of any federal, state or local
environmental statute, ordinance, rule or regulation (“Environmental Laws”). This indemnity
shall not apply to the extent that the willful act or omission of the Mortgagee contributes to the
actual or threatened discharge, dispersal, release, storage, treatment, generation, disposal or
escape of the Hazardous Substances. The indemnity provisions of this Section shall survive the
foreclosure or other termination of this Mortgage.
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Without limiting the generality of the foregoing, Mortgagor agrees that upon the discovery
of a release or threatened release of Hazardous Substances on or from the Mortgaged Property, it
will promptly, diligently and without cost to Mortgagee, proceed to remediate all contamination
in accordance with all applicable laws, ordinances, rules and regulations, and the requirements of
all governmental authorities having jurisdiction, and otherwise to the satisfaction of Mortgagee.
A failure to do so shall constitute a default by Mortgagor under this Mortgage.
1.10. Escrows. Upon the request of Mortgagee after the occurrence of an Event of
Default (whether or not such Event of Default is subsequently cured), Mortgagor shall deposit
with Mortgagee, on the first day of each and every month, commencing with the date the first
payment shall be due on the Note which is after the date of such request, a deposit to pay the
Impositions and insurance premiums (collectively “Charges”) in an amount equal to:
(a) One-twelfth (1/12) of the Impositions next to become due upon the
Mortgaged Property; provided, however, that, in the case of the first such deposit, there
shall be deposited in addition an amount as estimated by Mortgagee which, when added
to monthly deposits to be made thereafter as provided for herein, shall assure that there
will be sufficient funds on deposit to pay the Impositions as they come due; plus
(b) One-twelfth (1/12) of the annual premiums on each policy of insurance
required to be maintained hereunder; provided that with the first such deposit there shall
be deposited, in addition, an amount equal to one-twelfth (1/12) of such annual insurance
premiums multiplied by the number of months elapsed between the date premiums on
each policy are last paid to and including the date of deposit.
The amount of such deposits shall be based upon Mortgagee’s reasonable estimate as to the
amount of Impositions and premiums of insurance next to be payable. Mortgagee will, upon
timely presentation to Mortgagee by Mortgagor of the bills therefor, pay the Charges from such
deposits. In the event the deposits on hand shall not be sufficient to pay all of the Charges when
the same shall become due from time to time, or the prior deposits shall be less than the currently
estimated monthly amounts, then Mortgagor shall pay to Mortgagee on demand any amount
necessary to make up the deficiency. The excess of any such deposits shall be returned to
Mortgagor or credited towards subsequent Charges, at the discretion of Mortgagee. If an Event
of Default shall occur under the terms of this Mortgage, Mortgagee may, at its option, without
being required so to do, apply any deposits on hand to the Obligations, in such order and manner
as Mortgagee may elect. When the Obligations have been fully paid, any remaining deposits
shall be returned to Mortgagor as its interest may appear. All deposits are hereby pledged as
additional security for the Obligations, shall be held for the purposes for which made as herein
provided, may be held by Mortgagee and may be commingled with other funds of Mortgagee,
shall be held without any allowance of interest thereon, and shall not be subject to the decision or
control of Mortgagor. Mortgagee shall not be liable for any act or omission made or taken in
good faith. In making any payments, Mortgagee may rely on any statement, bill or estimate
procured from or issued by the payee without inquiry into the validity or accuracy of the same.
If the taxes shown in the tax statement shall be levied on property more extensive than the
Mortgaged Property, Mortgagee shall be under no duty to seek a tax division or apportionment of
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the tax bill, and any payment of taxes based on a larger parcel shall be paid by Mortgagor, and
Mortgagor shall expeditiously cause a tax subdivision to be made.
1.11. Compliance with Code. Mortgagor covenants that when completed the
improvements to the Mortgaged Property shall comply with all applicable restrictions,
conditions, codes, ordinances, regulations and laws of the City of Elk River (the “City”) and
other governmental bodies having jurisdiction over the Mortgaged Property, including, without
limitation, the Americans with Disabilities Act and those related to environmental protection.
Mortgagor has NOT commenced construction of improvements to the Mortgaged Property.
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ARTICLE TWO
EVENTS OF DEFAULT
Each of the following occurrences shall constitute an Event of Default hereunder:
2.1. Failure to pay. Mortgagor’s failure to pay any amount due under the Note or the
Loan Agreement or any other amount required to be paid by Mortgagor hereunder when due.
2.2. Other Performance Failure. The Mortgagor’s or the Entity Guarantor failure to
duly observe or perform any of the other terms, conditions, covenants or agreements required to
be observed or performed by Mortgagor hereunder or by the Entity Guarantor in the Entity
Guaranty and the continuation of such failure for a period of thirty (30) days after Mortgagee
gives Mortgagor written notice of such failure.
2.3. Breach of Warranty of Title. Subject to Mortgagor’s right to contest in good faith
as set forth in Section 1.4 hereof, the breach of any warranty of title or any other warranty made
by Mortgagor hereunder.
2.4. Misrepresentation. The making of any material misstatement in any financial
statement or report submitted to Mortgagee by or on behalf of Mortgagor.
2.5. Foreclosure. The institution of a foreclosure or other enforcement proceedings by
the holder of any other lien on the Mortgaged Property (without hereby implying Mortgagee’s
consent to any mortgage or other lien).
2.6. Sale of Property. The sale, assignment, conveyance, mortgage, encumbrance,
lease or transfer of: (i) Mortgagor’s interest in the Mortgaged Property or any part thereof, or any
interest therein; or (ii) any transfer in ownership or control of Mortgagor, without the prior
written consent of Mortgagee, which consent may be granted or withheld by Mortgagee at its
sole discretion.
2.7. Breach of the First Lien Mortgage, Other Agreements, etc. Any default or breach
under the First Lien Mortgage, any other note, mortgage or other obligation of Mortgagor or
Borrower now held or hereafter acquired by Mortgagee or City, or any other failure to comply
with the terms and conditions thereof and the continuance thereof beyond any applicable notice
and/or cure period contained therein.
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ARTICLE THREE
ACCELERATION AND FORECLOSURE; OTHER REMEDIES
Upon any Event of Default, Mortgagee may, at its option, exercise one or more of the
following rights and remedies (and any other rights and remedies available to it):
3.1. Acceleration. Mortgagee may declare immediately due and payable all
unmatured Obligations secured by this Mortgage, and the same shall thereupon be immediately
due and payable, without notice or demand.
3.2. UCC Remedies. Mortgagee shall have and may exercise with respect to all
fixtures and any personal property included in the Mortgaged Property, all the rights and
remedies accorded upon default to a secured party under the Uniform Commercial Code, as in
effect in the State of Minnesota.
3.3. Foreclosure; Action or Advertisement. Mortgagee may (and is hereby authorized
and empowered to) foreclose this Mortgage by action or advertisement, pursuant to the statutes
of the State of Minnesota in such case made and provided, power being expressly granted to sell
the Mortgaged Property at public auction and convey the same to the purchaser to the full extent
of Mortgagor’s interest and, out of the proceeds arising from such sale, to pay all Obligations
secured hereby with interest, and all legal costs and charges of such foreclosure and the
maximum attorneys’ fees permitted by law, which costs, charges and fees Mortgagor agrees to
pay. Any real estate or interest or estate sold hereunder may be sold in one parcel, as an entirety,
or in such parcels and in such manner or order as Mortgagee, in its sole discretion, may elect. In
case of any sale of the Mortgaged Property pursuant to any judgment or decree of any court or at
public auction or otherwise in connection with the enforcement of any of the terms of this
Mortgage, Mortgagee, its successors and assigns, may become the purchaser, and for the purpose
of making settlement for or payment of the purchase price, shall be entitled to deliver over and
use any sum then due under the Note and any claims for interest accrued and unpaid thereon,
together with all other sums, with interest, advanced and unpaid hereunder, and all statutory
charges for such foreclosure including maximum attorney’s fees allowed by law in order that
there may be credited as paid on the purchase price the sum then due under the Note and all other
sums, with interest, advanced and unpaid hereunder, and all charges and expenses of such
foreclosure including maximum attorneys’ fees allowed by law.
3.4. Receiver. Mortgagee shall be entitled as a matter of right without notice and
without giving bond and without regard to the solvency or insolvency of Mortgagor, or waste of
the Mortgaged Property or adequacy of the security of the Mortgaged Property, to apply for the
appointment of a receiver, in accordance with the statutes and law made and provided. The
receiver shall collect the rents, and all other income of any kind; manage the Mortgaged Property
so to prevent waste; execute leases within or beyond the period of receivership, pay all expenses
for normal maintenance of the Mortgaged Property and perform the terms of this Mortgage and
apply the rents, issues and profits as permitted by Minnesota Statutes, Section 576.25 in the
following order to (i) payment of the reasonable fees of said receiver, (ii) application of tenant
security deposits as required by Minnesota Statutes Section 504B.178, (iii) payment when due of
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prior or current real estate taxes or special assessments with respect to the Mortgaged Property
or, if this Mortgage so requires, to the periodic escrow for the payment thereof, (iv) the payment
when due of premiums for insurance of the type required by this Mortgage or, if this Mortgage
so requires, to the periodic escrow for the payment thereof; and (v) as further provided in any
Assignment of Rents executed by Mortgagor as further security for the Obligations (whether
included in this Mortgage or separate instrument), including but not limited to applying the same
to the costs and expenses of the receivership, including reasonable attorneys’ fees, to the
repayment of the Obligations and to the operation, maintenance, upkeep and repair of the
Mortgaged Property, including payment of taxes and payments of premiums of insurance.
Mortgagor does hereby irrevocably consent to such appointment.
3.5. Specific Performance. Mortgagee may bring suit for specific performance of any
covenant or warranty hereunder.
3.6. Forbearance and Other Rights of Mortgagee. Any delay by Mortgagee in
exercising any right or remedy hereunder, or otherwise afforded by law or equity, shall not be a
waiver of or preclude the exercise of such right or remedy or any other right or remedy
hereunder or at law or in equity. The failure of Mortgagee to exercise any option to accelerate
maturity of the Obligations secured by the Mortgage, the forbearance by Mortgagee before or
after the exercise of such option, or the withdrawal or abandonment of proceedings provided for
by this Mortgage shall not be a waiver of the right to exercise such option or to accelerate the
maturity of such Obligations by reason of any past, present or future event which would permit
acceleration. The procurement of insurance or the payment of taxes or other liens or charges by
Mortgagee shall not be a waiver of Mortgagee’s right to accelerate the maturity of the
Obligations. Mortgagee’s receipt of any awards, proceeds or damages shall not operate to cure
or waive default by Mortgagor. Mortgagee may at any time, without notice, release any person
liable for payment of any Obligations, extend the time or agree to alter the terms of payment of
any of the Obligations, accept additional security of any kind, release any plat or map of the
Mortgaged Property or the creation of any easement thereon or any covenants restricting use or
occupancy thereof, or agree to alter or amend the terms of this Mortgage in any way. No such
release, modification, addition or change shall affect the liability of any person other than the
person so released, for payment of any Obligations, nor affect the priority and lien status of this
Mortgage upon any property not so released.
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ARTICLE FOUR
ASSIGNMENT OF RENTS
4.1. Assignment. As security in addition to the lien of this Mortgage upon the
Property, Mortgagor hereby grants, transfers and assigns to Mortgagee all of the right, title and
interest of Mortgagor in and to all Leases and all rents, income, profits, revenues, royalties,
bonuses, rights, accounts, contract rights, general intangibles and benefits (all of which are
sometimes hereinafter referred to as “Rents”), now or hereafter accruing or owing by reason of a
Lease of any or all of the Property.
4.2. Covenants of Performance. To protect the security of this Assignment,
Mortgagor warrants, covenants and agrees:
(a) to faithfully abide by, perform and discharge each and every obligation,
covenant and agreement under any Leases to be performed by Mortgagor thereunder; to
give prompt written notice to Mortgagee of any notice of default on the part of Mortgagor
with respect to any Lease received from a tenant thereunder; to enforce or secure short of
termination of any Lease the performance of each and every obligation, covenant,
condition and agreement of the Leases by the tenants thereunder to be performed; not to
borrow against, pledge or assign any of the Rents, or anticipate the Rents; not to waive,
excuse, condone or in any manner release or discharge any tenant thereunder of or from
the obligations, covenants, conditions and agreements to be performed under the Lease or
to permit the tenant to assign its interest in the Lease unless required to do so by the terms
of the Lease; not to terminate the Leases or accept a surrender thereof or a discharge of
the tenant unless required to do so by the terms of the Lease; not to consent to a
subordination of the interest of the tenant thereunder to any party other than Mortgagee
and then only if specifically required to do so by Mortgagee;
(b) at Mortgagor’s sole cost and expense, to appear in and defend any action
or proceeding arising under, growing out of or in any manner connected with the Leases
or the obligations, duties or liabilities of Mortgagor and tenants thereunder, and to pay all
costs and expenses of Mortgagee, including attorneys’ fees in a reasonable sum, in any
such action or proceeding in which Mortgagee may appear or with respect to which it
may incur costs;
(c) that Mortgagor has the full right and title to assign the Rents; that at the
date of this Mortgage there exist no Leases which now or in the future affect the
Mortgaged Property which have not been disclosed to Mortgagee in writing; and that
there is no outstanding assignment or pledge of the Leases or Rents; and
(d) to furnish to Mortgagee, at Mortgagee’s written request, a complete list of
all Leases and security deposits made thereunder as to any part of the Mortgaged
Property, showing the type of lease, the name of the tenant, the monthly rental, the date to
which paid, the term of the Lease, the date of occupancy, and the date of expiration and
any and every special premium, concession or inducement granted to the tenant.
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4.3. Assignment Absolute. This Assignment is absolute and is effective immediately.
Notwithstanding the foregoing, until an Event of Default, as defined in ARTICLE TWO above,
has occurred, Mortgagor may receive, collect and enjoy the Rents. Upon or at any time after an
Event of Default has occurred, Mortgagee may at its option, without notice:
(a) in the name, place and stead of Mortgagor (i) enter upon, manage and
operate the Mortgaged Property, or retain the services of an independent contractor to
manage and operate the same, (ii) make, enforce, modify and accept surrender of the
Leases, (iii) obtain or evict tenants, demand, collect, sue for, receive and give
acquittances for, fix or modify Rents and enforce all rights of Mortgagor under the
Leases, and (iv) perform any and all other acts that may be necessary or proper to protect
the security of this Assignment; provided always, however, that until the end of any
redemption period available to Mortgagor after any foreclosure of this Mortgage
Mortgagee shall continue to deal with the Leases on the Property in a reasonable
businesslike manner, recognizing and protecting Mortgagor’s continuing rights during
such period to retake possession and control of the Mortgaged Property upon paying the
appropriate redemption price, and to resume the management of such Leases;
(b) give or require Mortgagor to give notice to any and all tenants under the
Leases authorizing and directing the tenants to pay all Rents due under the Leases
directly to Mortgagee; and
(c) apply for, and Mortgagor hereby consents to, the appointment of a
receiver of the Mortgaged Property.
4.4. Application of Rents.
(a) All Rents collected by Mortgagee, or by a receiver, shall be held and
applied by Mortgagee in its reasonable discretion, in accordance with applicable law,
including, without limitation to: (i) payment of all reasonable fees of the receiver, if any,
approved by the court; (ii) the repayment when due of all tenant security deposits
pursuant to the provisions of Minnesota Statutes Section 504B.178; (iii) payment of all
delinquent or current real estate taxes and special assessments payable with respect to the
Property or, if this Mortgage so requires, to the periodic escrow for the payment thereof;
(iv) payment of all premiums then due for the insurance required by the provisions of this
Mortgage or, if this Mortgage so requires, to the periodic escrow for the payment thereof;
(v) payment of expenses incurred for normal maintenance of the Mortgaged Property.
(b) Any amounts remaining after such application shall be applied as follows:
(i) if received prior to any foreclosure sale of the Mortgaged Property
to Mortgagee for payment of the indebtedness secured by this Mortgage, but no
such payment made after acceleration of the indebtedness shall affect such
acceleration; and
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(ii) if received during or with respect to a period after a foreclosure
sale of the Mortgaged Property:
(1) if the purchaser at the foreclosure sale is not Mortgagee,
first to Mortgagee to the extent of any deficiency of the sale proceeds to
repay the indebtedness secured by this Mortgage, second to the purchaser
as a credit to the redemption price, but if the Mortgaged Property is not
redeemed, then to the purchaser of the Mortgaged Property;
(2) if the purchaser at the foreclosure sale is Mortgagee, first to
Mortgagee to the extent of any deficiency of the sale proceeds to repay the
indebtedness secured by this Mortgage and the balance to be retained by
Mortgagee as a credit to the redemption price, but if the Mortgaged
Property is not redeemed, then to Mortgagee, whether or not such
deficiency exists.
4.5. Continuing Effect. The rights and powers of Mortgagee under this Assignment
and the application of the Rents shall continue and remain in full force and effect both before and
after commencement of any action or procedure to foreclose this Mortgage, after any foreclosure
sale of Mortgagor’s interest in the Property in connection with the foreclosure of this Mortgage,
and until expiration of the period of redemption from any such foreclosure sale, whether or not
any deficiency from the unpaid balance of the Obligations exists after such foreclosure sale.
4.6. Mortgagee Not Obligated. Mortgagee shall not be obligated by this Assignment
for the control, care, management or repair of the Mortgaged Property, nor for the carrying out of
any of the terms and conditions of the Leases; nor shall this Assignment operate to make
Mortgagee responsible or liable for any waste committed on the Mortgaged Property by the
tenants or any other party, or for any dangerous or defective condition of the Mortgaged
Property, or for any violation of Environmental Laws or for any negligence in the management,
upkeep, repair or control of the Mortgaged Property resulting in any loss or any injury or death to
any person.
4.7. Hold Harmless. Mortgagor shall and does agree to indemnify and to hold
Mortgagee harmless of and from any and all liability, loss or damage which it may or might
incur under or by reason of this Assignment, and of and from any and all claims and demands
whatsoever which may be asserted against it by reason of any alleged obligations or undertakings
on its part to perform or discharge any of the terms, covenants or agreements contained in the
Leases; provided, however, that such indemnification shall not apply if the same arises out of
Leases intentionally breached by Mortgagee which were made by Mortgagor in the ordinary
course of managing the Mortgaged Property and prior to the time Mortgagee obtained the right
to possess and manage the Mortgaged Property, or if the same arises out of the negligent or
willful act of Mortgagee in operating and using the Mortgaged Property. Should Mortgagee
incur any such liability, loss or damage under any Lease or by reason of this Assignment, or in
the defense of any such claims or demands, the amount thereof, including costs, expenses, and
reasonable attorneys’ fees, shall be secured hereby and Mortgagor shall reimburse Mortgagee
therefor immediately upon demand. Mortgagee shall give Mortgagor notice of any such claim
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and Assignor shall have the opportunity to defend Mortgagee in connection therewith with
counsel reasonably acceptable to Mortgagee; provided Mortgagee’s failure to give such notice
and opportunity to defend shall not affect Mortgagor’s obligations under this Section except to
the extent Mortgagor is actually prejudiced by such failure.
4.8. Authorization to Tenants. The tenants under any of the Leases are hereby
irrevocably authorized and directed to recognize the claims of Mortgagee or its assigns
hereunder without investigating the reason for any action taken by Mortgagee, or the validity or
the amount of indebtedness owing to Mortgagee, or the existence of any such event of default, or
the application of the Rents to be made by Mortgagee. Mortgagor hereby irrevocably directs and
authorizes each tenant to pay to Mortgagee all sums due under its Lease and consents and directs
that said sums shall be paid to Mortgagee without the necessity for a judicial determination that
any such event of default has occurred or that Mortgagee is entitled to exercise its rights
hereunder, and to the extent such sums are paid to Mortgagee, Mortgagor agrees that the tenants
shall have no further liability to Mortgagor for the same. The sole signature of Mortgagee shall
be sufficient for the exercise of any rights under this Assignment and the sole receipt of
Mortgagee for any sums received shall be a full discharge and release therefor to the tenants or
occupants of the Mortgaged Property.
4.9. Mortgagee Attorney-in-Fact. Mortgagor hereby irrevocably appoints Mortgagee
as its agent and attorney in fact, which appointment is coupled with an interest, to exercise any
rights or remedies hereunder and to execute and deliver during the term of this Assignment such
instruments as Mortgagee may deem necessary to make this Assignment and any further
assignment effective.
4.10. Mortgagee Not in Possession. Nothing herein contained and no actions taken
pursuant to this Assignment shall be construed as constituting Mortgagee a “Mortgagee in
Possession.”
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ARTICLE FIVE
CONDEMNATION
5.1. Notice. Mortgagor will give Mortgagee prompt notice of any action, actual or
threatened, in condemnation or eminent domain, direct or inverse.
5.2. Awards. Subject to any obligations under the First Lien Mortgage, which has
priority over this Mortgage, Mortgagor hereby assigns, transfers, and sets over to Mortgagee the
entire proceeds of any award or payment which becomes payable by reason of any taking of or
damage to the Mortgaged Property, or any part or appurtenance thereof, either temporarily or
permanently, in or by condemnation or other eminent domain proceedings or by reason of sale
under threat thereof, or in anticipation of the exercise of the right of condemnation or other
eminent domain proceedings. Mortgagor will file or prosecute in good faith and with due
diligence what would otherwise be its claim in any such award or payment and cause the same to
be collected and paid over to Mortgagee, and Mortgagor irrevocably authorizes and empowers
Mortgagee, which power is coupled with an interest and is irrevocable, in the name of Mortgagor
or otherwise, in the event that Mortgagor fails to do so, to file and prosecute any such claim and
to collect, receipt for and retain the same. The proceeds of the award or payment, after deducting
all reasonable costs, attorneys’ fees and other expenses which may have been incurred by
Mortgagee in collection thereof, at the sole discretion of Mortgagee, may be released to
Mortgagor, applied to restoration of the Mortgaged Property or applied to the payment of any
part of the Obligations, in such order of application as Mortgagee may determine. If proceeds
are made available to be applied to restoration, they shall be held and disbursed in accordance
with Paragraph 1.6(d) hereof.
ARTICLE SIX
UNIFORM COMMERCIAL CODE
6.1. Security Interest. This Mortgage shall constitute a security agreement as defined
in the Uniform Commercial Code with respect to, and Mortgagor hereby grants Mortgagee a
security interest in, all of fixtures and any personal property included in the Mortgaged Property
and substitutions therefor and proceeds thereof. Mortgagor hereby authorizes Mortgagee to file
one or more financing statements, covering such fixtures and personal property (in a form
satisfactory to Mortgagee) which Mortgagee may reasonably consider necessary or appropriate
to perfect its security interest. Mortgagor also authorizes Mortgagee to file amendments to
financing statements, and terminations of financing statements filed by other secured parties, all
with respect to all fixtures and personal property included in the Mortgaged Property, in such
form and substance as Mortgagee, in its reasonable discretion, may determine. Mortgagor will
pay to Mortgagee, on demand, the amount of any and all costs and expenses (including
reasonable attorneys’ fees and legal expenses) paid or incurred by Mortgagee in connection with
the exercise of any right or remedy referred to in this Section. In any instance where Mortgagor
in its sound discretion determines that any item subject to a security interest under this Mortgage
has become: (i) inadequate, obsolete, worn out, or (ii) unsuitable, undesirable or unnecessary for
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the operation of the Mortgaged Property, Mortgagor may, at its expense, remove and dispose of
it and substitute and install other items not necessarily having the same function, provided, that
such removal and substitution shall not impair the operating utility and unity of the Mortgaged
Property. With respect to items which are a part of the Mortgaged Property, all items substituted
for such items shall become a part of the Mortgaged Property and subject to the lien of this
Mortgage. Any amounts received or allowed Mortgagor upon the sale or other disposition of the
removed items of property shall be applied against the cost of acquisition and installation of the
substituted items. Nothing herein contained shall be construed to prevent any tenant or subtenant
from removing from the Mortgaged Property trade fixtures, furniture and equipment installed by
it and removable by tenant under its terms of any one or more of the Leases, on the condition,
however, that Mortgagor shall assure the repair of any and all damages to the Mortgaged
Property resulting from or caused by the removal thereof. Mortgagee acknowledges that no
items of personal property are included in the Mortgaged Property.
6.2. Fixture Filing. From the date of its recording, this Mortgage shall be effective as
a financing statement with respect to all goods constituting part of the Mortgaged Property which
are or are to become fixtures related to the real estate described herein. For this purpose, the
following information is set forth:
(a) Name and Address of Mortgagor:
Hemmer Companies L.L.C.
15970 Jarvis Street NW
Elk River, MN 55330
Attention: David Walters
(b) Name and address of Secured Party:
Economic Development Authority of the City of Elk River
13065 Orono Parkway
Elk River, MN 55330
Attention: Director of Economic Development
(c) This document covers goods which are or are to become fixtures.
(d) The real estate to which such fixtures are or are to be attached is that
described in Exhibit A attached hereto.
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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:
Hemmer Companies L.L.C.
15970 Jarvis Street NW
Elk River, MN 55330
Attention: David Walters
7.4. Governing Law; Severability. This Mortgage shall be governed by the laws of the
State of Minnesota. In the event that any provision or clause of this Mortgage conflicts with
applicable law, such conflict shall not affect other provisions of this Mortgage which can be
given effect without conflicting provisions and to this end the provisions of this Mortgage are
declared to be severable.
7.5. Counterparts. This Mortgage may be executed in any number of counterparts,
each of which shall be an original but all of which together shall constitute one instrument.
7.6. Waiver of Appraisement, Homestead, Marshaling. Mortgagor hereby waives the
benefit of any homestead, appraisement, evaluation, stay and extension laws now or hereinafter
in force. Mortgagor hereby waives any rights available with respect to marshaling of assets so as
to require the separate sales of any portion of the Mortgaged Property or to require Mortgagee to
exhaust its remedies against a specific portion of the Mortgaged Property before proceeding
against the other.
7.7. Subsequent Agreements. Any agreement hereafter made by Mortgagor and
Mortgagee pursuant to this Mortgage shall be superior to the rights of the holder of any
intervening lien or encumbrance.
[Signature Page follows]
S-1
456465v5 EL185-30
611367v1EL185-30
Signature Page to Mortgage
IN WITNESS WHEREOF, Mortgagor has caused this Mortgage to be duly executed as of
the day and year first written.
HEMMER COMPANIES L.L.C.,
a Minnesota limited liability company
By:
Cynthia Mae Hemmer
Its: President
STATE OF MINNESOTA )
) ss.
COUNTY OF ________ )
The foregoing instrument was acknowledged before me on ______________, 2019, by
Cynthia Mae Hemmer, President of Hemmer Companies L.L.C., a Minnesota limited liability
company, on behalf of the limited liability company.
Notary Public
My Commission Expires:
This Instrument was drafted by:
Kennedy & Graven, Chartered
470 U.S. Bank Plaza
200 South Sixth Street
Minneapolis, Minnesota 55402
Telephone: (612) 337-9300
A-1
611367v1EL185-30
EXHIBIT A Legal Description
[ADD LEGAL DESCRIPTION]
B-1
611367v1EL185-30
EXHIBIT B
Permitted Encumbrances
1) That certain [mortgage] in the amount of $_______________ from Hemmer Companies
L.L.C., and for the benefit of The Bank of Elk River dated _______________, recorded
in the Office of the Sherburne County Recorder/Registrar of Titles on
________________, 20___, as Document No. ________________.
2)
MICROLOAN CLOSING CHECKLIST
CLOSING DATE: ____________, 2019
Borrower Hemmer Companies L.L.C.
Entity Guarantor Distinctive Iron LLC
Lender Economic Development Authority of the City of Elk River
Property Address 19128 Industrial Blvd, Elk River, MN 55330
PID
Legal
Title Co./Closer
CLOSING DOCUMENTS
1. Amended and Restated Loan Agreement
2. Amended and Restated Promissory Note
3. Amended and Restated Security Agreement (for equipment)
4. Amended and Restated Personal Guaranty of Steven Michael Hemmer
5. Amended and Restated Personal Guaranty of Cynthia Mae Hemmer
6. Amended and Restated Entity Guaranty
7. Termination of Original Mortgage
8. Amended and Restated Mortgage and Assignment of Rents and Security Agreement and Fixture
Financing Statement
9. Certificate and Request for Notice
10. Title Commitment
11. Title Insurance Policy
12. Borrower’s articles of organization (certified by Sec. of State)
13. Borrower’s certificate of good standing (issued by Sec. of State)
14. Borrower’s member control agreement and bylaws
15. Borrower’s certified resolutions authorizing execution and delivery of the every document
executed by Borrower
16. Entity Guarantor’s articles of organization (certified by Sec. of State)
17. Entity Guarantor’s certificate of good standing (issued by Sec. of State)
18. Entity Guarantor’s member control agreement and bylaws
19. Entity Guarantor’s certified resolutions authorizing execution and delivery of the every document
executed by Borrower
20. Borrower’s certificate of insurance for Property
21. Borrower’s evidence that Property is not located in a flood plain or flood hazard area
22. Environmental Indemnification Agreement
23. Indemnity agreement in favor of Title
24. Lease Agreement between Borrower and Entity Guarantor
25. Equipment List (Ex A to Loan Agreement & to Security Agreement)
26. EDA Resolution approving loan agreement and related documents City
27. City Resolution approving loan agreement City
City of
Elk City of Elk River
Wver City Council
Resolution 19-
A Resolution of the City Council of the City of Elk River Approving an
Amended and Restated Loan Agreement (Distinctive Iron Project)
WHEREAS, on February 17, 2015, the Economic Development Authority of the City of
Elk River (the "EDA") provided a loan to Hemmer Companies L.L.C., a Minnesota limited
liability company (the "Borrower"),pursuant to the FDA's NEcroloan Program (the
"Program") in the amount of$126,000.00 (the "Original Loan") in accordance with a Loan
Agreement, dated February 17,2015 (the "Original Loan Agreement"),between the Borrower
and the EDA.
WHEREAS, the current outstanding principal balance of the Original Loan is $89,338.20.
WHEREAS, , the City Council (the "Council") of the City has received a request from the
Borrower that the EDA provide an additional loan to the Borrower in the amount of
$100,000.00 (the "New Loan") pursuant to the Program in order to assist in financing the
acquisition,renovation and equipping of a new facility in the City in connection with the expansion
of its current business in the City.
WHEREAS, the Borrower has proposed that the Borrower and the EDA enter into an
Amended and Restated Loan Agreement (the "Amended and Restated Loan Agreement")
and related documents in connection with the New Loan.In total, the outstanding principal
of the Original Loan and the New Loan (together, the "Loan") will be $189,338.20.
WHEREAS, the EDA has caused to be prepared the Amended and Restated Loan
Agreement with the Borrower setting forth, among other things, the terms and conditions
under which the EDA will make the Loan. The Amended and Restated Loan Agreement
amends and restates the Original Loan Agreement to provide for the issuance of the New
Loan.
WHEREAS, the EDA has approved the Loan and the Amended and Restated Loan
Agreement on this same date and a copy of the Amended and Restated Loan Agreement is
on file with the City NATUREJ
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Elk
River,Minnesota, as follows:
Section 1. Business Subsidy.
1.01. The Loan constitutes a business subsidy within the meaning of Minnesota
Statutes, Section 116J.993 to 116J.995 (the `Business Subsidy Act"), and the Amended and
Restated Loan Agreement includes a "business subsidy agreement" as required under the
Business Subsidy Act.
1.02. The City has adopted a Business Subsidy Policy (the "Subsidy Policy'), which
sets the general criteria for all types of subsidies granted by the EDA, all as required under the
Business Subsidy Act.
Section 2. Consent.
2.01 In accordance with Section 116J.994, Subd. 3(d) of the Business Subsidy Act,
the City hereby approves the Amended and Restated Loan Agreement and consents to the
EDA entering into the Amended and Restated Loan Agreement and related documents with
the Borrower.
2.02 The City hereby approves the provision of the Loan to the Borrower in
accordance with the terms of the Amended and Restated Loan Agreement in substantially the
form submitted to the City Council together 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 of the EDA 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.
Passed and adopted this 161h day of September,2019.
John J. Dietz,Mayor
ATTEST:
Tina Allard, City NATUREJ