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Commercial Development Revenue Bond - Stendal$900,000 CITY OF HOPKINS COMMERCIAL DEVELOPMENT REVENUE BOND (STANDAL PROJECT) LOAN AND PURCHASE AGREEMENT Dated as of February 1, 1982 CITY OF HOPKINS AND JOHN B. STANDAL AND FIRST NATIONAL BANK OF HOPKINS This instrument was drafted by Faegre Benson 1300 Northwestern Bank Building Minneapolis, Minnesota 55402 $900,000 City of Hopkins Commercial Development Revenue Bond (Standal Project)' PARTIES AND RECITALS ARTICLE I ARTICLE V Parties Recitals ARTICLE II ARTICLE IV Section 1.01 Section 1.02 Section 1.03 Section 1.04 Section 2.01 Section 2.02 ARTICLE III Section 3.01 Section 3.02 Section 4.01 Section 4.02 Section 4.03 Section 4.04 Section 4.05 Section 5.01 Section 5.02 Section 5.03 Section 5.04 Section 5.05 Section 5.06 Section 5.07 TABLE OF CONTENTS LOAN AND PURCHASE AGREEMENT DEFINITIONS AND INTERPRETATION Definitions Characteristics of Certificate or Opinion Description of Project Additional Provisions as to Interpretation REPRESENTATIONS Representations by the Municipality Representations by the Borrower PURCHASE OF BOND Purchase of Bond by Bank; Closing Conditions to the Closing ISSUANCE OF THE BOND Completion of Project Loan of Proceeds Borrower Required to Pay Project Costs in Event Proceeds Insufficient Project Costs Defined Title to the Project LOAN REPAYMENTS AND OTHER PAYMENTS Repayment of Loan Additional Payments No Set -Off; Borrower's Obligations Unconditional Late Charge on Overdue Payments Option to Prepay Loan Mandatory Redemption Tax Exempt Status of the Bond PAGE 1 1 2 6 6 7 8 9 12 12 15 15 15 15 17 18 18 18 19 19 19 19 ARTICLE VI PROJECT FACILITIES Section 6.01 Section 6.02 Section 6.03 Section 6.04 Section 6.05 Section 6.06 Section 6.07 Section 6.08 Section 6.09 ARTICLE VII Section 7.01 Section 7.02 Section 7.03 Section 7.04 Section 7.05 Section 7.06 ARTICLE VIII Section 8.01 Section 8.02 Section 8.03 Section 8.04 Section 8.05 ARTICLE IX Section 9.01 Section 9.02 Section 9.03 Section 9.04 Section 9.05 Section 9.06 Section 9.07 Section 9.08 Section 9.09 Use of Project Facilities Maintenance and Possession of Project Facilities by Borrower Operating Expenses and Liens Taxes and Other Governmental Charges Alterations Installation of Equipment Insurance Damage or Destruction Condemnation SPECIAL COVENANTS No Warranty of Condition or Suitability; Indemnification Annual Statement and Certificate; Reports Records and Inspection Further Assurances, Financing Statements, Maintenance of Lien Assignments Observance of Bond Resolution Covenants and Terms EVENTS OF DEFAULT AND REMEDIES Events of Default Remedies on Default Remedies Cumulative, Delay Not to Constitute Waiver Agreement to Pay Attorneys' Fees and Expenses Advances MISCELLANEOUS Notices Binding Effect Modifications Counterparts Benefit of Holder Due Dates Captions Term of Agreement Severability 22 22 22 22 23 23 23 23 23 24 24 25 25 25 25 27 28 29 29 29 31 31 31 31 31 31 32 32 32 EXHIBITS EXHIBIT A Bond Resolution EXHIBIT 1 Bond Form EXHIBIT 2 Loan Agreement Assignment EXHIBIT B Combination Mortgage, Security Agreement and Fixture Financing Statement EXHIBIT 1 Description of Premises EXHIBIT 2 Additional Permitted Encumbrances EXHIBIT C Assignment of Rents and Leases EXHIBIT D Borrower's Counsel's Opinion EXHIBIT E Bond Counsel Opinion LOAN AND PURCHASE AGREEMENT THIS LOAN AND PURCHASE AGREEMENT, Made as of the 1st day of February, 1982, between the CITY OF HOPKINS, Minnesota, a Minnesota municipal corporation (the "Muncipality JOHN B. STANDAL, an individual residing in the City of Eden Prairie, Minnesota (the "Borrower and FIRST NATIONAL BANK OF HOPKINS, a national banking association having its principal office in Hopkins, Minnesota (the "Bank WITNESSETH: WHEREAS, Chapter 474, Minnesota Statutes (the "Act authorizes and empowers municipalities of the State of Minnesota to issue and sell revenue bonds and lend the proceeds thereof to an individual for the purpose of financing projects authorized thereby; and WHEREAS, the Borrower proposes to acquire, construct and equip a commercial building (the "Project Building in the Municipality to be owned by the Borrower and leased to various tenants (hereinafter defined as the "Project and WHEREAS, the City Council of the Municipality adopted a preliminary resolution giving preliminary approval of the Project and the Commissioner of Securities of the State of Minnesota has approved the Project as tending to further the purposes of the Act; and WHEREAS, the Municipality proposes to make a loan to the Borrower pursuant to the Act to provide financing for the Project; and WHEREAS, the Municipality proposes to issue its $900,000 Commercial Development Revenue Bond (Standal Project) (the "Bond pursuant to a Bond Resolution adopted by the City Council of the Municipality on February 16, 1982 (the "Bond Resolution to provide the funds to be loaned to the Borrower hereunder and to assign its interest in this Loan Agreement to the Holder of the Bond; and WHEREAS, the Bank has agreed to purchase the Bond, and the Bond Resolution provides for the sale of the Bond to the Bank; and WHEREAS, the Borrower has agreed to execute and deliver to the Bank a Combination Mortgage, Security Agreement and Fixture Financing Statement dated as of February 1, 1982 (the "Mortgage on the Project Building, the site thereof and certain fixtures therein to secure the prompt and full payment of the principal of and interest on the Bond; and WHEREAS, the Borrower proposes to lease the Project to certain tenants and to assign all of his right and interests in any leases, including rental payments to be made thereunder, to the Bank pursuant to an Assignment of Rents and Leases dated February 1, 1982 (the "Lease Assignment NOW, THEREFORE, in consideration of the mutual covenants hereinafter contained, the parties hereto covenant and agree as follows: ARTICLE I Definitions and Interpretation Section 1.01 Definitions. Unless the context other- wise requires, the terms defined in this Article I and in the succeeding Articles of this Loan Agreement shall, for all pur- poses of this Loan Agreement and of any agreement supplemental hereto, have the meanings herein specified, such definitions to be equally applicable to both the singular and plural forms of any of the terms defined: "Act" means the Minnesota Municipal Industrial Develop- ment Act, Chapter 474, Minnesota Statutes, as amended from time to time. "Assignment" means the Loan Agreement Assignment sub- stantially in the form of Exhibit 2 to the Bond Resolution, dated as of February 1, 1982, between the Municipality as assignor and the Bank as assignee. "Authorized Borrower Representative" means the Borrower or the person at the time designated to act on behalf of the Borrower by written certificate furnished to the Municipality and the Bank, containing the specimen signature of such person and signed by the Borrower. Such certificate may designate an alter- nate or alternates. "Authorized Municipal Representative" means the person at the time designated to act on behalf of the Municipality by written Certificate furnished to the Borrower and the Bank, con- taining the specimen signature of such person and signed on behalf of the Municipality by its Mayor or City Manager. Such Certificate may designate an alternate or alternates. "Bank" means the First National Bank of Hopkins, a national banking association whose principal office is in Hopkins, Minnesota, its successors and assigns. -2- "Bond" means the City of Hopkins Commercial Development Revenue Bond (Standal Project) authorized by this Loan Agreement and the Bond Resolution. "Bond Resolution" means the resolution of the Munici- pality adopted substantially in the form attached as Exhibit A hereto by the City Council on February 16, 1982, authorizing the issuance and sale of the Bond, as the same may be amended, modi- fied or supplemented by any amendments or modifications thereof. "Borrower" means John B. Standal, an individual residing in Eden Prairie, Minnesota and his heirs, legal representatives, successors and assigns. "Certificate" means a certification in writing required or permitted by the provisions of the Loan Agreement, the Bond Resolution or the Mortgage, signed and delivered to the Bank or other proper person or persons. If and to the extent required by the provisions of Section 1.02 hereof, each Certificate shall include the statements provided for in said Section 1.02. "Certified Resolution" means a copy of a resolution of the City Council, certified by the City Clerk to have been duly adopted by said City Council and to be in full force and effect on the date of such certification. "City Council" or "Council" means the City Council of the Municipality or its successor as governing body of the Munic- ipality. hereof. "Closing" means the Closing described in Section 3.01 "Default" means default by the Borrower in the perform- ance or observance of any of the covenants, agreements or condi- tions on his part contained in this Loan Agreement, exclusive of any notice or period of grace required to constitute a default an "Event of Default" as described in Section 8.01 hereof. "Determination of Taxability" means the issuance of a statutory notice of deficiency by the Internal Revenue Service, or a ruling of the National Office of the Internal Revenue Service, or a final decision of a court of competent jurisdiction which holds in effect that the interest payable on the Bond is includable in the gross income of the Holder thereof (other than a Holder who is a substantial user of the Project or a related person, within the meaning of Section 103(b)(10) of the Code) for federal income tax purposes, if the period, if any, for contest or appeal of such action, ruling or decision by the Borrower, Holder or Municipality has expired without any such contest or appeal having been properly instituted by the Borrower, Holder or Munici- pality. The expenses of any such contest shall be paid by the party initiating the contest and neither the Borrower, Holder or Municipality shall be required to contest or appeal any Determina- -3- tion of Taxability. The "Date of Taxability" shall mean that point in time, as specified in the determination, ruling or decision, that the interest payable on the Bond becomes includible in the gross income of the Holder for federal income tax purposes. In addition to the foregoing, a "Determination of Taxability" shall also mean, except by reason of the fact the Holder is a substantial user of the Project or a related person thereto, (i) the inability of the Holder to obtain an opinion of nationally recognized bond counsel that the interest payable on the Bond continues to be exempt from federal income taxes or (ii) receipt by the Holder of an opinion of nationally recognized bond counsel that the interest payable on the Bond continues to be exempt from federal income taxes or (ii) receipt by the Holder of an opinion of nationally recognized bond counsel which holds in effect that the interest payable on the Bond is includible in the gross income of the Holder for federal income tax purposes. The "Date of Taxability" in such instance shall be the point in time, as specified in such opinion, that said interest became includable in the gross income of the Holder for federal income tax purposes, or the point of time after which no favorable opinion as to tax exemption could be given, as the case may be. "Event of Default" means an Event of Default described in Section 8.01 hereof which has not been cured. "Financial Newspaper" or "Financial Journal" means Commercial West or any other newspaper or journal devoted to financial news circulated in the English language in the Cities of Minneapolis or St. Paul, Minnesota. "Fiscal Year" means the Borrower's fiscal year, and shall initially mean the 12 -month period commencing on January 1 in each year. "Holder "Bondholder" or "Owner" means the person in whose name the Bond shall be registered. "Independent when used with reference to an attorney, engineer, architect, certified public accountant, or other pro- fessional person, means a person who (i) is in fact independent, (ii) does not have any material financial interest in the Borrower or the transaction to which his Certificate or opinion relates (other than the payment to be received for professional services rendered), and (iii) is not connected with the Municipality and is not a spouse, parent, child, brother or sister of the Borrower. "Independent Counsel" means an Independent attorney duly admitted to practice law before the highest court of any state. "Independent Engineer" means an Independent engineer or engineering firm or an Independent architect or architectural firm qualified to practice the profession of engineering or architecture under the laws of Minnesota. -4- "Internal Revenue Code" means the Internal Revenue Code of 1954, as amended from time to time. "Lease Assignment" means the Assignment of Rents and Leases substantially in the form of Exhibit C hereto, dated as of February 1, 1982, from the Borrower to the Bank and any amendments or supplements thereto. "Loan Agreement" means this Loan and Purchase Agreement between the Municipality, the Borrower and the Bank, dated as February 1, 1982, and any amendments or supplements thereto. "Loan Repayments" means the payments made or to be made by the Borrower pursuant to Section 5.01 of this Loan Agreement. "Loan Year" or "Loan Years" means the successive one year periods commencing on March 1, 1982, and subsequent Loan Years commencing on successive anniversaries of March 1, 1982. "Mortgage" means the Combination Mortgage, Security Agreement and Fixture Financing Statement, substantially in the form of Exhibit B hereto, dated as of February 1, 1982, between the Borrower, as Mortgagor, and the Bank, as Mortgagee, and any amendments or supplements thereto. "Municipality" means the City of Hopkins, a Minnesota municipal corporation, and any successors to its functions. "Opinion of Counsel" means a written opinion of counsel (who need not be Independent Counsel unless so specified) appointed by the Borrower or Municipality, satisfactory to the Bank, or appointed by the Bank. If and to the extent required by the provisions of Section 1.02 hereof, each Opinion of Counsel shall include the statements provided for in said Section 1.02. "Permitted Encumbrances" means those matters identified as such in Exhibit 2 to the Mortgage. hereof. "Project" means the Project described in Section 1.03 "Project Building" means the building constructed and equipped by the Borrower on the Project Site as part of the Project and all other structures located or to be located on the Project Site. "Project Costs" mean the costs defined in Section 4.04 of the Loan Agreement. "Project Equipment" means the building service equip- ment acquired, installed and located permanently or used exclu- sively in and as part of the Project Building or the Project Site as part of the Project, which shall be specifically described in -5- the Certificate of the Project Supervisor to be furnished pursuant to Section 4.07 of the Loan Agreement. "Project Facilities" means the Project Site, the Project Building and the Project Equipment, as the same may at any time exist. "Project Site" means the land on which the Project Facilities are and are to be located, described in Exhibit 1 to the Mortgage. "Redeem" or "redemption" means and includes "prepay" or "prepayment" as the case may be. Section 1.02 Characteristics of Certificate or Opinion. Every Certificate or Opinion of Counsel with respect to compliance with a condition or covenant provided for in the Bond Resolution or the Loan Agreement but not otherwise and except for Certificates and opinions given pursuant to Article III hereof, shall include: (1) a statement that the person or persons making such certificate or opinion have read such covenant or condition and the definitions herein relating thereto; (ii) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based; (iii) a statement that, in the opinion of the signers, they have made or caused to be made such examination or investi- gation as is necessary to enable them to express an informed opinion as to whether or not such covenant or condition has been complied with; and (iv) a statement as to whether, in the opinion of the signers, such condition or covenant has been complied with. Any such Certificate made or given by the Borrower or by an officer of the Municipality may be based, insofar as it relates to legal matters, upon an Opinion of Counsel, unless such person or officer knows that the opinion with respect to the matters upon which his Certificate may be based as aforesaid is erroneous, or, in the exercise of reasonable care, should have known that the same was erroneous. Any such Opinion of Counsel may be based, insofar as it relates to factual matters on infor- mation with respect to which is in the possession of the Munici- pality or the Borrower, upon the Certificate of an officer or officers of the Municipality or the Borrower, unless such counsel knows that the Certificate with respect to the matters upon which his opinion may be based as aforesaid is erroneous, or, in the exercise of reasonable care, should have known that the same was erroneous. Section 1.03 Description of Project. The term "Project" refers to a project to acquire, construct and equip a commercial building on the Project Site in the Municipality, including the Project Building, the Project Equipment and such site improvements as may be necessary for such purposes, to be owned by the Borrower and leased to various tenants. -6- Section 1.04 Additional Provisions as to Interpretation. All references herein to "Articles "Sections" and other subdivi- sions are to the corresponding Articles, Sections or subdivisions of this Loan Agreement; and the words "herein "hereof "here- under" and other words of similar import refer to this Loan Agreement as a whole and not any particular Article, Section or subdivision hereof. Any terms defined in the Bond Resolution but not defined herein shall have the same meaning herein unless the context hereof clearly requires otherwise. This Loan Agreement is governed by and shall be con- strued in accordance with the laws of Minnesota. [The balance of this page is intentionally left blank] ARTICLE II REPRESENTATIONS Section 2.01 Representations by the Municipality. The Municipality makes the following representations: (a) The Municipality is a duly organized and existing municipal corporation under the laws of the State of Minnesota and has power to issue the Bond under the Act. (b) The Project comprises real and personal properties useful and to be used in connection with the operation of a revenue producing enterprise and is an authorized "project" under Section 474.02, Subd. la of the Act. (c) In authorizing the Project, the Municipal- ity's purpose is, and in the judgment of the City Council the effect thereof will be, to promote the public welfare by: preventing the emergence of blighted and marginal lands and areas of chronic un- employment; preventing economic deterioration; the development of sound industry and commerce to use the available resources of the community, in order to retain the benefit of the community's existing invest- ment in educational and public service facilities, and halting the movement of talented, educated personnel to other areas and thus preserving the economic and human resources needed as a base for providing governmental services and facilities; and increasing the tax base of the Municipality and the county and school district in which the Municipality is located. (d) On April 15, 1980, after due publication of notice of hearing in the official newspaper and a newspaper of general circulation at least 15 days prior thereto, the City Council held a public hearing and duly adopted a resolution giving preliminary approval to the Project pursuant to the Act. (e) The Project has been approved by the Commis- sioner of Securities of the State of Minnesota as tending to further the purposes and policies of the Act. (f) The Project, the issuance and sale of the Bond, the execution and delivery of this Loan Agreement and the Assignment, the performance of all covenants and agreements of the Municipality contained in the Loan Agreement and the Assignment and the Bond Resolu- tion and of all other acts and things required under -8- the Constitution and laws of the State of Minnesota and the City Charter to make the Loan Agreement and the Bond valid and binding special obligations of the Municipality in accordance with their terms and the loan of money hereunder are authorized and have been duly authorized by resolutions of said City Council, including the Bond Resolution duly adopted at a meeting of said City Council duly called and held on February 16, 1982, by a vote of a majority of its members. (g) To finance the cost of the Project, the Municipality proposes to issue the Bond of the Munici- pality as provided in the Act and Bond Resolution and lend the proceeds thereof to the Borrower pursuant to this Loan Agreement. The Municipality will issue the Bond in the authorized principal amount of $900,000, dated the date of the Closing, in the form set forth in Exhibit 1 to the Bond Resolution which is attached as Exhibit A hereto. (h) There is no litigation pending or, to the best of its knowledge threatened, against the Munici- pality relating to the Project or to the Bond or to this Loan Agreement or the Bond Resolution, or ques- tioning the power or authority of the Municipality under the Act, or questioning the corporate existence or boundaries of the Municipality or the title of any of the present officers of the Municipality to their respective offices. (1) The execution, delivery and performance of this Loan Agreement does not violate any law, City Charter provision, regulation or agreement or any court order or judgment in any litigation to which the Munici- pality is a party or by which it is bound. (j) To the best of the Municipality's knowledge and belief, no council member of the Municipality, and no other elected or appointed official who is authorized to take part in the making of the Loan Agreement or the issuance of the Bond, is directly or indirectly inter- ested in this Loan Agreement, the Bond, the Project, or any contract, agreement or job contemplated to be entered into or undertaken for completion of the Project. Section 2.02 Representations by the Borrower. The Borrower makes the following representations: (a) The Borrower is an individual residing in Eden Prairie, Minnesota. (b) The preliminary resolutions adopted by the City Council on April 15, 1980, giving preliminary -9- approval to the Project and for the loan by the Munici- pality provided for herein to the Borrower have induced the Borrower to construct a "project" authorized by the Act in the Municipality. (c) The Borrower intends, but shall not be obli- gated, to operate the Project Facilities to the expira- tion or sooner termination of this Loan Agreement, as provided herein, except to the extent such operation may be interrupted by strikes, riots, acts of God or public enemy or other circumstances beyond the control of the Borrower. (d) The execution and delivery of this Loan Agreement, Lease Assignment and the Mortgage and the consummation of the transactions herein and therein contemplated will not conflict with or constitute a breach of or default under any agreement of the Bor- rower or any bond, debenture, note or other evidence of indebtedness or any contract, loan agreement or lease to which the Borrower is a party or by which he is bound,,or violate any law, regulation or order of the United States or the State of Minnesota or agency or political subdivision thereof, or any court order or judgment in any proceeding to which the Borrower is or was a party or by which he is bound. (e) The proceeds of the Bond to be loaned to the Borrower hereunder, together with the other funds to be contributed to the Project by the Borrower in accordance with this Loan Agreement, will be sufficient to pay the costs of the Project in a manner suitable for oper- ation. (f) There has been no default by the Borrower or, to the best of the knowledge of the Borrower, by any contractor, under any contract between the Borrower and any contractor or other person relating to the Project. (g) There is no litigation pending, or to the best of his knowledge threatened, against the Borrower affecting his ability to carry out the Project or the terms of this Loan Agreement. (h) The Borrower has all necessary licenses and permits required for construction and operation of the Project Building. (i) To the best of the Borrower's knowledge and belief, no council member or other officer or employee of the Municipality is directly or indirectly inter- ested in this Loan Agreement, the Bond, the Project or any contract, agreement or job hereby contemplated to be entered into or undertaken for completion of the Project. -10- (j) No industrial development bonds have been issued by or in any manner authorized by the City Council a major portion of the proceeds of which have been or will be used in the trade or business of the Borrower or any person related to the Borrower or any other principal user of the Project, as such terms are defined in Section 103(b) of the Internal Revenue Code and regulations thereunder, except the Bond. (k) Substantially all of the proceeds of the Bond will be used for the acquisition, construction, recon- struction or improvement of land or property of a character subject to the allowance for depreciation under Section 167 of the Internal Revenue Code. [The balance of this page is intentionally left blank.] ARTICLE III PURCHASE OF BOND Section 3.01 Purchase of Bond by Bank; Closing. Subject to the terms and conditions hereof, the Municipality will sell to the Bank, and the Bank will purchase from the Municipal- ity, the Bond as described in the Bond Resolution, at a purchase price of $900,000 (100% of the principal amount thereof). At the Closing to be held at the offices of Faegre Benson, 1300 North- western Bank Building, Minneapolis, Minnesota, 55402, at 10:00 A.M., Minneapolis time, on February 19, 1982, the Municipality will deliver to the Bank a single Bond to be dated the date of the Closing and substantially in the form of Exhibit 1 to the Bond Resolution; provided that the Bond shall not be issued except in accordance with the Bond Resolution and this Loan Agreement. Delivery of the Bond shall be made against payment therefor in Federal or other immediately available funds, such payment and the simultaneous loan of the proceeds thereof by the Municipality to the Borrower to be effected by the deposit of the full amount of the purchase price of the Bond with the Borower, for the account of the Municipality. Section 3.02 Conditions to the Closing. The obligation of the Bank to purchase and make a payment for the Bond is condit- ioned upon delivery to the Bank at the Closing of the following, any of which may be waived by the Bank in its discretion: (a) A Certificate signed by an Authorized Borrower Representative stating that no Event of Default and no event which, with the giving of notice or lapse of time or both, would become an Event of Default, shall have occurred and be continuing or shall exist upon the completion of such Closing; (b) A Certificate of an Authorized Borrower Representative that the representations and warranties of the Borrower contained in Section 2.02 hereof are true and correct in all material respects; (c) A Certificate of an Authorized Municipal Representative that the representations and warranties of the Municipality contained in Section 2.01 hereof are true and correct in all material respects; (d) The opinions of Lindquist Vennum, as counsel to the Borrower, and of Faegre Benson, as bond counsel, substantially to the effects set forth in Exhibits D and E hereto and otherwise in form and content satisfac- tory to the Bank; (e) Certified copies of the Bond Resolution auth- orizing the issuance of the Bond and the execution and -12- delivery of the Loan Agreement and Assignment and of the resolution adopted by the City Council on April 15, 1980, giving preliminary approval to the Project; (f) Executed counterparts of the Loan Agreement, Bond, Mortgage, Lease Assignment and Assignment; (g) Copy of approval of the Project by the Commissioner of Securities of the State of Minnesota as tending to further the purposes and policies of the Act; (h) Mortgagee's title policy (ALTA form 1970), or commitment therefor insuring that the Mortgage constitutes a valid first mortgage lien on the Project Site subject only to Permitted Encumbrances in an amount not less than $900,000 and in form and substance satisfactory to the Bank; (i) A Certificate of the Authorized Borrower Representative to the effect that the Project has been completed and that the Borrower has expended or incur- red Project Costs for the acquisition, construction, reconstruction or improvement of land or property subject to the allowance for depreciation under Section 167 of the Internal Revenue Code an amount not less than the proceeds of the Bond and setting forth in detail all amounts of Project Costs previously paid for by the Borrower; (j) A Certificate of the Municipality pursuant to the regulations under Section 103(c) of the Internal Revenue Code as to absence of arbitrage expectation, which may be given in reliance on the representations and /or certifications of the Borrower; (k) Acknowledgment copies of proper financing statements, duly filed on or before the date of the Closing, under the Uniform Commercial Code of Minnesota, as the Bank may deem necessary or desirable in order to perfect the security interests granted by the Municipality and the Borrower to secure the Bond, and completed requests for information, dated on or before the date of Closing, as to effective financing statements filed in all filing offices in which the financing statements shall have been filed, together with copies of such financing statements; (1) An Architect's certificate certifying that the Project has been completed in a good and workmanlike manner in accordance with the plans and specifications on file with the Bank and that the Project is in compliance with all applicable building and energy codes; -13- (m) Appraisal of the Project prepared by an MAI appraiser approved by the Bank, certifying a fair market value not less than $1,100,000; (n) Certificate of occupancy; (o) Leases of the Project; (p) Tenant estoppel certificates; (q) Certified survey by a registered and licensed surveyor, of the Project Site, showing the location of the Project Building and otherwise in form and substance satisfactory to the Bank; (r) Certificate of Insurance Policies relating to the insurance required by Section 6.07 of this Loan Agreement; (s) All other documents the Bank may reasonably request relating to the execution and validity of the Bond, the Bond Resolution, the Mortgage, the Lease Assignment, the Assignment, and this Loan Agreement, the tax exempt status of the Bond for Federal income tax purposes and other matters relevant hereto, all in form and substance satisfactory to the Bank, including any documents not specifically identified herein which are required by the Bank's commitment letter to Borrower dated January 21, 1982. [The balance of this page is intentionally left blank.] ARTICLE IV ISSUANCE OF THE BOND Section 4.01 Completion of Project. The Borrower represents and warrants that (1) he has completed the Project substantially in accordance with the plans and specifications now on file in the office of the Bank, (ii) no changes will be made which would delete from the Project any essential characteristics of the Project as specified in Section 1.03 or which materially and adversely affect the total operating unity and efficiency or capacity of the Project or which would prevent the Project from constituting an authorized "project" within the meaning of the Act and (iii) the work of the Project has been completed in accordance with all applicable zoning, planning and building regulations of governmental authorities having jurisdiction of the Project. Section 4.02 Loan of Proceeds. In order to loan funds to the Borrower for reimbursement of the Project Costs, the Municipality shall cause the proceeds of the Bond to be paid t� the Borrower. The obligation of the Municipality to make the loan to the Borrower shall be discharged, and the obligation of the Borrower to repay the loan shall become effective upon deposit of the Bond proceeds with the Borrower. Section 4.03 Borrower Required to Pay Project Costs in Event Proceeds Insufficient. In the event proceeds of the Bond available for payment of Project Costs should not be sufficient to pay the costs of the Project in full, the Borrower agrees, for the benefit of the Municipality and the Bank to pay the remaining costs of the Project. The Muni- cipality and the Bank do not make any warranty, either express or implied, that the proceeds of the Bond, which under the provisions of this Loan Agreement will be available for payment of Project Costs, will be sufficient to pay all the costs which will be incurred in that connection. If the Borrower should pay any portion of the Project Costs in excess of the proceeds of the Bond, he shall not be entitled to any reimbursement therefor from the Municipality or the Bank, nor shall he be entitled to any diminution in or postponement of payments to be made under Section 5.01, 5.02 or 5.05 hereof. Section 4.04 Project Costs Defined. For the purposes of this Loan Agreement, the Project Costs shall include, without intending thereby to limit or restrict any proper definition of such cost under any applicable laws or sound accounting practice, the following: (a) Obligations incurred for labor (including payroll cost of Borrower's employees according to time -15- spent by such employees on the Project) and to contrac- tors, builders and materialmen in connection with the acquisition, construction and installation of the Project and demolition of any existing building on the site or removal of any equipment (net of any salvage), including obligations for machinery, materials and equipment therefor; (b) The cost of acquisition of the Project Site and site improvements required for the construction or operation of the Project Facilities; (c) Interest accruing during the construction period; (d) The cost of any indemnity and surety bonds deemed necessary by the Borrower, taxes and other muni- cipal or governmental charges levied or assessed during the construction period on the Project or any property acquired therefor, and the premiums for insurance, if any, in connection with the Project during the construc- tion period; (e) Costs of acquisition and installation of Project Equipment; (f) Fees and expenses of engineers and architects for surveys and estimates and other preliminary investi- gations, preparation of plans, drawings and specifications and supervising construction, as well as for the perform- ance of all other duties of engineers and architects in relation to the acquisition and betterment of the Project or the issuance of the Bond; (g) Expenses of administration, supervision and inspection properly chargeable to the Project, adminis- trative fees of the Municipality, title insurance premiums and charges, abstracting and filing fees, legal expenses and fees, the Bank's fees and the fees of its attorneys, fiscal consultant fees and expenses, and cost of audits and of preparing, offering and issuing the Bond, incident to the acquisition and betterment and financing of the Project; and (h) Any other obligation or expense heretofore or hereafter incurred by the Borrower in connection with the acquisition and betterment of the Project defined as and constituting a proper project cost under the Act and certified by the Authorized Borrower Representative. Notwithstanding the foregoing, Project Costs shall not include any costs paid or incurred prior to April 15, 1980. -16- Section 4.05 Title to the Project. The Municipality and the Bank acknowledge and agree that as between the Munici- pality and the Borrower, and as between the Bank and the Borrower, the Borrower shall be the owner of the Project Site, the Project Building, the Project Equipment and other Project Facilities and shall be entitled to sole and exclusive possession thereof and neither the Municipality, the Bank nor the Holder of the Bond shall be entitled to or have a security interest in the Project Site, the Project Building, Project Equipment, or other Project Facilities or in the Borrower's title thereto or interest therein except as provided by the Lease Assignment and the Mortgage. [The balance of this page is intentionally left blank.] ARTICLE V LOAN REPAYMENTS AND OTHER PAYMENTS Section 5.01 Repayment of Loan. The Borrower covenants and agrees to repay the loan, together with interest and premium, if any, in Loan Repayments which shall be in amounts sufficient to pay, in full and when due, the principal of, premium, if any, and interest on the Bond. To provide for the repayment of the loan (until the principal of, premium (if any) on and interest on the Bond shall have been fully paid), the Borrower agrees to pay to the Bank for the account of the Municipality in immediately available funds, (i) on March 1, 1982, and monthly thereafter on or before the 1st day of each month, to and including January 1, 1997, the amount of principal and interest accruing on the Bond during the preceding calendar month, interest to be computed on a 360 day year, and (ii) on February 1, 1997, the unpaid principal of and interest on the Bond. The Borrower shall furnish to the Municipality, if the Municipality so requests, advice of the transmittal of such payments at the time of transmittal of pay- ment. Section 5.02 Additional Payments. The Borrower also agrees to pay to the Municipality, including but not limited to items of Project Cost specified in Section 4.04 hereof, all reasonable expenses of the Municipality incurred in connection with the transactions contemplated by this Loan Agreement. Section 5.03 No Set -Off; Borrower's Obligations Uncondi- tional. The obligation of the Borrower to make the payments and to perform and observe the other agreements on his part contained herein shall be absolute and unconditional. So long as the Bond is outstanding, the Borrower will pay without abatement, diminution or deduction (whether for taxes or otherwise) all Loan Repayments required to be paid hereunder, regardless of any cause or cir- cumstance whatsoever including, without limiting the generality of the foregoing: any defense, setoff, recoupment or counter- claim which the Borrower may have or assert against the Municipality, the Bank, any other Holder or any other person; any failure of the Municipality to perform any covenant or agreement contained herein or in any other agreement between the Municipality and the Borrower; any indebtedness or liability at any time owing to the Borrower by the Municipality, the Bank, any other Holder or any other person; any acts or circumstances that may constitute failure of consideration; damage to or condemnation of the Project Facilities; failure or delay in completion of the Project; evic- tion by paramount title; commercial frustration of purpose; bankruptcy or insolvency of the Municipality or the Bank; fore- closure of the Mortgage; any change in the tax or other laws of the United States of America or of any State or any political -18- subdivision of either; or any failure of the Municipality or the Bank to perform and observe any agreement, whether express or implied, or any duty, liability or obligation, arising out of or connected with this Loan Agreement, the Lease Assignment, the Mortgage or the Bond Resolution. Section 5.04 Late Charge on Overdue Payments. In the event the Borrower shall fail to make any payment required under Section 5.01 or Secton 5.02, the item or installment so in default shall continue as an obligation of the Borrower until the amount in default shall have been fully paid and a late charge of 4.00% shall be charged on any item or installments so in default for the Bank's uncovered administrative costs in handling late payments, unless collection from the Borrower of such late charges at such rate would be contrary to applicable law in which event such late charges shall be at the highest rate which may be collected from the Borrower under applicable law. Section 5.05 Option to Prepay Loan. The Borrower shall have, and is hereby granted, the option to prepay the loan in whole or in part at any time, without penalty or premium. Any such partial prepayment shall not defer, postpone or change the amount of any regularly scheduled Loan Repayment. In the event the Borrower elects to prepay the loan, the Borrower shall cause to be given in the name of the Municipal- ity due notice of redemption or prepayment of the Bond as required by the provisions of paragraph 6 of the Bond Resolution and the form of Bond, Exhibit 1 to the Bond Resolution, and shall pay the prepayment price when due to the Bank. The Municipality hereby authorizes the Borrower to give mailed notice of prepayment and, if required by law, published notice of prepayment of the Bond in the name of the Municipality from time to time. Section 5.06 Mandatory Redemption. The Bond shall be subject to mandatory redemption at the end of the Fifth Loan Year, or (if not previously redeemed) at the end of the Tenth Loan Year at a price equal to the principal amount thereof then outstanding plus accrued interest to the redemption date, which mandatory redemption shall be deemed to have been waived unless at least 180 days prior to the redemption date the Holder gives written notice to the Borrower and the Municipality that it does not waive such mandatory redemption, in which event the Bond shall be due and payable in full as of the redemption date. Section 5.07 Tax Exempt Status of the Bond. It is the intention of the parties hereto that the interest paid on the Bond will not be included in the gross income of the recipients of said interest by reason of Section 103(a) of the Internal Revenue Code. In order to confirm and carry out such intention: (a) The Borrower shall (i) provide such Certifi- cates of an Authorized Borrower Representative, Opinions of Counsel, and other evidence as may be necessary or -19- requested by the Municipality or the Bank to establish the exemption of the Bond under Section 103(a) and the absence of arbitrage expectation under Section 103(c) of the Internal Revenue Code, and (ii) file such infor- mation and statements, acting alone or with the Munici- pality, with the Internal Revenue Service as may be required from the Borrower or the Municipality to establish or preserve such exemption or as may be required by Section 103 of the Internal Revenue Code, regulations thereunder and related provisions of law or regulation. (b) If the Bank shall be given notice of a pro- posed deficiency by the Internal Revenue Service, based upon a proposed Determination of Taxability, or if a responsible officer of the Bank shall have actual knowledge of a proposed ruling by the Internal Revenue Service to the effect that interest on the Bond is includible in the gross income of the Bank or its successor as Holder of the Bond, the Bank shall give notice to the Borrower of such proposed deficiency or ruling as promptly as possible and permit the Borrower, to the extent reasonably possible, to participate in contesting any such proposed deficiency or ruling. Any expenses incurred by the Borrower or by the Bank at the request of the Borrower in connection with such contest shall be paid by the Borrower. Notwithstanding the foregoing, the Bank shall have the right to control all proceedings before the Internal Revenue Service and any judicial proceedings relating to taxability of interest on the Bond received by the Bank, including the compro- mise of claims in such proceedings and abandonment of rights to appeal, and failure to the Bank to give notice to the Borrower under this paragraph (b) shall not affect the Borrower's obligations under paragraph (c) of this Section. (c) If the Holder of the Bond receives notice of a Determination Taxability, the rate of interest then payable hereunder on the Loan shall be automatically increased to one percent (1%) per annum above the rate of interest then most recently publicly announced by the First National Bank of Saint Paul as its prime rate of interest (the "Prime Rate effective as of the date of receipt by the Holder of the notice of such Determination of Taxability, in which event the monthly installment payments of principal and interest required hereunder by the Borrower in Section 5.01 hereof shall be increased, effective as of the first day of the calendar month following such date of receipt, to the amount which would be sufficient to amortize the then unpaid principal balance of the Loan, together with interest at the rate of interest per annum computed as provided above, in full, in equal monthly installment -20- payments of principal and interest, by February 1, 2012; provided that the entire principal balance and all accrued interest shall be due and payable in full on February 1, 1997, as provided in Section 5.01 hereof. The Holder shall notify in writing the City and the Borrower, as soon as practicable after the receipt thereof, of its receipt of a Determination of Taxability and of the consequent increase in interest rate and monthly installment payments required under Section 5.01 hereof. In the event of subsequent changes in the Prime Rate, the rate of interest payable hereunder shall be changed, effective as of the date or dates that the change or changes in the Prime Rate are effec- tive, to one percent (1 per annum in excess of the Prime Rate; however, the monthly installment payments of principal and interest, as recomputed in accordance with the preceding provisions of this Section 5.07(c), shall remain the same, unless any such payment would not be sufficient at the time such payment is due to pay all accrued and unpaid interest on the Loan, in which case such monthly installment payment shall be increased by the amount of such deficiency. In addition, the Holder, at its option, may, at any time after receipt of notice of a Determination of Taxability, declare the unpaid principal balance of the Loan, together with accrued interest thereon and any other indebtedness due hereunder or under the Bond, due and payable in full, upon at least six (6) months' prior written notice to the Borrower and the City, in which event the Borrower shall pay to the Holder on the date specified in said notice an amount equal to the entire interest thereon and any other indebtedness due hereunder or under the Bond. The Borrower also shall pay to the current and any previous Holder of the Bond, in addition to the other amounts set forth in this Section 5.07(c), and within thirty (30) days of receipt of a notice setting forth such amounts, the amounts of additional federal and state income taxes, including penalties and interest thereon, which such Holder or Holders estimate they will incur by reason of such Determination of Taxability for or with respect to their current and past tax years for the period of time between the Date of Taxability and the date of increase in interest rate on the Loan. The provisions of this Section 5.07(c) shall survive payment of the Loan. [The balance of this page is intentionally left blank.] ARTICLE VI PROJECT FACILITIES Section 6.01 Use of Project Facilities. The Borrower will use and operate the Project Facilities only as a revenue producing enterprise, eligible to be and defined as a "project" under the Act. The Borrower will not use or permit any person to use the Project Facilities for any use or purpose in violation of the laws of the United States, the State of Minnesota, or any ordi- nance of the Municipality, and agrees to comply with all the orders, rules, regulations and requirements of the Board of Fire Underwriters and officers or boards of the City, County or State or other governmental authority having jurisdiction over the Project Facilities. The Borrower shall have the right to contest by appropriate legal proceedings, without cost or expense to the Municipality, the validity of any law, ordinance, order, rule, regulation or requirement of the nature herein referred to. Section 6.02 Maintenance and Possession of Project Facilities by Borrower. The Borrower agrees that so long as the Bond is outstanding, the Borrower will keep the Project Facili- ties in good repair and good operating condition at his own cost, making such repairs and replacements as are necessary in the judgment of the Borrower so that the Project will remain a "project" under the Act and the interest on the Bond will be exempt from federal income taxation. The Borrower represents that he has no present intention to sell or otherwise dispose of the Project Facilities, but the Borrower, with the prior written consent of the Holder, may sell, lease or otherwise dispose of all or any part of the Project Facilities or enter into an agreement for the use of the Project Facilities. Section 6.03 Operating Expenses and Liens. As required by the Act, the Borrower will pay all expenses arising from the operation and maintenance of the Project Facilities and will not permit any lien or encumbrance except Permitted Encumbrances to be established or to remain unsatisfied against the Project Facilities, except as may be permitted by the Lease Assignment and the Mortgage. Section 6.04 Taxes and Other Governmental Charges. As required by the Act, and in conformance with Section 3 of the Mortgage, the Borrower will pay, as the same respectively become due, any taxes, special assessments, license fees and governmental charges of any kind whatsoever that may at any time be lawfully assessed or levied against or with respect to the operations of the Project Facilities, or any improvements, equipment or related property installed or brought by the Borrower therein or thereon, or the Bond, the Loan Agreement, the Bond Resolution, the Lease Assignment, the Mortgage or the interest of the Municipality, the Bank, or the Bondholder therein. The Borrower may, at his expense, -22- ARTICLE VII SPECIAL COVENANTS Section 7.01 No Warranty of Condition or Suitability; Indemnification. Neither the Municipality nor the Bank makes any warranty either expressed or implied, as to the design or capacity of the Project, as to the suitability for operation of the Project Facilities, or as to the condition of the Project Building or that the Project Facilities will be suitable for the Borrower's purposes or needs. The Borrower releases the Municipality and the Bank from, agrees that the Municipality and the Bank shall not be liable for, and agrees to hold the Municipality and the Bank, the City Council and their respective officers and employees, harmless against, any claim, cause of action, suit or liability for any loss or damage to property or any injury to or death of any person that may be occasioned by any cause whatsoever pertaining to the Project Facilities or the use thereof. The Borrower further agrees to indemnify and hold harm- less the Municipality, its officers and employees, against any and all losses, claims, damages or liability to which the Munici- pality, its officers and employees, may become subject under any law in connection with the issuance and sale of the Bond and the carrying out of the transactions contemplated by this Loan Agree- ment, and to reimburse the Municipality, its officers and employ- ees, for any out -of- pocket legal and other expenses (including reasonable counsel fees) incurred by the Municipality, its offi- cers and employees, in connection with investigating any such losses, claims, damages or liabilities or in connection with defending any actions relating thereto. The Municipality agrees, at the request and expense of the Borrower, to cooperate in the making of any investigation in defense of any such claim and promptly to assert any or all of the rights and privileges and defenses which may be available to the Municipality. The provi- sions of this Section shall survive the payment and redemption of the Bond. Section 7.02 Annual Statement and Certificate; Reports. The Borrower agrees to provide the financial statements required by the Mortgage and to furnish to the Bank, within 90 days after the end of each Fiscal Year, a Certificate of the Authorized Borrower Representative that there is no Default under the Loan Agreement or the Mortgage and that he has no knowledge of any default by the Municipality under the Loan Agreement or the Bond Resolution, or, if there be any such Default or default by the Municipality, explaining the nature thereof and specifying the steps being taken to remedy the same. The Borrower shall render to the Municipality and the Bank such additional reports concerning the Bond or the Project Facilities as the Municipality and the Bank may from time to time request, or as may be required by any law, regulation or ordinance of the State of Minnesota or the Municipality. -24- in good faith contest any such taxes, assessments, license fees and other governmental charges, but only to the extent permitted and subject to the conditions provided by the Mortgage. Section 6.05 Alterations. The Borrower shall make no additions, modifications, alterations, improvements and changes in or to the Project Facilities without obtaining the prior written approval of the Bank. All work in connection with any alterations shall be done promptly, unavoidable delays excepted, and in good workman- like manner and according to the building and zoning laws of the Municipality and other governmental subdivisions wherein the Project Facilities are situated, and in accordance with all laws, ordinances, orders, rules, regulations and requirements of all federal, state and municipal governments and the appropriate departments, commissions, boards and officers thereof, and shall not violate the provisions of any policy of insurance covering the Project Facilities. Section 6.06 Installation of Equipment. The Borrower may, from time to time in his discretion and at his own cost and expense, install or place other equipment and tangible personal property in the Project Building and Project Facilities. In the event that a lessor, vendor or purchase money lender is entitled to and does remove any equipment or other property, any damage resulting to the Project Building and Project Facilities there- from shall be repaired and the Project Building and Project Facilities restored to their previous condition at the sole expense of the party effecting such removal or at the sole expense of the Borrower. Section 6.07 Insurance. So long as the Bond is out- standing, the Borrower agrees to provide the insurance required by the Mortgage which at a minimum shall include insurance in such amounts and against such loss, damage and liability (includ- ing liability to third parties) as are customary for a prudent owner of properties comparable to the Project Facilities. Section 6.08 Damage or Destruction. In the event of damage to the Project Facilities from any cause whatsoever, the Borrower will comply with the provisions of Section 8 of the Mortgage. Section 6.09 Condemnation. In the event title to any part of the Project Facilities shall be condemned or the use or control thereof shall be taken in any proceeding (hereinafter referred to as a "Taking involving the exercise of the right of eminent domain, the Borrower will comply with the provisions of Section 12 of the Mortgage. Section 7.03 Records and Inspection. The Borrower shall maintain (i) copies of all plans and specifications, con- tracts, performance and payment bonds, building permits, surveys, insurance, change orders, decisions of architects and all other documents relating to the Project, (ii) copies of federal, state, municipal and other licenses and permits obtained by the Borrower relating to the operation of the Project Facilities, (iii) finan- cial books and records reflecting the results of operation and condition of the Borrower, and (iv) all other documents, instru- ments, reports and records required by any provision of the Loan Agreement, the Bond Resolution, the Lease Assignment, the Mortgage or by law relating to the Project or the business of the Borrower. The Municipality and the Bank shall have the right to inspect the Project Facilities and all such materials, except any materials made private or confidential by federal or state law or regulation, at all reasonable times and to make such copies and extracts as they may desire. At the request of the Municipality, the Borrower shall furnish to the Municipality, at the Borrower's expense, a copy of any such materials which are required by the Municipality in the performance of duties under the Loan Agreement, the Bond Resolution or the Act. Section 7.04 Further Assurances, Financing Statements, Maintenance of Lien. At the request of the Municipality or the Bank, the Borrower shall execute any financing statement or other instrument which, according to an Opinion of Counsel, is or may be required to carry out the intent of the parties as expressed in this Loan Agreement, the Bond Resolution, the Lease Assignment and the Mortgage. The Borrower shall, at his sole expense, file or cause to be filed any financing statements under the Uniform Commercial Code or similar instruments deemed necessary by the Bank to perfect and continue the security interest of the Bank in this Loan Agreement, including any financing statements which the Municipality may be required to file, and any financing state- ments or similar instruments deemed necessary by the Bank to perfect and continue the security interest of the Bank under the Lease Assignment and the Mortgage. Section 7.05 Assignments. The Borrower consents to the pledge and assignment of the Loan Repayments and other inter- ests of the Municipality in this Loan Agreement by the Municipal- ity to the Bank as provided in the Bond Resolution and in the form of Assignment set forth in Exhibit 2 of the Bond Resolution. The interests and obligations of the Borrower under this Loan Agreement are non assignable and shall not be assigned except pursuant to Section 6.02 hereof or to a trustee in bankruptcy or similar officer pursuant to the Bankruptcy Code or similar law. Section 7.06 Observance of Bond Resolution Covenants and Terms. The Borrower will not do, in any manner, anything which will cause or permit to occur any default under the Bond Resolution, but will faithfully observe and perform, and will do -25- all things necessary so that the Municipality may observe and perform, all the conditions, covenants and requirements of the Bond Resolution. The Municipality agrees that it will observe and perform all obligations imposed upon it by the Loan Agreement and the Bond Resolution, and will not suffer or permit any default to occur thereunder; provided that the Municipality has no obli- gation to use its own funds or funds of the State of Minnesota to perform or cause performance of any such obligations. [The balance of this page is intentionally left blank.] ARTICLE VIII EVENTS OF DEFAULT AND REMEDIES Section 8.01 Events of Default. The following shall be "Events of Default" under this Loan Agreement and the term "Event of Default" shall mean, whenever used in this Loan Agree- ment, any one or more of the following events: (a) If the Borrower fails to pay the amounts of any Loan Repayment required to be paid under Section 5.01 hereof when due and such failure shall result in any failure to pay any principal of, premium (if any) or interest on the Bond when due; or (b) If the Borrower shall default in the due and punctual performance of any of the covenants, conditions, agreements and provisions contained in Section 5.02 hereof, and such Default shall have continued for a period of ten days after written notice, specifying such Default and requiring the same to be remedied, shall have been given to the Borrower by the Munic- ipality or the Bank; or (c) If any representation or warranty of the Municipality or the Borrower made herein or in any report, certificate or financial statement provided by the Borrower in connection with this Loan Agreement shall prove to be false or misleading in any material respect; or (d) If the Borrower shall default in the due and punctual performance of any of the other covenants, conditions, agreements and provisions contained in this Loan Agreement, the Lease Assignment or in any instru- ment supplemental hereto or thereto, on the part of the Borrower to be performed, and such Default shall have continued for a period of thirty days after written notice, specifying such Default and requiring the same to be remedied, shall have been given to the Borrower by the Municipality or Bank; or (e) If an event of default, as defined in the Mortgage shall exist; or (f) If the Borrower files a petition in bank- ruptcy or for rehabilitation of the Borrower under the Bankruptcy Code of the United States or a court of competent jurisdiction shall enter an order pursuant to a petition filed against the Borrower for liquidation or rehabilitation of the Borrower under the Bankruptcy Code of the United States; or -27- (g) If an order, judgment or decree shall be entered without the application, approval or consent of the Borrower by any court of competent jurisdiction, appointing a receiver, trustee or liquidator of the Borrower or of all or a substantial part of the assets of the Borrower and such order, judgment or decree shall continue unstayed and in effect for any period of 60 days; or (h) If of the Borrower makes a general assignment for the benefit of creditors or consents in writing to the appointment of a trustee or receiver for himself or for the whole or any substantial part of his property; or (i) If the Borrower shall mortgage or encumber the Project, Project Building or Project Site, or any part thereof without the prior written consent of the Bank. Section 8.02 Remedies on Default. Whenever any Event of Default shall have happened and be subsisting, any one or more of the following steps may be taken: (a) The Bank may declare the unpaid principal of and interest on the Bond, and all or any amounts of Loan Repayments thereafter to become due and payable under Section 5.01 hereof for the remainder of the term of this Loan Agreement, to be immediately due and pay- able, whereupon the same shall become immediately due and payable. (b) The Bank may enforce any provision of a contract or performance bond for acquisition or better- ment of the Project or of any lease or agreement relat- ing to Project Facilities, in behalf of the Borrower, or as beneficiary of any provision of any such contract, bond, lease or agreement conferring such right on the Bank, or as assignee of any assignment of such contract, bond, lease or agreement by the Borrower. (c) The Bank may foreclose the Mortgage or take whatever action in law or equity appears necessary or desirable to enforce the Loan Agreement, the Lease Assignment or the Mortgage in accordance with the provisions thereof. Any amounts collected by the Bank pursuant to action taken under the foregoing paragraphs shall be applied first to advances, expenses and payment of the Bond (principal and interest) and any excess to the Borrower. Whenever any Default shall occur, the Bank (or the Municipality with respect to Sections 5.02, 7.01 and 8.05 hereof) may take whatever action at law or in equity which may appear necessary or desirable to collect any other payments then due and thereafter to become due hereunder or to enforce performance and observance of any obligation, agreement or covenant of the Borrower under this Loan Agreement. Section 8.03 Remedies Cumulative, Delay Not to Consti- tute Waiver. No remedy conferred upon or reserved to the Munic- ipality, the Bank, or a receiver by this Loan Agreement, the Lease Assignment or the Mortgage is intended to be exclusive of any other available remedy or remedies, but each and every such remedy shall be cumulative aid shall be in addition to every other remedy given under this Loan Agreement, Lease Assignment or the Mortgage or now or hereafter existing at law or in equity or by statute. No delay or omission to exercise any right or power accruing upon any Default shall impair any such right or power, and any such right or power may be exercised from time to time and as often as may be deemed expedient. In order to entitle the Municipality, the Bank, or a receiver to exercise any remedy reserved to it in this Article, it shall not be necessary to give any notice, other than such notice as may be herein expressly required. In the event any agreement contained in this Loan Agreement, Lease Assigment or the Mortgage should be breached by any party and thereafter waived by the other parties, such waiver shall be limited to a particular breach so waived and shall not be deemed to waive any other breach hereunder. Section 8.04 Agreement to Pay Attorneys' Fees and Expenses. In the event the Borrower should default under any of the provisions of this Loan Agreement, Lease Assignment or the Mortgage and the Municipality, the Bank, or a receiver should employ attorneys or incur other expenses for the collection of payments due or to become due hereunder or the enforcement of performance or observance of any obligation or agreement on the part of the Borrower contained in this Loan Agreement, Lease Assignment or the Mortgage, the Borrower agrees that he will on demand therefor reimburse the reasonable fee of such attorneys and such other expenses so incurred. Section 8.05 Advances. In the event the Borrower shall fail to pay any Loan Repayments under Section 5.01 hereof, or to do any other thing or make any other payment required to be done or made by any other provision of this Loan Agreement, Lease Assignment or the Mortgage, the Municipality or the Bank, each in its own discretion, may do or cause to be done any such thing or make or cause to be made any such payment at the expense or as an advance for the account of the Borrower, and the Borrower shall pay to the Municipality or the Bank, as the case may be, upon demand, all costs and expenses so incurred and advances so made, with interest at the rate of eighteen percent (18.00 per annum unless collection from the Borrower of interest at such rate -29- would be contrary to applicable law in which event such amount shall bear interest at the highest rate which may be collected from the Borrower under applicable law. Any such advance shall be entitled to priority of payment from any funds thereafter received from the Borrower or under Section 8.02 or 8.03. [The balance of this page is intentionally left blank.] ARTICLE IX MISCELLANEOUS Section 9.01 Notices. All notices, certificates, requests or other communrEiEr5Es hereunder shall be deemed to have been given on the day on which received and, if mailed, shall be conclusively deemed to have been received on the day on which mailed by registered or certified mail, return receipt requested, addressed, if to any party hereto, at its address set forth on the execution page hereof. The Borrower, the Municipality, the Bank and the Holder may, by notice given hereunder, designate any further or different addresses to which subsequent notices, certificates, requests or other communications shall be sent. Section 9.02 Binding Effect. This Loan Agreement shall inure to the benefit of and shall be binding upon the parties hereto and their respective heirs, representatives, successors and assigns, subject to the limitation that any obligation of the Municipality created by or arising out of this Loan Agreement shall not be a general debt of the Municipality but shall be payable solely out of the proceeds derived from this Loan Agreement, the Lease Assignment or the Mortgage. Section 9.03 Modifications. Except as otherwise pro- vided herein or in the Bond Resolution, any term of this Loan Agreement, the Bond, the Lease Assignment, the Assignment, the Bond Resolution or the Mortgage may be amended with the consent of the Borrower, the Bank and the Municipality; provided that, except as otherwise provided herein, so long as the Bond is outstanding, no amendment, modification or waiver of any provi- sion of this Loan Agreement, the Bond, the Lease Assignment, the Assignment, the Bond Resolution or the Mortgage nor consent to any departure by the Borrower or the Municipality therefrom shall in any event be effective unless the same shall be in writing and signed by the Holder of the Bond. Section 9.04 Counterparts. This Loan Agreement may be signed in any number of counterparts. Complete sets of counter- parts shall be lodged with the Municipality, the Borrower and the Bank. Section 9.05 Benefit of Holder. Except as otherwise provided herein, all covenants and agreements on the part of the Borrower and the Municipality herein are hereby declared to be for the benefit of the Bank and the Holder of the Bond and any subsequent Holder of the Bond. Persons other than the parties hereto and the Holder are not intended to be beneficiaries of any of the covenants and agreements set forth in this Loan Agreement. Section 9.06 Due Dates. Should any payment on the Bond become due and payable upon a day not a business day, such payment shall be made on the next succeeding business day. -31- Section 9.07 Captions. The captions or headings in this Loan Agreement are for convenience only and in no way define, limit or describe the scope or intent of any provision of this Loan Agreement. Section 9.08 Term of Agreement. Except as otherwise provided herein, the provisions of this Loan Agreement shall remain in full force and effect from the date of execution hereof until such time as the Bond is paid in full. Section 9.09 Severability. Any provision of this Loan Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforce- ability in any jurisdiction shall not invalidate or render un- enforceable such provision in any other jurisdiction. IN WITNESS WHEREOF, the Municipality, the Bank and the Borrower have caused this Loan Agreement to be duly executed in their respective names and attested by duly authorized officers of the Municipality and the Bank, all as of the day and year first above written but actually on the day of 1982. ATTEST: City Clerk (SEAL) And By CITY OF HOPKINS By Title: Mayor Address: City Hall 1010 First Street South Hopkins, Minnesota 55343 City Manager JOHN B. STANDAL John B. Standal 9955 Spring Road Eden Prairie, Minnesota 55344 By And By FIRST NATIONAL BANK OF HOPKINS Title: Address: 16 9th Avenue North Hopkins, Minnesota 55376 Title (SEAL) EXHIBIT 1 TO COMBINATION MORTGAGE AND SECURITY AGREEMENT AND FIXTURE FINANCING STATEMENT (Description of Land) Lot 1, Block 1, Standal First Addition; together with an easement for the purpose of pedestrian and motor vehicle ingress and egress over, across and upon the East 20 feet of the West 222 feet of the North 97 feet of Lot 2, Block 1, Standal First Addition as described in Document No. 1394152, Files of the Registrar of Titles, according to the plat thereof on file and of record in the office of the Registrar of Titles in and for Hennepin County, Minnesota. ASSIGNMENT OF RENTS AND LEASES EXHIBIT C This Assignment is made as of this 1st day of February, 1982, between JOHN B. STANDAL (herein called the "Assignor and CAROL L. STANDAL, spouse of Assignor who joins solely to assign her marital interest in the Leases and Rents and who is not per- sonally liable hereunder, and FIRST NATIONAL BANK OF HOPKINS, a national banking association (herein called the "Assignee Recitals The City of Hopkins, Minnesota has executed and delivered to the Assignee its Commercial Development Revenue Bond (Standal Project), to be dated the date of delivery, in the principal amount of $900,000 (herein called the "Bond the proceeds of which have been loaned to the Assignor pursuant to a Loan and Purchase Agreement dated as of February 1, 1982, by and between the City, the Assignee and the Assignor (herein called the "Loan Agreement The City has assigned its interest in the Loan Agreement to the Assignee. To secure payment of the Bond and the Loan Repayments under the Loan Agreement, the Assignor has executed and delivered to the Assignee a Combination Mortgage, Security Agreement and Fixture Financing Statement of even date herewith (herein, together with all future amendments and supplements thereto, called the "Mortgage covering certain property (herein called the "Mort- gaged Property which, among other things, includes the real estate described in Exhibit A attached hereto and the buildings, improvements and fixtures now or hereafter located thereon. The Assignee, as a condition to making the loan evi- denced by the Bond, has required the execution of this Assignment. ACCORDINGLY, in consideration of the premises and in further consideration of the sum of One Dollar paid by the Assignee to the Assignor, the receipt of which is hereby acknowledged, the Assignor does hereby grant, transfer and assign to the Assignee all of the right, title and interest of the Assignor in and to (i) any and all present or future leases or tenancies, whether written or oral, covering or affecting any or all of the Mortgaged Property, (all of which, together with any and all extensions, modifications and renewals thereof, are hereinafter collectively referred to as the "Leases" and each of which is referred to as a "Lease and (ii) all rents, profits and other income or payments of any kind due or payable or to become due or payable to the Assignor as the result of any use, possession or occupancy of all or any portion of the Mortgaged Property or as the result of the use of or lease of any personal property constituting a part of the Mortgaged Property (all of which are hereinafter collectively referred to as "Rents whether the Rents accrue before or after foreclosure of the Mortgage or during the periods of redemption thereof, all for the purpose of securing: (a) Payment of all indebtedness evidenced by the Bond, the Loan Agreement and all sums secured by the Mortgage or this Assignment; and (b) Performance and discharge of each and every obligation, covenant and agreement of the Assignor contained herein and in the Loan Agreement and Mortgage. THE ASSIGNOR WARRANTS AND COVENANTS that he is and will remain the absolute owner of the Rents and Leases free and clear of all liens and encumbrances other than the lien granted herein; that he has not heretofore assigned or otherwise encumbered his interest in any of the Rents or Leases to any person; that he has the right under applicable law, under the Leases, and otherwise to execute and deliver this Assignment and keep and perform all of his obligations hereunder; that he will warrant and defend the Leases and Rents against all adverse claims, whether now existing or hereafter arising. The Assignor further covenants and agrees with the Assignee as follows: 1. Performance of Leases. The Assignor will faith- fully abide by, perform and discharge each and every obligation, covenant and agreement which he is now or hereafter becomes liable to observe or perform under any present or future Lease, and, at his sole cost and expense, enforce or secure the per- formance of each and every obligation, covenant, condition and agreement to be performed by the tenant under each and every Lease. The Assignor will observe and comply with all provisions of law applicable to the operation and ownership of the Mortgaged Property. The Assignor will give prompt written notice to the Assignee of any notice of default on the part of the Assignor with respect to any Lease received from the tenant thereunder, and will also at his sole cost and expense, appear in and defend any action or proceeding arising under, growing out of or in any manner connected with any Lease or the obligations, duties or liabilities of the Assignor or any tenant thereunder. The Assignor will not lease or otherwise permit the use of all or any portion of the Mortgaged Property for rent that is below the fair market rent for such property. 2. Collection of Rents. The Assignor will not collect or accept any Rents for the use or occupancy of the Mortgaged Property for more than one month in advance. Security deposits shall not be deemed Rents for purpose of this paragraph. 3. Protecting the Security of This Assignment. Should the Assignor fail to perform or observe any covenant or agreement contained in this Assignment, then the Assignee, but without obligation to do so and without releasing the Assignor from any obligation hereunder, may make or do the same in such manner and to such extent as the Assignee may deem appropriate to protect -2- the security hereof, including, specifically, without limiting its general powers, the right to appear in and defend any action or proceeding purporting to affect the security hereof or the rights or powers of the Assignee, and also the right to perform and discharge each and every obligation, covenant and agreement of the Assignor contained in the Leases and in exercising any such powers to pay necessary costs and expenses, employ counsel and pay reasonable attorneys' fees. The Assignor will pay imme- diately upon demand all sums expended by the Assignee under the authority of this Agreement, together with interest thereon at the rate of the lesser of 18.00% per annum and the highest rate permitted by law, and the same shall be added to said indebted- ness and shall be secured hereby and by the Mortgage. 4. Present Assignment. This Assignment shall con- stitute a perfected, absolute and present assignment, provided that the Assignor shall have the right to collect, but not prior to accrual (except as permitted by paragraph 2 above), all of the Rents, and to retain, use and enjoy the same unless and until an Event of Default shall occur under the Loan Agreement or the Mortgage or the Assignor shall have breached any warranty or covenant in this Assignment. Any Rents which accrue prior to an Event of Default under the Mortgage but are paid thereafter shall be paid to the Assignee. 5. Survival of Obligation to Comply with Mortgage and This Assignment. This Assignment is given as security in addition to the Mortgage. The Assignor covenants and agrees to observe and comply with all terms and conditions contained in the Mortgage and in this Assignment and to preclude any Event of Default from occurring under the Mortgage. All of the Assignor's obligations under the Mortgage and this Assignment shall survive foreclosure of the Mortgage and the Assignor covenants and agrees to observe and comply with all terms and conditions of the Mortgage and this Assignment and to preclude any Event of Default from occurring under the Mortgage throughout any period of redemption after foreclosure of the Mortgage. 6. Default, Remedies. Upon the occurrence of any Event of Default specified in the Mortgage or in the Loan Agree- ment or upon the breach of any warranty or covenant in this Assignment, the Assignee may, at its option, at any time: (a) in the name, place and stead of the Assignor and without becoming a mortgagee in possession (i) enter upon, manage and operate the Mortgaged Property or retain the services of one or more independent contractors to manage and operate all or any part of the Mortgaged Property; (ii) make, enforce, modify and accept surrender of the Leases; (iii) obtain or evict tenants, collect, sue for, fix or modify the Rents and enforce all rights of the Assignor under the Leases; and (iv) perform any and all other acts that may be necessary or proper to protect the security of this Assignment. -3- (b) with or without exercising the rights set forth in subparagraph (a) above, give or require the Assignor to give, notice to any or all tenants under the Leases authorizing and directing the tenants to pay all Rents under the Leases directly to the Assignee. (c) without regard to waste, adequacy of the security or solvency of the Assignor, apply for, and the Assignor hereby consents to, the appointment of a receiver of the Mortgaged Property, whether or not foreclosure proceedings have been commenced under the Mortgage, and if such proceedings have been commenced, whether or not a foreclosure sale has occurred. The exercise of any of the foregoing rights or remedies and the application of the rents, profits and income pursuant to paragraph 7, shall not cure or waive any Event of Default (or notice of default) under the Mortgage or under the Loan Agreement or inval- idate any act done pursuant to such notice. 7. Application of Rents, Profits and Income. All Rents collected by the Assignee or the receiver each month shall be applied as follows: (a) to payment of all reasonable fees of the receiver approved by the court; (b) to payment of all tenant security deposits then owing to tenants under any of the Leases pursuant to the provisions of Minn. Stats. §504.20; (c) to payment of all prior or current real estate taxes and special assessments with respect to the Mortgaged Property, or if the Mortgage requires periodic escrow payments for such taxes and assess- ments, to the escrow payments then due; (d) to payment of all premiums then due for the insurance required by the provisions of the Mortgage, or if the Mortgage requires periodic escrow payments for such premiums, to the escrow payments then due; (e) to payment of expenses incurred for normal maintenance of the Mortgaged Property; (f) if received prior to any foreclosure sale of the Mortgaged Property, to the Assignee for payment of the indebtedness secured by the Mortgage or this Assign- ment, but no such payment made after acceleration of the indebtedness shall affect such acceleration; (g) if received during or with respect to the period of redemption after a foreclosure sale of the Mortgaged Property: (1) if the purchaser at the foreclosure sale is not the Assignee, first to the Assignee to the extent of any deficiency of the sale proceeds to repay the indebtedness secured by the Mortgage or this Assignment, second to the purchaser as a credit to the redemption price, but if the Mort- gaged Property is not redeemed, then to the pur- chaser of the Mortgaged Property; (2) if the purchaser at the foreclosure sale is the Assignee, to the Assignee to the extent of any deficiency of the sale proceeds to repay the indebtedness secured by the Mortgage or this Assignment and the balance to be retained by the Assignee as a credit to the redemption price, but if the Mortgaged Property is not redeemed, then to the Assignee, whether or not any such deficiency exists. The rights and powers of the Assignee under this Assignment and the application of Rents under this paragraph 7 shall continue until expiration of the redemption period from any foreclosure sale, whether or not any deficiency remains after a foreclosure sale. 8. No Liability for Assignee. The Assignee shall not be obligated to perform or discharge, nor does it hereby undertake to perform or discharge, any obligation, duty or liability of the Assignor under the Leases. This Assignment shall not operate to place upon the Assignee responsibility for the control, care, management or repair of the Mortgaged Property or for the carrying out of any of the terms and conditions of the Leases. The Assignee shall not be responsible or liable for any waste committed on the Mortgaged Property, for any dangerous or defective condition of the Mortgaged Property, for any negligence in the management, upkeep, repair or control of said Mortgaged Property or for failure to collect the Rents. 9. Assignor's Indemnification. The Assignor shall and does hereby agree to indemnify and to hold Assignee harmless of and from any and all claims, demands, liability, loss or damage (including all costs, expenses, and reasonable attorney's fees in the defense thereof) asserted against, imposed on or incurred by the Assignee in connection with or as a result of this Assignment or the exercise of any rights or remedies under this Assignment or under the Leases or by reason of any alleged obligations or undertakings of the Assignee to perform or discharge any of the terms, covenants or agreements contained in the Leases. Should the Assignee incur any such liability, the amount thereof, together with interest thereon at the lesser of 18.00% per annum and the -5- highest rate permitted by law, shall be secured hereby and by the Mortgage and the Assignor shall reimburse the Assignee therefor immediately upon demand. 10. Authorization to Tenant. Upon notice from the Assignee that it is exercising the remedy set forth in paragraph 6(b) of this Assignment, the tenants under the Leases are hereby irrevocably authorized and directed to pay to the Assignee all sums due under the Leases, and the Assignor hereby consents and directs that said sums shall be paid to the Assignee without the necessity for a judicial determination that a default has occurred hereunder or under the Mortgage or that Assignee is entitled to exercise its rights hereunder, and to the extent such sums are paid to Assignee, the Assignor agrees that the tenant shall have no further liability to Assignor for the same. The signature of the Assignee alone shall be sufficient for the exercise of any rights under this Assignment and the receipt of the Assignee alone for any sums received shall be a full discharge and release therefor to any such tenant or occupant of the Mortgaged Property. Checks for all or any part of the Rents collected under this Assignment shall upon notice from the Assignee be drawn to the exclusive order of the Assignee. 11. Satisfaction. Upon the payment in full of all in- debtedness secured hereby as evidenced by a recorded satisfaction of the Mortgage executed by the Assignee, this Assignment shall, without the need for any further satisfaction or release, become null and void and be of no further effect. 12. Assignee an Attorney -In -Fact. The Assignor hereby irrevocably appoints the Assignee, and its successors and assigns, as his agent and attorney -in -fact, which appointment is coupled with an interest, with the right but not the duty to exercise any rights or remedies hereunder and to execute and deliver during the term of this Assignment such instruments as the Assignee may deem appropriate to make this Assignment and any further assignment effective, including without limiting the generality of the fore- going, the right to endorse on behalf and in the name of the Assignor all checks from tenants in payment of Rents that are made payable to the Assignee. 13. Assignor Not a Mortgagee in Possession. Nothing herein contained and no actions taken pursuant to this Assignment shall be construed as constituting the Assignee a mortgagee in possession. 14. Specific Assignment of Leases. The Assignor will transfer and assign to the Assignee, upon written notice by As- signee, any and all specific Leases that the Assignee requests. Such transfer or assignment by the Assignor shall be upon the same or substantially the same terms and conditions as are herein contained, and the Assignor will properly file or record such assignments, at the Assignor's expense, if requested by the Assignee. -6- 15. Unenforceable Provisions Severable. All rights, powers and remedies provided herein may be exercised only to the extent that the exercise thereof does not violate any applicable law, and are intended to be limited to the extent necessary so that they will not render this Assignment invalid, unenforceable or not entitled to be recorded, registered or filed under any applicable law. If any term of this Assignment shall be held to be invalid, illegal or unenforceable, the validity of other terms hereof shall in no way be affected thereby. It is the intention of the parties hereto, however, that this Assignment shall confer upon the Assignee the fullest rights, remedies and benefits available pursuant to Chapter 202, Minnesota Laws of 1977. 16. Successors and Assigns. The covenants and agreements herein contained shall bind, and the rights hereunder shall inure to the respective successors and assigns of the Assignor and the Assignee, including any purchaser at a foreclosure sale. 17. Captions; Amendments; Notices. The captions and headings of the paragraphs of this Assignment are for convenience only and shall not be used to interpret or define the provisions of this Assignment. This Assignment can be amended only in writing signed by the Assignor and the Assignee. Any notice from the Assignee to the Assignor under this Assignment shall be deemed to have been given when given by the Assignee in accordance with the requirements for notice by the Mortgagee under the Mortgage. 18. Counterparts. This Assignment may be executed in any number of counterparts, each of which shall be an original but all of which shall constitute one instrument. IN WITNESS WHEREOF the Assignor and his spouse have executed this Assignment as of the day and year first -above written but actually on the day of 1982. This instrument was drafted by: Faegre Benson 1300 Northwestern Bank Building Minneapolis, Minnesota 55402 -7- JOHN B. STANDAL The undersigned, CAROL L. STANDAL, spouse of John B. Standal, joins solely to assign her marital interest in the Leases and Rents and shall not be personally liable hereon by the reason of the execution hereof. CAROL L. STANDAL r STATE OF MINNESOTA) COUNTY OF HENNEPIN) The foregoing instrument was acknowledged before me this day of 1982, by John B. Standal and Carol L. Standal, husband and wife. Notary Public EXHIBIT 1 TO BOND RESOLUTION (Form of Bond) UNITED STATES OF AMERICA STATE OF MINNESOTA COUNTY OF HENNEPIN CITY OF HOPKINS Commercial Development Revenue Bond (Standal Project) No. R -1 $900,000 The City of Hopkins, a municipal corporation in the County of Hennepin and State of Minnesota (the "City for value received, hereby promises to pay, but solely from the source and in the manner hereinafter provided, to the First National Bank of Hopkins (the "Bank or registered assigns the outstanding and unpaid balance on account of an authorized principal sum of Nine Hundred Thousand Dollars ($900,000), together with interest thereon at the annual rates set forth below, principal and interest to be due and payable in equal consecutive monthly installments of principal and interest in the amount of commencing on March 1, 1982, to and including January 1, 1997, and one final installment of principal and interest on February 1, 1997, such amounts representing payments of principal of this Bond and interest hereon at an interest rate of thirteen percent (13 per annum. Principal and interest shall be paid to the registered holder hereof in lawful money of the United States at the office of the Bank in Hopkins, Minnesota. All payments of principal and interest hereunder shall be applied first to interest and the balance to reduction of principal. All interest hereon shall be computed on the assumption that each year contains 360 days and is composed of twelve (12) 30 -day months. At the option of the Holder, the rate of interest payable on the unpaid principal balance of this Bond may be increased as of the 1st day of Loan Year six and the 1st day of Loan Year Eleven, upon no less than one hundred twenty (120) days' prior written notice to the City and the Borrower, to the rate of interest per annum equal to 125% of the average of the yields reflected in The Bond Buyer's Revenue Bond Index (20 Bond 20 Year) as published in The Daily Bond Buyer (or, if said Index is no longer published, a comparable index selected by the Holder) during the last quarter of the Loan Year immediately preceding the period in question. In the event of any such increase in the rate of interest hereunder, the monthly installment payments of principal and interest hereunder shall be increased, effective as of the 1st day of the second calendar month of the Loan Year in question, to an amount which would be sufficient to amortize the then unpaid principal balance of this Bond, together with interest at the rate of interest per annum then payable under this Bond, as increased in accordance with the provisions of this paragraph, in full, in equal monthly installment payments of principal and interest, by February 1, 2012, provided that in any event the entire unpaid principal balance and interest on this Note shall be due and payable in full on February 1, 1997. Notwithstanding anything in this Bond to the contrary, in no event shall the rate of interest at any time payable on this Bond be less than thirteen percent (13 per annum, or exceed thirty percent (30 per annum. Principal and interest shall be paid to the registered holder hereof in lawful money of the United States at the office of the Bank in Hopkins, Minnesota. This Bond is issued pursuant to the Minnesota Municipal Industrial Development Act, Chapter 474, Minnesota Statutes, as amended (the "Act and in conformity with the provisions, restrictions and limitations thereof. This Bond does not consti- tute a charge against the general credit, property or taxing powers of the City and does not grant to the owner or holder of this Bond any right to have the City levy any taxes or appropriate any funds for the payment of the principal hereof or interest hereon, nor is this Bond a general obligation of the City or an obligation of the individual officers or agents thereof. This Bond and interest hereon are payable solely and only from the moneys received under the Loan Agreement hereinafter mentioned, including loan repayments to be made by John B. Standal, an individual residing in Eden Prairie, Minnesota (the "Borrower and from enforcement of the Mortgage and Lease Assignment herein- after mentioned. This Bond represents an authorized series of special obligation Bonds of an aggregate principal amount of $900,000, which have been authorized by law to be issued and have been issued for the purpose of funding a loan from the City to the Borrower to finance costs of acquiring a site for and construct- ing and equipping a commercial building in the City for use by the Borrower (the "Project and to provide permanent financing for the Project. This Bond is issued pursuant to a Loan and Purchase Agreement (the "Loan Agreement by and among the City, the Borrower and the Bank, dated as of February 1, 1982, and a Bond Resolution of the City duly adopted February 16, 1982. Pursuant to a Loan Agreement Assignment dated as of February 1, 1982 (the "Assignment the City has assigned its interest in the Loan Agreement (except its rights under Sections 5.02, 7.01, 8.04 and 8.05 thereof) to the Bank. This Bond is secured by the Loan Agreement, the Assignment, the Bond Resolution and a Combina- tion Mortgage, Security Agreement and Fixture Financing Statement (the "Mortgage by the Borrower to the said Bank dated as of February 1, 1982, and an Assignment of Rents and Leases (the "Lease Assignment dated as of February 1, 1982, by the Borrower -2- to the Bank to which Loan Agreement, Assignment, Bond Resolution, Mortgage and Lease Assignment and amendments thereof reference is hereby made for a description and limitation of the revenues and funds pledged and appropriated to the payment of the Bond, the nature and extent of the security thereby created, the rights of the Holder of the Bond, the rights, duties and immunities of the Bank and the rights, immunities and obligations of the City thereunder. Certified copies of the Bond Resolution and executed counterparts of the Loan Agreement, the Assignment, Mortgage and Lease Assignment are on file at the office of the City Clerk. This Bond shall be subject to prepayment on any interest payment date at the option of the City, at the request of the Borrower, in whole or in part upon prepayment to the Bank of the principal amount of the Bond to be prepaid plus accrued interest. Any such partial prepayment shall not defer, postpone or change the amount of any regularly scheduled Loan Repayment. This Bond is subject to mandatory redemption at the end of the Fifth Loan Year, or (if not previously redeemed) at the end of the Tenth Loan Year at a price equal to the principal amount thereof then outstanding plus accrued interest to the redemption date which mandatory redemption shall be deemed to have been waived unless at least 180 days prior to the redemption date such mandatory redemption the Holder gives written notice to the Borrower and the Municipality that it does not waive such mandatory redemption If the Holder of the Bond receives notice of a Determi- nation of Taxability, the rate of interest then payable hereunder on the Loan shall be automatically increased to one percent (1 per annum above the rate of interest then most recently publicly announced by the First National Bank of Saint Paul as its prime rate of interest (the "Prime Rate effective as of the date of receipt by the Holder of the notice of such Determination of Taxability, in which event the monthly installment payments of principal and interest required hereunder by the Borrower in Section 5.01 hereof shall be increased, effective as of the first day of the calendar month following such date of receipt, to the amount which would be sufficient to amortize the then unpaid principal balance of the Loan, together with interest at the rate of interest per annum computed as provided above, in full, in equal monthly installment payments of principal and interest, by February 1, 2012; provided that the entire principal balance and all accrued interest shall be due and payable in full on February 1, 1997, as provided in Section 5.01 hereof. The Holder shall notify in writing the City and the Borrower, as soon as practicable after the receipt thereof, of its receipt of a Determination of Taxability and of the consequent increase in interest rate and monthly installment payments required under Section 5.01 hereof. In the event of subsequent changes in the Prime Rate, the rate of interest payable hereunder shall be changed, effective as of the date or dates that the change or changes in the Prime Rate are effective, to one percent (1%) per annum in excess of the Prime Rate; however, the monthly installment payments of principal and interest, as recomputed in accordance with the preceding provisions -3- of this Section 5.07(c), shall remain the same, unless any such payment would not be sufficient at the time such payment is due to pay all accrued and unpaid interest on the Loan, in which case such monthly installment payment shall be increased by the amount of such deficiency. In addition, the Holder, at its option, may, at any time after receipt of notice of a Determination of Taxability, declare the unpaid principal balance of the Loan, together with accrued interest thereon and any other indebtedness due hereunder or under the Bond, due and payable in full, upon at least six (6) months' prior written notice to the Borrower and the City, in which event the Borrower shall pay to the Holder on the date specified in said notice an amount equal to the entire interest thereon and any other indebtedness due hereunder or under the Bond. The Borrower also shall pay to the current and any previous Holder of the Bond, in addition to the other amounts set forth in this Section 5.07(c), and within thirty (30) days of receipt of a notice setting forth such amounts, the amounts of additional federal and state income taxes, including penalties and interest thereon, which such Holder or Holders estimate they will incur by reason of such Determination of Taxability for or with respect to their current and past tax years for the period of time between the Date of Taxability and the date of increase in interest rate on the Loan. Notice of any such prepayment shall be given to the owner or registered assigns of the Bond by certified or regis- tered mail, addressed to him at his registered address, not less than thirty (30) days prior to the date fixed for prepayment, and shall be published, if required by law, in a financial journal circulated in the English language in the cities of Minneapolis or St. Paul, Minnesota, at least once, not less than thirty (30) days before the date so fixed for prepayment. At the date fixed for prepayment, funds shall be paid to the owner hereof at the office of the Bank or shall be deposited with the Bank, sufficient to pay the Bond, or the principal amount thereof to be prepaid and accrued interest thereon. Upon the happening of the above conditions, the Bond thus called or the principal portions thereof prepaid shall not bear interest after the date of prepayment. This Bond is transferable, as provided in the Bond Resolution, only upon the bond register of the City Clerk, as bond registrar, by the owner hereof in person or by his duly authorized attorney, as provided in the Bond Resolution. In case an Event of Default as defined in the Loan Agreement occurs, this Bond and the Loan Repayments thereafter to become due under the Loan Agreement may become immediately due and payable, in the manner and with the effect and subject to the conditions provided in the Loan Agreement. The Holder of this Bond shall have the right to enforce the provisions of the Bond Resolution, Loan Agreement, Assignment, Lease Assignment and Mortgage. -4- The terms and provisions of the Bond Resolution, Loan Agreement, Assignment, Lease Assignment and Mortgage, or of any instrument supplemental thereto, may be modified or altered pursuant to Section 9.03 of the Loan Agreement and paragraph 11 of the Bond Resolution. It is hereby certified and recited and the City Council has found: That the Project is an eligible "project" defined in Section 474.02, Subd. la of the Act; that the issuance of the Bond and the acquisition and construction of the Project will promote the public welfare and carry out the purposes of the Act; that the Project has been approved by the Commissioner of Securi- ties of the State of Minnesota as tending to further the purposes and policies of the Act; that all acts, conditions and things required to be done precedent to and in the issuance of this Bond have been properly done, have happened and have been performed in regular and due time, form and manner as required by law; and that this Bond does not constitute a debt of the City within the meaning of any constitutional, statutory or charter limitation. IN WITNESS WHEREOF, the City of Hopkins, by its City Council, has caused this Bond to be signed in its behalf by the manual signatures of the Mayor and the City Manager and sealed with the corporate seal of the City, attested by the City Clerk, all as of the day of 1982. ATTEST: And By City Clerk City Manager (Form of Transfer) CITY OF HOPKINS By Mayor (SEAL) For value received, the undersigned owner does hereby assign and transfer the foregoing Bond to the named Assignee, and the undersigned City Clerk of the City of Hopkins as bond regis- trar hereby certifies that the foregoing Bond has been transferred and registered on the bond register in the name of such Assignee. Date of Name of Signature of Signature of Transfer on Assignee Owner City Clerk Bond Register (Seal) EXHIBIT 2 TO BOND RESOLUTION LOAN AGREEMENT ASSIGNMENT This Assignment is made as of the 1st day of February, 1982, between the CITY OF HOPKINS, Minnesota, a municipal corpora- tion in the County of Hennepin and State of Minnesota (herein called the "City and the FIRST NATIONAL BANK OF HOPKINS (herein called the "Bank Recitals The City has executed and delivered to the Bank its single fully registered Commercial Development Revenue Bond (Standal Project) in the principal amount of $900,000 dated the date of delivery, issued pursuant to a resolution adopted February 16, 1982 (the "Bond Resolution The proceeds of the Bond have been or are to be loaned to John B. Standal, an individual residing in Eden Prairie, Minnesota (the "Borrower pursuant to a Loan and Purchase Agreement dated as of February 1, 1982, between the City, the Bank and the Borrower. The Bond is payable from and secured by the Loan Repay- ments to be made by the Borrower under the Loan Agreement and the Bank, as a condition to the purchase of the Bond, has required the execution of this Assignment. ACCORDINGLY, as authorized by the Bond Resolution and in consideration of the premises and other good and valuable consideration, the receipt of which is hereby acknowledged, the City does hereby grant, transfer, assign and pledge to the Bank and its registered assigns of the Bond, all of the right, title and interest of the City in the Loan and Purchase Agreement and the Loan Repayments of the Borrower payable thereunder (except for the rights of the City under Section 5.02, 7.01, 8.04 and 8.05 thereof relating to expenses, indemnity and advances of the City), all for the purpose of securing the Bond. IN WITNESS WHEREOF, the City has executed this Assign- ment as of the date first above written, but actually on the day of 1982. CITY OF HOPKINS By Mayor Attest And By City Clerk City Manager EXHIBIT A TO ASSIGNMENT OF RENTS AND LEASES Lot 1, Block 1, Standal First Addition; together with an easement for the purpose of pedestrian and motor vehicle ingress and egress over, across and upon the East 20 feet of the West 222 feet of the North 97 feet of Lot 2, Block 1, Standal First Addition as described in Document No. 1394152, Files of the Registrar of Titles, according to the plat thereof on file and of record in the office of the Registrar of Titles in and for Hennepin County, Minnesota. $900,000 CITY OF HOPKINS COMMERCIAL DEVELOPMENT REVENUE BOND (STANDAL PROJECT) COMBINATION MORTGAGE, SECURITY AGREEMENT AND FIXTURE FINANCING STATEMENT Dated as of February 1, 1982 JOHN B. STANDAL TO FIRST NATIONAL BANK OF HOPKINS This instrument was drafted by Faegre Benson 1300 Northwestern Bank Building Minneapolis, Minnesota 55402 EXHIBIT B COMBINATION MORTGAGE, SECURITY AGREEMENT AND FIXTURE FINANCING STATEMENT This Combination Mortgage, Security Agreement and Fixture Financing Statement dated as of February 1, 1982 (the "Mortgage by and between JOHN B. STANDAL, an individual resid- ing in the City of Eden Prairie, Minnesota (the "Mortgagor and CAROL L. STANDAL, spouse of Borrower who joins solely to encumber her marital interest in the Project Facilities and who is not personally liable hereunder, to FIRST NATIONAL BANK OF HOPKINS, a national banking association, as mortgagee (the "Mortgagee WHEREAS, the Mortgagor, the Mortgagee and the City of Hopkins, a municipal corporation of the State of Minnesota (the "Municipality have entered into a Loan and Purchase Agreement (the "Loan Agreement dated as of February 1, 1982, pursuant to which the Municipality will lend to the Mortgagor the proceeds of an issue of $900,000 City of Hopkins Commercial Development Revenue Bond (Standal Project) (the "Bond consisting of one bond in the denomination of $900,000 to be issued and sold to First National Bank of Hopkins, as described in the Loan Agree- ment, which Bond is to be issued pursuant to the Minnesota Indus- trial Development Act, Chapter 474, Minnesota Statutes, as amended (the "Act WHEREAS, the Bond bears interest at variable interest rates not less than 13.00% nor more than 30.00 per annum, princi- pal and interest being payable in monthly installments, with the last of said interest installments and the principal amount of the Bond due and payable on February 1, 1997, which Bond is subject to mandatory redemption as set forth in the Loan Agreement. WHEREAS, the City Council of the Municipality adopted on February 16, 1982, a resolution (the "Bond Resolution pro- viding for the issuance of the Bond and pursuant to which the Municipality has pledged and assigned to the holders of the Bond the Loan Repayments and all other rights and interests of the Municipality in the Loan Agreement (except for the rights of the Municipality under Sections 5.02, 7.01, 8.04 and 8.05 thereof relating to expenses, indemnity and advances of the Municipality); and WHEREAS, the Mortgagor has agreed to mortgage and grant a security interest in the Mortgaged Property hereinafter defined to secure the principal of and interest on the Bond; NOW, THEREFORE, in consideration of One Dollar ($1.00) and other good and valuable consideration, the receipt and suf- ficiency of which is hereby acknowledged; in consideration of the purchase and acceptance of the Bond by the Mortgagee and any other person who, from time to time, may become the holder and owner thereof; and to secure (a) the due and punctual payment of principal of and interest on the Bond, and all renewals, exten- sions and modifications thereof and any Bond issued in substitution therefor; (b) all liabilities of the Mortgagor under the Assign- ment of Rents and Leases dated as of February 1, 1982, from the Mortgagor to the Mortgagee (the "Lease Assignment (c) the payment of all other sums with interest thereon as may be advanced by the Mortgagee in accordance with this Mortgage, the Lease Assignment and the Loan Agreement (the indebtedness evidenced by the Bond and all such other sums are hereinafter collectively referred to as the "Indebtedness and (d) the performance of all the covenants and agreements of Mortgagor herein, in the Lease Assignment and in the Loan Agreement contained, the Mort- gagor does hereby mortgage, grant, bargain, sell, assign, transfer and convey unto the Mortgagee forever, with power of sale, the following: All rents, issues, profits, condemnation awards, insur- ance proceeds, revenues and income arising from the ownership of operation of the Land and the Improvements and all proceeds and products thereof (herein collectively called "Revenues and Income To Have and To Hold the Land, and Improvements, (together the "Mortgaged Property and the Revenues and Income thereof, together with all privileges, hereditaments and appurtenances thereunto now or hereafter belonging or in anywise appertaining, and the proceeds thereof unto the Mortgagee forever; provided, nevertheless, that this Mortgage is upon the express condition that if the Mortgagor shall cause to be paid to the Mortgagee as and when due and payable the principal of and interest on the Bond, and all other Indebtedness, and shall also keep and perform I. All of his right, title and interest in and to the tracts, parcels and interests in land described in Exhibit 1 hereto (the "Land and the buildings, structures and other im- provements now standing or at any time hereafter constructed or placed upon the Land (the "Improvements including but not limited to (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, (ii) 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, (iii) all additions, accessions, increases, parts, fittings, accessories, replacements, substitu- tions, betterments, repairs and proceeds to and of any and all of the foregoing, and (iv) all hereditaments, easements, appurte- nances, estates, and other rights and interests now or hereafter belonging to or in any way pertaining to the Land or to any building or improvement now or hereafter located thereon. -2- II each and every covenant and agreement of Mortgagor herein and in the Loan Agreement contained, then, this Mortgage and the estate hereby granted shall cease and be and become void and shall be released of record at the expense of the Mortgagor; otherwise this Mortgage shall be and remain in full force and effect. The Mortgagor represents, warrants and covenants to and with the Mortgagee that he is lawfully seized of the Land in fee simple and has good right and full power and authority to execute this Mortgage and to mortgage the Mortgaged Property; that the Mortgagor owns the Mortgaged Property free from all liens, secu- rity interests and encumbrances except as listed in Exhibit 2 attached hereto; that the Mortgagor will warrant and defend the title to the Mortgaged Property and the lien and priority of this Mortgage against all claims and demands of all persons whomsoever, whether now existing or hereafter arising, not listed in Exhibit 2; and that all buildings and improvements now or hereafter located on the Land are, or will be located entirely within the boundaries of the Land. The covenants and warranties of this paragraph shall survive foreclosure of this Mortgage and shall run with the Land. The Mortgagor further covenants and agrees as follows: 1. Payment of the Bond. Mortgagor will cause the principal of and interest on the Bond to be duly and punctually paid in accordance with the terms thereof and all other Indebted- ness, when and as due and payable. The provisions of the Bond are hereby incorporated by reference into this Mortgage as fully as if set forth at length herein. 2. Fund for Taxes, Assessments and Insurance. (a) Subject to any written waiver by Mortgagee, Mortgagor shall pay to the Mortgagee on the day monthly installments of interest or principal and interest are payable under the Bond, until the Bond is paid in full, a sum equal to one twelfth of the yearly taxes and assessments levied against the Mortgaged Property plus one twelfth of the annual premiums of the insurance required by paragraph 9 (a)(i), (ii), (iii), (iv) and (v), all as estimated initially and from time to time by the Mortgagee, to be applied by the Mortgagee to pay said taxes, assessments and insurance premiums (such amounts being hereafter referred to as the "Funds Mortgagee shall apply the Funds to pay said taxes, assessments and insurance premiums prior to the date that penalty attaches for nonpayment, or at least 15 days before such insurance premiums are due, so long as the amount of Funds held by the Mortgagee is sufficient at that time to make such payments. No earnings or interest shall be payable to the Mortgagor on the Funds. Such Funds shall not be, nor be deemed to be, trust funds, and the Mortgagee shall have the right to hold the Funds in any manner the Mortgagee elects and may commingle the Funds with other moneys held by the Mortgagee. -3- (b) If the amount of the Funds held by the Mortgagee shall exceed at any time the amount deemed necessary by the Mortgagee to provide for the payment of taxes, assessments and insuance premiums, such excess shall, at the option of the Mortgagee, either be promptly repaid to the Mortgagor or be credited to the Mortgagor on the next monthly installment of Funds due. If at any time the amount of the Funds held by the Mortgagee shall be less than the amount deemed necessary by Mortgagee to pay taxes, assessments and insurance premiums' as they fall due, the Mortgagor shall promptly pay to the Mortgagee any amount necessary to make up the deficiency upon notice from the Mortgagee to the Mortgagor requesting payment thereof. The Funds are pledged as additional security for the Indebtedness. (c) Upon the occurrence of any Event of Default (as defined in paragraph 16 hereof) the Mortgagee may apply in any order as Mortgagee shall determine in its sole discretion, any Funds held by Mortgagee at the time of application to pay taxes, assessments and insurance premiums which are then or will thereafter become due or as a credit against the Indebtedness. Upon payment in full of all Indebtedness, the Mortgagee shall promptly refund to the Mortgagor any Funds held by the Mortgagee. 3. Application of Payments. All payments received by Mortgagee with respect to the Bond or this Mortgage shall be applied by Mortgagee in the following order of priority: (i) interest payable on advances made pursuant to paragraph 12 hereof; (ii) principal of advances made pursuant to paragraph 12 hereof; (iii) interest payable on the Bond; (iv) principal of the Bond; and (v) in such order of application as Mortgagee may determine any other sums secured by this Mortgage. 4. Payment of Taxes, Assessments and Other Charges. Subject to paragraph 8 relating to contests, the Mortgagor shall pay before a penalty might attach for nonpayment thereof, all taxes and assessments and all other charges whatsoever levied upon or assessed or placed against the Mortgaged Property. Mortgagor shall likewise pay all taxes, assessments and other charges, levied upon or assessed, placed or made against, or measured by, this Mortgage, or the recordation hereof, or the Indebtedness secured hereby, provided that the 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 unlawful rate of interest on the Indebtedness secured hereby; and provided further that nothing herein contained shall be construed as requiring Mortgagor to pay any net income, profits, Bank excise or revenue taxes of the Mortgagee. Mortgagor shall promptly furnish to the Mortgagee all notices received by the Mortgagor of amounts due under this paragraph and in the event Mortgagor shall make payment directly, Mortgagor shall promptly furnish to Mortgagee receipts evidencing such payments. -4- 5. Payment of Utility Charges. Subject to paragraph 8 relating to contests, the Mortgagor shall pay or cause to be paid, all charges made by utility companies, whether public or private, for electricity, gas, heat, water, or sewer, furnished or used in connection with the Mortgaged Property or any part thereof, and will, upon written request of Mortgagee, furnish proper receipts evidencing such payment. 6. Liens. Subject to paragraph 8 hereof relating to contests, the Mortgagor shall not create, incur or suffer to exist any lien, encumbrance or charge on the Mortgaged Property or Revenues and Income or any part thereof, other than the lien of current real estate taxes. Mortgagor shall pay, when due, the claims of all persons supplying labor or materials to or in connection with the Mortgaged Property. 7. Compliance with Laws. Subject to paragraph 8 re- lating to contests, Mortgagor shall comply with all present and future statutes, laws, rules, order, regulations and ordinances affecting the Mortgaged Property, any part thereof or the use thereof. 8. Permitted Contests. The Mortgagor shall not be required to (i) pay any tax, assessment or other charge referred to in paragraph 4 hereof, (ii) pay any charge referred to in paragraph 5 hereof, (iii) discharge or remove any lien encum- brance or charge referred to in paragraph 6 hereof, or (iv) comply with any statute, law, rule, regulation or ordinance referred to in paragraph 7 hereof, so long as Mortgagor shall (a) contest, in good faith, the existence, amount or the validity thereof, the amount of damages caused thereby or the extent of his liability therefor, by appropriate proceedings which shall operate during the pendency thereof to prevent (A) the collection of, or other realization upon the tax, assessment, charge or lien, encumbrance or charge so contested, (B) the sale, for- feiture or loss of the Mortgaged Property or any part thereof, and (C) any interference with the use or occupancy of the Mort- gaged Property or any part thereof, and (b) shall give such security to the Mortgagee as may be reasonably demanded by the Mortgagee to insure compliance with the foregoing provisions of this paragraph 8. Mortgagor shall give prompt written notice to Mortgagee of the commencement of any contest referred to in this paragraph 8. 9. Insurance. (a) Risks to be Insured. Mortgagor, at his sole cost and expense, will maintain insurance of the fol- lowing character: (i) Insurance on the buildings and other improvements now existing or hereafter erected on the Land against loss by fire, lightning, extended coverage perils, collapse, water damage, vandalism and malicious mischief, on an "all risk" form, in an amount equal to the actual replacement cost thereof (exclusive of foundations and excavations) without deduction for physical depreciation, with coverage for demolition and increased costs of construction, in an agreed amount without provi- sion for co- insurance. While any building or other improvement is in the course of being con- structed or rebuilt on the Land, the Mortgagor shall provide the aforesaid hazard insurance in builder's risk completed value form, including coverage available on the so- called "all risk" non reporting form of policy. (ii) If the Land or any part thereof is located in a designated official flood- hazardous area, flood insurance insuring the buildings and improvements now existing or hereafter erected on the Land in an amount equal to the principal balance of the Bond or to the maximum limit of coverage made available with respect to such buildings and improvements under the Flood Insur- ance Act of 1968, as amended, whichever is less. (iii) Public liability, including personal injury and property damage, insurance applicable to the Mortgaged Property in such amounts as are usually carried by persons operating similar properties in the same general locality but in any event with a combined single limit of not less than $1,000,000 per accident. (iv) Appropriate worker's compensation insurance with respect to any work on or about the Mortgaged Property. (v) Rent loss insurance in an amount not less than $131,000. (b) Policy Provisions. All insurance policies and renewals thereof maintained by Mortgagor pursuant to subparagraph (a) above shall be written by an insur- ance carrier satisfactory to the Mortgagee, contain, except in the case of liability insurance and worker's compensation insurance, a standard mortgage clause in favor of and in form acceptable to Mortgagee, contain an agreement of the insurer that it will not cancel or materially modify the policy except after 20 days' prior written notice to the Mortgagee, include effec- tive waivers by the insurer of all claims for insurance premiums against the Mortgagee, provide that all sums paid for losses shall be paid to the Mortgagee, provide that any losses shall be payable notwithstanding (1) any -6- act of negligence of the Mortgagor or Mortgagee, (2) any foreclosure or other proceedings or notice of sale relating to the Mortgaged Property, or (3) any change in the title to or ownership of the Mortgaged Property, and be reasonably satisfactory to Mortgagee in all other respects. (c) Delivery of Policy. Mortgagor will deliver to Mortgagee copies of policies satisfactory to Mort- gagee evidencing the insurance which is required under subparagraph (a), and Mortgagor shall promptly furnish to Mortgagee all renewal notices and all receipts of paid premiums received by him. At least 30 days prior to the expiration date of a required policy, Mortgagor shall deliver to Mortgagee a renewal policy in form satisfactory to Mortgagee. (d) Assignment of Policy. If the Mortgaged Property is sold at a foreclosure sale or if Mortgagee shall acquire title to the Mortgaged Property, the Mortgagee shall have all of the right, title and inter- est of Mortgagor in and to any insurance policies required under paragraph 9(a) hereof and the unearned premiums thereon and in and to the proceeds resulting from any damage to the Mortgaged Property prior to such sale or acquisition. (e) Notice of Damage or Destruction; Adjusting Loss. If the Mortgaged Property or any part thereof shall be damaged or destroyed by fire or other casualty, Mortgagor will promptly give written notice thereof to the insurance carrier and Mortgagee, and the Mortgagee shall have the right to join the Mortgagor in adjusting any damage or loss; but if there has been no adjustment of any such damage or loss within four months from the date of occurrence thereof and if an Event of Default shall exist at the end of such four -month period or at any time thereafter, Mortgagee may alone, make proof of loss, adjust and compromise any claim under the policies and appear in and prosecute any action arising from such policies. In connection therewith, Mortgagor does hereby irrevocably authorize, empower and appoint Mortgagee as attorney -in -fact for Mortgagor (which appointment is coupled with an interest) to do any and all of the foregoing in the name and on behalf of Mortgagor. (f) Restoration of Damaged or Destroyed Property. In case of any damage to or destruction of the Mortgaged Property or any part thereof, the Mortgagor, if the Mortgagee elects to make insurance proceeds available therefor but regardless of whether or not the insurance proceeds, if any, on account of such damage or destruc- tion shall be sufficient for the purpose, at his expense, -7- shall promptly commence and complete the restoration, repair, replacement or rebuilding of the Mortgaged Property that is damaged or destroyed (the "Restoration as nearly as possible to its value, condition and character, immediately prior to such damage or destruction, with such alterations and additions as may be made at the Mortgagor's election; provided, however, that in case all or any part of the Mortgaged Property is destroyed or damaged so as to render such property, in the reasonable judgment of the Mortgagee, incapable of being restored for purposes of normal operation of the Mortgagor's business on the property within four months after its damage or destruction, the Mortgagor shall have no obligation to restore, rebuild or replace the Mortgaged Property and no right to have the net proceeds of the insurance claim applied to such restoration, repair, rebuilding or replacement and the Mortgagee may elect to apply the net proceeds of the insurance claim to the prepayment of the Bond without premium. (g) Application of Insurance Proceeds. (A) All sums paid for losses under any hazard insurance policy and /or flood insurance policy required in paragraph 9(a) shall be paid to Mortgagee. Such insurance proceeds shall be applied to the reduction of the indebtedness secured hereby or, at the option of the Mortgagee (after first deducting therefrom Mortgagee's expenses in collecting the same and in paying out such proceeds, including but not limited to reasonable attorney's fees, fees and charges of any title insurance company engaged by Mortgagee to disburse such insurance proceeds, fees of any architect or engineer engaged by Mortgagee to make periodic inspection of the Restoration (as hereinafter defined) and /or to review any plans and specifications of the Restoration submitted to Mortgagee for approval) to the payment of the Restoration as work progresses, subject to (1) deposit with the Mortgagee of the amount in excess of insurance proceeds necessary to effect the restoration and (2) such other conditions as the Mortgagee may reasonably request. Any such application of insurance proceeds to the principal of the Bond shall not extend or postpone the due dates of the monthly installments payable under the Bond or change the amount of such installments, and no such application shall be deemed to cure any Event of Default then existing. (B) Mortgagor shall promptly reimburse Mortgagee upon demand for all of Mortgagee's expenses incurred in connection with the collection of the insurance proceeds and all such expenses, together with interest from the date of disbursement at the rate of 18.00% per annum (unless collection of interest from Mortgagor at such rate would be contrary to applicable law, in which -8- event such amounts shall bear interest at the highest rate which may be collected from Mortgagor under appli- cable law) shall be additional amounts secured by this Mortgage. 10. Preservation and Maintenance of Mortgaged Property. Mortgagor (i) shall keep the buildings and other improvements now or hereafter erected on the Land in safe and good repair and condition, ordinary depreciation excepted, (ii) shall constantly maintain the parking and landscaped areas of the Mortgaged Property, (iii) shall not commit waste or permit impairment or deterioration of the Mortgaged Property, (iv) shall not alter or permit the alteration by any tenant of the design or structural character of any building now or hereafter erected on the Land or hereafter constructed, or permit any tenant to construct additions to existing buildings or additional buildings on the Land, without the prior written consent of the Mortgagee, and (v) shall not remove from the Land any of the fixtures included in the Mort- gaged Property unless the same is immediately replaced with like property of at least equal value and utility, and this Mortgage becomes a valid first lien on such property. 11. Inspection. The Mortgagee, or its agents, shall have the right at all reasonable times, to enter upon the Mort- gaged Property for the purposes of inspecting the Mortgaged Property or any part thereof. The Mortgagee shall, however, have no duty to make such inspection. 12. Protection of Mortgagee's Security. Subject to the rights of the Mortgagor under paragraph 8 hereof, if the Mortgagor fails to perform any of the covenants and agreements contained in this Mortgage or if any action or proceeding is commenced which affects the Mortgaged Property or the interest of the Mortgagee therein, or the title thereto, then the Mortgagee, at Mortgagees' option, may perform such covenants and agreements, defend against and /or investigate such action or proceeding, and take such other action as the Mortgagee deems necessary to protect the Mortgagee's interest. Mortgagee shall be the sole judge of the legality, validity and priority of any claim, lien, encum- brance, tax, assessment, charge and premium paid by it and of the amount necessary to be paid in satisfaction thereof. Mortgagee is hereby given the irrevocable power of attorney (which power is coupled with an interest and is irrevocable) to enter upon the Mortgaged Property as the Mortgagor's agent in the Mortgagor's name to perform any and all covenants and agreements to be per- formed by the Mortgagor as herein provided. Any amounts disbursed or incurred by the Mortgagee pursuant to this paragraph 12, with interest thereon, shall become additional Indebtedness of the Mortgagor secured by this Mortgage. Unless Mortgagor and Mort- gagee agree in writing to other terms of repayment, such amounts shall be immediately due and payable, and shall bear interest from the date of disbursement at the annual rate of 18.00 unless collection from Mortgagor of interest at such rate would be contrary to applicable law, in which event such amounts shall -9- bear interest at the highest rate which may be collected from Mortgagor under applicable law. Mortgagee shall, at its option, be subrogated to the lien of any mortgage or other lien discharged in whole or in part by the Indebtedness or by the Mortgagee under the provisions hereof, and any such subrogation rights shall be additional and cumulative security for this Mortgage. Nothing contained in this paragraph 12 shall require the Mortgagee to incur any expense or do any act hereunder, and the Mortgagee shall not be liable to the Mortgagor for any damages or claims arising out of action taken by the Mortgagee pursuant to this paragraph 12. 13. Condemnation. (a) Mortgagor hereby irrevocably assigns to the Mortgagee any award or payment which becomes payable by reason of any taking of the Mortgaged Property, or any part thereof, whether directly or indirectly or tempo- rarily 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 (hereinafter called "Taking Forthwith upon receipt by Mortgagor of notice of the institution of any proceeding or negotiations for a Taking, Mort- gagor shall give notice thereof to Mortgagee. Mort- gagee may appear in any such proceedings and partici- pate in any such negotiations and may be represented by counsel. Mortgagor, notwithstanding that Mortgagee may not be a party to any such proceeding, will promptly give to Mortgagee copies of all notices, pleadings, judgments, determinations and other papers received by Mortgagor therein. Mortgagor will not enter into any agreement permitting or consenting to the Taking of the Mortgaged Property, or any part thereof, or providing for the conveyance thereof in lieu of condemnation, with anyone authorized to acquire the same in condem- nation or by eminent domain unless Mortgagee shall first have consented thereto in writing, which consent will not be unreasonably withheld. All Taking awards shall be adjusted jointly by Mortgagor and Mortgagee. All awards payable as a result of a Taking shall be paid to Mortgagee, which may, at its option, apply them, after first deducting Mortgagee's expenses in- curred in the collection thereof, to the payment of the Indebtedness, whether or not due and in such order of application as Mortgagee may determine, or to the repair or restoration of the Mortgaged Property, in such manner as Mortgagee may determine. Any appli- cation of Taking awards to principal of the Bond shall not extend or postpone the due dates of the install- ments payable under the Bond or change the amount of such installments. -10- (b) If the Taking involves a taking of any build- ing or other improvement now or hereafter located on the Land, Mortgagor shall proceed, with reasonable diligence, to demolish and remove any ruins and com- plete repair or restoration of the Mortgaged Property as nearly as possible to its respective size, type and character immediately prior to the Taking, whether or not the condemnation awards are available or adequate to complete such repair or restoration; provided, however, that if Mortgagee shall apply the condemnation award to payment of the Indebtedness, Mortgagor shall have the option, in lieu of completing such repair or restoration, to pay in full the Bond and all other Indebtedness without payment of a premium or penalty. Mortgagor shall promptly reimburse Mortgagee upon demand for all of Mortgagee's expenses (including reasonable attorney's fees) incurred in the collection of awards and their disbursement in accordance with this paragraph, and all such expenses, together with interest from the date of disbursement at the rate of 18.00% per annum (unless collection of interest from Mortgagor at such rate would be contrary to applicable law, in which event such amounts shall bear interest at the highest rate which may be collected from Mortgagor under applicable law) shall be additional amounts secured by this Mortgage. 14. Information; Books and Records. Mortgagor will prepare or cause to be prepared at his expense and deliver to Mortgagee immediately upon becoming aware of the existence of any condition or event which constitutes, or which after notice or lapse of time or both would constitute, an Event of Default, written notice specifying the nature and period of existence thereof and what action Mortgagor has taken, is taking or proposes to take with respect thereto. Mortgagor shall keep and maintain at all times at Mortgagor's address stated below or at such other place as Mortgagee may approve in writing, complete and accurate books of accounts and records in sufficient detail to reflect correctly the results of the operation of the Mortgaged Property and copies of all written contracts, leases and other instruments which affect the Mortgaged Property. Such books, records, con- tracts, leases and other instruments shall be subject to examina- tion and inspection by the Mortgagee or its representatives during ordinary business hours. 15. Security Interest. This Mortgage shall constitute a security agreement with respect to (and the Mortgagor hereby grants the Mortgagee a security interest in) all fixtures included in the Mortgaged Property (as more particularly described in Granting Clauses I of this Mortgage) and the Revenues and Income (as more particularly described in Granting Clause II). The Mortgagor will from time to time, at the request of the Mort- gagee, execute any and all financing statements covering such fixtures (in a form satisfactory to the Mortgagee) which the Mortgagee may reasonably consider necessary or appropriate to perfect its security interest. 16. Events of Default. Each of the following occur- rences shall constitute an event of default hereunder (herein called an "Event of Default (a) Municipality shall fail to duly and punc- tually pay any installment of principal or interest payable under the Bond. (b) Mortgagor shall fail duly to perform or observe any of the covenants or agreements contained in this Mortgage and such failure shall continue for 10 days after the Mortgagee has given written notice to the Mortgagor specifying such default or breach, except that the grace period shall be 5 days in case of a default in performance, or a breach, of the covenants of Mortgagor contained in paragraph 9(a) hereof. (c) The Mortgagor shall make an assignment for the benefit of his creditors, or shall admit in writing his inability to pay his debts as they become due, or shall file a petition in bankruptcy, or shall become or be adjudicated a bankrupt or insolvent, however defined, or shall file a petition seeking any reorganization, dissolution, liquidation, arrangement, composition, readjustment or similar relief under any present or future bankruptcy or insolvency statute, law or regula- tion or shall file an answer admitting to or not con- testing the material allegations of a petition filed against him in such proceedings, or shall not, within 30 days after the filing of such petition against him, have same dismissed or vacated, or shall seek or consent to or acquiesce in the appointment of any trustee, receiver or liquidator of a material part of his prop- erties or of the Mortgaged Property or shall not, within 30 days after the appointment (without his consent or acquiescence) of a trustee, receiver or liquidator of any material part of his properties or of the Mortgaged Property, have such appointment vacated. (d) Mortgagor shall sell, lease or convey the Mortgaged Property, the Revenues and Income or any part thereof or any interest therein without obtaining in each instance the prior written consent of the Mort- gagee. (e) An Event of Default under the Loan Agreement or the Lease Assignment shall have occurred. 17. Acceleration; Foreclosure. Upon the occurrence of any Event of Default or at any time thereafter until such Event of Default is cured to the written satisfaction of the Mortgagee, -12- the Mortgagee may, at its option, exercise one or more of the following rights and remedies (and any other rights and remedies available to it): (a) Mortgagee may, by written notice to the Mortgagor, declare immediately due and payable all unmatured Indebtedness secured by this Mortgage and accelerate the Loan Repayments under the Loan Agree- ment, and, as provided in the Bond Resolution and Loan Agreement, the same shall thereupon be immediately due and payable, without further notice or demand. (b) Mortgagee shall have and may exercise with respect to all fixtures which are part of the Mortgaged Property and with respect to the Revenues and Income, 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. If notice to the Mortgagor of intended disposition of such property is required by law in a particular instance, such notice shall be deemed commercially reasonable if given to Mortgagor (in the manner specified in paragraph 21) at least 10 calendar days prior to the date of intended disposition. Mortgagor shall pay on demand all costs and expenses incurred by Mortgagee in exercising such rights and remedies, including without limitation, reasonable attorneys' fees and legal expenses. (c) The Mortgagee shall be entitled, without notice and without any showing of waste of the Mort- gaged Property, inadequacy of the Mortgaged Property as security, or insolvency of the Mortgagor, to the appoint- ment of a receiver of the rents and profits of the Mortgaged Property, including those past due, as permitted by Minnesota Statutes §576.01. The Mortgagee or any receiver shall be entitled to receive and dispose of the Revenues and Income of the Mortgaged Property and to sue for and recover any account or other item of Revenues and Income from the Mortgagor or any account debtor or other third person. Subject to any order of a court appointing a receiver or otherwise having jurisdiction of the Mortgaged Property, the Mortgagee in its discretion may apply the Revenues and Income as provided in Section 576.01, subdivision 2, to the items and in the order set forth in Section 7 of the Lease Assignment. (d) The 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 in fee simple and to apply the proceeds arising from such -13- sale, first, to the payment of the indebtedness secured thereby and hereby, including all expenses, liabilities and advances of the Mortgagee and the Bond and interest thereon and Loan Repayments relating thereto, and all legal costs and charges of such foreclosure and the maximum attorneys' fees permitted by law, which costs, charges and fees the Mortgagor agrees to pay, and, second, to the payment of any obligations of the Mort- gagor to the Municipality under the Loan Agreement, and, third, to return any surplus to the Mortgagor or such other person as may be entitled thereto. Such sale shall be made at public auction and at such place or places and at such time or times and upon such notice as the Mortgagee may be advised by counsel to be con- sistent with the laws applicable thereto, and upon such terms as the Mortgagee or the public officer conducting such sale may fix. Any such sale made pursuant to judicial proceedings or advertisement shall be made either as an entirety or in such parcels as may be directed by the court or as the Mortgagee in its sole discretion may determine. The Mortgagor, for himself and all persons and corporations hereafter claiming through or under him, hereby expressly waives and releases all right to have the properties and rights comprised in the Mortgaged Property marshaled upon any foreclosure or other enforcement hereof. The Mortgagee or public officer conducting such sale from time to time may adjourn any such sale to be made by it by announcement at the time and place appointed for such sale or for such adjourned sale or sales, and without further notice or publication it may make such sale at the time to which the same shall be so adjourned, but in the event of such adjournment or adjournments, sale shall be made within any limitation of time or number of adjournments prescribed by law and, in any event, within six months from the date of sale fixed in the advertisement or court order, unless notice of sale on some later date shall be given again in the manner provided by law. (e) Upon any foreclosure sale, the holder of the Bond, or the Mortgagee, may bid for and purchase the Mortgaged Property or any part thereof and upon compli- ance with the terms of sale may hold, retain and possess and dispose of such property in his or its own absolute right without further accountability, and any purchaser at any such sale may, in paying the purchase money, turn in the Bond or claims for interest outstanding hereunder in lieu of cash to the amount which shall, upon distribution of the net proceeds of such sale, be payable thereon. (f) Upon the completion of any sale or sales made under or by virtue of this Mortgage, the Mortgagor -14- shall execute and deliver, or cause to be executed and delivered, to the accepted purchaser or purchasers the property sold with good and sufficient transfers, assigning and transferring all its right, title and interest in and to the properties sold. The Mortgagee and its successor or successors are hereby appointed the true and lawful attorney or attorneys irrevocable of the Mortgagor in his name and stead or in the name of the Mortgagee to make all necessary assignments, transfers and deliveries of the property thus sold, and for that purpose, the Mortgagee and its successors may execute all necessary instruments of assignment and transfer, and may substitute one or more persons with like power, the Mortgagor hereby ratifying and confirm- ing all that said attorney or attorneys or such substi- tute or substitutes shall lawfully do by virtue hereof. Nevertheless, the Mortgagor, if so requested in writing by the Mortgagee shall ratify and confirm any such sale or sales by executing and delivering to the Mortgagee or to such purchaser or purchasers, after the expiration of any statutory redemption period from such sale, all such instruments as may be advisable, in the judgment of the Mortgagee, for the purpose and as may be desig- nated in such request. (g) Upon any sale made under the power of sale hereby granted or under judgment or decree in any judicial proceedings for the foreclosure or otherwise for the enforcement of this Mortgage, the receipt of the Mortgagee or of the officer making such sale shall be a sufficient discharge to the purchaser or purchasers at any sale for his or their purchase money, and such purchaser or purchasers, his or their assigns or personal representatives shall not, after paying such purchase money and receiving such receipt of the Mortgagee or of such officer therefor, be obliged to see to the applica- tion of such purchase money, or be in anywise answerable for any loss, misapplication, or nonapplication thereof. (h) The Mortgagor hereby expressly consents to sale of the Mortgaged Property by advertisement pursuant to Minnesota Statutes, Chapter 580, which provides for sale after service of notice thereof upon the occupant of the Mortgaged Property and publication of said notice for six weeks in the county in which the Mortgaged Property is located, notwithstanding that service might not be made upon the Mortgagor personally, and that no hearing of any type is required in connection with the sale. Except as required by the aforesaid statutory provision, the Mortgagor hereby expressly waives any and all rights to notice of sale of the Mortgaged Property and any and all rights to a hearing of any type in connection with the sale of the Mortgaged Property. -15- (i) Any sale made under the power of sale granted hereby or under judgment or decree in any judicial proceedings for foreclosure or otherwise for the enforce- ment of this Mortgage shall, if and to the extent then permitted by law and after the expiration of any statutory redemption period from such sale, operate to divest all right, title, interest, claims and demand whatsoever, either at law or in equity, of the Mortgagor of, in and to the property so sold, and be a perpetual bar both at law and in equity against the Mortgagor and against any and all persons, firms or corporations claiming or who may claim the property sold, or any part thereof, from, through or under the Mortgagor. (j) Mortgagee may pursue one or more of the remedies provided for in the Bond Resolution, Lease Assignment and Loan Agreement. 18. Estoppel Certificate. Mortgagor agrees at any time and from time to time, upon not less than 15 days' prior notice by Mortgagee, to execute, acknowledge and deliver, without charge, to Mortgagee or to any person designated by Mortgagee, a statement in writing certifying that this Mortgage is unmodified (or if there have been modifications, indentifying the same by the date thereof and specifying the nature thereof), the principal amount then secured hereby and the unpaid balance of the Bond, that Mortgagor has not received any notice of default or notice of acceleration or foreclosure of this Mortgage (or if Mortgagor has received such a notice, that it has been revoked, if such be the case), that to the knowledge of Mortgagor no Event of Default exists hereunder (or if any such Event of Default does exist, specifying the same and stating that the same has been cured, if such be the case), the Mortgagor to his knowledge has no claims or offsets against Mortgagee (or if Mortgagor has any such claims, specifying the same), and the dates to which the principal and interest and the other sums and charges payable by Mortgagor pursuant to the Bond, Lease Assignment and the Loan Agreement have been paid. 19. Forbearance Not a Waiver, Rights and Remedies Cumulative. No delay by the Mortgagee in exercising any right shall be deemed a waiver of or preclude the exercise of such right or remedy, and no waiver by the Mortgagee of any particular provision of this Mortgage shall be deemed effective unless in writing signed by the Mortgagee. All such rights and remedies provided for herein or which the Mortgagee or any holder of the Bond may have otherwise, at law or in equity, shall be distinct, separate and cumulative and may be exercised concurrently, inde- pendently or successively in any order whatsoever, and as often as the occasion therefor arises. The Mortgagee's taking action pursuant to paragraph 12 or receiving proceeds, awards or damages pursuant to paragraphs 9 or 13 shall not impair any right or remedy available to the Mortgagee under paragraph 17 hereof. Acceleration of maturity of the Bond, once claimed hereunder by -16- the Mortgagee, may, at the option of Mortgagee, be rescinded by written acknowledgment to that effect by Mortgagee, but the tender and acceptance of partial payments alone shall not in any way affect or rescind such acceleration of maturity of the Bond, provided that any such acceleration shall be subject to Mortgagor's right of reinstatement as provided in Section 580.30, Minnesota Statutes. 20. Successors and Assigns Bound; Number; Gender; Agents; Captions. The covenants and agreements herein contained shall bind, and the rights hereunder shall inure to, the respec- tive heirs, legal representatives, successors and assigns of the Mortgagee and the Mortgagor, subject to paragraph 16(d). Wher- ever used, the singular number shall include the plural, and the plural the singular, and the use of any gender shall apply to all genders. In exercising any rights hereunder or taking any actions provided for herein, Mortgagee may act through its employees, agents or independent contractors as authorized by Mortgagee. The captions and headings of the paragraphs of this Mortgage are for convenience only and are not to be used to interpret or define the provisions hereof. 21. Notice. Any notice from the Mortgagee to the Mortgagor under th s Mortgage shall be deemed to have been given by the Mortgagee and received by the Mortgagor when mailed by certified mail by the Mortgagee to the Mortgagor at the following address: John B. Standal 9955 Spring Road Eden Prairie, Minnesota 55344 or at such other address as the Mortgagor may designate in writing to the Mortgagee. 22. Governing Law; Severability. This Mortgage shall be governed by the substantive 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 the conflicting provisions and to this end the provisions of the Mortgage are declared to be severable. 22. 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. 23. Production of Documents. Mortgagor shall, while this Mortgage is in full force and effect, furnish the Mortgagee with such documents, instruments and papers as the Mortgagee may request from time to time in order for the Mortgagee to effectuate a sale or a participation in the loan evidenced by the Bond and this Mortgage. -17- 24. Waiver of Marshalling. Mortgagor, any party who consents to this Mortgage and any party who now or hereafter acquires a lien on the Mortgaged Property and who has actual or constructive notice of this Mortgage hereby waives any and all right to require the marshalling of assets in connection with the exercise of any of the remedies permitted by applicable law or provided herein. 25. Fixture Filing. From the date of its recording, this Mortgage shall be effective as a financing statement filed as a fixture filing with respect to all goods constituting part of the Mortgaged Property (as more particularly described in Granting Clause I of this Mortgage) 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 Debtor: John B. Standal 9955 Spring Road Eden Prairie Minnesota 55344 (b) Name and Address of Secured Party: First National Bank of Hopkins 16 9th Avenue North Hopkins, Minnesota 55343 (c) This document covers goods which are or are to become fixtures. IN WITNESS WHEREOF, the Mortgagor and his spouse have caused this Mortgage to be duly executed as of the day and year first above written, but actually on the day of 1982. JOHN B. STANDAL CAROL L. STANDAL The undersigned, Carol L. Standal, spouse of John B. Standal, joins herein solely to encumber her marital interest in the Mortgaged Property and shall not be personally liable hereon. STATE OF MINNESOTA SS. COUNTY OF HENNEPIN The foregoing instrument was acknowledged before me this day of 1982, by John B. Standal and Carol L. Standal, husband and wife who reside at 9955 Spring Road, Eden Prairie, Minnesota 55344. 1 -1 M EXHIBIT D The Opinion of counsel for the Borrower, shall be dated the date of the Closing, shall be addressed to the Municipality and the Bank and shall be to the effect that: 1. The Loan Agreement, Lease Assignment and Mortgage have been duly executed and delivered by the Borrower and, assuming due execution by the other parties thereto, constitute valid and binding obligations of the Borrower, subject to bankruptcy, insolvency, reorganization, moratorium and other laws affecting the enforcement of creditors' rights generally. 2. No consent, approval, order or authorization of any governmental body other than authorization of the Municipality and approval by the Minnesota Commissioner of Securities is required in connection with the valid execution and delivery by the Borrower of the Loan Agreement, Lease Assignment or Mortgage. 3. The execution and delivery by the Borrower of and the performance of his obligations under the Loan Agreement, Lease Assignment and Mortgage do not violate any provision of applicable law, or, to said counsel's knowledge, any agreement or instrument binding upon the Borrower. 4. To the best of said counsel's knowledge, there are no actions, suits or proceedings pending or threatened against the Borrower before any court, governmental department, board, commission, bureau, agency or instrumentality, domestic or foreign, which if determined adversely to the Borrower would have a material adverse effect on the financial condition, property or operations of the Borrower. EXHIBIT E The opinion of Faegre Benson, as bond counsel, shall be dated the date of the Closing, shall be addressed to the Municipality and the Bank and shall be to the effect that: 1. The City is a municipal corporation duly organized and existing under the Constitution and laws of the State of Minnesota and is authorized by the laws of the State of Minnesota, including Chapter 474, Minnesota Statutes, as amended, to issue the Bond and to loan the proceeds thereof to the Borrower to finance the Project. 2. The Bond Resolution has been duly adopted and remains in full force and effect. The Loan Agreement, the Assign- ment, Lease Assignment and the Mortgage have been duly and validly authorized, executed and delivered by the parties thereto, are in full force and effect and are valid and legally binding instruments of such parties enforceable in accordance with their terms, except to the extent limited by applicable laws affecting remedies and by bankruptcy, reorganization or other state or federal laws of general application relating to or affecting the enforcement of creditors' rights. 3. The Bond has been duly and validly authorized, executed and delivered by the City and is the valid and legally binding special obligation of the City in accordance with its terms, secured by and entitled to the benefits provided by the Loan Agreement, the Assignment, the Lease Assignment, the Bond Resolution and the Mortgage. 4. The Bond is not a general obligation or indebted- ness of the City but is payable solely from moneys pledged and assigned to the Bank under the Bond Resolution, including the loan repayments payable by the Borrower under the Loan Agreement. No taxes may be levied by the City to pay the principal of or interest on the Bond. 5. Interest on the Bond is exempt from federal income taxation under present laws and rulings, except as provided in Section 103(b) of the Internal Revenue Code of 1954 in the event the Bond is held by a "substantial user" of the Project or by a "related person as such terms are defined in Section 103(b) of the Code and is exempt from income taxation by the State of Minnesota (other than corporate franchise and bank excise taxes measured by income). The Bond is not an "arbitrage bond" under Section 103(c) of the Internal Revenue Code of 1954, as amended, and §1.103 -13, 1.103 -14 and 1.103 -15 of the Income Tax Regulations thereunder. 6. The Bond is exempt from registration requirements of the Securities Act of 1933. A RESOLUTION PROVIDING FOR THE ISSUANCE AND SALE OF REVENUE BOND PURSUANT TO CHAPTER 474, MINNESOTA STATUTES, TO PROVIDE FUNDS TO BE LOANED TO JOHN B. STANDAL FOR INDUSTRIAL DEVELOPMENT PROJECT BE IT RESOLVED by the City Council of the City of Hopkins, Minnesota, as follows: EXHIBIT A 1. Authority. The City is, by the Constitution and Laws of the State of Minnesota, including Chapter 474, Minnesota Statutes, as amended (the "Act authorized to issue and sell its revenue bonds for the purpose of financing the cost of construc- tion of authorized projects and to enter into contracts necessary or convenient in the exercise of the powers granted by the Act and to pledge revenues of the project and otherwise secure such bonds. 2. Authorization of Bond and Series of Bonds. The City Council hereby determines that it is necessary and expedient to authorize, and the City Council does hereby authorize, the issuance of revenue bonds of the City in the aggregate principal amount of Nine Hundred Thousand Dollars ($900,000) pursuant to the Act to provide money to be loaned to John B. Standal, an individual residing in Eden Prairie, Minnesota (the "Borrower to finance costs of acquiring, constructing and equipping a commercial building in the City (the "Project Building to be owned by the Borrower and leased to various tenants, together with necessary equipment (the "Project Equipment to be located permanently in and become a part of the Project Building or the site thereof (the "Project Site and necessary site improvements (collectively the "Project" as more fully defined in the Loan Agreement hereinafter mentioned). In order to provide financing for the Project, the City shall issue and sell its $900,000 City of Hopkins Commercial Development Revenue Bond (Standal Project) (the "Bond 3. Documents Presented. Forms of the following docu- ments relating to the Bond and the Project have been submitted to and examined by the City Council and are now on file in the office of the City Clerk: (a) Loan and Purchase Agreement (the "Loan Agree- ment"), dated as of February 1, 1982, by and among the City, the Borrower and the First National Bank of Hopkins (the "Bank whereby, among other things, the City agrees to sell and the Bank agrees to purchase the Bond, the City agrees to make a loan to the Borrower of the proceeds of the sale of the Bond and the Borrower covenants to complete the Project and to pay amounts sufficient to provide for the prompt payment of the principal of and interest on the Bond; (b) Combination Mortgage, Security Agreement and Fixture Financing Statement (the "Mortgage dated as of February 1, 1982, by and between the Borrower and the Bank, whereby the Borrower mortgages the Project Site, the Project Building and the Project Equipment (the "Project Facilities as security for the Bond (this document not to be executed by the City); and (c) Loan Agreement Assignment (the "Assignment dated as of February 1, 1982, whereby the City assigns to the Bank all of its interest in the Loan and Purchase Agreement and Loan Repayments of the Borrower thereunder (except its rights under Sections 5.02, 7.01, 8.04 and 8.05), for the purpose of securing the Bond; and (d) Assignment of Rents and Leases (the "Lease Assignment dated as of February 1, 1982, from the Borrower to the Bank whereby the Borrower assigns the rents and leases of the Project to the Bank as security for the Bond (this document not to be executed by the City). 4. Findings. It is hereby found, determined and declared that: (a) The Project, as described in the Loan Agree- ment, constitutes a project authorized by and described in Section 474.02, Subd. la of the Act. (b) The purpose of the Project is and the effect thereof will be to promote the public welfare by: preventing the emergence of blighted and marginal lands and areas of chronic unemployment; preventing economic deterioration; the development of sound industry and commerce to use the available resources of the community, in order to retain the benefit of the community's existing investment in educational and public service facilities; halting the movement of talented, educated personnel to other areas and thus preserving the economic and human resources needed as a base for providing governmental services and facilities; adding to the tax base of the City and the county and school district in which the Project Facilities will be located. (c) The Project has been approved by preliminary resolution of the Council duly adopted April 15, 1980 after a public hearing thereon, duly called and held and has been approved by the Commissioner of Securities of the State of Minnesota as tending to further the purposes and policies of the Act. -2- (d) The issuance and sale of the Bond, the execu- tion and delivery of the Loan Agreement and the Assign- ment and the performance of all covenants and agreements of the City contained in the Bond, the Loan Agreement and the Assignment and of all other acts and things required under the Constitution and laws of the State of Minnesota to make the Bond, Loan Agreement and the Assignment valid and binding obligations of the City in accordance with their terms, are authorized by the Act. (e) There is no litigation pending or, to the best of its knowledge threatened, against the City relating to the Project or to the Bond or Loan Agree- ment, or questioning the organization of the City or its power or authority to issue the Bond or execute and deliver the Loan Agreement and the Assignment. (f) The execution and delivery of and performance of the City's obligations under the Bond, the Loan Agreement and the Assignment have been fully authorized by all requisite action and do not and will not violate any law, any provision of the City Charter, any order of any court or other agency of government, or any indenture, agreement or other instrument to which the City is a party or by which it or any of its property is bound, or be in conflict with, result in a breach of, or constitute (with due notice or lapse of time or both) a default under any such indenture, agreement or other instrument. (g) The Loan Agreement provides for payments by the Borrower to the Holder of the Bond for the account of the City of such amounts as will be sufficient to pay the principal of and interest on the Bond when due. No reserve funds are deemed necessary for this purpose. The Loan Agreement obligates the Borrower to provide for the operation and maintenance of the Project Facil- ities, including adequate insurance, taxes and special assessments. (h) Under the provisions of Section 474.10 of the Act, and the Bond shall recite that, the Bond is not to be payable from nor charged upon any funds other than amounts payable by the Borrower pursuant to the Loan Agreement which are pledged to the payment thereof, and, in event of default, moneys derived from foreclo- sure or other enforcement of the Lease Assignment or the Mortgage; the City is not subject to any liability thereon; no Holder of the Bond shall ever have the right to compel the exercise of the taxing power of the City to pay the Bond or the interest thereon, nor to enforce payment thereof against any property of the City; the Bond shall not constitute a charge, lien or encumbrance, legal or equitable, upon any property of -3- the City; and such Bond does not constitute an indebt- edness of the City within the meaning of any constitu- tional, statutory or charter limitation. (i) No member of the City Council (i) has a direct or indirect interest in the Project, the Loan Agreement, the Lease Assignment, the Assignment or Bond, (ii) owns any capital stock of or other interest in the Project or the Bank, (iii) will be involved in supervising the completion of the Project on behalf of the Borrower, or (v) will receive any commission, bonus or other remuneration for or in respect of the Project, the Loan Agreement or the Bond. 5. Approval and Execution of Documents. The forms of Mortgage, Loan Agreement, the Lease Assignment, and Assignment referred to in paragraph 3 are approved. The Loan Agreement and Assignment shall be executed in the name and on behalf of the City by the Mayor and the City Manager, in substantially the form on file, but with all such changes therein, not inconsistent with the Act or other law, as may be approved by the Mayor, City Manager or City Attorney, which approval shall be conclusively evidenced by the execution thereof. The Mortgage and the Lease Assignment may contain such revisions as may be approved by the Bank and the Borrower. 6. Approval of Terms and Sale of Bond. The City shall proceed forthwith to issue its City of Hopkins Commercial Develop- ment Revenue Bond (Standal Project), in the authorized principal amount of $900,000 substantially in the form, maturing, bearing interest, payable in the installments and otherwise containing the provisions set forth in the form of Bond attached hereto as Exhibit 1, which terms and provisions are hereby approved and incorporated in this Bond Resolution and made a part hereof. A single Bond, substantially in the form of Exhibit 1 to this Bond Resolution, shall be issued and delivered to the Bank in the authorized principal amount of $900,000 and as auth- orized by the Act, principal of and interest on the Bond shall be payable at the office of the Bank in Hopkins, Minnesota. The proposal of the Bank to purchase such Bond at a price of $900,000 (100% of par value) is hereby found and determined to be reasonable and is hereby accepted. Pursuant to the Loan Agreement the Bank has agreed to pay the purchase price of the Bond to provide funds to be loaned by the City to the Borrower to pay Project Costs, as defined in the Loan Agreement, then due or reimburse the Borrower for Project Costs paid by the Borrower. 7. Execution, Delivery and Endorsement of Bond. The Bond may be in typewritten or printed form and shall be executed by the manual signatures of the Mayor and City Manager and the official seal of the City shall be affixed thereto. When so prepared and executed, the Bond shall be delivered to the Bank upon payment of all of the purchase price, and upon receipt of -4- the signed legal opinion of Faegre Benson, of Minneapolis, Minnesota, bond counsel, pursuant to the Loan Agreement. The Bond shall contain a recital that it is issued pursuant to the Act, and such recital shall be conclusive evidence of the validity and regularity of the issuance thereof. 8. Registration Records. The City Clerk, as bond registrar, shall keep a bond register in which the City shall provide for the registration of the Bond and for transfers of the Bond. The principal of and interest on the Bond shall be paid to the Bank for the account of the Holder entitled thereto in Federal or other immediately available funds. The City Clerk is autho- rized and directed to deliver a certified copy of this Bond Resolution to the County Auditor of Hennepin County, together with such other information as the County Auditor may require, and obtain the certificate of the County Auditor as to entry of the Bond on his bond register as required by the Act and Section 475.63, Minnesota Statutes. 9. Mutilated, Lost, Stolen or Destroyed Bond. If the Bond is mutilated, lost, stolen or destroyed, the City may execute and deliver to the Holder a new Bond of like amount, date, number and tenor as that mutilated, lost, stolen or destroyed; provided that, in the case of mutilation, the mutilated Bond shall first be surrendered to the City, and in the case of a lost, stolen or destroyed Bond, there shall be first furnished to the City and the Borrower evidence of such loss, theft or destruction satis- factory to the City and the Borrower, together with indemnity satisfactory to them. The City and Borrower may charge the Holder with their reasonable fees and expenses in replacing any mutilated, lost, stolen or destroyed Bond. 10. Transfer of Bond; Person Treated as Holder. The Bond shall be transferable by the Owner on the bond register of the City, upon presentation of the Bond for notation of such transfer thereon at the office of the City Clerk, as bond regis- trar, accompanied by a written instrument of transfer in form satisfactory to the City Clerk and the City Attorney, duly exe- cuted by the Owner or its attorney duly authorized in writing. The Owner seeking to transfer ownership of the Bond shall also give written notice thereof to the Borrower. The Bond shall continue to be subject to successive transfers at the option of the Owner of the Bond. No service charge shall be made for any such transfer, but the City Clerk may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith. The person in whose name the Bond shall be issued or, if transferred, shall be registered from time to time shall be deemed and regarded as the absolute Holder thereof for all purposes, and payment of or on account of the principal of and interest on the Bond shall be made only to or upon the order of the Holder thereof, or its attorney duly authorized in writing, and neither the City, the City Clerk, the Borrower, nor the Bank shall be affected by any notice to the contrary. All such payments shall be valid and effectual to satisfy and dis- -5- charge the liability upon the Bond to the extent of the sum or sums so paid. The Bond shall be initially registered in the name of the Bank. 11. Amendments, Changes and Modifications to Loan Agreement, Assignment and Bond Resolution. Except pursuant to Section 9.03 of the Loan Agreement, the City shall not enter into or make any change, modification, alteration or termination of the Loan Agreement, Assignment or this Bond Resolution. 12. Pledge to Holder. Pursuant to the Assignment, the City shall pledge and assign to the Bank and its successor Holders of the Bond all interest of the City in the revenues of the Project and the Project Facilities, including all Loan Repayments to be made by the Borrower under the Loan Agreement and moneys derived from enforcement of the Lease Assignment and the Mortgage. All collections of moneys by the City in any proceeding for enforcement of the obligations of the Borrower under the Loan Agreement shall be received, held and applied by the City for the benefit of the Holder of the Bond. 13. Covenants with Holders; Enforceability. All pro- visions of the Bond and of this Bond Resolution and all repre- sentations and undertakings by the City in the Loan Agreement are hereby declared to be covenants between the City and the Bank and its successor Holders of the Bond and shall be enforceable by the Bank or any Holder in a proceeding brought for that purpose. 14. Definitions and Interpretation. Terms not other- wise defined in this Bond Resolution but defined in the Loan Agreement shall have the same meanings in this Bond Resolution and shall be interpreted herein as provided therein. Notices may be given as provided in Section 9.01 of the Loan Agreement. In case any provision of this Bond Resolution is for any reason illegal or invalid or inoperable, such illegality or invalidity or inoperability shall not affect the remaining provisions of this Bond Resolution, which shall be construed or enforced as if such illegal or invalid or inoperable provision were not con- tained herein. 15. Certifications. The Mayor, City Manager and other officers of the City are authorized and directed to prepare and furnish to Faegre Benson, bond counsel, to the Borrower, to the Bank and to counsel for the Borrower and the Bank, certified copies of all proceedings and records of the City relating to the Project and the Bond, and such other affidavits and certificates as may be required to show the facts appearing from the books and records in the officers' custody and control or as otherwise known to them; and all such certified copies, certificates and affidavits, including any heretofore furnished, shall constitute representations of the City as to the truth of all statements contained therein. Attest: City Manager Signed: Mayor