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Imp. Proj. #554 EDA GNZ Y O� REQUEST FOR ACTION 2•` �� 41/e v,1041 Originating Department Approved for Agenda Agenda Section City Manager EDA 10-14-96 Sarah Bellefuil Item No. By: Community Development Specialist B3,. 4 RESOLUTION APPROVING PLANS A SPECIFICATIONS FOR REHABILITATION OF TASKS UNLIMITED PROPERTY AT 3579/3581 INDEPENDENCE AVENUE NORTH AND AMENDMENT OF LOAN AGREEMENT (IMPROVEMENT PROJECT NO. 554) At the September 9 New Hope Economic Development Authority meeting, the EDA approved a loan to Tasks Unlimited Lodges to purchase 3579/3581 Independence Avenue North. Tasks Unlimited closed on the property on September 20 and would like to remodel the building during the next few months. Tasks Unlimited will move clients into the site in December. During the October 14 EDA meeting, staff will present the architectural drawings of the proposed remodeling of the building. The plans are attached for your review. The twin home located at 3579/3581 Independence was built in 1981. Currently each unit has 1,440 square feet of living space including three bedrooms, two bathrooms, a kitchen, dining room, living room, laundry room, and two-car attached garage. Because residents of the twin home do not own cars, Tasks Unlimited would like to convert the northern garage into a recreation room. Changes to the northern garage include placing a bay window where the garage door was and installing a sliding glass door and closet at the west wall of the recreation room. The southern garage will remain to house a single van which is used to take residents to work, shopping, etc. The southern garage door will be extended four feet to accommodate a large van. Additional changes include converting an old den located in the lower level of each house into additional bedrooms and building a hall in the southern garage to link the two units. No changes will be made to the upper levels of the twin home. The New Hope Building Official reviewed the plans and stated that one problem with the proposed remodeling is the loss of the garage on the northern unit. This is a problem because a single car garage is required for all housing units in the City. Staff feels that the requirement can be met because MOTION BY '116241N rt SECOND BY (Vell-A/45 L9 6 Review: Administration: Finance: RFA-001 Request for Action Page 2 10-14-96 the two-car garage on the southern unit will remain. In addition, an amendment to the agreement between Tasks Unlimited and the City will include the requirement that the northern garage must be converted back to a two-car garage if the property is sold. A second requirement will be that a maximum of two vehicles will be allowed to park overnight on the site while the property is owned by Tasks Unlimited. The Building Official is also requesting additional information, including the following, which Tasks Unlimited has agreed to provide. • New bedroom escape window sizes. • A 1% hour rated door assembly at the property line door linking the units. The door should have an electric"hold-open" assembly that is connected to the smoke detectors in each unit. • The new exterior materials such as siding, brick, and shingles, should match the existing exterior materials. The City Attorney has prepared the enclosed resolution approving the plans and specifications for the remodeling and to amend the loan agreement. • Staff recommend approval of the resolution. CORRICK & SONDRALL, P.A. STEVEN A.SONDRALL ATTORNEYS AT LAW CEO_____AMr MICHAEL R.LAFLEUR MARTIN P.MALECHA Edinburgh Executive Office Plaza SHARON D.DERBY WILLIAM C.STRAIT 8525 Edinbrook Crossing Suite #203 Brooklyn Park, Minnesota 55443 TELEPHONE(612)425-5671 FAX(612)425-5867 October 9 , 1996 Daniel J . Donahue New Hope EDA 4401 Xylon Avenue North New Hope, MN 55428 RE: Tasks Unlimited Loan Our File No. 99 . 11169 Dear Dan : - The closing of the purchase of the twinhome at 3579/3581 by Tasks 0 Unlimited Lodges was completed on September 20. The EDA loaned Tasks Unlimited $90,000 for the purchase, receiving a Mortgage in return. The Loan terms included a requirement of EDA approval of the rehabilitation plans of Tasks Unlimited for the property. Tasks Unlimited submitted their plans, which call for the conversion of the two car garage on one side of the twinhome to a great room. — S a The enclosed Resolution approves those plans. The approval includes an amendment to the Loan Agreement specifying that Tasks Unlimited is to convert the great room back to a garage prior to selling the property, and also to limit overnight parking or _ storage on the property to two motor vehicles. In addition , to ensure the City can enforce these conversion and parking requirements even if the loan is paid off , a short Declaration of ' ll Covenants (to be signed only by Tasks Unlimited) is also attached. If the EDA approves the Plans as submitted by Tasks Unlimited, the enclosed Resolution should be passed at the October 14 meeting . Be sure to call if you have any questions. Sincerely, .m. , :CHA Martin P. Malecha m3w ----,--6E05nwisc cc : Valerie Leone, City Clerk (w/enc) Kirk McDonald, Management Assistant (w/enc) Sarah Bellefuil , Administrative Assistant (w/enc) Steven A. Sondrall , City Attorney EDA RESOLUTION NO. 96- RESOLUTION APPROVING PLANS AND SPECIFICATIONS FOR REHABILITATION OF TASKS UNLIMITED PROPERTY AT 3579/3581 INDEPENDENCE AVENUE NORTH AND AMENDMENT OF LOAN AGREEMENT WHEREAS, the Economic Development Authority in and for the City of New Hope (EDA) has a goal of encouraging special needs housing in the City of New Hope (City) , and WHEREAS, the EDA approved a $90,000 loan. (the Loan) to Tasks Unlimited Lodges, a Minnesota non-profit corporation (Tasks Unlimited) , to purchase a twinhome at. 3579/3581 Independence Avenue North (the Loan Property) for use of the Loan Property as a peer supported group residence for adult persons with persistent mental illness by EDA Resolution 96-16, and WHEREAS, the Loan was completed at the closing of the purchase of the Loan Property by Tasks Unlimited on September 20, 1996, and WHEREAS, the Loan was conditioned upon the approval by the EDA of the plans and specifications of Tasks Unlimited for the rehabilitation of the Loan Property, and WHEREAS, the EDA has reviewed the Plans and Specifications dated September 23 , 1996 (the Plans) submitted by Tasks Unlimited, which Plans call for the conversion of one of the two car garages on the Loan Property to a great room, and WHEREAS, Tasks Unlimited is willing to agree to reconvert the great room back to a two car garage upon sale of the Loan Property, and to limit to two motor vehicles any overnight parking and storage on the Loan Property, and WHEREAS, the Amendment to Loan Agreement attached hereto as Exhibit A amends the original Loan Agreement to add the great room reconversion requirement and the parking limitation as additional covenants of Tasks Unlimited, and WHEREAS, the Declaration of Covenants attached hereto as Exhibit B allows the EDA to enforce the great room reconversion requirement and the parking limitation . NOW, THEREFORE, BE IT RESOLVED by the Economic Development Authority in and for the City of New Hope as follows: 1 . That the above recitals are incorporated herein by reference. 2. That the Plans and Specifications dated 1996 submitted by Tasks Unlimited for the rehabilitation of the Loan Property are approved, subject to execution by Tasks Unlimited of the Amendment of Loan Agreement and the Declaration of Covenants attached hereto as Exhibits A and B, respectively. 3 . That the Amendment of Loan Agreement attached hereto as Exhibit A is approved, and the President and Executive Director are authorized and directed to sign the same on behalf of the EDA. Adopted by the Economic Development Authority in and for the City of New Hope this 14th day of October, 1996 . Edw: J . Erickson , President Attest : Daniel J . Donahue, Executive Director AMENDMENT TO LOAN AGREEMENT This is an amendment made this day of , 1996 ( hereinafter referred to as the Amendment ) to that certain Loan Agreement dated September 20 , 1996 (hereinafter referred to as the Loan Agreement ) between TASKS UNLIMITED LODGES, a Minnesota non- profit corporation (hereinafter referred to as "Borrower" ) , and ECONOMIC DEVELOPMENT AUTHORITY IN AND FOR THE CITY OF NEW HOPE, a Minnesota municipal corporation (hereinafter referred to as "Lender" ) . WHEREAS, Lender has made a loan of $90,000.00 to Borrower to aid Borrower in the purchase of certain real estate (hereinafter referred to as the Loan Property) identified in more detail in the Loan Agreement , said loan having been secured by a Mortgage dated September 20 , 1996 (hereinafter referred to as the Mortgage) , and WHEREAS, the Loan Agreement requires Borrower to rehabilitate the Loan Property for occupation and use as a peer supported group residence for adult persons with persistent mental illness, with the further requirement that the plans and specifications for said rehabilitation of the Loan Property be approved by the Lender in advance of the commencement of such rehabilitation , and WHEREAS, Borrower has submitted certain rehabilitation plans and specifications dated September 23 , 1996 (hereinafter referred to as the Plans) to Lender for approval , and WHEREAS, the Plans call for the temporary conversion of one double garage on the Loan Property to a great room, to be reconverted back to a garage upon the sale of the Loan Property by Borrower, and WHEREAS, in order to approve the Plans, Borrower requires the Loan Agreement be amended to include as additional affirmative covenants of Borrower a limitation on the number of motor vehicles located overnight on the property, as well as the reconversion of the great room back to a two car garage prior to the sale of the Loan Property by Borrower. NOW, THEREFORE, in consideration of the mutual covenants herein contained, it is hereby agreed as follows : 1 . Amendment of Loan Agreement . This Amendment shall amend the terms of the Loan Agreement , and if there is any conflict between the terms of the Amendment and the Loan Agreement , the terms of the Amendment shall control . 2 . Additional Affirmative Covenants . Paragraph 3 of the 1 EXHIBIT A s Loan Agreement shall include the following as additional affirmative covenants , the violation of which will be a default giving Lender a legally sufficient basis to foreclose the Mortgage : ( 1 ) Not allow more than two motor vehicles to be parked or stored overnight on the Loan Property ; ( k ) Reconvert the great room on the Loan Property back to a two car garage prior to the sale of the Loan Property ; (No change is intended to any other language in Paragraph 3 of the Loan Agreement ) . 3 . Covenants and Restrictions. Borrower shall provide Lender with a Declaration of Covenants in recordable form and meeting Lender' s approval , which Declaration of Covenants shall include the additional affirmative covenants set forth in paragraph 2 above , and allow for the enforcement of said covenants by Lender . IN TESTIMONY WHEREOF, each of the parties hereto have caused these presents to be duly executed as of the day and year first above written . TASKS UNLIMITED LODGES, a Minnesota non-profit corporation By: Its By: Its ECONOMIC DEVELOPMENT AUTHORITY IN AND FOR THE CITY OF NEW HOPE, a Minnesota municipal corporation By: Its President By: Its Executive Director tas k sa m d.a gr 2 DECLARATION OF COVENANTS This declaration is made this day of , 1996 , by TASKS UNLIMITED LODGES, a Minnesota non-profit corporation , hereinafter referred to as the Declarant . WHEREAS, the Declarant is the fee owner of the following legally described property located in Hennepin County, Minnesota: Lot 15, Block 1 , New Hope Highlands 2nd Addition, and Lot 16, Block 1 , New Hope Highlands 2nd Addition, (hereinafter the Property) , and WHEREAS, the Property is improved with a twinhome, with one of the two dwelling units of the twinhome located on each of Lot 15 and Lot 16 of the Property, and WHEREAS, Declarant plans to rehabilitate the Property, which rehabilitation will include the conversion of the two car garage on Lot 16 of the Property to a great room, and WHEREAS, Declarant ' s rehabilitation plans for the Property must be approved by the Economic Development Authority in and for the City of New Hope (the EDA) , and WHEREAS, the EDA is willing to approve Declarant ' s 1 EXHIBIT B • rehabilitation plans conditioned upon Declarant agreeing to limit the overnight parking or storage of motor vehicles on the Property to two such motor vehicles , and to convert the great room on Lot 16 back to a garage prior to the sale of the Property or either of Lot 15 or Lot 16 of the Property , and WHEREAS, the purpose of the Declaration is to provide a method for enforcement of these conditions by the EDA. NOW, THEREFORE, the Declarant hereby declares that all of the Property shall be held , transferred, sold , conveyed and occupied subject to the following covenants, conditions and restrictions which are of the Property, and which shall run with the Property and be binding on all parties that have a right , title, or interest in the Property or any part thereof , their heirs, successors and assigns, and shall inure to the benefit of each owner thereof . 1 . Incorporation of Recitals. The above recitals are incorporated herein by this reference. 2 . Limitation on Overnight Parking . No more than two motor vehicles shall be parked or stored overnight on the Property, whether said motor vehicles shall be located in the two car garage of Lot 15 of the Property or parked on the driveway of either Lot 15 or Lot 16 of the Property . 3 . Reconversion of Garage . The two car garage located on 2 Lot 16 of the Property , which shall be converted to a great room as part of Declarant ' s rehabilitation of the Property, shall be reconverted back to a two car garage prior to the sale of the Property or the sale of either of Lot 15 or Lot 16 of the Property , or if the Property or either of Lot 15 or Lot 16 of the Property is no longer used as a peer supported group residence for adult persons with persistent mental illness . 4. Covenants Run With Land. These restrictions and covenants are to run with the land and shall be binding on all parties and all persons claiming under them. 5 . Enforcement . Enforcement of these covenants shall be by proceeding at law or in equity against any person or persons violating or attempting to violate any of the covenants and restrictions, either to restrain violation or to recover damages , the EDA specifically having the right to seek enforcement of these covenants and restrictions, and in the event such party seeking such enforcement shall be upheld by the courts, the defendant or defendants in such case shall be liable for the reasonable attorney' s fees sustained by the plaintiff , together with court costs of such action, and the same shall , to the extent permitted by law, constitute a lien upon the property of such defendant . 6 . Severability . Each of the provisions hereof shall be 3 deemed independent of the others , and invalidation of any one of these covenants , or any part or parts thereof , by judgments or court order , shall in no way affect any of the other provisions hereof which shall remain in full force and effect . IN WITNESS WHEREOF, the Declarant hereto has executed this declaration on the day and year indicated below. TASKS UNLIMITED LODGES, a Minnesota Non-Profit Corporation By Its By Its STATE OF MINNESOTA ) ) ss. COUNTY OF HENNEPIN ) The foregoing was acknowledged before me, a Notary Public within and for said County, this day of 1996 by and the and , respectively, of TASKS UNLIMITED LODGES, a Minnesota non-profit corporation, on behalf of said non- profit corporation . Notary Public 4 THIS INSTRUMENT DRAFTED BY: CORRICK & SONDRALL, P.A. 8525 Edinbrook Crossing , #203 Brooklyn Park , MN 55443 ( 612) 425-5671 c:\wp51\cnh\tasks.cov 5 • • +ice 4i-0'. \ a( ', JJ • 3389 .0t 10- , ARKWA Y r-� C` 1-C' 433 • ?)St N•RIrl �, r °'. 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La ;,- :I..:Lii: Ji 1.,) 4 • •- '---Tiii. 1::. ;.! :11:.*: x . .. L4 �+ .r2 • i I 11 A s i )' t r ii. • • flaw t : 14 - , i , F h. : - DOi El ” IE1- Cl) lig ;{ i� li- - 1 ". 1 AI MEMO TO: SARAH FROM: DOUG DATE: SEPT. 19, 1996 RE: 3579-81 Independence Avenue Property I have looked at the Timothy Gaetz, MA, design for a small garage addition and some interior remodelling, per your request. In concept, There are no major problems with the plan. When the time comes to submit plans for a building permit, I will expect to see more details, including the new bedroom "Escape Window" sizes and a 1-1/2 hour rated door assembly at the property line etc. Electric hold-opens should be included for a "single dwelling" concept (tied to smoke detectors on each side of the lot line). Conversely, the "single dwelling" use tells me that the property line should be removed between the existing lots, eliminating the north lot garage nonconformity and the rated wall issue. Cc: McDonald file EDA 2 � REQUEST FOR ACTION , �`k, NpQ Originating Department Approved for Agenda Agenda Section City Manager EDA 9-9-96 Sarah Bellefuil Item No. By: Community Development Specialist By. 5 RESOLUTION APPROVING LOAN TASKS UNLIMITED LODGES TO PURCHASE 3579/3581 INDEPENDENCE AVENU NORTH (IMPROVEMENT PROJECT NO. 554) At the May 1ti Economic Development Authority meeting, the EDA approved Tasks Unlimited as the owner and service provider for a special needs rental housing project to be located in New Hope. On June 24, the EDA passed a resolution approving a Letter of Understanding with Tasks Unlimited for a loan to purchase housing in New Hope for persons with serious or persistent mental illness. Tasks Unlimited would also provide support services to the residents. At the July 22 EDA meeting, the EDA approved a motion allowing Tasks Unlimited to sign a purchase agreement for the duplex property at 3579/3581 Independence Avenue North. After the July 22 motion was approved, Tasks Unlimited signed a purchase agreement and are scheduled to close on the property on September 20, 1996. Since the July 22 meeting, Assistant City Attorney Marty Malecha, Tasks Unlimited, and City staff have been finalizing a loan document between the City and Tasks Unlimited. The attached resolution approves the loan to Tasks Unlimited Lodges. The loan provided by the City will be a $90,000 zero interest, 30-year first mortgage that will be used for the purchase of the property. If the loan is defaulted, the EDA can declare a default, begin charging interest 2% over prime, and foreclose on the property. CO-OP NW Community Revitalization Corporation will be supplying a $90,000 second mortgage that will be used toward the purchase and remodeling of the property. The second mortgage is provided through 1995 Federal HOME funds that have been designated specifically for special needs rental housing to be located in New Hope. MOTION BY — SECOND BY 7� 'i "'' To: of ,/J � 9 �y Q, Review: Administration: Finance: RFA-001 Request for Action Page 2 9-9-96 The house that the EDA approved at the July 22 meeting is located at 3579/3581 Independence Avenue North. The duplex was built in 1981 and is 1440 square feet per side. Each unit contains three bedrooms, two bathrooms, a kitchen, living room, dining room, den, laundry room, and two-car garage. Only one of the two-car garages is needed by Tasks Unlimited, the other garage will probably be converted into a recreation room. Tasks Unlimited will be presenting architectural drawings of the interior remodeling at the September 23, EDA meeting. Staff recommends approval of the resolution. SEP-05-96 THU 10: 15 P. 02/04 COluucK & SONDRALI.. P.A. srevo1 A.SONORA.A krrORNEYS AT LAW MAL ANNITANT MIC,u HAELRTIN PNALCLAPLSUR CHA Edinburgh Executive Office Plaza °k DOEM mAJAM c sraAIT 825 Edinbrook Crossing Suite#203 Rrnnklyn Park. Minnesota 55443 TELEPHONE(612)ae,.Ns I TAX MR)4 NIN? September 5, 1996 Daniel J . Donahue New Hope EDA 4401 Xylon Avenue North New Hope. MN 55428 RE: Tasks Unlimited Loan Our File No. 99. 11169 Dear Dan : Tasks Unlimited lodges has now located a suitable site in New Hope for its group living facility. The property is 3579/2581 Independence Avenue North. A closing on the purchase is scheduled for September 20. The EDA has committed to help Tasks Unlimited . Lodges complete the purchase by providing a 30 year loan of $90,000 at zero interest in the form of a first mortgage . The enclosed Resolution approves the loan and the attached loan documents. Consistent with the loan commitment , the loan documents call for a no interest loan for 30 years, requiring principal only payments. If a condition of default exists (including the usual mortgage conditions plus requirements of rehabilitating the property and using it as a peer supported group residence) , the EDA can declare a default , commence charging interest at 2% over prime, and foreclose the mortgage. This mortgage shall be the first priority encumbrance on the property. If the EDA approves this loan, the enclosed Resolution should be passed at the September 9 meeting. Be sure to call if you have any questions. Sincerely, *01) ))/61A)t-- martin P. Malecha m3t cc: Valerie Leone, City Clerk (w/enc) Kirk McDonald, Management Assistant (w/enc) Sarah Bellefuil , Administrative Assistant (w/enc) Steven A. Sondrall , City Attorney • EDA RESOLUTION NO. 96- RESOLUTION APPROVING LOAN TO TASKS UNLIMITED LODGES TO PURCHASE 3581 INDEPENDENCE AVENUE NORTH WHEREAS, the Economic Development Authority in and for the City of New Hope (EDA) has a goal of encouraging special needs housing in the City of New Hope (City) , and WHEREAS, CO-OP Northwest Community Revitalization Corporation (CO-OP Northwest ) has received 1995 Federal HOME Investment Partnership Program funds which member cities, including the City of New Hope, can use toward their affordable housing goals, and WHEREAS, $90,000 of the 1995 Federal HOME funds has been designated for special needs rental housing in the City, and WHEREAS, the EDA previously approved Tasks Unlimited Lodges, a Minnesota non-profit corporation, (Tasks Unlimited) as the owner and service provider for special needs rental housing to be located in the City, and WHEREAS, the EDA then entered into a Letter of Understanding with Tasks Unlimited which includes a commitment by the EDA to provide a 30 year no interest $90,000.00 loan (the Loan) as part of the financing to help Tasks Unlimited purchase suitable housing in the City for use as a peer supported group living facility for six to eight adults with serious and persistent mental illness, and WHEREAS, Tasks Unlimited has entered into an agreement to purchase certain real estate known as 3581 Independence Avenue North in the City for its group living facility, and now looks to the EDA for the Loan to enable Task Unlimited to purchase said real estate, and WHEREAS, the Loan will be a first mortgage secured by said real estate, and supplemented by a $90,000 loan to Tasks Unlimited from the 1995 CO-OP Northwest 1995 Federal HOME funds allocated to the City, and WHEREAS, the details of the Loan are as set forth in the Loan Agreement , the Loan Note, and the Mortgage, attached hereto as Exhibits A, B, and C, respectively, and WHEREAS, entering into the Loan is in the best interests of the City and its residents, and will further the general plan of economic development . NOW, THEREFORE, BE IT RESOLVED by the Economic Development Authority in and for the City of New Hope as follows: 1 . That the above recitals are incorporated herein by reference. 2 . That the Loan of $90,000.00 to Tasks Unlimited Lodges as set forth in the Loan Agreement , the Loan Note, and the Mortgage attached hereto as Exhibits A, B, and C, is approved. 3. That the President and Executive Director are authorized and directed to sign the Loan Agreement on behalf of the EDA. 4. That the EDA staff is authorized and directed to take such other actions as are necessary and advisable to complete the Loan . Adopted by the Economic Development Authority in and for the City of New Hope this 9th day of September, 1996. Edw. J . Erickson , President Attest : Daniel J . Donahue, Executive Director - - - NORTHWOOD PARK 4o u; a1:15 � I 1 Al' N. -3 cp; 4019 : • 3854 T 4r d- �" 'ARKWg;Rep y �" off, S •.- I 3a81 N•- - . 4001 e- • 8TH Ir • 9 - qi. v :' . 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WITNESSETH : WHEREAS, Borrower has applied to Lender for a real estate mortgage loan on certain real estate as set forth on Exhibit A ( the "Loan Property" ) , in the principal amount of $90 , 000. 00 (the "Loan Amount " ) ; and WHEREAS, Borrower has issued the following security documents : ( a) Note of even date herewith made by Borrower and payable to the order of Lender in the original principal amount of $90,000.00 ( "Loan Note" or "Note" ) . (b) Mortgage securing the Loan Note in the amount of $90,000 .00 ( "Loan Mortgage" or "Mortgage" ) of even date herewith , executed by Borrower , as Mortgagor , in favor of Lender , as Mortgagee, covering property therein described situated in Hennepin County, Minnesota ( the "Loan Property" ) . ( c ) A Loan Agreement executed by the Borrower to the Lender . NOW, THEREFORE , in consideration of the mutual covenants hereinafter contained, it is hereby agreed as follows: 1 . Amount of Loan . Borrower agrees to take and Lender agrees to make a loan in the principal amount of $90,000.00 ( hereinafter called the "Loan" ) to be advanced as hereinafter provided , said Loan to be evidenced by the Loan Note and secured by the Loan Mortgage and any other security documents required under this Loan Agreement . The terms and conditions of the Loan Note, the Loan Mortgage and any other instrument required under this Agreement are herebyexpressly incorporated herein by reference and made a part hereo . 2 . Documents to be Delivered . Borrower covenants and agrees to immediately without expense to Lender cause the compliance with the following conditions , such conditions being hereby made a condition precedent to Lender ' s obligation to make any advance of the Loan : ( a ) Note . Deliver to Lender the Loan Note . EXHIBIT A ( b ) Mortgage . Deliver to Lender the Loan Mortgage together with evidence that the Mortgage has been duly filed for record . ( c ) Title Insurance Policy . Deliver to Lender a Mortgagee ' s Title Policy , hereinafter called "Title Policy" , from a reputable title insurance company , issued to Lender in the amount of $90 , 000 . 00 with respect to the Loan Mortgage and insuring that the Mortgage is a lien on the Loan Property to the extent it purports to be free and clear of mechanic ' s liens , materialmen ' s liens , taxes , special assessments , rights of parties in possession and questions of survey and subject only to exceptions specifically approved in writing by Lender . ( d ) Corporate Existence. Deliver to Lender evidence satisfactory to Lender that Borrower is duly organized and validly existing under the laws of the State of Minnesota; that the execution of this Agreement , the Note , the Mortgage and any other instrument required under this Agreement have been duly authorized by all necessary corporate action ; and that this Agreement , the Note , the Mortgage and any other document required under this Agreement have been duly executed and delivered and are the legal , valid and binding obligation of Borrower , enforceable in accordance with their terms, and containing such other resolutions and certifications as Lender may require. ( e ) Insurance . Deliver to Lender a certificate or policy for all insurance required, under the terms hereof or of the Mortgage, to be maintained by Borrower . 3 . Affirmative Covenants. The Borrower covenants and agrees that it will , until the borrowing hereunder and thereafter , so long as any indebtedness remains outstanding under this Agreement : (a) Furnish to Lender : ( ii ) Such information as required by the terms and conditions of this Agreement and all other documents or instruments of security referred to in this Agreement ; ( iii ) Promptly and in a form satisfactory to the Lender , such other information as Lender may reasonably request from time to time ; ( b ) Repay and discharge all taxes and other governmental charges and all contractual obligations calling for the payment of money before the same shall become overdue , unless to the extent only that such payment is being contested in good faith . 2 • ( c ) Pay all charges required by local , state and federal governments for the maintenance and operation of the Loan Property . ( d ) Maintain insurance coverage on its physical assets and against other business risks in such amounts and of such types as are customarily carried by entities similar in size and nature , and in the event of acquisition of additional property , real or personal , or of incurrence of additional risks of any nature, increase such insurance coverage in such manner and to such extent as prudent business judgment and present practice would dictate ; and in the case of all policies covering property mortgaged or pledged to Lender or property in which Lender shall have a security interest of any kind whatsoever , other than those policies protecting against casualty liabilities to strangers, all such insurance policies shall provide that the loss payable thereunder shall be payable to the Borrower and Lender as their respective interests may appear , all said policies or copies thereof , including all endorsements thereon and those required hereunder , to be deposited with Lender. (e ) Permit the Lender , through its authorized attorneys, accountants and representatives, to examine the Borrower' s books , accounts , records , ledgers and assets of every kind and description at all reasonable times upon oral or written request of Lender . ( f ) Promptly notify the Lender of any condition or event which constitutes , or with the running of time and/or the giving of notice would constitute default under this Agreement , and promptly inform the Lender of any materially adverse change in Borrower ' s financial condition . (g) Execute and deliver to the Lender at any time or times, assignments or supplemental assignments and such other and further instruments of assurance as the Lender may request and deem necessary in order to carry into effect the full intent and purpose of this Loan Agreement , and otherwise to do any and all things and acts whatsoever which the Lender may request as reasonably required in order to perfect the assignment to the Lender of security granted pursuant to this Loan Agreement . ( h ) Rehabilitate the Loan Property for the occupation and use as a peer supported group residence for adult persons with persistent mental illness , which rehabilitation shall be only in accordance with plans and specifications approved by Lender in advance of the commencement of such rehabilitation . Such rehabilitation shall be completed within on-e year of the date of this Loan Agreement , and shall also be in compliance with all applicable restrictions , conditions , codes , ordinances , regulations 3 and laws of all governmental bodies having jurisdiction over the Loan Property . ( i ) Apply for and obtain a loan of up to $90 , 000 . 00 from CO- OP Northwest Community Revitalization Corporation using 1995 Federal HOME funds , said loan proceeds to be used for the balance of the purchase price of the Loan Property or any improvement or rehabilitation of the Loan Property . ( j ) Allow the Loan Property to be used only as a peer supported group residence for adult persons with persistent mental illness . ( k ) Through its affiliates and related corporations provide support services and mental health case coordination services to the occupants of the Loan Property . 4 . Encumbrances and Transfer . Borrower agrees not to sell , transfer or convey the Loan Property or any part thereof , or encumber the Loan Property or any part thereof , in any manner, without written consent of Lender , which consent shall be given or withheld in the sole discretion of Lender . By this Loan Agreement Lender consents to Borrower obtaining a loan of up to $90,000 . 00 from CO-OP Northwest Community Revitalization Corporation, secured by a second mortgage on the Loan Property, as set forth above . 5 . Time of Essence . Time is of the essence in the performance of this Agreement . 6 . Assignability. Borrower shall not assign this Agreement nor assign its obligations as specified herein without the written consent of Lender , which consent shall be granted or withheld in the sole discretion of Lender. 7 . Representations and Warranties . Borrower represents and warrants to Lender the following: ( a) The Borrower is a Minnesota non-profit corporation duly formed, validly existing and in good standing under the laws and regulations of the State of Minnesota and the Internal Revenue Code . ( b ) The making and performance of this Loan Agreement and the execution and delivery of the herein described Note , Mortgage and all other instruments required hereunder are within the corporate powers of the Borrower and have been duly authorized by all necessary action . This Loan Agreement - and the Note , Mortgage and any other instruments required hereunder have been duly executed and delivered and are the legal , valid and binding 4 obligations of the Borrower enforceable in accordance with their respective terms . ( c ) No litigation , tax claims or governmental proceedings are pending or threatened against the Borrower , and no judgment or order of any court or administrative agency is outstanding against the Borrower . ( d ) The Borrower has filed and will file and cause to be filed all tax returns ( federal and state ) required to be filed and pay all taxes shown thereon to be due , including interest and penalties , or has provided adequate reserves for payment thereof . ( e ) No pollutants or other toxic or hazardous substances , including any solid , liquid , gaseous , or thermal irritant or contaminant , such as smoke, vapor, soot , fumes , acids, alkalis , chemicals or waste ( including materials to be recycled , reconditioned or reclaimed) ( collectively "substances" ) have been or shall be discharged , dispersed , released , stored , treated, generated , disposed of , or allowed to escape (collectively referred to as the " incident " ) on the Loan Property. ( f ) No asbestos or asbestos-containing materials have been installed , used , incorporated into, or disposed of on the Loan Property. (g ) No polychlorinated biphenyls ( "PCBs" ) are located on or in the Loan Property , in the form of electrical transformers, fluorescent light fixtures with ballasts , cooling oils, or any other device or form. ( h ) No underground storage tanks are located on the Loan Property or were located on the Loan Property and subsequently removed or filled. ( i ) No investigation, administrative order, consent order and agreement , litigation , or settlement (collectively referred to as the "action" ) with respect to substances is proposed , threatened , anticipated or in existence with respect to Borrower' s property . ( j ) The Loan Property and Borrower ' s activity in connection with the Loan Property are in compliance with all applicable federal , state and local statutes, laws and regulations . No notice has been served on Borrower from any entity , governmental body , or individual claiming any violation of any law, regulation , ordinance or code, or requiring compliance with any law, regulation , ordinance or code , or demanding payment or contribution for environmental damage or injury to natural resources . 5 • 8 . Indemnification . Borrower agrees to indemnify Lender and save it harmless against all loss , liability , expense , or damages including but not limited to attorneys fees , which may arise by reason of a breach by Borrower of any warranties or representations contained in this Loan Agreement or the assertion of any lien against the Loan Property . 9 . Defaults . In the event : ( a ) Borrower abandons the Loan Property; or ( b ) Bankruptcy , reorganization , assignment , insolvency or liquidation proceedings , or other proceedings for relief under any applicable bankruptcy law or other law for relief of debtors are instituted by or against Borrower ; or (c ) Any judgment , attachment , garnishment or other similar process is entered against Borrower or against any property or assets of Borrower and is not released , satisfied or discharged or bonded to Lender ' s satisfaction ; or ( d ) Any of the terms, covenants , or conditions of any permit or agreement issued or made by the City or other governmental body having jurisdiction over the Loan Property have not been complied with or are terminated or modified by the City or such other governmental body ; or ( e ) Any mechanic ' s or materialmen ' s lien is filed , against the Loan Property and is not released , satisfied or discharged or bonded to Lender ' s satisfaction ; or ( f ) Borrower defaults in the payment or performance of anything by it to be paid or performed under this Loan Agreement or under the Loan Note or Loan Mortgage; (g ) Any change of the corporate structure or non-profit status of the Borrower , voluntarily or involuntarily, without the consent of Lender; ( h ) Any representation or warranty by Borrower contained herein or in the Loan Note , Mortgage or any other instrument required hereunder is false or untrue in any material respect ; ( i ) Borrower defaults in the payment or performance of anything by it to be paid or performed under any note , mortgage or other agreement now or hereafter made by Borrower in favor of or with Lender or otherwise now or hereafter held by Lender ; then Lender , at its option , shall , in addition to any other remedies which it might be entitled to by law, have the right : 6 ( a ) To refrain from making an advance under this Agreement ; ( b ) Cancel this Agreement ; ( c ) Bring appropriate action to enforce performance and the correction of such failure or default ; ( d ) To declare the entire unpaid principal of the Loan Note and all accrued interest thereon immediately due and payable without notice ; ( e ) To foreclose the Mortgage and any other security instrument referred to in this Agreement . 11 . Notices . Any notices given hereunder shall be in writing and shall be deemed to have been given when delivered personally or when deposited in the United States mail , registered , postage prepaid , addressed as follows : If to Borrower at : Tasks Unlimited Lodges Attn : 2419 Nicollet Avenue South Minneapolis , MN 55404-3450 If to Lender at : New Hope EDA Attn : Daniel J . Donahue 4401 Xylon Avenue North New Hope, MN 55428 or addressed to any such party at such other address as such party shall hereafter furnish by notice to the other party. 12 . Fees . Borrower agrees to pay to Lender upon demand all attorneys fees incurred by Lender in connection with this Loan Agreement or the transactions contemplated hereby. If Borrower does not comply with the terms and conditions of this Agreement , Borrower shall remain liable to pay and shall pay to Lender the attorneys fees referred to in this Section . 13 . Headings . The headings used in this Agreement are for convenience only and do not define , limit or construe the contents of this Agreement . 14 . Bindings on Successors and Assigns . Subject to the limitations contained in this Agreement , this Agreement shall be binding upon and inure to the benefit of the successors and assigns of the parties hereto . 7 IN TESTIMONY WHEREOF , each of the parties hereto have caused these presents to be duly executed as of the day and year first above written . TASKS UNLIMITED LODGES , a Minnesota non-profit corporation By : Its By : Its ECONOMIC DEVELOPMENT AUTHORITY IN AND FOR THE CITY OF NEW HOPE, a Minnesota municipal corporation By : Its President By: Its Executive Director * * * * * * * * * * THIS INSTRUMENT DRAFTED BY: CORRICK & SONDRALL, P .A. 8525 Edinbrook Crossing Brooklyn Park , MN 55443 (612 ) 425-5671 99 . 11169 tasks.agr 8 LOAN NOTE $90 , 000 . 00 Minnesota September , 1996 FOR VALUE RECEIVED , the undersigned , TASKS UNLIMITED LODGES , a Minnesota non-profit corporation ( hereinafter designated as "Borrower" ) , promises to pay to the order of ECONOMIC DEVELOPMENT AUTHORITY IN AND FOR THE CITY OF NEW HOPE , a Minnesota municipal corporation ( hereinafter referred to as "Lender" ) , ( Lender and any holder of this Note from time to time are each hereinafter sometimes referred to as "Holder" ) , at 4401 Xylon Avenue North , New Hope , MN 55428, or such other place as may hereinafter be designated from time to time in writing by the Holder hereof , the principal sum of Ninety Thousand and no/100 Dollars ($90 ,000 . 00) or so much thereof as shall have been advanced hereunder to or for the benefit of the undersigned pursuant to the terms of a Loan Agreement of even date herewith, made by the Borrower and Lender ( hereinafter referred to as the "Loan Agreement " ) , together with interest from the date hereof as set forth below, until fully paid , at the rates hereinafter provided , on the Principal Balance, from time to time , advanced and remaining unpaid (hereinafter referred to as the "Principal Balance" ) , the Principal Balance and interest shall be due as follows : A. Until the declaration of a default by Lender for the failure of Borrower to make the payment of any principal due hereunder or in the payment or performance of anything by Borrower to be paid or performed under any of the terms and conditions in this Note or in the Mortgage or Loan Agreement , the Principal Balance shall bear no interest . Commencing as of the date of such a declaration by Lender of a default , interest shall accrue on the Principal Balance at a rate equal to 2% per annum over the rate of interest announced from time to time by First National Bank of Minneapolis, N.A. , as its Prime Rate. Said interest shall increase or decrease, automatically and without notice, effective on the day of any increase or decrease in the Prime Rate of interest announced by First National Bank of Minneapolis , N.A. Interest shall be computed on the Principal Balance at the end of each day as follows : The rate of interest as determined above shall be divided by 360 days and the Principal Balance of this Note shall be multiplied by the percentage so obtained . B . Monthly payments commencing October , 1996 shall be in the amount of $250 .00 per month and a like amount shall be due and payable on the same day of each month thereafter through and including September , 2026 . C . All payments made by Borrower pursuant to the terms of this Note shall he applied first to interest , if any , and then to reduction of principal . EXHIBIT B D . ALL AMOUNTS DUE AND OWING PURSUANT TO THIS NOTE SHALL, UNLESS SOONER PAID, BE DUE AND PAYABLE SEPTEMBER , 2026. SAID PAYMENT IS NOT A BALLOON PAYMENT. If any installment is paid more than fifteen ( 15 ) days after the due date thereof , the Borrower shall pay a late charge of 4% of the installment to cover the expenses of collection . Borrower may prepay this Note in whole or in part upon ten ( 10 ) days written notice to Holder and upon payment to Holder of all interest , if any , which has accrued to the date of such prepayment on the Principal Balance of this Note. This Note is secured by a Mortgage of even date herewith upon real property situated in Hennepin County , Minnesota. All of the terms and conditions contained in said Mortgage and in the Loan Agreement which are to be kept and performed by Borrower are hereby made a part of this Note and to the same extent and with the same force and effect as if they were fully set forth herein ; and Borrower covenants and agrees to keep and perform them, or cause them to be kept and performed , strictly in accordance with their terms . Time is of the essence hereof . In the event of a default in the payment of any principal due hereunder or in the payment or performance of anything by Borrower to be paid or performed under any of the terms and conditions in this Note or in the Mortgage or Loan Agreement , the Holder at its option and without further notice , demand or presentment for payment to Borrower or others, may declare immediately due and payable the Principal Balance , and interest accruing thereon from the date of declaration of the default , together with any reasonable attorneys ' fees incurred by Holder in collecting or enforcing payment thereof , whether suit be brought or not , and all other sums due by Borrower hereunder or under the Mortgage and Loan Agreement anything herein or in the Mortgage or Loan Agreement to the contrary notwithstanding, and payment thereof may be enforced and recovered in whole in or in part at any time by one or more of the remedies provided to Holder in this Note or in the Mortgage or Loan Agreement . The remedies of Holder as provided herein and in the Mortgage or Loan Agreement shall be cumulative and concurrent and may be pursued singly, successively or together , at the sole discretion of Holder , and may be exercised as often as occasion therefor shall occur ; and the failure to exercise any such right or remedy shall in no event be construed as a waiver or release thereof . Borrower waives presentment for payment , demand , notice of demand , notice of nonpayment or dishonor , protest and notice of protest of this Note, and all other notices in connection with the delivery , acceptance , performance, default or enforcement of the payment of this Note . 2 Holder shall not be deemed by any act of omission or commission to have waived any of its rights or remedies hereunder unless such waiver is in writing and signed by the Holder , and then only to the extent specifically set forth in the writing . A waiver with reference to one event shall not be construed as continuing or as a bar to or waiver of any right or remedy as to a subsequent event . All agreements herein are expressly limited so that in no contingency or event whatsoever shall the amount paid or agreed to be paid to the Holder for the use, forbearance or detention of the money to be advanced hereunder exceed the highest lawful rate permissible under applicable usury laws . If from any circumstances whatsoever fulfillment of any provision hereof at the time performance of such provisions shall be due , shall involve transcending the limit of validity prescribed by law which a court of competent jurisdiction may deem applicable hereto, then the obligation to be fulfilled shall be reduced to the limit of such validity and if from any circumstance the Holder shall ever receive as interest an amount which would exceed the highest lawful rate , such amount which would be excessive interest shall be applied to the reduction of the unpaid principal balance due hereunder and not to the payment of interest . This instrument shall be governed by and construed according to the laws of the State of Minnesota. IN WITNESS WHEREOF , Borrower , intending to be legally bound hereby , has duly executed this Note the day and year first above written . TASKS UNLIMITED LODGES, a Minnesota non—profit corporation By Its By Its tasks.pn 3 MORTGAGE THIS INDENTURE . ( hereinafter referred to as "Mortgage" ) is made this day of September , 1996 , between TASKS UNLIMITED LODGES , a Minnesota non-profit , whose address is 2419 Nicollet Avenue South , Minneapolis , MN 55404-3450 , the ( hereinafter called "Mortgagor" ) , and ECONOMIC DEVELOPMENT AUTHORITY IN AND FOR THE CITY OF NEW HOPE , a Minnesota municipal corporation , having its office at 4401 Xylon Avenue North , New Hope , MN 55428 , ( hereinafter called "Mortgagee" ) . WHEREAS, the Mortgagor has requested and the Mortgagee has agreed to make a loan to the Mortgagor , evidenced by Mortgagor ' s Note ( hereinafter the "Note" ) of even date herewith , payable to the order of Mortgagee in the principal amount of Ninety Thousand and no/100 Dollars ($90 ,000 . 00 ) and bearing interest at the rate set forth therein . NOW, THEREFORE , in consideration of the premises and for the purposes of securing the repayment of the loan made pursuant to the Note and this Mortgage , and of all other sums which may be advanced by the Mortgagee in accordance with this Mortgage, and all interest ( hereinafter the " Indebtedness" ) , and to secure the performance of all covenants , conditions and agreements herein and in the Note, and any other security document referred to therein , the Mortgagor conveys forever all of the Mortgagor ' s right , title and interest in the tract or parcel of land , legally described in Exhibit I hereto , ( hereinafter the "Land" ) together with ( i ) all building materials , supplies and equipment now or hereafter incorporated in any building , structure , or other improvement located or to be erected on the Land ; and ( ii ) all of the buildings, structures and other improvements now standing or at any time hereafter constructed or placed upon the Land; and ( iii ) all heating , plumbing and lighting apparatus , motors , engines , and machinery, electrical equipment , incinerator apparatus, air-conditioning equipment , water and gas apparatus , pipes , faucets , and all other fixtures of every description which are now or may hereafter be placed or used upon the Land or in any building or improvement now or hereafter located thereon ; and ( vi ) all additions , accessions , increases , parts , fittings , accessories , replacements , substitutions , betterments , repairs and proceeds to any and all of the foregoing ; ( v ) all right to receive disbursement of amounts due as a result of the establishment of a Tax Increment District which includes the Land together with all contract rights of Borrower and/or attributable to the Land as a result of such District ; and (vi ) all hereditaments , easements , appurtenances , estates , condemnation awards and other rights and interests now or hereafter located thereon ( all of the foregoing , together with the land , hereinafter being referred to as the "Property" or "Mortgaged Property" ) , EXHIBIT C i 6 TO HAVE AND TO HOLD, the Mortgaged Property unto the Mortgagee forever ; PROVIDED , NEVERTHELESS , that this Mortgage is upon the express condition that if the Mortgagor shall pay to the Mortgagee as and when due and payable the principal and the interest on the Note , and shall also keep and perform all and singular the covenants herein contained , or any other security document referred to therein , on the part of the Mortgagor to be kept and performed , then , the Mortgage and the estate hereby granted shall cease and be and become void and shall be released of record at the expense of 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 it is lawfully seized of the Mortgaged Property in fee simple and has good right and full power and authority to execute this Mortgage and to mortgage the Mortgaged Property; that neither this Mortgage , nor any other security document referred to therein nor the Note contravene any :=covenant in any indenture or agreement affecting the Mortgagor ; that the Mortgaged Property is free from all liens and encumbrances except those identified in Exhibit II ; that the Mortgagee shall quietly enjoy and possess the Mortgaged Property; that the Mortgagor will warrant and defend the title to the Mortgaged Property against all claims , whether now existing or hereafter arising ; 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 . AND IT FURTHER COVENANTED AND AGREED AS FOLLOWS: ARTICLE ONE GENERAL COVENANTS, AGREEMENTS, WARRANTIES 1 . 1 Payment of Indebtedness, Observance of Covenants . Mortgagor will duly pay each installment of principal on the Note and all other indebtedness and will perform all other agreements and covenants by Mortgagor to be performed hereunder or under the Note or the Loan Agreement . 1 . 2 Payment of Impositions. The Mortgagor agrees to pay, before a penalty might attach for non-payment thereof , all taxes , • assessments , water and sewer charges , and other fees , taxes and charges of whatsoever nature levied upon or assessed or placed against the Mortgaged Property. The Mortgagor will likewise pay all taxes , assessments and other charges , levied upon or assessed , placed or made against , or measured by , this Mortgage, or the recordation hereof , or the Indebtedness , provided that 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 a usurious rate of interest on the Indebtedness . The Mortgagor shall promptly furnish to the Mortgagee all notices received by the Mortgagor of amounts due under this paragraph and upon the Mortgagee ' s request , shall deliver proper receipts evidencing the payment of such amounts . In the event of a judicial decree or legislative enactment after the date of this Mortgage , providing that any such imposition may not be lawfully paid by the Mortgagor , or in the event that the payment of any such imposition by Mortgagor would result in the payment of a usurious rate of interest on the Indebtedness , the Indebtedness , together with interest , shall become immediately due and payable , or , at Mortgagee ' s option , Mortgagee may pay any amount or portion of such Imposition as renders the Indebtedness unlawful or usurious , in which event Mortgagor shall concurrently therewith pay the remaining lawful and non-usurious portion or balance of said Imposition . 1 . 3 Payment of Operating Costs : Prior Mortgages and Liens . Mortgagor agrees that it will pay all operating costs and expenses of the Premises; keep the Premises free from mechanic' s , materialmen ' s and other liens not expressly subordinated to the lien of this Mortgage; will keep the Property free from levy, execution or attachment and will immediately pay whether or not then due all indebtedness which may be secured by mortgage, lien or charge on the Property (other than this Mortgage) and upon request will exhibit to Mortgagee satisfactory evidence of such payment and discharge. 1 . 4 Contest of Impositions, Liens and Levies. Mortgagor shall not be required to pay, discharge or remove any imposition, lien or levy so long as the Mortgagor shall in good faith contest the same or the validity thereof by appropriate legal proceedings which shall operate to prevent the collection of the levy, lien or imposition so contested and the sale of the Property, or any part thereof to satisfy the same, provided that the Mortgagor shall , prior to the date such levy, lien or imposition is due and payable, having given such reasonable security as may be demanded by the Mortgagee to insure such payments and any penalties and interest that may accrue thereon and prevent any sale or forfeiture of the Property by reason of such nonpayment . Any such contest shall be prosecuted with due diligence and the Mortgagor shall promptly after final determination thereof pay the amount of any such levy, lien or imposition so determined , together with all interest and penalties, which may be payable in connection therewith . Notwithstanding the provisions of this section , Mortgagor shall , and Mortgagee may, pay any such levy, lien or imposition notwithstanding such contest if in the reasonable opinion of the Mortgagee , the Property is in jeopardy or in danger of being forfeited or foreclosed . 1 . 5 Maintenance and Repairs . Mortgagor agrees that it will keep and maintain the Property in good condition and repair , free from any waste or misuse , and will comply with all requirements of law, municipal ordinances and regulations , restrictions and covenants affecting the Property and its use, and will promptly repair or restore any buildings , improvements or structures now or hereafter on the Property which may become damaged or destroyed . Mortgagor further agrees that without the prior consent of the Mortgagee it will not remove from the Property any fixtures unless 3 the same is immediately replaced with like fixtures of at least equal value ; or expand any improvements on the Property , erect any new improvements or make any material alterations in any improvements which will alter the basic structure , affect the market value or change the existing architectural character of the Property except as the same may be done in accordance with the Loan Agreement . Mortgagor agrees that it will complete within a reasonable time any buildings now or any time in the process of erection on the Property . Mortgagor agrees not to acquiesce in any rezoning classification , modification or restriction affecting the Property without the Mortgagee ' s written consent . Mortgagor agrees that it will not vacate or abandon the Property. 1 . 6 Insurance. (a) So long as the Indebtedness remains unpaid , the Mortgagor shall , at its own cost , maintain with insurers of recognized responsibility acceptable to the Mortgagee, the insurance required by the Loan Agreement , and upon completion of the Improvements contemplated by the Loan Agreement , hazard and fire insurance on such completed improvements insuring against loss by fire , hazards included in the term "extended coverage" , loss by vandalism or malicious mischief , and such other hazards , - casualties and contingencies as may be required by the Mortgagee , on the basis of replacement cost without a co- insurance clause, in an amount sufficient to prevent the Mortgagor from becoming a co-insurer of any loss thereunder and at least equal to the sum of the unpaid balance of the Indebtedness and all amounts secured by any senior mortgage or other lien which exists from time to time against the Mortgaged Property (to which the Mortgagee does not necessarily consent ) or such additional amounts and for such periods as may be required by the Mortgagee. The Mortgagor shall pay all premiums on insurance required hereunder by making payment directly to the insurer. The Mortgagee shall have the right to hold the policies and renewals thereof , and the Mortgagor shall promptly furnish to the Mortgagee all such policies, renewals thereof , renewal notices and all paid-premium receipts received by it . All policies of insurance and any and all refunds of unearned premiums are hereby assigned to the Mortgagee as additional security for the payment of the Indebtedness secured hereby . In the event of foreclosure of this Mortgage, all right , title and interest of the Mortgagor in and to any insurance policies then in force shall pass to the purchaserat the foreclosure sale . ( b) The policies of all such insurance shall have loss payable provisions in favor of and in form acceptable to the Mortgagee , shall provide for at least thirty ( 30 ) days prior to written notices of cancellation , termination or modification thereof to the Mortgagee , shall permit Mortgagee to make premium 4 • payments to prevent cancellation , and shall provide that no act or negligence of the Mortgagor or of any occupant of the Mortgaged Property , and no occupancy or use of the Mortgaged Property for purposes more hazardous than permitted by the terms of the policy , will affect the validity or enforceability of such insurance as against Mortgagee . In the event of loss under such insurance the Mortgagor shall give prompt notice to the insurance carrier and the Mortgagee; Mortgagor shall duly make proof of loss , and shall immediately furnish to Mortgagee a copy of such proof of loss . The Mortgagee is authorized and empowered to collect and receive all insurance proceeds , and if no Event of Default has occurred under this Mortgage , it will apply such proceeds to the restoration of the Property . Any insurance proceeds not so applied shall be applied to the payment of the Indebtedness. 1 . 7 Inspection . The Mortgagee, or its agents , shall have the right to enter upon the Mortgaged Property during ordinary business hours for the purposes of inspecting the Mortgaged Property or any part thereof . The Mortgagee shall have no duty, however , to make such inspection . 1 .8 Protection of Mortgagee' s Security. 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 does or may adversely affect the Mortgaged Property or the interest of the Mortgagor , the Mortgagee, at Mortgagee' s option, may perform such covenants and agreements , defend against such action or proceeding , or otherwise act as the Mortgagee deems necessary to protect its interest . In the event that , after damage to or destruction of the Mortgaged Property or condemnation of a portion of the Mortgaged Property or a sale under threat thereof , the Mortgagee elects or is obligated to use the proceeds to restore the Mortgaged Property, and the insurance, sale or condemnation proceeds which are paid to the Mortgagee are not sufficient to pay for such restoration, the Mortgagee may, nevertheless effect the restoration . Any amounts disbursed or costs incurred by the Mortgagee pursuant to this paragraph , including interest and reasonable attorneys' fees , shall become additional indebtedness of the Mortgagor secured by this Mortgage. All amounts disbursed or costs incurred by the Mortgagee pursuant to this paragraph shall be payable upon demand , and shall bear interest from the date of disbursement or incurrence at the rate set forth in the Note for a default declaration, unless payment of interest at such rate would be contrary to law, in which event such amounts shall bear interest at the highest rate permitted by law. The Mortgagee shall , at its option , be subrogated to any encumbrance , lien , claim or demand , and to all the rights and securities for the payment thereof , paid or discharged with the principal sum secured hereby or by 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 shall require the Mortgagee to incur any expense or do any act hereunder , and the 5 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 . 1 . 9 Mortgagor ' s Covenant to Provide Information . Mortgagor covenants to provide documentation and such other information as is required by the terms and conditions of this Mortgage, the Loan Agreement and all other documents or instruments of security referred to in this Mortgage . ARTICLE TWO EVENTS OF DEFAULT Each of the following occurrences shall constitute an Event of Default hereunder : 2 . 1 Failure to Pay. The Mortgagor' s failure to pay, when due , any payment of principal on the Note or any other amount required to be paid by Mortgagor hereunder. 2 . 2 Other Performance Failure . The Mortgagor' s failure duly to observe or perform any of the other terms , conditions, covenants or agreements required to be observed or performed by the Mortgagor hereunder or pursuant to any other agreement between Mortgagor and Mortgagee, specifically including the Loan Agreement . 2 . 3 Breach of Warranty of Title. The breach of any warranty of title made by the Mortgagor hereunder . 2 . 4 Misrepresentation . The making of any misrepresentation in any financial statement or report submitted to the Mortgagee by or on behalf of the Mortgagor . 2 . 5 Entry of Judgment . The entry of a final judgment for the payment of money in excess of One Hundred Thousand and no/100 Dollars ($100,000.00) against Mortgagor, undischarged for a period of thirty (30) consecutive days while execution shall not be effectively stayed. 2 . 6 Voluntary Bankruptcy. The filing of a petition in bankruptcy by the Mortgagor , or its request or consent to the appointment of a receiver or trustee for the Mortgagor or for all or any part of its property , or the making of a general assignment for the benefit of creditors. 2 . 7 Involuntary Bankruptcy or Receivership. The entry of an order , judgment or decree appointing , without the consent of Mortgagor , a receiver or trustee for it or for all or any part of its property or approving a petition filed against it seeking relief under the bankruptcy laws of the United States or similar laws of any state or other competent jurisdiction , which order , judgment or decree shall have remained in force undischarged or unstayed for a period of thirty ( 30 ) days . 6 2 . 8 Foreclosure . The institution of foreclosure or other enforcement proceedings by the holder of any other lien on the Mortgaged Property (without hereby implying Mortgagee ' s consent to any mortgage or other lien ) . 2 . 9 Sale of Property. A sale , assignment , conveyance , encumbrance or transfer of the Mortgaged Property , or any part thereof , or any interest therein ( except leases for a term of less than three ( 3 ) years ) without the prior written consent of the Mortgagee , which consent may be granted or withheld by Mortgagee at its sole discretion . 2 . 10 Tax Increment Financing . The Mortgagor has obtained Tax Increment Financing in connection with development of the Land . Default in any terms or conditions of the requirements for payment in connection therewith shall be deemed an Event of Default . ARTICLE THREE ACCELERATION AND FORECLOSURE; OTHER REMEDIES Upon any Event of Default , 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 ) : 3 . 1 Acceleration . The Mortgagee may declare immediately due and payable all unmatured Indebtedness secured by this Mortgage, and the same shall thereupon be immediately due and payable, without notice or demand . 3 . 2 Foreclosure : Action or Advertisement . 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 , out of the proceeds arising from such sale, to pay all Indebtedness secured hereby with interest , and all legal costs and charges of such foreclosure and the maximum attorneys' fees permitted by law, which costs, charges and fees the Mortgagor agrees to pay. Any real estate or interest or estate sold hereunder may be sold in one parcel , as an entirety , or in such parcels and in such manner or order as the Mortgagee, in its sole discretion , may elect . In case of any sale of the Mortgaged Property pursuant to any judgment or decree of any court or at public auction or otherwise in connection with the enforcement of any of the terms of this Mortgage, the Mortgagee , its successors and assigns , may become the purchaser , and for the purpose of making settlement for or payment of the purchase price , shall be entitled to deliver over and use the Note and any claims for interest accrued and unpaid thereon , together with all other sums , with interest , advanced and unpaid hereunder , and all statutory charges for such foreclosure including maximum attorneys' fees allowed by law in order that there may be credited as paid on the purchase price the sum then due under the Note including principal and interest thereon and all other sums, with interest , 7 a • advanced and unpaid hereunder , and all charges and expenses of such foreclosure including maximum attorneys ' fees allowed by law. Mortgagor acknowledges that if the Mortgagee elects to foreclose by advertisement and cause the Property or any part thereof to be sold at public auction , notice of such sale must be published at least once a week for six ( 6 ) successive weeks in a newspaper of general circulation and that personal notice is not required to be served upon Mortgagor . Mortgagor further understands that under the Constitution of the United States and the Constitution of the State of Minnesota it may have the right to notice and hearing before the Property may be sold and that the procedure for foreclosure by advertisement described above does not insure that notice will be given and said procedure for foreclosure by advertisement does not require any hearing or other judicial proceeding . MORTGAGOR HEREBY RELINQUISHES, WAIVES AND GIVES UP ANY AND ALL OF THE CONSTITUTIONAL RIGHTS TO NOTICE AND HEARING BEFORE SALE OF THE PROPERTY AND EXPRESSLY CONSENTS AND AGREES THAT THE PREMISES MAY BE FORECLOSED BY ADVERTISEMENT ALL AS DESCRIBED ABOVE. MORTGAGOR ACKNOWLEDGES THAT IT IS REPRESENTED BY LEGAL COUNSEL; THAT BEFORE SIGNING THIS DOCUMENT THIS PARAGRAPH AND MORTGAGOR'S CONSTITUTIONAL RIGHTS WERE FULLY EXPLAINED BY SUCH COUNSEL AND THAT MORTGAGOR UNDERSTANDS THE NATURE AND EXTENT OF THE RIGHTS WAIVED HEREBY AND THE EFFECT OF SUCH WAIVER. 3 . 3 Forbearance and Other Rights of Mortgagee. Any delay by the Mortgagee in exercising any right or remedy hereunder, or otherwise afforded by law or equity, shall not be a waiver of or preclude the exercise of such right or remedy or any other right or remedy hereunder or at law or in equity. The failure of the Mortgagee to exercise any option to accelerate maturity of the Indebtedness secured by the Mortgage, the forbearance by the Mortgagee before or after the exercise of such option , or the withdrawal or abandonment of proceedings provided for by this Mortgage shall not be a waiver of the right to exercise such option or to accelerate the maturity of such Indebtedness by reason of any past , present or future event which would permit acceleration . The procurement of insurance or the payment of taxes or other liens or charges by the Mortgagee shall not be a waiver of the Mortgagee' s right to accelerate the maturity of the Indebtedness . The Mortgagee ' s receipt of any awards, proceeds or damages shall not operate to cure or waive default by the Mortgagor . The Mortgagee may at any time , without notice, release any person liable for payment of any Indebtedness , extend the time or agree to alter the terms of payment of any of the Indebtedness , accept additional security of any kind , release any plat or map of the Mortgaged Property or the creation of any easement thereon or any covenants restricting use or occupancy thereof , or alter or amend the terms of this Mortgage in any way . No such release , modification , addition or change shall affect the liability of any person other than the person so released , for payment of any Indebtedness , nor the priority and first lien status of this Mortgage upon any property not so released . 8 ARTICLE FOUR CONDEMNATION 4 . 1 Notice . Mortgagor will give the Mortgagee prompt notice of any action , actual or threatened , in condemnation or eminent domain , direct or inverse . 4 . 2 Awards . Mortgagor hereby assigns , transfers , and sets over to the Mortgagee the entire proceeds of any award or payment which becomes payable by reason of any taking of or damage to the Mortgaged Property , or any part or appurtenance thereof , either temporarily , 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 . The Mortgagor will file or prosecute in good faith and with due diligence what would otherwise be its claim in any such award or payment and cause the same to be collected and paid over to the Mortgagee , and the Mortgagor irrevocably authorizes and empowers the Mortgagee , which power is coupled with an interest and is irrevocable , in the name of the Mortgagor or otherwise , in the event that the Mortgagor fails to do so, to file and prosecute any such claim and to collect , receipt for and retain the same. The proceeds or the award or payment , after deducting all reasonable costs, attorneys fees and other expenses which may have been incurred by the Mortgagee in collection thereof , at the sole discretion of the Mortgagee, may be released to the Mortgagor, applied to restoration of the Mortgaged Property or applied to the payment of any part of the Indebtedness , in such order of application as the Mortgagee may determine. ARTICLE FIVE MISCELLANEOUS 5 . 1 Mortgagee' s Remedies Cumulative. All remedies of the Mortgagee are distinct and cumulative to any other right or remedy under this Mortgage or afforded by law or equity, and may be exercised concurrently or independently, as often as the occasion therefore arises . 5 . 2 Successors and Assigns Bound ; Captions . The covenants and agreements herein contained shall bind , and the rights hereunder shall inure to, the respective heirs , legal representatives, successors and assigns of the Mortgagee and the Mortgagor . 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 . 5 . 3 Notice . Any notice from the Mortgagee to the Mortgagor under this 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 : 9 i Tasks Unlimited Lodges Attn : 2419 Nicollet Avenue South Minneapolis , MN 55404-3450 or at such other address as the Mortgagor may designate in writing to the Mortgagee . 5 . 4 Governing Law; Severability . This Mortgage shall be governed by the laws of the State of Minnesota. In the event that any provision or clause of this Mortgage conflicts with applicable law, such conflict shall not affect other provisions of this Mortgage which can be given effect without conflicting provisions and to this end the provisions of the Mortgage are declared to be severable . 5 . 5 Counterparts . This Mortgage may be executed in any number of counterparts , each of which shall be an original but all of which together shall constitute one instrument . 5 . 6 Waiver of Appraisement , Homestead , Marshaling . The Mortgagor hereby waives the benefit of any homestead, appraisement , evaluation , stay and extension laws now or hereinafter in force . Mortgagor hereby waives any rights available with respect to marshaling of assets so as to require the separate sales of any portion of the Property, or to require the Mortgagee to exhaust its remedies against a specific portion of the Property before proceeding against the other . 5 . 7 Subsequent Agreements . Any agreement hereafter made by Mortgagor and Mortgagee pursuant to this Mortgage shall be superior to the rights of the holder of any intervening lien or encumbrance . 5 . 8 Hazardous Materials. Mortgagor covenants, represents and warrants to Mortgagee, its successors and assigns , that during the Mortgagor' s ownership of the Property, the operation of said Property has not violated and is not currently violating any federal , state or local law, regulation , ordinance or requirement governing Hazardous Materials ; that the Property is not listed in the United States Environmental Protection Agency' s National Priorities List of Hazardous Waste Sites nor any other list , schedule , log, inventory or record of Hazardous Materials or hazardous waste sites , whether maintained by the United States Government or any state or local agency , and that the building improvements do not contain any formaldehyde, urea or asbestos , except as may have been disclosed in writing to the Mortgagee by the Mortgagor at the time of execution and delivery of this Mortgage . The Mortgagor agrees to indemnify and reimburse the Mortgagee , its successors and assigns , for any breach of these representations and warranties and from any loss , damage, expense or cost arising out of or incurred by Mortgagee which is the result of a breach of , misstatement of or misrepresentation of the above covenants , representations and warranties , together with all attorneys ' fees incurred in connection with the defense of any action against the Mortgagee arising out of the above . These 10 a covenants , representations and warranties shall be deemed continuing covenants , representations and warranties for the benefit of the Mortgagee, including any purchaser at a mortgage foreclosure sale , any transferee of the title of the Mortgagee or any subsequent purchaser at a foreclosure sale , and any subsequent owner of the Property and shall survive any foreclosure of the Mortgage and any acquisition of title by Mortgagee or anyone claiming through or under the Mortgage as the title of the Mortgagee. The amount of all such indemnified loss, damage, expense or cost , shall bear interest thereon at the rate of interest in effect after a default declaration on the Note and shall become so much additional indebtedness , secured by this Mortgage and shall become immediately due and payable in full on demand of the Mortgagee, its successors and assigns . Said indemnity shall only apply in connection with the conditions which were in existence , in whole or in part , prior to the date on which Mortgagee acquires possession and title to the Property and shall not apply in connection with liability of the Mortgagee due to action taken by it or its assigns while it was Mortgagee. 5 . 9 Future Advances . (a) To the extent that this Mortgage secures future advances , the amount of such advances is not currently known . The acceptance of this Mortgage by the Mortgagee, however , constitutes an acknowledgement that the Mortgagee is aware of the provisions of Minnesota Statutes §287 . 05 , Subd. 5 , and intends to comply with the requirements contained therein . ( b) The maximum principal amount of indebtedness secured by this Mortgage at any one time, excluding advances made by the Mortgagee in protection of the mortgaged property or the lien of this Mortgage, shall be $90, 000 .00 . (c) The representations contained in this section are made solely for the benefit of the county recording authorities in determining the mortgage registry tax payable as a prerequisite to the recording of this Mortgage. The Mortgagor acknowledges that such representations do not constitute or imply any agreement by the Mortgagee to make any future advances to the Mortgagor . 11 t IN WITNESS WHEREOF , the Mortgagor has caused this Mortgage to be duly executed as of the day and year first above written. TASKS UNLIMITED LODGES , a Minnesota non-profit corporation By Its By Its STATE OF MINNESOTA ) ss. COUNTY OF ) The foregoing instrument was acknowledged before me this day of September , 1996 , by and _ the and respectively, of Tasks Unlimited Lodges, a Minnesota non-profit corporation , on behalf of the non-profit corporation . Notary Public THIS INSTRUMENT DRAFTED BY: CORRICK & SONDRALL, P.A. 8525 Edinbrook Crossing Brooklyn Park , MN 55443 ( 612 ) 425-5671 99 . 11169 tasks.mtg 12