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072296 EDA Official File Copy CITY OF NEW HO?E EDA AGENDA July 22, 1996 EDA Regular Meeting #12 Agenda #t 3 President Edward J. Erickson Commissioner W. Peter Enck Commissioner Pat LaVine Norby Commissioner Gerald Otten Commissioner Terri Wehling 1. Callto Order 2. Roll Call 3. Approval of Minutes of June 24, 1996 4. Discussion Regarding City Financial Assistance for Improvements to Super Valu Space at Winnetka Shopping Center for Data Recognition Corporation (Improvement Project No. 566). 566) 5. Resolution Transferring Approval of Letter of Understanding for Loan to Purchase Housing From Tasks Unlimited, Inc. to Task Unlimited Lodges (Improvement Project No. 554) 6. Motion Approving Tasks Unlimited Lodges to Sign a Purchase Agreement for a Duplex Property Located at 3579/3581 Independence Avenue North (Improvement Project No. 554) 7. Adjournment CITY OF NEW HOPE 4401 XYLON AVENUE NORTH HENNEPIN COUNTY, MINNESOTA 55428 Approved EDA Minutes June 24, 1996 Meeting #11 CALL TO ORDER. President Erickson called the meeting of the Economic Development Authority to order at 8:08 p.m. ROLL CALL Present: Erickson, Enck, Otten, Norby, Wehling Staff Present: Sondrall, Donahue, Leone, McDonald, Bellefuil APPROVE MINUTES Motion was made by Commissioner Otten, seconded by Commissioner Wehling, to approve the EDA minutes of June 10, 1996. Voting in favor: All. Motion Carried. WINNETKA CENTER President Erickson introduced for discussion Item 4, Discussion Regarding Item 4 City Financial Assistance for Proposed Developments at Winnetka Center Shopping Center. Mr. Dan Donahue, City Manager, explained that Items 4 and 6 relate to redevelopment within the City and have been included on the agenda for policy direction from the EDA. He stated there are no firm proposals to date; however, discussions have been underway and staff is seeking direction from the EDA. He stated a proposal for use of the former Super Valu space at the Winnetka Center has been brought forth. Also, a developer is attempting to attract a Brazier Dairy Queen store for the corner of 45th and Winnetka. Mr. Donahue stated a company known as Data Recognition is interested in leasing the Super Valu space. Data Recognition designs custom surveys and testing for students and would initially employ 250 people with a maximum of 450 employees. The site would require approximately $600,000 of building renovations to make it compatible for the office use. He stated one of the reasons the company is considering this site is due to the bus route. Mr. Donahue inquired whether the EDA would be willing to offer incentives for the development. President Erickson suggested that a formal proposal be 'made prior to any financial commitments by the EDA. Commissioner Enck pointed out that the viability of the entire center should be reviewed, and a recommendation for types of tenants should be made by the city's planner. He stated the recent market study only considered retail businesses. He questioned whether major anchor tenants such as Marquette Bank and US Swim will remain at the center. The EDA directed staff to continue discussions and to request a proposal from the developer. Also, the EDA expr~essed interest in exploring the fast food restaurant option. New Hope EDA June 24, 1996 Page 1 IMP. PROJECT 545 President Erickson introduced for discussion Item 5, Resolution Approving Item 5 Plans and Specifications and Ordering Advertisement for Bids for Construction of Single Family Home at 6067 West Broadway (Improvement Project No. 545). EDA RESOLUTION Commissioner Enck introduced the following resolution and moved its 96-13 adoption: "RESOLUTION APPROVING PLANS AND SPECIFICATIONS AND Item 5 ORDERING ADVERTISEMENT FOR BIDS FOR CONSTRUCTION OF SINGLE FAMILY HOME AT 6067 WEST BROADWAY (IMPROVEMENT PROJECT NO. 545)." The motion for adoption of the foregoing resolution was seconded by Commissioner Norby, and upon vote being taken thereon the following voted in favor thereof: Erickson, Enck, Otten, Wehling, Norby; and the following voted against the same: None; Abstained: None; Absent: None; whereupon the resolution was declared duly passed and adopted, signed by the president which was attested to by the executive director. 5540 WINNETKA President Erickson introduced for discussion Item 6, Motion Authorizing Item 6 Staff to Obtain an Appraisal for Property at 5540 Winnetka Avenue North. Commissioner Enck noted that the EDA must eventually decide what should occur on the corner. Mr. Donahue stated the property of 5540 Winnetka Avenue may be mandatory regardless of the type of development. He pointed out that a larger site is needed to attract a development. He stressed the importance of learning whether the property owner is interested in selling the property. Commissioner Enck disagreed with the need for the appraisal prior to a proposed development. Commissioner Wehling expressed the desire to take a proactive approach. MOTION Motion was made by Commissioner Wehling, seconded by Commissioner Item 6 Otten, to proceed with an appraisal for the property at 5540 Winnetka if the property owner expresses interest. Voting in favor: Wehling, Otten, Erickson; Voting Against: Enck, Norby. Motion carried. IMP. PROJECT 554 President Erickson introduced for discussion Item 7, Resolution Approving Item 7 Letter of Understanding with Tasks Unlimited, Inc., for Loan to Purchase Housing (Improvement Project No. 554). EDA RESOLUTION Commissioner Enck introduced the following resolution and moved its 96-14 adoption: "RESOLUTION APPROVING LETTER OF UNDERSTANDING WITH Item 7 TASKS UNLIMITED, INC. FOR LOAN TO PURCHASE HOUSING." The motion for adoption of the foregoing resolution was seconded by Commissioner Wehling and upon vote being taken thereon the following voted in favor thereof: Erickson, Enck, Otten, Wehling, Norby; and the following voted against the same: None; Abstained: None; Absent: None; whereupon the resolution was declared duly passed and adopted, signed by the President which was attested to by the executive director. IMP. PROJECT 554 President Erickson introduced for discussion Item 8, Motion Approving Item 8 Tasks Unlimited, Inc., to Sign a Purchase Agreement for the Duplex New Hope EDA June 24, 1996 Page 2 , Property Located at 2829/2833 Flag Avenue North (Improvement Project · No. 554). MOTION Motion was made by Commissioner Enck, seconded by Commissioner Item 8 Wehling, approving a purchase agreement for 282912833 Flag Avenue North. Voting in favor: All. Motion carried. ADJOURNMENT Motion was made by Commissioner Otten, seconded by Commissioner Wehling, to adjourn the meeting. All present voted in favor. The New Hope EDA adjourned at 8:30 p.m. Respectfully submitted, Valerie Leone City Clerk New Hope EDA June 24, 1996 Page 3 I'- u/-~, ~~ REQUEST FOR ACTION Originating Department Approved for Agenda Agenda Section City Manager EDA 7-22-96 Kirk McDonald Item No. By: Management Assistant ~ 4 DISCUSSION REGARDING CITY FINANCIAL ASSISTANCE FOR PROPOSED IMPROVEMENTS TO SUPERVALU SPACE AT WINNETKA SHOPPING CENTER FOR DATA RECOGNITION CORPORATION (IMPROVEMENT PROJECT NO. 566) Staff requests to continue discussion with the EDA on the request for financial assistance from Data Recognition Corporation for proposed improvements to be made to the SuperValu space at Winnetka Shopping Center. Russell Hagen, President of Data Recognition,' and developer Mark Senn, Marcus Corporation, will be attending the meeting to discuss their proposal with the EDA and answer questions. As discussed at the June 24 EDA meeting, a company known as Data Recognition, which designs custom surveys and testing for students, is interested in a long-term (8-year) lease of the SuperValu space at Winnetka Shopping Center and possible purchase of the building after the lease expires. Data Recognition employs 250-400 skilled employees and has a $2.1 million payroll (further background information on the company is attached). The company's headquarters is in Minnetonka. They are presently looking at three (3) sites for relocation. The New Hope site is desirable to them because of the easy access to mass transit, the building meets their needs, parking is adequate, potential employee base, and close proximity to the Police Station (large number of female employees working evening shifts). The property is located in a B-4 Zoning District and office uses are a permitted use. The 1995 Market Study that was completed suggested that with the changing retailing environment, consideration should be given to non-retailing uses. The study said that commercial office space may offer a workable option in conjunction with other retailing options. With the remodeling of this building, there would be little or no increase in market value or tax base. The main advantage to the City would be the large number of jobs and the potential impact of revitalizing the other businesses in the Center and surrounding area. MOTION BY _~/')q.~".~ SECOND BY (~/?.F/ ~ Review: Administration: Finance: RFA-O01 ~ Request for Action Page 2 7-22;9 ~6 Staff met with Data Recognition representatives several times since the June EDA meeting, and they have submitted the enclosed funding proposal and an aggressive development schedule. They estimate that it will cost $800,000 to get them into the building, with $550,000 for demolition/remodeling/construction and $250,000 for furniture/fixtures/moving expenses. They are proposing that these costs be funded with a $100,000 EDA grant, a $450,000 EDA Iow-interest loan, and a $250,000 investment by Data Recognition. They have indicated they want to move into the facility by mid-October and need two months to complete the renovation. Data Recognition has submitted financial documents to the City, which the City turned over to a financial consultant for review/analysis. The City Attorney has also prepared preliminary draft documents for a loan. The City Manager has reviewed this proposal and does not support the large financial assistance request and is recommending that the EDA not approve the current request. The Manager believes that Data Recognition should have more equity in the project. The Manager did indicate that he would support assistance of a lessor amount, such.as a $50,000 grant and a $200,000 loan, with an optional payback on the grant. (Please refer to the data regarding City financial assistance on previous projects to compare this request with others.) The City Manager also requested more specific information about the jobs that will be provided, including'a breakdown of the number of jobs to be initially provided, the hourly rate of pay, the level of the jobs, whether they will be permanent or temporary, and what the number/percentage of relocated vs. new jobs will be. The Manager also thinks 'that the development schedule is too aggressive and recommends that no decision be made until the August 12 EDA meeting. The City Attorney and Data Recognition are aware of the City Manager's viewpoint. Data Recognition is in the process of assembling the jobs data and will provide that at the EDA meeting. Staff also feels that Data Recognition is willing to modify their financial assistance request, but wants the City to take into account the $2 million they will be spending to lease the site for the next eight years. City staff is recommending that the EDA discuss this financial assistance request with Data Recognition at the EDA meeting and provide direction on the amount of the grant and loan and security issues. Data Recognition would like to see some conceptual agreement on a financial package at this meeting, if the EDA is so inclined, and would be agreeable to holding off on final approval of documents until August 12 if an agreement in concept can be reached. It is also doubtful that the financial analysis will be completed by Monday. In summary, the City Manager recommends that no decisions be made at this meeting, but that the EDA respond to the proposal and provide direction to staff. Attachments: Data Recognition 7/8 Proposal (Correspondence, Schedule, Proposed Budget, Site Plan) Data Recognition Background Information Marco Construction 6/12 Correspondence/Preliminary Cost Estimates City Attorney 7/18 Correspondence/Preliminary Loan Documents Summary of City Financial Assistance on Prior Projects Excerpts: Winnetka Center Market Study D ~.T -~ RE('OGNITI()N CORPORATION July 8, 1996 Honorable Mayor and Members of the City Council City of New Hope 4401 Xylon Avenue North New Hope, MN 55428 Dear Mayor and Members of the City Council: Data Recognition Corporation is looking forward to relocating 'our handscoring facility to the City of New Hope. Currently the facility is located in Minnetonka in approximately 30,000 square feet. We currently employ 200-250 people at the Minnetonka facility. This proposed move and expansion would allow us future growth to almost 40,000 square feet, and would accommodate up to 450 employees. With our proposed move to New Hope, space will not be a concern as it relates to future growth. Data Recognition Corporation views this as a long term move. While the landlord has stated they' have no desire to sell the building, we are assuming the balance of the grocery store lease until April 2005. It would be our intention to negotiate an additional term beyond that once we have Super Valu out of the middle. We view 40,000 square feet as an optimum for this facility and would not anticipate a need for additional square footage beyond that to house in the west metro area. I hope the City can help us make this a reality. We have enjoyed working with City staff to date and look forward to doing so in the future. The services in the vicinity of the proposed location, as well as the excellent bus service, are positive factors to our decision. Likewise, our large employment base should be a positive factor in the economic development and vitality of the area. Please be certain to let Mark Senn or me know if you have any additional questions. Very truly yours, · - Russell B. Hagen President ~EDUCATION DIVISION, 5900 Baker Road Minnetonka. Minnesota 55345 800-826-2368 612-935-59OO Fax 612-945-7301 SCI-~.r)ULE DATA RECOGNITION PROPOSED NEW HOPE FACILITY City Council Approval July 22, 1996 Implementation of Agreement with City July 23-26, 1996 Sign Lease and Obtain Final Landlord'Approval .luly 23-26, 1996 Obtain City Building Permits July 23-August 2, 1996 Begin Demolition, Remodelling, New Construction August 5, 1996 Complete Construction October 1, 1996 Install Furniture and Fixtures October 1-15, 1996 Move into Premises October 11-15, 1996 PROJECT BUDGET DATA RECOGNITION PROPOSED NEW HOPE FACILITY Demolition, Remodelling, Construction (see attached) $ 550,000 Furniture, Fbmu'es, and Moving Expenses $ 250,000 Total $ 800,000 PROPOSED FUNDING SOURCES City Economic Development Grant $100,000 City Low Interest Loan $ 450,000 Data Recognition $ 250,000 Total $ 800,000 Support Services DATA P~COGNITION CORPOP~-XTION At Data Recognition each project is an opportunity to Systems and Processes provide exceptional service to DRC manages prc,.!ects with a svs- our customers. We partner with terns approach to work ~o~ d-z- sign and quatit.v assurance. Each you to define and accomplish task is defined with appropriate project goals, providing you experts tprqlect te:'tm members, who implement quality control with the best processing steps for their area of responsibd- ity while coordinating with other and data management team members to ensure that over- solutions, all quality standards will be met. Partnering with you Our People Project Team Data Recognition Corporation Projects at DRC are managed kDRC5 has been providing sur- through a team process. Project [ rev support sen-ices to the sur- teams are organized based on spe- ~~?~-;. rev research market for 16 },ears. cific project requirements and are [ ~-,t~-,-,~ ~i~:~:2.~' ' Because We specialize in survey highlyadaptable to the dh-erse needs ~ ~ processing and data manage- ofthecustomersatisfactionresearch ~:~ ment. DRC can offeryou the best market. The client service manager s~,.o,~,i,,, [ (Client solutions to your project needs, acts as team leader and is our key to ~i~'!i :~. \Ve are committed to provid- proxidingyouthese~"icevouneed. ,...,,~,, [~-. ' ingyou seBices to fit your unique Their job is to facilitate the func- ~. . customer satisfaction measure- tioning of the team by providing ! s,,.,~ ~,,.... ment support needs. To this end, primary client interface, defining , our people, systems and facilities overall pro. ject specifications, re- are all aligned to allow for flex- source management, problemsolv- ibilitx 'while providing consis- ingandoverallqualitycontrolfocus. From developrnent and print- tent. dependable results. Our client sen'ice managers are experienced professionals who lng of the survey instruments through final data file or reports. know how to manage the diverse each task is defined in the context needs of your projects. They are of the overall project needs..As backed l~.x- experienced team projects roll out. procedures are members from our technical ser- adlusted as necessa~' to ensure vices group, comment processing c f~icient, acc'ur:~tc handlin< oi-vour center, operations, warehouse. ' clericaL/fulfillment center, laser project. printing and l!'~SCrt!Iq?'I~!lFtllrOOF!'l DRC's teams are flexible and adaptable to meet your unique program needs Fulfillment/Distribution maitouts, mukiple name/address packages, DRC can handIe,Your t'telds and other database tracking needs for presentation graphics, DRC mamtams an internal laser fie[ds as needed, easilv read summary,' reports or ?rinun~ and !ettershop facility. DRC's data management needs detailed statistical reports. ©ur ©ur clerical group is proficient in are met by' our staff of program- proprietor' report package, SL'PR, large scale manual pocketing el- met/analysts and data coordina- provides user-friendly summary forts for projects with unique re- tors who are backed by state- reports in a large va~ietx:'of for- quirements which cannot be of-the-art computer technotogy, mats. [.n addition, DRC supports machine processed. Electronic data capture is man- several statistical software pack- DRC's laser printing capabfli- aged through our Optical Mark' ages for further analysis and ties are backed by forms design Read (OMR) and IMAGE scan- porting options. specialists who work with staff ning systems. These systems al- Whetheryourintemalresearch programmers to set up forms and low DRC to capture traditional staff or one of ou.r strategic part- graphics for integration withvan- mark read documents, hand or ners is responsible for the inter- able text on printed pieces. Pro- machine pnnted alpha/numeric pretation a/xd analysis'process. grammers routinely' create characters, barcodes, and binary our data and presentation style programs to handle mult~plevan- numbers. Comment processing, reports will enhance the overall able printing needs (such as including coding and kel,4ng, and process. unique cover letters per distnbu- other manual key entry efforts tion segment) using database are supported. management techniques and computerized collation at pnnt Reporting ~..,~-,.= time to provide efficient, accurate :, laser output of personalized forms. Through propn- c Machine readable codes Can be etary, industry _ ~ =.=~ _ printed on documents for auto- 'standard, or __ mated respondent tracking, customized i -.._" -- -- Our insernng facilities can fold report , I and nest inserts into envelopes - ~-T,.~.--.~? --' from #9 to 9 x 12. DRC pro,Ades . address standardizatim'~ andzip+4 '~"' ~ updating to capitalize on lower """"~'"'""""~ <~ presort postal rates for large mail- ___ ings. Smaller mafling~ can often -~' be co-mingled with other pre- --. ;i~ ,c sorted mail through one of our -- '.i~ ~-"~"-~'"~;1 ]-~.__~7~_ strategic maiihouse partners to [-- ii~~i~ = , reduce postage costs. 'i -' -=' : ':':~' ] -' ~' ~ Data Management , ~ =-~--:-__=_ { "~:",{ I{ Large scale customer or quality -- i sun'evs require accurate tracking ~--'-'~.= ~, : :, ~ ~ ~' and c{atabase management. DRC :, : ' defines your database to incorpo- ~ ~,. rate ongoing updates, multi-wave '" ........ ~ ~.~ ~._.., .. ~.~ ,.,~,~ An Integrate roac ,~ ~ ..+. ~ ~ ~ ~ ~ ~ %:' ~ ~ I' Paul International airport) ~'as designed ~o house ' -. ~i ~ .~ ~ ~-; ~,~ state-of-the an computer equipment ~qth work flow '~"~"~-~' systems for large scale sun.ey projects. DRC can efficiently handle su~ey materials, even by the truck load ~ receixqng fores, readying them for data About DRC capture, scanning and validating data, referencing Founded in 1978, in reaction to management's on~nal fores' for quality control, analyzing and experience ~th companies needing high volume, crunching numbers, and outputting high quality accurate data capture ~thout costly investments in reports. facilities and expertise, DRC has focused from the Our resources include: beginning on _prox~ding sun-ey support semces. Through our expanded capabilities and new tech- · Optical Mark Read (OMR) scanners nologies. DRC has developed proven techniques for · I~GE (character read) scanners managing large, diverse projects. Our focus on sun'ey research support has remained cu~ent, flex- * Centrally maintained networked PC system ible and positioned to meet today's research needs. From short, targeted su~eys for feedback on spe- · High speed laser pnnters cific issues to complicated, multi-version programs · Lettershop 'facility world~hde; weekly customer satisfaction pro,ams to annual employee su~eys; government research * Fulfillmen~eceixqng center reports to triennial health su~eys. DRC has the * Comment processing group expertise and the systems to take care of your program needs. * ~rge onsite warehouse ~qth track access DATA RECOGNITION CORPORATION 5900 Baker Road Minnetonka, MN 55345 612-935-5900 800-826-2368 ' fax: 612-935-1435 marcus corporation June 12, 1996 Mr. Kirk McDonald City of New Hope 4401 Xylon Avenue North New Hope, MN 55428 Dear Kirk: We represent a company, Data Recognition Corporation, which is actively involved in relocating and expanding a division of their company. Dat~ Recognition is in the business of customized testing and rmtionally services states, school districts, corporations and others requiring or desirin$ customized tests for measurement or asaessment purposes. We are currently involved in negotiatin~ with Super Valu for the 40,000 square feet of vacant space at 45th and W'mnetkt Prior to fumlizin$ an amm~ement with Super Valu we trove met now and explored the prospect of any dty economic development ~s,q/stan~. The 45th and W'mnetka site, while bein~ our most des/red s/te, quit~ s/reply doesn~ compete with other locations economically. For tiffs r~ason we have broached a discuss/on over potential dry economic development assistance. Data Recognition will initially employ approximately 250 people md intends to employ up to 450 if enough skilled employees can be found. Dat~ ~n is quite excited about the New Hope location siven its easy mass trans/t access, goods and services lxovided in the area, as well as its To help 611 the gnp created between this s/te ~md other ~va/iable spar, es we are requesgng that the City and its Economic Dev~tol~nent Auttm~ O/DA) authorize staff to explore, negotiate and We also ~ · Dairy Qu~n tanchise that is interested in adding · Dq/Br~ier unit on an outlot (corn~ of4$th & W'mnetlm). At the france's request we would also like to discuss the potential ofus/n~ Tn~ to adp de/ny pans of the cost of development. Both of these deals invoivin~ sepahte clients need to stand independently, however, ~s we have both at the same time. I lmve arras:heal · building ¼yout for the former/l'oe, ery store space and I have attached some basic information on the Da/ry Queen unit 0001 Wayzata Blvd. * Suite 100 * Minnetonka MN 55305 * (612) 593-1177 * Fax (612) 54443999 Lk l~k McDonad J~ne I" 19% PaBe 2 Please let me know if'there is any additional information you need, otherwise we will look forward to an opportunity to address the EDA in the near future. Sincerely, MarkO Senn MOS/bjm I M,ARCO CONSTRU(iTION (;O.,i INC. Mr. P~sscH~e~ D~ Kecognidon Corporazion ~OK ~OD~' OF PR~SED DATA ~. 80 MINN~S~A U~ - L~ CANAl, MINNE~A 55117 ($121484-5655 ;~ (G1~1484-5.701': carpet- 13~OO/sy installed ~ll°Wm~ 39;~ $fl ACT,. 2.. x'4' :~ss~red i~e ~.4,700: . (~1~]484 5~5 F~ (Si~ 484-5~1~, i Pase 3 May6,~ t996 i ' Alieraate.~ ' ' Add gxitramponnorihsicle.~'required bY ~afiOn. asph~ removai~ a~d BID. I)~[~ NOT IN~ '~' ° C°~s. for ~eo uscct 'du=~~°tuu'ucti°n '. i' * :F6l(rmS partitions .... : . ..:- ....~ .. .. " If you: ~ve a~'qu~ttions rei~di~ ~bi~ lX. OposaL pl~se feel ~r~: to .., ~ mci ai your. - ~ -' 80 MINNESOTA AVENUE! '. - Lrl'r.LE'CIANADA, MINNES 3TA 55117! - ~ (~1E)484-5635 FAX 1:61E)4.84-570¢1 ' f: 8525 Ed~Ok Cross~ B~o~ P~k, ~c~ 55443 J~ly 18, lgg$ Kirk NcDonald City of New Hope 4401 ×ylon Avenue North New HOpe, HN 5548 RE: Da~a Recognition Corporation Loan Super Valu Site Our File No. 39.11175 Dear Kirk: Data EecognitJon Corporation (Data) has approached the City for a grant and a loan fm~ remodelling the old Supe~ Valu site. Da~a would ~hen move i~8 handecorin9 operations ~o %he New Hope si~e, w~bh ZSO part-aims Jobs belng Jnvolved, Th~s le~er wil1 raise some o~ the legal details of the ~equeeted financing which the Council should ooneider. The requested gran~, i~ ap0roved, would be an outright gift with ~epayment provisions. The lo&n, however, would need ~o be repaid. The City will wan~ aa muuh me~uriby ~or repaymen~ as =~e City can ge~. Becaose Data will ~e taking over (aa a subtenant) the existing lease on the prope~y, Data will neve~ have anything ~han a leasehold ~n~eree~ in ~he site. A mortgage secureU ~y a leasehold interes~ in real estate is essentially worth nothing. tn ourjni~al meeting w~h Data, %he owner Eusmell Hagan lnUlcateU ha has other real es%aaa Interests, aha may be willing ~o use those to secure the loan. [n that ~a~e the City would make the loan the improvements &~ %he Super Valu site~ secured by a mortgage on o~her re~l esCabe owned by Russell Hagan, Zf unencumbered real estate of su~lcien~ value owned by Hagan i~ mortgaged to the loan, that arrangemen~ will give ~he C~¥ appropriate for repayment. The loan terms ~hemselve~ need some consideration, The JUL-!8-96 THU !4:04 Kirk McDamald July 18, 1996 Page 2 rate will need ~o be set, and can be fixed or variable. Da~a has ind'ic~bed'bhe¥ w~ll be willing to p~y b~ck bhe enb'irm lo~n within the time ?r~me o? the underlying lease on the proper~y, ~h~ch me,ne repayment in eight years. The loan documents should include terms making certain the funds will be spent only on the construction at the New Hope site, and can also be se% up on ~ reimburmem~nt bamim, mo the Ci%y o:n be .sure ~h~ ~he improvements mmve in fmc~ been in~alled before gets loan money for those item~. The City should require mecur~y in~eres~ in ~he fixtures and o~her i~em~ of movable proper:y ~ ~he si%e, ~o fur:~er enhance ~he~moun~ of security for the la~n. T~e lo&n can ~15o include guarantees ~h~ ~he employm~n~ ~ site will exceed ~ certain number, say 250, and a drop below ~mount w~11 ~r~g~er ~ def~ul~ ~n ~he toan ~nd ~11ow ~he City ~o c~11 ~he lo~n due, Enclosed you w~11 find ~ s~mple Rort~ge'Note, Lo~n Agreemen~ ~nd Conm~ruc~Jon Lo~n D~mburme~n~ Agreeing, ~nd m Mortgage ~nd As~ign~n~ of Ren~s and Securiby Agree~n~ ~n~ Fixture Finencing S~emen~. T~ese ~re ~ypim8l nf :he dncu~ntm the C~y ~hould require. In ~dd~ion, ~h~ O~y ehould requ~rm ~ A~signmen: of Le~se~ mnd Ren:~ an~ sever~l o:~er mlscellmneou~ document. The ~rom~m~ory Norm mnd Lomn Agrmm~n~ should bm by bo~h Da~a and Ru~sell Hagen, and ~he ~r~gage signed by whoever i~ in :l~le :o ~he mecure~ proper~y. we w~ll no~ ~ ~ble ~o f~nml~ze ~he ~rm~ or %he exmc~ docu~n~m requ~re~ un:tl %~ ~ouncil m~ke~ ~e ini:iml d~ci~ion~, mna we receive mddi~ionml information ~bou~ D~ ~nd Ru~8ell H~gen. ~ ~ mute you w~ll have ~o~ que~on~. Do no~ hee~e ~o c~11. V~ry truly yourm, 8~even A. eno 1 o~u ~e~ Da~ Do~a~U~ JUL-18-96 THU 14:04 P, 04/26 MORTGAGE NOTE $ ,000. O0 .. , bi1 nnesot a , 1996 FOR VA[ UE RECEIVED, the undersigned, DATA RECOGN[TTON CORPORAT[ON, a Minnoeota oorporation and Russell Hagen (hereinafter collectively "Borrower"), promise to pay to the order o; ECONOMZC DEVELOPMENT AUTHORTTY IN AND FOR THE CITY OF NEW HOPE ("Lender",), (Lender and any holder of thia Note from time to time are eabh hereafter sometJmes referred Lo as "Holder-") at its business address, 4401 xylon Avenue North, New Hope, Minnesota 55428, or suoh other place as may hereinafter be designated from time to time in wr'i Lin9 by the Holder hereof, the principal sum of and /100 Del Jars ($ ) or so much thereof as shall have been advanced hereunder to or for the benefit of the undersigned pursuant, to the terms o1' a Consl:rucl;ion Loan Agreement and Loan Agreement ol' even date herewith, made by the Rorrower, and a , as Lender (hereinafter referred to as ~he "Loan Agreement"), together with interest 1'rom the date hereof unfi] fully paid, at the rates hereinafter provided, on the Principal Balance, from time to time, advanced and remainin9 unpaid (hereina1'ter referred to as the "Principal Balance"), the Principal Balance and interest shat~ be due as follows: A, Commencing as of the date hereof, interest sha~l accrue on the Principal Balance at a rate of ...... · per annum. [nterest shall be computed on the Principal Balance at the end of each day a~ follows: The rate of ~nterest as determined above shall be divided by 360 days and the Principal Balance of this Note sh~11 be multiplied by the percentage so obtained, B, Moot hl y payment s commenci n9 , 19 she11 be i n t he amount of $ Der month and a ~k.~-amount shall be due and payable on the same day of each month thereafter through and including , 19~.[payments to ~tllow full amor~tiz&t~on of loan in eight years]. c. All payments made by Borrower pursuant to the terme of this Note sha~l be applied 1'irst ~o interest and then to reduc[lon of principal. D. ALL AMOUNTS DUE AND OWING PURSUANT TO THI~ NOTE SHALL, UNLESS SOONER PAZD, BE DUE AND PAYABLE , 20 . SAID PAYMENT l'S NOT A BALLOON PAYMENT. If any installment is pa~c~ more than tifteen (15) days &1'tar the due date thereof, the Borrower shall pay a late charge of &ti of 1 JUL-18-96 THU 14:04 P, 05/26 the installment to cover the expenses of collection. Borrower may prepay this Note in whole or in par% upon ten' (10) days written notice to Holder and upon payment to Holder of all interest'which has accrued to the date of such prepayment on the Principal Balance of this No[e, This Note is secured by a Mortgage and Assignment of Rents and Security Agreement and Fixture Financing Statement of even date herewith upon real property situated in Hennepin County, Minnesota. All of the terms and conditions contained in said Mortgage end in the Loan Agreement which ~r-e tu 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 sst forth herein; and Borrower covenants and agrees to keep end perform them, or 'cause them to De kept and performed, strictly in accorOance with their terms. 'Time is of the essence hereof. In the event of a default in fha payment of any principal or interest 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 thts Note or in the Mortgage or Loan Agreement, the Holder at its option and without further notice~ demand or preaentment for payment to Borrower or others, may declare immediately due and payable the PrinciDal Balance and interest accrued thereon, 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 who~e In or in part at any t~me by one or m~re ct 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, ~t the sole discretion of Holder, &nd=may be exercised as 01ten as occasion therefor sha~l occur; and the failure to exercise any such right or remedy shal~ in no event be construed as a waiver or release thereof. Borrowmr waivms presentment for payment, demand, notice of demand, notice of nonpayment or dishonor, protest and notice of protest of this NOte, a~d all other notices in conneotion with the delivery, acceptance, performance, default or enforcement of the payment of this Note. Holder shall not be deemed by any act of omission or commission to have waived any of its rights or r~medies hereunder unless such waiver ie in writing ~nd signed by the Holder, and then only tO the extent specifically set forth in t~e writing, A waiver 2 JUL-18-@8 THU 14:08 P. 08/28 with reference to one event shall not be construed ~s continuin9 or ss a bar to or .waiver of any right or remedy ss to a subsequent event. All agreements herein are expremsl¥ l~mited ed th:t 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 ~hall be reduced to the limit of ~uch 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 ~he payment of interest. This instrument shall be 9overned by and construed accord(n9 to the laws of the State of Minnesota. IN WITNESS WHEREOF~ Borrower, ~ntendin9 to be legally bound hereby, has duly executed this Note the day and year first above written. DATA RECOGNITION CORPORATION, a Minnesota corporation By, By, Its Russell Hagen c;\ ~p~i\cnh\dr~ nt~ 3 JUL-18-96 THU 14:05 P, 07/26 LOAN AGREEMENT AND CONSTRU~TJO.N LOAN DISBURSEMENT AGREEMENT THIS LOAN AGREEMENT and CONSTRUCTION LOAN DISBURSING AGREEMENT (hereinafter referred to as "Loan Agreement") made this day of , 1996, by and between DATA RECOGNITION CORPORATION, ~ Minnesot& corporation (hereinafter "DRC") and RUSSELL HAGEN (hereinafter "HAGEN"), (hereinafter collectively referred to as "Borrower'°'), and the ECONOMIC DEVELOPMENT AUTHORITY IN AND FOR THE CITY OF NEW HOPE, a MinneSota municipal corporation (her'e~nafter referred to ~s "Lender"). WITNESSETH: WHEREAS, Borrower has applied to Lender for a rea3 estat~ mortgage ~oan to ~nance cons~ruc[ton on the Construction Property, to he secured by a mortgage on t~e Loan Property, as both properties are hereinafter defined, w~th the loan fo be in the principa3 amount of $ (the "Loan Amount"); and WHEREAS, Borrower has i~sued the fo31~wing security documents: (a) First Mortgage Note of even da~e herewith made by Borrower and payable to the order of Lender in the original principa~ amount of $ ("Loan Note" or "Note"), (b) First Mortgage and Assignment of Rents and Security Agreement and. Fixture F~nancin9 Statement securin~ the Loan Note in the amount of $,, ("Loan Mortgage" or'"Mortgage") of even date herewith, executed by HA~EN, as Mortgagor, in favor of Lender, ~s Mortgagee, covering prooerty therein described situated in Hennepin County, M~nnesota (the "loan Property"). (c) Assfgnment of Leases and Rents fn favor or Lender for the L~an ~rope~ty, of even date herewith, executed by HAGEN. (d) A Loan Agreement executed by Lhe Borrower to the Lender. (e) Security A~reement in ~avor of Lender for all f~xtures, equipment, and leasehold ~mprovements lo~ated on the Construction Property, executed by DRC. (f) A Security Agreement ~ranting to Lender a first priority security interest as respects the Loan Amount ~overing a11--Borrower's machinery, equipment, furniture and fixtures, and all other tangible personal prop,try. whether then owr~ed or thereafter acquired by the Borrower, or whether purchased or leased which are use~ or installed at the Construction Property. JUL-18-@B ?HU 14:05 P. 08/26 A Security Agreement 9ranting the Lender a first priority security interest in all of ~he Borrower's accounts receivable, contract rights, chattel paper, inventory, g®nerml intangible~ instruments, patent ri~ht~, and ~uch additional documents a~ r'el~le thereto as the same may relate to the Construction Property. (h) A ~u~ordinatiun Agr'eement for all debts owed by the to its shareholders. (i) A Hazar'd~u~ Waste Indemnity Agreement, NOW, THEREFORE, in consideration of the mutual covonant$ hereinafter contained, it is hereby agreed as ~ollows: 1. ~Ount of Loan. Borrower agrees to t~ke and Lender agrees to make a loan in the principal amount of $. (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, Assignment oF Leases and Rents, Security Agreement, and any other security documents required under this Loan Agreement. The terms and condition~ of the Loan Note, the Loan Mortgage, the Assignment of Leases and Rents, the Security Agreement, and any other instrument required under this Agreemen~ ~re hereby expressly incorporated herein by reference and made a parl her'mof. 2- Amount. of Borrower Contqjbution. The Loan amount shall be not more than percent of the totml project cost of the improvements to the Construction Property. Borrower' shall pay out of other funds the total ~ro}ect cost of the improvements, less the Loan amount. . 3. Use of Loan. PrOCeeds, The Loan ~roceeds shall be used solely to improve the Construction Property located at 4471 Winnetka Avenue North, New Hope, Minnesota by all as approved' by Lender, and all in accordanc~ with the List of Improvements and Budget attached hereto, The disbursement of the Loan Amount will be on a reimbursement basis, with Loan disbursements made only after the improvements have been completed and found acceptmble by the Lender'. 4. Documents to be Delivered. Borrower covenants and agrees to immediately without expense to Lender cause the comp3iancs with the following ~onditions., such conditions being hereby n~mde a condition ~recedent to Lender's obligation to make any advance of the Loan: (a) NOte, Oeliver tO Lender the Loan Note. (b) Mortgage. Deliver to Lender the Loan Mortgage together with evidenue tl~at the Mortgage has been du~y filed for record. 2 JUL-18-96 THU 14:05 P. 09/26 (c) ~ssignment ,o,¢.._Leases and R~ts. Deliver to Lender the Assignment of Leases and Rants together wifh evidence that the Assignment of Leases and Rents has been duly filed for record. (d) Securrty. Agreement. Deliver to Lender the Security Agreement together with evidence that UCC-1 Sl~lements have been duly filed for record with Henneoin County and the State of Minnesota. (e) COrporate Fx..istence. De]iver to Lender evidence satisfactory to Lender that DRC is duly organized and validly existing under Lhe laws of the State ~f Minnesota; that the execut ion of this Agreement, the Note, the Mortgage and any other instrument required u~der this Agreement have been duly authorized by all necessary corporate action; and that this Agreement, the Note, the Mortgage end any other document required under this A~reement have been duly executed and delivered and are the legal~ valid and binding obligation uf DRC, enforceable in accordance with their terms, and containing such other resolutions and certif-icationa as Lender may require. (f) Tit~..e ~n~urancQ P_olioy. Deliver to Lender a Mortgagee's Title Poltcy, hereinafter called "Title Policy", from a re~utable title insur&nce comoany, issued ~o Lender in the amount of $ with respect to the Loan Mortgage arid insuring that the Mortgage is a lien on the Loan Pro~erty to the extent it ~ur~orts to be free and clear of mortgages, mechanic's l~ens, mater~alme~'s liens, taxes,' special assessments, rights of parties in Dossession and ~uestlons of survey and sub~ect only to e~ceptions spec{fically a~proved in writing by Lender. (g) Insurance. Deliver to Lenders certificate or policy ~or al~ insurance required under the terms hereof or o¢ the Mortgage, to be maintained by Borrower. 5. Affirmatiye C~¥enants. The BOrrOWer covenants and agrees that it will~ unti~ the borrowing hereunder and thereafter, so long as any ~ndebtedness remains outstanding under this Agreement: (s) Furnish tO Lender: (i) Cash f~OW projectior~ for the time period th&t the Loan Amount w~l be outstanalng in form and substance accept&ble to the Bank prior to the advance of any portion of the Loan Amount, end ~ during the term of ~he Loan furnish cash flow projections ~n form and substance acceOtabl® to the Bank; (ii) Such information as required by the ~erms and conditions of this Agreement and al3 othe~ 3 JUL-18-96 THU 14:06 P, I0/26 documents or instruments o¢ 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; (iv) Completm and accurate financial statements for itself and its Guarantor prior to the advance of any portion of the Loan Amount; (v) Complete and accurate unaudited financial statements quarterly while any portion of the Ldan Amount remains outstanding prepared by an accounting firm acceptable to the Lender; (vi) Furnish or cause to be furnished by the Guarantor annually while any portion of the Loan Amount remains outstanding unaudited financial statements prepared in accordance with accepted accounting principles, (vii) Prior to June I of each ye&r, commencing June 1, lg__, the Borrnwmr shall furnish a CODY of its federal and state tax returns to the Lender certified by an officer of Borro-er as true and correct and certified that all amounts due tot federal and state income tax in connection with such returns have been pm'id, (viii) Prior to June I of each year, commencing June I, 19 , the Borrower shall cause to be furnished by each Guarantor a copy its federal and state corporate tax returns to the Lend.r, certified by the respective Guarantor to be true and correct and certify that all amounts due for federal and st~[e income tax in connection with such returns have been paid. (b) R6p&y and discharge all taxes and other governmenta~ eherges and all contractual obl{gations calling for the payment o[ money before the same shall become overdue, unless to the extent only t~at such payment is being contested in good faith. (c) Pay all charges required by local, state and federal governments for the maintenance and operation of the Construction Property and the Loan Property. · (d) Maintain insurance coverage on its physical assets and against other business risks in sueh 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 incurre~ce of additional ri~ks of any nature, increase such JUL-18-96 THU 14:06 P, 11/26 insurance Covmrage 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' [hen those policies protecting against casualty liabilities to strangers, all such insurance policies sh~ll provide that the los~ payable thereunder shall be payable to the Borrower end 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 [.~nder, through its authorized attorneys, accountants and repre~entatives~ to examine the Borrower's books, accounts, records, ledgers and assets of ~very kind and description at all reasonable times upon oral or written request of Lender. if) Promptly notify the Lender of any' condition o.r event which conatitutes, or with the running of time and/or the giving or notice would constitute default 'under this Agreement, and promp[ly inform th~ Lender of any materially adverse change i~ Borrower's financial condition. (g) Execute and deliver to the Lender at any time or times, assignments or supplemental assignmente and such other and further instrument~ of assurance ae the Lender 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. 6. ~ncum~ances and TEansfer. Borrower agrees not to sell, transfer or convey the Construction Property or the Loan Property or any part thereof, or encumber the Construction Property or the Loan Property or any part thereof, in any manner, without written con~ent of Lender, which consent shall be given or withheld in the sole discretion of Lender, 7. Time of Ee~ence. Time is of the essence in the performance or [his Agreement. 8, Assjqnability. Borrower ~hall not assign this Agreement nor assign it~ obligations ~s specified herein without the written consent of Lender~ whic~ consent shall be ~iver~ or withheld in the sole di~cretidn of Lender. $. R¢~resentaligf)~ ~nd WaF.ranties. Borrower represents and warrants to Lender the following: JUL-18-96 THU 14:06 P, 12/26 (a) DRC is a Minnesota corporation duly formed, validly existing and in 9cod standing under the laws of the State of Minnesota, {b} The making and performance of this Loan Agreement and the execution and delivery of the herein described Note, Security Agreement and all other instruments required hereunder are within the corporate powers of DRC and have been duly authorized by alt necessary action. This Loan Agreement and the NOte, Security Agreement and any other instruments required hereunder have been duly executed and delivered and are the legal, valid and binding obligations of the DRC enforceable in accordance wi~h their respective terms. (C) The making and performance of this Loan Agreement and the execution and delivery of the herein described Note, First Mortgage, Aosignment of Leases and Rents and all other instrumenls required hereunder are the legal, valid and binding obligations of HAGEN en~orceaDle in accordance with their respective terms. (d) 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. (e) The Borrower has filod and will file and cause to be ~iled 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, No pollutants or other toxic or h~zardous substances, including any solid, liquid, gaseous, or thermal irritant or contaminant, such as smoke, vapor, soot, fumes, aciOs, alkalis, chemicals or waste ((ncluding 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 ConsLr'uction Property or the Loan Property. (g) No asbestos ur asbestos-containing materials have been installed, used, incorporated into, or disposed e~ on the Construction Property or the Loan Property. (hi No polychlorinate~ biphenyls ("PCBs") are located un or in the Construction Property or the Loan Property, in the form of electrical transformers, fluorescent light fixtures with ballasLs, cooling oils, or any other device or form. 6 JUL-18-96 THU I4:07 P, 13/26 ( i ) No underground storage t~nks are located on the Construction Property or the Loan Property or were located on the Construction Property or the Loan Property and subsequently removed or ~ilted. No invs~Ligat~on, administrative order~ consent order and agreement, litigation, or settlemen~ (collectively referred to as the "action") with respect to substances Is proposed, threatened, antJcipated or in existence with respect to Borrower's property, (k) The Construction Property and the Loan Property, and Borrower's activity in connection wiLh the Constructi,on Property and the Loan Property are in compliance with all ~ppl~cable federal, state and local statutes, laws and regulations. No notice has been served on Borrower from any entity, governmental body, or ~ndivtdual cla~ming any v~olation of any law~ regulation, ordinance or code, or requiring compliance with any law, ~egulation~ ordinance or code, or demanding payment or contribution for environmental damage or injury to natural resources. t0. Indemnification. Borrower agrees ~o Indemnify Lender and save ~t harmless against a11 losR, liabil'ity, expense, or damages including but not l~mited to attorneys fees, wh{ch may arise by reason of a breach by Borrower o? any warranties ur representations contained ~n this Loan Agreement or the assertion o~ any lien against the Construet~on Property or the Loan Property. 11. Oefau~ts. In the event: (&) Borrower ruils to maintain employmen't at the Conetructlon Property of at least 250 part-time employees. (b) Borrower abandons the Construction Property or HAGEN abandons the Loan Property; or Bankruptcy, reorganization, assi9nment, insolvency or liquidation proceedings, or other proceedings for relief uhder any applicable bankruptcy law or other law for relief of debtors are instituted by or againRt Borrower; or (d) Any judgment, attachment, garnishment or other similar process is entered against Borrower or against any ~ property or assets o~ Borrower an~ ~s' n~l ~eleased, satisfied or . d~charged or bonded to Lender's satisfaction; or (e) Any-Of ,the terms, covenants, or conditions of any perm~t or agreement ~ssued or made by the City or other governmen L ul body having jur~ sdtctlon over the Construction Property or the Loan Property have not been complied, with or are terminated or modified by the C~ty or such other governmental body; or 7 JUL-18-96 THU 14:07 P, 14/26 (f) Any mechanic's or materialmen's lien is filed, against the Construction Property or the Loan Property and is not r'elea~ed, satisfied or discharged or bonded to Lender's satisfaction; or (g) Borrower defaults in the payment or performance of anything by it to be paid or performed under this Lo~n Agreement or under the Loan Note or Loan Mortgage, specifically including the failure of DRC to meet the employment goals at the Constru~tiun Property ~s set for, h more fully in the LOan Note: or (h) Any change of the corporate str'uulur~ or stock ownership of O~C, voluntarily or involuntarily, without the consent of Lender; or (i) Any representation or warranty ~y Borrower contained herein or in the Loan Note, Mortgage or any o, her instrument required hereunder i~ false or untrue in any material respect; or , (j) Borrower defaultm in the payment or performance of anything by it ~o be paid or performed under any note~ m~rfgage or other agreement now or hereafter made by Borrower in f~vor of or with Lender or otherwiae now or hereafter held by Lender; then Lender, at its option, ~hall, in addition to any other remedies which it might be entitled to by law, have the right to: (a) Refrain from making an advance under this Agreement; (b) Cancel this Agreement; (c) Brin9 appropriate action to enforce performance and the correction of SUCh failure or default; (d) Declare the entire unpaid principal of the Loan Note and all accrued interest thereon i rrm~edialely due and payable without notice; (e) Fureulose the Mortga9e and any other security instrument referred to in this Agreement. 1Z. Advance ~ Funds and C~o~truction. Borrower agrees to improve the ConstruCtion Property in a manner acceptable 'lu the Lender in accordance with plans, specifications and contracts provided to Lender and in compliance with all applicable restrictions, conditions, ~ude~, ordin~noes, regulations and laws of all governmental bodies having jurisdiction over the Construction ~roperty. ~n connection therewith, fh~ Borrower shall comply with the terms and advances shall be made in accordance with the terms and conditions of the Construction Loan Disbursing Agreement attached as Exhibit "A". The Lender's obligation to advance is specifically oubject to compliance with all terms and JUL-18-96 THU 14:07 P, 15/26 conditions az specified on Exhibit "A". Failure of the Lender to enforce strict or timely compliance with an nhligation shall not be deemed a waiver of the right to require compliance at a lator date, 13. No~:icee. Any noti'ces given h~reunder shall be in writing and shall be deemed to have been given when delivered personally or when deposited in the United 5rates mail, registered, postage prepaid, addressed as follows: [f to Borrower at: Data Recognition Corporalion Russell Hagen 5900 Baker Road Mirtrletonka, MN 5'5345 If to Lender at: The Economic Development Authority in and for City of New Hope, MN 4401Xylon Avenue North New Hope, MN R~428 If to Guarantor at: As d~.~ignated or addressed to any such party at such other address as such party shall hereafter furnish by written notice to the other party. 1~. ~adin~s. The headings used in this Agreemenl are ~or convenience only and do not define, limit or construe the contents O~ this Agreement. 15. ~indings...on Sucqessors and Assigns. Subject to the limitations conl~ined in this Agreement, thi~ Agreement shall be binding upon and inure to the benefit of the successors mhd assigns of the parties hereto. IN TESTIMONY WNFREOF, each of the parties hereto have caused these presents to be duly executed as of the day and year first above written. DATA RECOGNITION CORPORATION, a Minnesota corporation By: Its By: ........ Its g JUL-18-96 ?HU 14:08 P, 16/26 Russell Hagen, IndiviUually THE ECONOMIC DEVELOPMENT AUTHORITY TN AND FOR THE C[TY OF NEW HOPE Ils President By: Its Executive Director 10 JUL-18-96 THU 14:08 P, I7/26 m MORTGAGE AND ASSIGNMENT OF RENT~ AND SECURITY AGREEMENT FIXTURE FINANCING STATEMENT THIS INDENTURE, (hereinafter referred to as "Mortgage") is made this ..... day of , 1990, belween RUSSELL HAGEN, whose add'ress i~ ..., the ("Mortgasor"), and the ECONOMIC DEVELOPMENT AUTHORITY TN AND FOR THE CITY OF NEW HOPE, MINNESOTA, having its office =t 4401 Xylon Avenue North, New Hope, Minnesota 55428, (hereinafter called "Mortgagee"), WHFREAS, the Mortgagor has requested eno the Mur'tgagee has agreed to make a loan to the Mortgagor, evidenced by Mortgager's Note (hereinafter the "Note") of even date herewith, payable to the order of Mortgagee in the principal amount or and __/100 Dollars ($ ) and bearing interest at tho rate set forth therein. NOW, THEREFORE, in consideration of the premlses and rut' 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 accorOance with this Mortgage, and all interest (hereinafter the "Indebtedness"), and to secure the performance or all covenants, condltiono and agreements herein and in the Note, and ~r}y other security document referred to therein, the Mortgagor conveys forever all of the Mortgager's right, litle and interest in the tract or parcel of land, l~gally described in Exhibit [ hereto, (hereinafter the "Land,) together with (i) all building materials, supplies and equipment now or hereafter incorporated ~n ~ny building, structure, or other improvement located or to be erected on the L~nd; and (ii) all of the buildings, structures and other improvements now stanOing or at any time hereafter ~onstructed or placed upon the Land; and (iii) al] heating, p]umbing and 15ghting apparatus, _motors, engines, and machinery~ electrical equipment, incinerator apparatus, air-~onditionin~ equipment, water and gas apparatus, pipes, faucets, and all other fixtures of every description which are now or may hereafter be ~laced or uaed upon the Land or ~n any building or improvement now or hereafter ~ocated thereon; and (iv) all furniture, furnishings eno other per'son~l property which are now or may herenfter be installed or placed in or about or' used in connection with tho use, operation or maintenance of the buildings or improvemenLs now or hereafter located on the Land; and (v} all additions, accessions, increases, parts, fitti.ngs, accesoories, replacement~, substitutions, betterments, ~epairs aha proceeds to any and ~11 of the foregoing; (vi) all right t~ receive disbursement of amounts due as a result of the establishment of a T~x Increment District which includes the Land together wi th all contract rights of Borrower and/or aftributab3e to the Land as a result o~ such District; and (vii) ~l hereditaments, easements, appurtenances, estates, rents, JUL-18-96 THU 14:08 P, !8/26 issues, profits, condemnation awards and other rights and interests now or hereafter located thereon (all of the f~regoing, together with the land, herein:fter being referred to ss the "Property" or "M~rtgaged Property"), TO HAVE AND TO HOLD, the Mortgaged Property unto the Mortgagee l'orever; PROVIDED, N~VERTHELESS, that this Mortgage i~ 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 pt 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 MORTGAGOH 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 Lo mortgage the Mortgaged Property; that neither th~s Mortgage, nor any other security document tel'artsci to therein nor the Note contravene any covenant in any ~nd~.nture or agreement affecting the Mortgagor; that the Mortgaged Property 5s free from all l~ens and encumbrances except those Identified in Exhibit ti; that the Mortgagee shall quietly enjoy and possess the Mortgaged ProperLy; that the Mortgagor will warrant and defend the t~tle to the Mortgaged Property against alt claims, whether now exist{ng or hereafter ar~.~ng: and that all buildings and ~mprovements now or hereafter located on the Land are, or w{ll be., 3ocated entirely within the bounaaries of Lhe Land, The covenants and warrant~es of this paragraph shall surviYe foreclosure of this Mortgage and shall run with the land. AND [T FURTHER COVENANTED AND AGREED AS FOLLOWS: ARTICLE ONE GENERAL COVENANTS, AGREFMFNTS, WARRANT[ ES 1.1 Payment o...f [ndeb.t. edness,... Observance of, Co.ven.a.nts, Mortgagor will duly pay each installment of principal and interest on the Note and all other indebtednea~ and will perform all other agreements and covenants by Mor-t~agor to be performed hereunder or under the Note, the Loan Agreement, or any other securtty document referred to herein. 1.2 Payment .of...ImDositi.ons, The Mortgago~ agree~ to pay, before a penalty might attach for non-payment thereof, all taxes, assessments, w~ter and ~ewer charges, and other fees, taxe,~ and charges pt wmatsoever nature ~evied upon or assessed or placed against the Mortgaged Property. The Mortgagor will likewise pay all taxeo~ aesesementm and other charge~, levied upon or assessed, JUL-t8-96 THU 14:08 P, t9/26 placed or made ~a'inst, or measured by, this Mortgage, or the recordation hereof, or the indebtedness, provided th~l 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 et a usurious rate of interest on lhe Indebtedness. The Mortgagor shall promptly furnish to the Mortgagee alt notices received by the Mortg~9or of amounts due under this paragraph and upon the Mortgagee's request, sha~l de~iver' proper receipts evidencing the payment of ~uch amounts. In the event of a decree or tegislatlve enactment after the date of this Mortgage, providing that any such ~mposition m~y not be ]awfu~y paid by Mortgagor, nr in the event that the payment of any such imposition by Mortgagor would result in the payment of a usurious rate .,of interes~ on the Indebtedness, ~he Indebtedness, together with interest, sha]] become immediately due and payab]e, or, at Mortga~ee's option, Mortgagee may pay any Amount or portion of such Imposltlon as renders the Indebtedness unlawful or usurious, in which event Mortgagor shall concurrently ~herewith pay ~he remaining lawful and non-usurious portion or balance of said imposition. 1.A PaYment of OEeratin~ Oosts:._~,rior...Mort~&~es. ~n.d Liens. Mortgagor ~g~ees that it wil~ pay ~]] operating costs and expenses of ~he Premises; keep the Premises free {rom mechanic's, materialmen's and other liens no~ expressly subordinated tu the lien of this Mortgage; will keep the Property free from ]evy, execution ~r attachment and will immediately pay whether or not then due a~l indebtedness which may be secured by mortgage, ]ion or charge on the property (other than this Mortgage) and upon request will exhibit to Mortgagee s~tisfaotory evidence of ~uch payment and discharge. 1.4 Contest of imooaitions, .Liens and Ley~es. Mortgagor shal~ not be required to pay, disch~r'Be or remove any imposition, ~ien or levy so ~ong as the Mortg~gor sha~] in good faith contest the same or the va~idity thereof by appropriate leg~ proceedings which shal~ operate to prevent the collection of the levy, ~ien or imposition so contested and the sale of the Property, or any part thereof to ~atisfy the same, provided that the aortgagor shall, prior to lhe date such ]evy~ lien or imposition is due and payable, having given such reason&b~e security as may be demanded by the Mortgagee to insure such payments and any pen&lties and interest that may ~6~rue thereon and prevent any sale or forfeiture of the Property by reason of such nonpayment. Any such contest sh~ll be prosecuted with due d~ligence and the Mortgagor shall promptly after final determinatign_th~reo~ p~Y thc amount %~¢ny ~uch llen or imposition so ~e~erm~nea, together with ~ 3n~eres~ penalties, whlch rn~y be payable in connection therewith, Notwithstanding the provisions of this section, Mortgagor shall, and Mortga~e~ may, pay any such levy, ~ien or imposition notwithstanding such c~ntest if in the reasonable opinion of the Mortgagee, the Property is in jeopardy or in danger o~ being forfeited or forecloaed. 3 JUL-18-96 THU !4:09 P, 20/26 1.5 ~intenance and Repa~.C~; Inventory, 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, r~strictions'and covenants affecting The Proper~y 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 Mortgag~ it will not remove from the Property any fixtures or personal property unless the same is immediately replaced with tike fixtures or personal property of at least equal value, or is otherwise removable under paragraph 6.1 hereof; or expand any improvements on the Property, erect any new improvements or make any material alterations in any improvements which will alter the basic ~tructure, 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 agre~ 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 con~ent. Mortgagor agrees that it will not vacate or abandon the Property, Upon request of Mortgagor, Mortgagor shall deliver to Mortgagee an inventory showing make, model, serial number, and location of all personal property to be included in the Mortgaged Property pursuant to the terms hereof together with a certification by the Mor-lga~or that said inventory is a true and complete schedule of the personal property to be included in the Mortgaged Property pursu~n, to the terms hereof, Such invenlory shall list any conditional sales contracts and other title retention arrangements to which such personal properly m~y be subject. 1,6 )nsurance. (al So lon~ as the Indebtedness remains unpaid, the Mortgagor shall, at its own dost, maintain with insurers of r~cognized responsibility acceptable to the Mortgagee, the insurance required by the Loan Agreement, and upon completion of the lmprovements contemplated by the Loan Agreement, hazard and fire insurance on such completed improvements insuring against loss by fire, hazards included in the term "extended coverageS, loss by vandalism or malicious mischief, and such other hazards, casualties and contingencies.as may be required by the Mortgagee, on the basi~ of reptaceman, cost without a co- insurance clause, in an amount sufficient to prevent the Mortgagor from becoming a co-insurer or any loss thereunder and at least equal to the sum of the unpaid balance of the Indebtedneso and all amounts secured by any senior mortgage or other lien wh(ch, exisks from time to tim~ 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 s~all pay all JUL-18-96 THU t4:09 P, 21/26 premiums On' insurance required hereunder by making payment directly to lhe insurer. The Mortgagee 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 ad additional security for the payment of the Infle~tednes~ secured hereby. In the event of foreclosure of this Mortgage, ~ll right, title ~nd interest of the Mortgagor in and to any insurance poli~ies then in forc~ sh~ll paes to the purchaser at the foreclosure sale. (b) The policies of mll mu~h insurance shall have loss payable provisions in favor of and in form a~cept&blm to the Mortgagee, sh&ll provide for at least 'thirty (80) days prior to written not iceQ of cancellation, termination or modification thereof to the ~ortgagee, shall permit Mortgagee tO make premium payment~ to prevent cancellation, and ~hall provide t'hat no act or negligence of the Mortgagor or' of any occupant of the ~ortgaged Property, and no occupancy or use o~ the Mortgaged Property for purpo~ei more hazardous than permitted by t~e terms uf the policy, will affect the validity or enforceability of such insurance as against Mortgagee. In the event of lol~ under such insurance the Mortgagor shall y!v~ prompt notice to the insurance carrier and the aortgagee; ~ortgagor shall Ouly make proof of ~oeQ, and shall immediately furnish to Mortgagee a copy of such proof of loss. The aortgaQee authorized and empowered to collect an~ receive insurance proceeds, and if no Event of 0efault has occurred under this Mortga~e~ it will apply ~uoh prooeed~ tO the restoration of t~e Property an~ make d~ursements thereof according and Rubject to the provisions of Loan Agreement relating to the disbursement of Loan proceeds. Any insurance proceeds nol so applied shall be app]ied to the payment of the ~ndebtedness. 1.7 Inspection. The Mortgagee, or its agents, shall have the right tn enter upon the Mortgaged Property Outing ordlnary hours for the purposes of inspecting the aOrtQaQed Property or any part T~ereof. The Mortgagee shall h~ve no duty, however, to make such inspection. 1.8 Protection of aort~e~'s SeOu.~it..¥, If the Mortgagor fails to per~orm any o~ the covenants ~nd agreements contained in this Mortgage or if any action or proceeding is commenced whlc~ does or may adversely affect the ~ort~aged Property or the interest O~ the Mortgagor, at Mortgayee's option, may perform such covenants and agreements, defend against such action or proceedtny~ or otherwise act as the Mortgagee de~ms necessary to protect its interest. In the event that, aftor damage to or destruction of the Mortgage~ Property or condemn~tio~ of a portion of the Mortgaged 5 JUL-18-96 THU 14;10 ?,22/26 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 pr'oceed~ which ~re paid to the Mortgagee are not sufficient to pay for such restoration, the Mortgagee may, nevertheless effect the restoration. Any amount~ disbursed or costs incurred by the Mortgagee pursuant to this paragraph, including interest and reason&bls attorneys' fees, shall become sdditional indebtedness of the M~rtgagor secured by this Mortgage. All amounls disbursed or costs incurred by the Mortgagee pursuant to this paragraph she1] be payable upon demand, and shall bear interest from the d~te of disbursement or 1ncurrence ~t the r~te set forth in the Note un]ess payment of interest at such rate wou]d be contrary to ~aw, tn which event such amou,ts shall b~ar interest at the highest ra,e permitted by ]aw. The Mortgagee shal~, ~t its option, be subrogated to ~ny encumbrance, lien, claim or demand, and to ali the rights and securi:lies for the payment thereof, paid or discharged with the principal sum secured hereby or by the Mortgagee under the provisions hereof, and any such subrog~lion rights ~ha]l be additional and cumulative security for this Mortgage, Nothing contained in ~his para~r'aph shall require the Mortgagee to incur any exp~nse or do a~y act hereunder, and Mortg&~ee shal3 not bo liable to the MortQagor for any daBages or c~ai~s arising out of action taken by the Mortgagee purmuant to this paragraph. 1.9 Mortgager's Covenant to Provide Information. Morteagor covenants to provide documentation and Such other information as required by the terms and conditions of this Mortgage, the Loan Agreement and al] other documents or instruments of security referred to ~n this Mortgage. ARTICLE TWO ~VFNTS OF DEFAULT Each o~ the following occurrences shall cons~i~ute ~n Event o~ Default hereunder= ~.1 ~al]Nr~ ~ Pa~. The Mortg~gor's failure to pay, ~hen ~ue, any ~aymen~ o~ in~erest or principal on ~he ~ote or &ny o~her ~mount requirod to be paid by ~or~gagor hereunder. 2,2 Other Performance Failure. The Mort~agor's failure to observe or perform any o~ ~he o~her terms, condi~ions, covenants or a9reemen~s required to be observed or performed by the Mor~9~9or hereunder or ~ur~uan~ to any other agreement between Mortgagor and ~ortga~ee. ~.3 ~?each ofWarranl~ ~f Title. The breach o~ any warranty of ~i~le made'by the Mortgagor hereunder. ~.4 ~isreoresen~a~i~n. The making of any misrepresentation in any rinanGia] ~tement or report submitted to the ~or~9~gee by or on behalf o~ the Mortgagor. 6 JUL-I8-96 THU 14:10 P, 23/26 2.5 Entry ot J~Rment. The entry of ~ fin~t judgment fur the payment of money in exce~ of and __/100 Ooll~r~ ($ ,,. ) against MortgAgor, undischargQd'}-or & period 0f thirty (50) consecutive Qay8 while execution sh~ not be effectively ~tayed. 2.6 VOluntarY. B~rlkr'u~tG.y. Thm filin9 of a petition in bankruptcy by the Mortgagor, or its request or consent to the mppointment of ~ re~eivor or trustQe for the Mortgagor or for all or any part 0¢ its properly, ur' the making of m general assiBnment for th~ benefit of creditors. 2.7 InvolunturY B~nkrupt~y or Re~¥ermhiD. The ~ntry order, judgment or decree appointing, without the con~ent of Mort9agor, a receiver or trustee for it or for ~1 .or any part of il~ property or ~pprovin9 ~ petition fi led against it ~eeking relief under the DanZruptcy laws of the United State8 or similar IAws .of any state or other campetent jurisdiction, which order, judgment or decree mba11 have rmmained in force undischarged or unstayed for ~ period of thirty (~0) days, 2.8 Foreclosure. Tho ~nstitution of foreclosure or other enforcement proceedin~s by Lhe holder of ~ny othmr lien on the Mortgaged ~r~pert¥ (without hereby implying Mortg~gee's consent to any mortgmge or other ~ien). ).9 ~ale of ProDer~y. A sale, assignment, conveyance, encumbr~noe or tr&nsfer of the Mortgagmd ~roDert¥, or any p&rt thereot, or any interest therein (exGept leame~ for a term of less than three (~) ye&rs) without the prior written ~onsent of the Mortgagee, which con~ent may b~ granted or withheld by Mortgagee at its so~e discretion. 2.10 T~x Increment Financing. The Mortgagor has o~tained T~X Increment Finmn¢ing in connection with development of the Land. Default in any terms or conditions u[ the requirementm for pmyment in connection therewith sh&l~ be deemed an Event of Default, ARTICLE THREE ACCELERATION AND FORE~LOSURF; OTHER REMEDIES Upon any Event of 0fffa~lt.,. the Mortgagee m~¥, exercise one or more o~ the Tgi/owing rip-tm ~nm rmmeo~oe other right~ ~nd remedtem available to it): 3.1 Acceler&%ion, The Mortgmgme m~y declare immmdiAtely due amd payable all unmatured Indebtedness secured Dy thi~ Mortgage, ~nd the s~me ~hall thereupon be imm~dimtel¥ due and payable, without notice or demmnd. 3.~ ~C~ Remedie~. The Mortgagee shall have ~nd may exercise with respect t~ mll permonml property ~nd fixturee which are p~rt of the Mortgaged Property, all the rights mhd remediem accorded JUL-18-96 THU 14:10 P, 24/26 upon default to a secured party under the Uniform Commercial Code, as in effect in the State of Minnesnfa. 3.3 Foreclosure; Actio~ or Advertisemenl. The Mortgagee may (and is hereby authnriTed and empowered to) foreclose this Mortgage by action or ~dvertisement, pursuant to the statutes of the State of Minnesota in such case made and pr'~vided, power being expressly granted to sell the Mortgaged Property at public auction and convey the same to the purchaser in fee simple end, out of the proceeds arising from such sale, to pay all Indebtedness ~ecured hereby with interest, and all iegal costs and charges of such foreclosure and the maximum attorney~' fees permitted by law, which co,ts, charges and fees the Morl~agur 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 4n ~uch manner or ~rder as the Mortgagee, in its sole discretion, may elect. In case of ~ny sate of the Mortgaged Property pursuant to any judgment or decree of any court or at public auction or othmrwise in connection with the enforcement of any of the terms of this Mortgage, the Mortgagee, its successors an~ assigns, may become the purchsser, ~nd.for the purpose of making settlement for or payment of the purchase price, shal~ be entitled to deliver over and use the Note and: any claims for interest accrued ~r;d unpaid thereon, together with all other sumS, with interest, advanced and unpaid hereunder, and all statutory charges for ~uch foreclosure including maximum attorneys' Fees allowed by law in order that there may be credited ms paid on the Purchase price the sum then due under the Nuts including principal and interest thereon and all other sums, with interest, advmnced and unpaid hereunder, ~nd all charges and expenses of such foreclosure including maximum att~r'neys' 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 ~a~e must be published at least once a week for six (6) successive weeks in a newspaper of ~eneral circulation and that personal notice is not required to be served upon Mortgagor. Mortgagor further understands that in the event of such default the Mortgagee may aisc elect its rights under the Uniform Commercial Code and take possession of the personal property (as defined in the Mortgage) and dispose of the same by sale or o%herwise In one or more parcels provided that at least ten (10) days prior notice of such disposition must be given, all as provided for by the Uniform Commercia3 Code, as hereafter amended or by ~n¥ similar or replacement ~tatute hereafter enacted. 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 so~d ~nd that the procedure for foreolosure by advertisement described above does not insure that notice will be given and neither said procedure f~r foreclosure by advertisement nor the Uniform Commercial Code requirec any hearing or other ~udici&l ~roceeding. MORTGAGOR HEREBY RELINQUISHES, WAIVES AND GIVE8 UP ANY AND ALL OF THF CONSTITUTIONAL RIGHTS TO NOTICE AND HEARING BEFORE SALE OF THE PROPERTY AND EXPRESSLY CONSENT~ AND AGREE~ THAT THE PREMISES MAT BE FORECLOSED BY ADVERTISEMENT AND THAT THE PERSONAL PROPERTY MAY BE D~SPOSED OF PURSUANT TO THE UNIFORM COMMERCIAL 8 JUL-18-96 THU 14:11 P, 25/26 CODE. ALL AS DESCRIBED ABOVE. MORTGAGOR ACKNOWLEDGES THAT ZT IS REPRESENTED BY .LEGAL COUNSEL; THAT REFORE SIGNING THIS DOCUMENT THIS PARAGRAPH AND MORTGAGOR'~ CONSTITUTIONAL RIGHTS WERE FULLY EXPLAINED BY SUCH COUNSEL AND THAT MORTGAGOR UNDERSTAND~ THE NATURE AND EXT~NT OF THE RIGHTS WAIVED HEREBY AND THE EFFECT OF SUCH WAIVER. 3.4 Receiver. The Mortgagee shall be entitled as a matter of right without notice and without giving bond and without regard to the solvency or' insolvency of the Mortgagor~ or waste of the Property or adequacy of the security of the Property, to apply for' the appointment of a receiver, in accnrdance with the statutes and law made and provided. The receiver shal~ collect the rents, ~nd a~l other income of any Eind; manage the Premises so lo prevent waste; execute ~e~ses within nr beyond the Defied of receivership, p~y all expense for normal maintenance of the premises and perform the terms of th~s Mortgage and appl'y the refits, issues and profits in the following order to (i) payment of the reasonable fees of said-receiver, (ii) application of tenant security deposits as required by Mlnn. Stat. §504.20, and (iii) as further provided in ~ny Assignment of Rents executed by the Mortgagor as further security for the Indebtedness (whether included in this Mortgage or separate instrument), including but not limited to applying the same to the costs and expenses of ~he receivership, includ~n~ ~easnnable attorneys' fees, to the repayment of the Indebtedness and to the operation, maintenance, upkeep and repair of the Property, including payment of taxes and payment of premiums of insurance. The Mortgagor does hereby irrevocably consenL ~o such appointment. 3.5 Foc_bearance and Other Rights of Mortgagee. Ar~¥ delay by the Mortgagee in exercising any right or remedy hereunder, or otherwise afforded by law or equity, shall not be a w~iver of or preclude the exercise o.f such right or remedy or any other right or remedy hereunder nr at law or in equity. The failure of the Mortaagee to exercise any option to accelerate maturity of the Indebtedness secured by the Mor't~a~, the forbearance by the Mortgagee before or after the exercise of such option, or ~he withdraw~1 or abandonment of proceedings provided for by this Mortgage sha]] not be a w~iver of the right to exercise such option or to accelerate the maturity of such Indebtedness by reason o~ any past, present or future event wh{ch would permit a~celeration. The procurement of insurance or the paTment of taxes or other 3ien~ or charges by the Mortgagee Shall not 0e a waiver of ~he Mortgagee's right to accelerate the maturity of ,he Indebtedness. The Mortgagee's receipt of any awards, proceeds or da~la~es sha3l not operate tO cure or waive~de~ault by the Mortga~or. The Mortgagee may at any time, without notice, release any person liable for payment of any ~ndebtedness, extend the time or agree to alter ,he terms of payment of ~r~¥ uf the Indebtedness, accept additional security of anY kind, release any plat or.map of [he MortgageO Property or the creation of any easement thereon or any covenants restrictir~ u~e ur' occupancy thereof, or alter or amend the terms Of this Mortgage in any way. NO such re, ease, modification, addition or change shall affect the]lability of any person other JUL-18-96 ?HU 14:11 P, 26/26 than the person so released, for p~yraent of any Indebtedness, nor the priority and first lien status of this M~rtgage upon anY property not $o released. ART~CI.F FOUR A~;SIGNMENT OF RENTS 4.1 A~signment. Aa ~ecurity in addition to the lien of thi~ Mortgage upon the Property, Mortgagor' hereby grants, transfers and assigns to Mortgagee all of the right, title and interest of Mortg:9or in and to all rent~, income, profits, revenues, royalties, bonuses, rights, accounts, ~ontract rights, general intangibles and benefits (all pt which are sometimes hereinafter' referrod to as-"Rentm"), now or hereafter ac. truing or owil3g by reason of a Lease or any or atl of the Property. 4.2 Covenant~ of Performance. To protect the security of this Assignment, Mortgagor warrants, covenant.s and agrees: (a) To faithfully abide by, ~)erform and discharge each and every obligation, covenant and agreement under any Leases to be per'formed by the Mortgagor thereunder; to give prompt written notice to Mortgagee of any notice of .default on the part of Mortgagor with respect to any Lease received from a tenant thereunder; to enforce or secure short of termination of any Lease the performance pi= each and every obligation, covenant, condition and · agreement of the Leases by the tenants thereunder to be performed; not to borrow against, pledge or ~ssign any of the Rent.~, or anticipate the Rents: not to waive, excuse, condone or in any mannor release or discharge any tenant thereunder of or from the obligations, covenants, conditions and agreements to be performed under the lease or to permit the tenant to assign its interest in the lease unless required to do so by the terms of the lease; not to terminate the leases or accept a st~rrender thereof or & discharge of the tenant unless required to do so by the terms of the lease; .not to consent to a subordination of the- interest of the tenant thereunder to any party other than Assignee and then only if specifically required to do ap by the Mortgagee; (b) At the Mortgag0r's so~e cost and expense, to ~tppear in and defend any action or proceeding arising under, growing out of or in shy manner conneoted with the La&se8 or the obligations, duties or ~iabillties of Mortgagor and tenants thereunder, and to pay a~ costs and expenses of Mortgagee, includin9 attorneys' fees in a reasonable sum, in any such a~liun or proceedin9 in or with respecl to which ch the Mortgagee may appear ~imay incur costs; (c) That Mortgagor is now and wil3 be the absolute owner of the Leases wi[h tull right and title to essi9n 10 JUL-18-96 THU 15:01 P,O?!@. the Rents; that at fha date of this Moctg~ge the Leases are valid and enforceable irt ~ccordance with their terms: that there is no outstanding assignment or ~ledge of the Rents; that no Rents have been waived, anticipated, discontinued, compromised or released; ~hat there are no major defaults now existing under any of the Leases and there exists no stat~ of f&cts which, with the giving of notice or lapse of time or both, would constitute default ur]der any of ~he Leases; (d) To furnish to Mortgagee, At Mortgagee's written request, a complele. 3ist O~ all Leases and security ., deposits ma~e thereunder as t~ any part of the Property, showing the type of lease, the name of lhe tenant, the monthly rental, the date to which paid, the term of the Lease, ~he date of occupancy, and the date of expiration and any and every special premium, conce~$ion or inducement granted to the tenant. 4.3 Assignment Ab~Qlute. This A~signment iS absolute and tS effective immediately. Notwithstar~din9 the foregoing, unti} an Event of Default, as defined in ARTICLE TWO above, has occurred, Mortgagor may receive, collect and enjoy the Rentm. Upon or at time after &n Event of Default ham o~¢ur'r'.d, the Mortgagee may at its option, without ~otice: (a) In the name, p~ace and stead of Mortgagor enter upon, mail.ge and operate the Pro~erty, or retain the services of an i~dependent contractor to manage and operate the same, (ii) make, enforce, modify and accept surrender of the Lea~es, (iii) obtain or evict tenants, demand, Co~lert, sue for, receive and give acquittance for, fix or modify Rents and enforce a}3 rights of the Mortgagor under the Lease~, an~ (iv) perform any and all other acts that may be ~ecestary or ~roper to protect the security of this Assignment; provided always, however, that until the end of any redemptior~ perlod available to Mortgagor after any toreclosure of this Mortgage the Mortgagee shall continue to deal with the Le~se~ on the Property in a reasonable buminessllke marm.r, recognizing and protecting Mortgagor's continuing rights during such period to retake possession and c~ntrol of the property upon paying the appropriate redemption price, ~nd to resume the management of such leases; (b) Give or require the Mortgagor to give notiue to any and e]~ tenmnts under' lhe Leases a~horizing and direcling the tenants to pay all Rents due under the Leases directly to the Mortgagee; (c) Apply for, and the Mortgagor hereby consents to, the appointment of a receiver of the Property. JUL-18-96 THU 15:02 P,,04/tO 4.¢ A~Dlication ~f ,Rent~, All rents collecteO by the MOrtgagee, or .by a rece~ve~-, ~hall be held and apol~ed in the fo~ow~n9 order: .(a) To payment of all reusonable fees of the rece~ver~ if ar~y, approved by the court; (b) To the repayment when due of &ll tenant security deposiLs with interest thereon, pursuant to the provisions of Minn. Stat. §504.20; (c) To paymertL Of all delinquent or current rea] es[ate ~axes and special asses~ment~ payable with respect to the Property; (d) TO payment of all premiums then due for the ~nsurance required by the provisions of this Mortsa~e; (e) To the keeping Of the covenants required of a lessor or licens~r pursuant to Minn. 8tat. (f) To payment of expenses incurred for normal maintenance of the Property; (9) TO the paymen~ of the Indebtedness, ~n such manner and order as Mortgagee may elect, to the full extent permitted by and under applicable l~w. ¢,5 Conti.nuin~ Effect.. The rtgh[s and powers of the MorLgagee under th~S Assignment and the application of the Rents shall continue and remain in full force and effect both before and after commencement of any action or pr'ocedu're to foreclose the Mortgage~ after any foreclosure sale of the Property in connection with the foreclosure of the Mortgage, and until expiration of the per~od of redemption from any such foreclosure sale, whether or not an~ deficiency from the unpaid balance of the Indebtedness after such foreclosure sale. 4.6 Mortgagee NoL ~ll~ate~. The Mortgagee shall not be obl~gate~ by this Assignment for the control, c~re, management or repair of the Property, nor for the c~rr¥ing out of any of the terms ~nd conditions of the Leases; nor shall this Assignment oper'~le to make the Mortgagee responsible or liable for any waste committed on the Property by the Mortgagee responsible or liable for any dangerous or defective conQlt10n of the Property or for any neg]iSen~e ~n [he management, upkeep, r~pair or control of the Property resulting in any loss or any injury or death to any person. 4.1 HO]_{[~:[aL~33~. The Mortgagor shall and does agree to indemnify and to hold Mortgagee harmless or and from any and liability, loss or' damage which it may or might i~cur under or by reason of this Assignment, and of and from any and all clalms and demand whatsoever which may be aeserted against it by reason of any alleged obligations or undertakings on its part to perform or JUL-18-§~ ?HU 15:02 P,O~/IO, ,, , digch&r~e any of the [erms, covenants or agreement contained in the Leases; provided, however, that ~uch indemnification shall not apply if the same arises out of Le~se~ intentionally breached, by Mortgagee which were made by Mortgagor in the ordinary course of managin~ the Property and pri~r to the t~me Mortgagee obtained the right to possess and manage the Property, or' if the same arises out of the willful act or the Mortgagee in operating and using the Propmrty. Should the Mortgagee incur any such liability, loss or damage under any Lease or by reason of this Assignment, or in the defense of any such claims or demands, the amount thereof, including costs, expenses, ~nd reasonable attorney~' fees shal~ be secured hereby ~nd Mortgagor sha~l reimburse the Mortgagee therefore immediately upon demand, 4.8 Aqthorizat.ion t.P Ten~nt~. The tenants under any of the' Leases are hereby irrevocably authorized and directed to recognize the claims of Mortgagee or its assigns hereunder without investigating the reason for any action taken by the Mortgagee or' assigns, or the validity or the amounl of indebtedness owing to the Morro&gee or ~ssigns, or the existence of &ny such 6vent. of default, or the application of the Rents to be made by th~ Mortgmgee or assigna, Mortgagor hereby irrevocably directs and authorizes each tenant to pay to Mortgagee all sums due under its Lease and consents and direct~ that said sums shall be paid to Mortgagee without the necessity for a judicial detmrmtnatlo~ tha~ &ny such event of default has occurred Or that Mortgagee is entitled to exercise its rights hereunder, and to the extent such sums are paid to Mortgagee, the Mortgagor agrees that [he tenants sha~l have no further liability to Mortgagor for the Same. The sole signature of the Mortgagee, or assigns, ~ha13 be sufficient for the exercise of any rights under this Assignment and the ~ole receipt of the Mortgagee or assigns for arty sums received shall be ~ full discharge and release therefor to the tenants or occupants o¢ the Property. &,9 Am_$_¢mnee Attorney-in-Fact, Assignor hereby irrevocably appoints Assignee and its successors and assign~ am itm a~ent and attorney in fact, wh4ch~pE~n%ment .is eoumled wi h t~n interest,a~ exerclse any rights or r~meules ner~unuer an~ execute deliver durin~ the term of this Assignment such Instruments as Assignee may deem necessary to make this Assignment and any further assignment effect ire, 4,10 Mortma~e~.Np[ inPosses~io~, Nothing herein contained and no actions taken pursuant to thi~ ~ssignment ~ha13 be construed ss constituting the Assignee a "Mortgagee in Possession", ARTICLE FIVE · COND[MNATION 5.1 N_.Q.~. Mortgagor will give the Mortgagee prompt notice of any action, actual or threatened, in ~ondemnation or eminent domain, dir'eu[ or inverse, 13 JUL-18-98 THU 15:02 P. 06/IO 5.2 A.~ards_ ~ortgagor hereby a~s~gns, transfers, a~d sets over to the Mortgagee the entire proceeds of any award or payment which becomes payable by reason of any takin9 of or damage to Ihs Mortgaged Property~ or any part or appurtenance thereof, either temporarily, perman~rlLly, in or Dy 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 i~ any ~uch award or payment and pause the same [o be collected and p~id over to lhe Mortgagee, &nd the Mortgagor irrevocably au[.horizes and:empowers the Mortgagee, which power~io coupled with an interest and is irrevocable, in the name of the MortQ~gOr or otherwise, in the even£ [hat t~e Mortgagor fails to do so, to file ~nd prosecute any such claim and to collect, receipt for and retain the same. The proceeds or the ~w~rd or payment, after deducting all reasonable costs, attorneys fees a~d other expenses which m~¥ have been incurred by the Mortgagee in collectio~ thereof, at the sole discretion of the Mortgagee, may be released to the ~ortgagor, applied to restoration of lhe Mortgaged Property or applied lo the payment of mny part of the Indebtedness, in such order of application as the M~rtgagee may determine. ARTICLE SIX UNIFORM OOMMERC~AL CODE ~.1 tequrit¥ Interest. This Mortgage shell constitute a security &greeme~t as defined in the Uniform Commercial Code with respect to (and the Mortgagor hereby grants to Mortgagee ~ Security interest in) all per'sunni property and fixtures i~cluded in fha Mortgaged Property. Including s~ecifica]~y &l~ right of the Mortgagor to receive -payments as a result of Tax Increment Financing. The Mortgagor' shall from time tO time, at the request of the Mortgagee, execute any and ail financing ~tatementa covering such personal property and fixtures (in a form satisfactory to the Mortgagee) which the Mortgage&may reasonably consider necessary or appropri~le to perfect i~s security interest. The Mortgagor will pay to the Mortgagee, on demand, the amount of any and all comts and expense~ (inoluding reasonable attorneys' fees and legal expenses) paid or incurred Dy the Mortgagee in connection with the exercise of a~y right or remedy referred to in this paragraph in any instance where Mortgagor in its sound discretion determines that any item subject to asecurtty interest under this Mortgage has become InadeQuate, obsolete, worn out, unsuitable, undesirabl~ or unnecessary for the operation of the Property, Mortgagor may, et its expense, remove and dispose of it provided, th~[ such removal end substitulion shall not impair the operating utility and unity of the Property. All substituted item~ ~hall become a part of the Property and s~bject to the lien of the Mortgage. Any amount8 received or allowed Mortgagor upon the ~ale or other disposition of lhe removed items of property shall be applied first against the cost of acquisition and installation of the substituted items. Nothing herein contained shall be construed to prevent any tenant or subtenarll from removing from the Property trade fixture~, JUL-18-96 THU 1~:03 P,O?/IO ...... Purniture and equipment installed Dy il and removable by ten&hr under its terms of the lease, on the condition, however, that the Mortgagor shall assure the repair ~f any and all damage~ to the Property resulting from or caused by the remoYm~ thereof. 8.Z Fixtur¢ Fi~in~. From the date of its recording, this Mortgage sha~ be effective as a financing statement ~lth respect to ~I1 goods conmtituting p~r't of ~he Mortgaged Property which are cr ~re l~ become fixtures re~ated to th~ rem~ m~t~te described here~n and/or other right~ of the M~rt~or deemed for' ~n¥ purpose to be an interest in rea~ estate in~uding specifically oayments made or to be made as a result of Tax Increment ~inancing in the event such payments or right to such payment$ i8 $o charmcter'iz~d. For this purpose, the fo~o~in~ in¢ormmt~on is se~ forth: (a) Name and Address of Bebt~r: (b) Name and Address of Secured Party: (c) This document covers goods which are or are to become fixtures, (d) The r'eu3 estate to which such fixtures are or are to be attached is that described in Exhibit · attached hereto, the record owner of which i~ ARTICLE SEVEN MISCELLANEOUS 7.1 Mort~agoe's Remedies' Cumulative. All remedies o~ the Mortgagee are di~linct and cumulative to any other right or remedy under this Mortgage or afforded by law or equity, and may be exercised concurrently or independently, as often as the occasion therefore arises. 7.2 S~cessors and .A~i~ns B~und; Caotion~. The covenants and agreementm herein conluine~ shall binO, and the rights hereunder shall inure to, the respective heirs, legal representative~, successors and assigns of the Mortgagee ~nd the Mortgagor. The oaptions and headings of the paragraphs of this Mortgage are '~or convenience only and are not to be used to interpret or define the proviRions hereof. 15 JUL-18-@8 THU t5:03 P, 08/lO 7.3 Not.ice. 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 Dy certified mail by the Mortsagee lo the Mortgagor at the following address: or at such other address as the Mortgagor may desigrlate in writing to lhe Mortgagee. 7.~, GO..v. ernlng Law; Severab. ilit~.. This Mortgage .~hall be ~overneO by t~e laws of the State o~ ~innesot~. In the event that any provision or clause of thio Mortgage confl ict~ with applicable l~w, such conflict shall r~l affect other provisions of thgs Mortgage w~ich can be given effect without conf3ictins provisions ~nQ to this end thm provision~ of the MortQa~e are dec3~red to be sever~b3e. 7.5 ~og~. This Mortgage may be executed in any number of counterparts, each of which shal3 be a~ original but all of which together shall constitute one instrument. 7.6 W&JYer of Appraisement, Homestead, ..Marshaling. The Mort~:9or hereby waives the benefit of any homestead, appraisement, ~v~3umtton, s~y ~nd extension laws now or hereinafter ~n force. Mortgagor hereby w~ivea any rights avmilab3e with respect to marmhalin~ o~ assets so ~s to require the seDarate sa~m~ of any port ion o~ t~e Property, or to require the Mortgagee to exhaust its remedies against a specific port~on of the Property before proceedina a~ainst the other, 7.7 ~se~uant AQre~ments. Any ~areement hereafter mmde by Mortgagor and Mortgagee pursuant lo this Mortgage sh~l] be superior to the rights or the holder of any intervening lien or encumbrance. 7.~ H~zardoua Mmteriels, Mortgagor covenants, represents and warrant8 to Morteaaee, its SUCCeSSors and assigns, that during the Morsgagor's ownershi: of the Property, the oporat(on of s~id ProDerty has not v~otated and ~s not currently violating eny federal, state or local l~w, regulation, ordinance or requirement eoverning Hazaraous Materials; that the Property ~s not l~sted ~n the Un{ted Steams ~nv~ronmenta3 Protection A~enc~'s NaSional Priorities L~st of Hmzardous Waste Bises nor any other l~st, schedu3e, ~o~, invenSory or record of Haxmrdous Mater{a3s. or hazardous waste s~tem, whether maintained by the United States ~vernment or ~ny state or local a~enu~, and %hBt %he b~ildi~g ~mprovements do not coat,in any ~ormaldehyde, urea or asbestos, except aS m~y have been d~closed ~n wr~t~n~ to the Mortgagee by the Mortgagor at the t~mo of execution and dellvery of this Mortea~e, The Mortgagor a~r'ees ~o inde~ni~y and re~mbur~m the Mor"t~a~ee, its sUCCessors and assigns, for any breach of these representations and warranties and from any loom, d~a~e, expense 16 JUL-18-96 THU 15:03 P. 09/lO or' cost arising out of or incurred by Mortgagee which is the result of a breach ~f, misstatement of or misrepresentation of the above covenants, representation~ ancl warrarlties, together with attorneys' fees incurred in connection with the defense of ~ny action against the Mortgagee arisin~ out of the above. These covenants, re~resentat ions and warranties shall be deemed continuin~ covenantm~ representations and warranties for the benefit Of the Mortgagee, including any purchaser at a mortgage foreclosure sale, any tranoferee of the tills ot the Mortgagee or any suboequent purchaser' at a foreclosure sale, and any subsequent owner o~ the Property and shall survive any foreclosure of the Mortgage ~nd any acquis~ t ion of t it le b~ Mortgagee or mnyone cl~imin~ through or under the Mortgage as the title of ~he Mortgagee. The a~unt of all such indemnified loss, dmm~ge, expense or cost, ~hal 1 bear interest thereon at the rate of interest in effect on the N~[e and shall become so much additional indebtedness, secured Dy this Mortgage and sha3l become immediately due and payable in full on demand of the Mortgagee, ils successors and assigns. ~ald indemnity shall only apply ~n connection with the conditiu,s w~ich were t~ existence, in whole or in pert, prior tO the date on which Mortgagee acquires possession and title ~o.t~e Property and ~halt not apply in connection with liability of th~ Mortgagee due Lo action taken by it or its ams{gns while it wee Mortgagee. 7.9 Future AdvQnFes. (a) To the extent that this Mortgage secures ¢~ture advances, the amount of such advances ts not currently known. The acceptsnce of this M~rtgege by the however, con~t itutes an acknowl ed~ement that Mortgagee is aware of the provisions ot Minnesota 8tatutes ~287.05, Subd. 5, and intends to comply with the requirements contained therein. (b) The maximum principal amount of indebfednema secured by this Mortgage at any one time, excluding advances made by the Mortgagee in protection O1 the mortgaged property or the lien o~ this Mortgage, shal~ bm (c) The representations uuntained in this section are mede solely for the benefit of the county recordin~ authorities in determining the mortgage registry tax payable as a prerequisite to the re~ording of th~s Mortgage. The Mortgagor a~knowl edges [hat such representations do not constitute or im~y any agreement Dy tbs Mortgagee to make any future advances to the Mortgagor. 17 JUL-tS-96 THU 15:04 P, t0/t0 IN WETNESS WHEREOF, the Mortgagor has caused this Mor't~e to be du3¥ executed as of the day and year flr$~ above written. Russe31 Hagen STATE OF MINNESOTA ) COUNTY OF ) The foregoing instrument was ~cknowledged before me this ..... d~y of , 1~_., by Russell Hagen . No%ary Public THIS INSTRUMENT DRAFTED Corrick & Sondr&31, P.A. 8525 Edinbrook Crossing Brooklyn Park, MN 5544R (812) 425-5671 Previous Financial Assistance From City of New Hope Development Proiect $ Amount Type Autohaus of Minneapolis $187,500 Low Interest Loan 7709 42nd Avenue 4/4/91 InterestJPayback Interest rate 9% Interest reduced on 5/9/94 to 7.75% Loan paid in full summer of 1995 Purpose Acquire New Hope Animal Hospital property and development improvements Animal Hospital Acquisition $140,000 Improvements 47,500 $187,500 Development Proiect $ Amount Type " Broadway Village Community Center $142,500 Loan/Grant West Broadway 3/8/94 Commitment $14,000 (deferred 9~22~94 repayment ($156,500) loan) No interest unless default on terms in contract, then 8% per annum. Purpose To rehabilitate and expand Community Center and street lighting at Broadway Village Shopping Center. $200,000 Community Center 85,000 Lighting - 28,000 Storm Sewer '$313,000 $156,500 City Portion - % Cost Development Proiect $ Amount Type New Hope Apartments $97,350 Loan 7200, 7220, 7240, 7260 43~u Avenue 6/10/94 $20,000 5/8/95 ($117,350) InterestJPayback Payback: 1% of principal/month until paid ($973.50) beginning 11t~ month. No interest as long as rents are raised during next 2 years. If default on rents, 8% interest per annum. Purpose .To improve the property by rehabilitating basic components of existing buildings, including roof and windows. Development Proiect $ Amount Type Universal Color Lab $140,000 Gap Financing 7709 42°d Avenue Loan Interest/Payback 8% interest 15 year amortization period & balloon at end of 10 years Purpose To purchase/improve Kuppenheimer building and remain in New Hope. Development Proiect $ Amount Type Gill Bros. Funeral Chapels $150,000 Pay-As-You-Go 7300 42nd Avenue TIF Term of Agreement ends 12/31/2006 Purpose To develop property with funeral chapel. $$$ for land acquisition and site improvements. N E' -~~...'0" P F. .,. , ~..~, '-~ ..... ,. ~ ~ ',~' ~_~ ~ >,~ Valley N TKA Par~ I ~ - ~ ; .; ,-,'/ ~ ~ - ,nka d I ' ~ -~ - ' '" : -7 ';.._.. : -. - 2.: 5 .__.. ~ ~- . -_ .,. ,.~' . ...... : . '~ EXISTING CONDITIONS The Winr, e.',:,~a Comer ~s iccated .,ves~ cf Winnetka Avenue ~e~ve~n Avenues. The center notds 2 92.400 square feet of leasable space, 42.200 square feet. or 46 percent, of which is currently available. It should be noted that the vast majority of ;! vacant space (+ 36000) square feet was held by a single use (former grocery store). The mix of current tenants is eclectic and does not provide for any business interchange or accumulative attraction to draw consumers to the Center. The tenant mixture, both past I and present, combined different types of commercial businesses. While some consumer interchange could be anticipated between the businesses, the majority of businesses in the Center attract a distinct market which does not serve to complement other tenants. For 'I example, the Center's most prominate tenant, Marquette Bank is not retail oriented. The current tenants are listed inthe table below: I TABLE 1 WINNETKA CENTER EXISTING TENANTS I Cocie Business Approximate Scluare Footage I I Marque~e Bank 10,800 2 Half Styling and Tanning 1,600 3 New Hope Pet and SUl3¢y 1,600 4 Vacant 1,600 5 Vacant 1,600 I 6 Winnetka Chiropractic 1 .~00 7 Cardinal Beauty Sul31:4y 1 I 8 Abbey .Carpet 4,000 9 Ace Hardware 6,000 10 Circua Pizza 11,000 11 Karate 2,500 I 12 Andef~n Floral 2,500 11 The Spectacle Makers " 2,500 I 12 l. iquom 5.000 13 Vacant 2,500 1 16 Vacant - 36,000 TOTAL 92,400 .. N~r v MOirE MAMKET STUOY I SITE CHARACTERISTICS I L:caticn is t~e key :~ any successful ~usmess. Strengths anc~ weaknesses of cc, mmerc:a~ sites must be evaluated to assist in developing market strategies for each site. Site location, accessibility, surrounding land uses. and physical barriers all influence the type. size and impact of-- c~mmercial uses. A summary of the strengths and weaknesses of the Winnetka Center is provided below: Strengths · Located along Winnetka Avenue, the site lies adjacent to a major collector street~ Traffic volumes upon Winnetka Avenue directly east of the Winnetka Cent,er are approximately 14,000 trips per day. I · The site has good visibility to southbound traffic on Winnetka Avenue. I · An ample supply of off-street parking exists upon the property. · The existing commercial center is structurally sound and well maintained. 'i · The center lies adjacent to multiple family residential uses which contribute to its customer base. · The center has an efficient vehicular circulation system. I · The site is provided with a full range of municipal utilities. · The site is serviced by three MCTO bus routes. I Weaknesses I · Due in large part to its setback, building configuuation and orientation, the center has limited visibility to northbound traffic on Winnetka Avenue or 42nd Avenue. I · The center does not have a strong anchor retail ,tenant from which spinoff business may result. I · The centers most visible tenant (Marquette Bank) is not retail oriented. I · From a design standpoint, the orientation of the center isolates the building from adjacent commercial uses to the south. 5 I ~e~. I A~ m~ ~kt ~ ~m to I I m ~l ~l IIW~ ~ates ~e Center m ~m Id~ ~mme~ctal u~s to t~ ~. I I " on ~ A~ mn~ at ~ 4~ A~e. I Public sidewalk I Site Issues Map 2 · The centers identification sign is dated and does not promote a "vital" or "active' retail experience. · The center is an older architectural design which does not incorporate contemporary design elements which draw attention to the center. · The existing tenant mixture is eclectic and does not present any accumulative attraction or business interchange advantages. · At peak traffic times, access to the canter can be inconvenient as northbound"t'raffic along Winnetka Avenue must make left turns to access the center. · The center does not promote pedestrian traffic as it is setback a significant distance from Winnetka Avenue. The existing site layout does not invite pedestrians from adjacent sidewalk areas to the center across an expansive parking lot. · The center has an "over supply" of off-street parking. According to an APA referenca document entitled 'Off-Street Parking Requirements", five parking spaces for each 1,(300 square feet of leasable area are recommended for shopping centers. Utilizing this standard, an off-strl~et parking supply of 462 parking spaces would be considered adequate. With a total supply of _.+ 540 spaces, the center is in significant excess of the off-street parking supply considered necassary to accommodate the use. As illustrated by the items above, the existing site layout and building design does not promote convenience. A direct result of these problems is the center's vacancy rate and less desirable tenant mixture. ! 1 _Il STUDY CONCLUSIONS When New Hcce s cc,mmerciai retail areas ,yore area that included residential neighborhoods beyond ~ts I~oundanes in Plymouth. Mapte Grove, and Brooklyn Center. The New Hope, commercial facilities comceted and shared tt~e trade area wit. lq commercial shopping facilities in Golden Valley, Brooklyn Center and Crystal. As New Hot2e and its surrounding cor:nmunities have matured through the 1980s and 1990s. ':he following physical and demographic influences have reduced the City reta~t trade area. Demographics Demographic and sales trends identified in earlier market studies in 1985 and 1987 have continued through 1995. These trends indicate that New Hope's retail trade area continues to be reduced. 1. As New Hope and its mature neighboring communities reached development saturation, the population has declined and matured. This results in older, smaller households in immediate proximity to New Hope's commercial areas. 2. Between 1980 and 1990, New Hope's median age has increased and average household size declined. Tl~e number of residents over the age of 55 has increased from 14 percent to 24 percent during this same pedod. These demographic characteristics project a different consumer group than the young families of the 1970s. 3. The emerging communities of Brooklyn Park, Maple Grove, and Plymouth which have land available for development display strong growth. continue to The demographic profile of these communities contrast with mature communities in that they exhibit younger median age, larger household sizes, and greater household income. 4. With the exception of Golden Valley at $46,212, the median income of New Hope and the mature communities average $35,116. In contrast, the growing communities to the north and west have mediah incomes that range from $40,018 to $51,314. -- I Retail Space Following the stror, g residential, the newer commuc,~ties of Brooklyn Park. Maple Grove and Plymout~ have experienced extraordinary commercial growth since 1985. During t~s period, these three communities have added approximately 2.8 million square feet of reta~l space. This Corrrmercial growth is anticipated to continue with ongoing development in Maple Grove at the 1-694ANeaver Lake Road interchange and the Plymouth City Center I1area at Vicksburg Avenue and Highway 55. Additionally, Golden Valley is undertaking a commercial redevelopment project at Highway 55 and Winnetka Avenue and Crystal is undertaking a commercial redevelopment at Bass Lake and West Broadway. !1 The introduction of new retail facilities in these surrounding communities reduces New Hope's retail drawing power. These new facilities offer new contemporary retail i opi2ortunities, a location convenient to major transportation routes, and residential growth areas that were historically served by New Hope commercial facilities. I Most of New Hope's retail/shopping centers were developed in 1960 and 1970. In 1985, the New Hope Mall underwent major redevelopment, clfianging the appearance of this facility. However, other shopping centers such as Winnetka Center, Midland Shopping I Center, Poste Haste Center, and the K-Mart generally hold their odginal architectural form. These centers do not present the fresh and exciting appearance of the newer contemporary facilities being constructed. Steps are being taken by Midland Shopping I Center 'with regard to landscaping 'and site design in an effort to maintain a fresh appearance. IVaCant retail space in New Hope has increased from 5 percent in 1989 to over 20 percent in 1995. I Transportation The transportation network has contributed to reducing New Hope's trade area. The major I highways and freeways (Highway 169, 1-694, and 1-494) serve a physical barrier that diverts traffic by New Hope. The Winnetka Center's proximity one mile east of Highway I 1 69 does not present a convenient shopping location of area commuter traffic. Retail Sales I New Hope retail sales for 1986 through 1990 exhibit a decline,. 1992 sales figures showed a jump in sales, while some increase was anticipated with the maturity of the I Winnetka Commons Shoppin~ Center. The significance of the increase raises question - on accuracy of the reporting. Comparatively, New Hope ranks behind most of the other study area communities in sales and per capita sales. 28 I STRATEGIES FOR RETAIL Market cc~t~cr's ',r.C[cate *,nat New Hoce marxet focus has c;~ar, gec f:om a :eg~cr'a~ -- community or neighborhood focus. Shoppers Goods Shopl:;ers goods retading has exhibited declining sales in areas of household appliances. apparel. Only miscellaneous merchandise and automotive retailers furniture, exhibited growth. New commercial grov,(th within the study area will make difficult for New Hope commercial facilities to compete in the shopper good markets. Shoppers goods retailing in larger box stores which focus on a regional markets"iS the current retailing trenS. These facilities attempt to locate on larger parcels in close proximity to major highways. The Winnetka Center building manager's efforts to solicit tenants for the vacated Super Valu space gain responses from the major box store retailers (including Kohl's Department Store, Home Depot, Pet Food Warehouse, etc.) that prefer location two miles west of Winnetka Center near the freeway. Under these circumstances, the continued pursuit of shopper goods retailers will not likely be productive. Convenience Goods The market analysis suggests that within a declining trade area, New Hope retailers must increasingly focus on community-wide and neighborhood markets. Local retailing should be geared towards convenience goods and services that address the day-to-day needs of New Hope's changing consumer profile. Winnetka Cehter already includes a number of convenience goods retailers, including hardware, liquor and florist. Future marketing and renovation should enhance these types of businesses by attracting complementary business and making physical improvements to the building and site that presents an image of convenience and vitality. The Winnetka Center was originally constructed as a designation shopping center. Its building design and site layout does not lend itself to a O3nvenience retail center. In giving attention to convenience goals and services, the following changes are recommended. These changes could involve the redevelopment of the site. 1. The total floor space of-the Winnetka Center may be greater than needed for a convenience shopping canter. 2. The size of the larger tenant does not lend itself to being carved up for smaller convenience .businesses. 29 .3. T;"e c,... ~.'",~ cc..,at'.crl ar',d ....... r. detracting frcm t~e centers icient~ty. 4. The shopping center's architectural form has not changed dramatically from original construct, io~. A facelift or renovation to the building fec~d®, pertnaps adding some vertical elements to the building's front elevation could change the appearance and image of the Winnetka Center. 5. The large parking tot isolates the shopping center at the rear of the site. If the shopping center is redeveloped, a new smaller ratail facility in closer proximity to Winnetka is suggested. If the existing center is retained, a satellite building ~.hould be considered to giv® the site additional visibility and to enhance the ~City's shopping center image. A second-option would be to [educe the parking area and expand the site's green spac~ and landscap® area to make the site more attractive and inviting. 6. The parking lot layout moves the parking stalls away from the building. Rearranging the parking to place perking closer to the business entrance emphasizes consumer convenience. " 7. The Winnetka Center off~'~ no defined p~lestrian connection beb. veen the building and public sidewalks. 8. The Winnetka 8hopping Center tenant mix is very eclec4i¢. The consolidation of complementary businesses would assist in promoting ~, higher degree of accumulative attr~,ction and business interchange. Marketing focus should be on attracting complementary businesses. While the loss of the super Valu supermarket is refl~-'q, ive of the trend toward larger wholesale grocers, the site may offer some potential for a convenienc~ grocery store at a smaller scale th~n th~ previous Super Valu store. The nearest convenience food store is located near the corner of 4gl~ 8trot ~nd Nevada Avenue. Other than this store, food retailing in New Hope is limit~l to community gas stations. The Winnetk~ C~nter'$ current lease with Super Valu presents an obstacle to any new food store from entering the shopping center. Resolution of the lease issues must be addressed wi~ any b'eatment of the shopping center. ~0 Other Commercial Opportunities Other ccmmerc, a~ ac?,,~t:es to inves,',',~are ~r~ :~,e receve~o,cment, renova:~c~, and marxe::,-~ of the Winnetka Center to inctuOe: 1. Entertainment/Recreation: With the decline in traditional retail sales facilities, the promotion of entertainment and recreational commercial use has worked with other New Hope shopping centers. New Hope Center uses U.S. Swim and Fitness ancl Blockbuster Video as major anchors. Midland Shopping Center has Cinema Drafthouse Theater as a major tenant. Currently Circus Pizza is a major tenant to the Winnetka Center. The promotion of additional entertainment/recreation commercial facilities can be a signi'ficam attraction to the shopping center that would enhance the Winnetka Center image. 2. Dining: Associated with the entertainment facilities opportunities may exist in additional dining facilities. Fast food restaurants have dominated the City Center area both as freestanding .facilities and within the New Hope Center. These existing fast food restaurants saturate the current market and have a business interception advantage over the Winnetka Center. Sit down restaurants with liquor offer some potential. If a dining facility is pursued it.must be a sit down restaurants offering a unique attractive image. The facility must be freestanding away from the Winnetka Center to take advantage of the visibility from both Winnetka Avenue and 42nd Avenue. 3. Automotive: Automotive goods and services have displayed sales growth in New Hope since 1987. The introduction of automobile goods and service businesses would likely require some redevelopment of the Winnetka Center building and site layout. Historic sales trends suggest that this area retailing in New Hope has remained steady. With the changing retailing environment, consideration may be given to non- ¢ retailing uses. Commercial office space may offer a workable option in conjunction ~.t with the other retailing options. EDA REQUEST FOR ACTION Originating Department Approved for Agenda Agenda Section City Manager EDA 7-22-96 Sarah Bellefuil Item No. By: Community Development SI: ;c~!~. t 5 RESOLUTION TRANSFERRING APPROVAL OF LE'I-FER OF UNDERSTANDING FOR LOAN TO PURCHASE HOUSING FROM TASKS UNLIMITED, INC. TO TASKS UNLIMITED LODGES At the June 24, 1996, Economic Development Authority meeting, the EDA approved Resolution No. 96-14, Resolution Approving Letter of Understanding with Tasks Unlimited, Inc., for Loan to Purchase Housing. Specifically, Resolution No. 96-14 states that Tasks Unlimited, Inc. will be the owner of a special needs housing development in New Hope. This is incorrect. Instead, Tasks Unlimited Lodges will own the property. Because of the substitution of Tasks Unlimited Lodges for Tasks Unlimited, Inc., the EDA will have to approve the enclosed resolution signaling the change. Staff recommends approval of a resolution transferring approval of the Letter of Understanding with Tasks Unlimited, Inc. to Tasks Unlimited Lodges. Review: Administration: Finance: RFA-O01 ~ CORRICK & SONDRALL, P.A. STEVEN A. SONDRALL ATTORNEYS AT LAW ~r MICHAEL R. LAFLEUR MARTIN P. MALECHA Edinburgh Executive Office Plaza SHARON O. DERBY W~LUAM C. ST.A~T 8525 Edinbrook Crossing Suite #203 Brooklyn Park, Minnesota 55443 TELEPHONE (612) 425-5671 FAX (612) 425-5867 July 16, 1996 Daniel J. Donahue New Hope EDA 4401 Xylon Avenue North New Hope, MN 55428 RE: Tasks Unlimited Letter of Understanding Our File No. 99.11175 Dear Dan: The EDA passed Resolution No. 96-14 at its June 24, 1996 meet ng. That Resolution approved a Letter of Understanding between the EDA and Tasks Unlimited, Inc. for a loan from the EDA to purchase a group living facility. It has now come to my attention that the appropriate entity for the Letter of Understanding is Tasks Unlimited Lodges, a non-profit corporation affiliated with Tasks Unlimited, Inc. The enclosed Resolution approves this change in entity for the Letter of Understanding. Be sure to call if you have any questions. Sincerely, Martin P. Malecha m3t cc: Valerie Leone, City Clerk (w/enc) Kirk McDonald, Management Assistant (w/eric) Sarah Bgllefuil, Administrative Assistant (w/eric) Steven A. Sondrall, City Attorney EDA RESOLUTION NO. 96- RESOLUTION TRANSFERRING APPROVAL OF LETTER OF UNDERSTANDING FOR LOAN TO PURCHASE HOUSING FROM TASKS UNLIMITED, INC. TO TASKS UNLIMITED LODGES WHEREAS, on June 24, 1996 the Economic Development Authority in and for the City of New Hope (EDA) passed EDA Resolution No. 96-14, Resolution Approving Letter of Understanding with Tasks Unlimited, Inc. for Loan to Purchase Housing, which EDA Resolution No. 96-14 is incorporated herein by reference, and WHEREAS, Tasks Unlimited, Inc. is a non-profit Minnesota corporation and has several affiliated non-profit Minnesota corporations involved in various aspects of the Tasks Unlimited, Inc. mission, including Tasks Unlimited Lodges as the non-profit Minnesota corporation which owns all of the rea] estate involved in Tasks Unlimited, Inc. activities, and WHEREAS, Tasks Unlimited Lodges will be the entity purchasing the housing for the group living facility, and WHEREAS, it is appropriate for the Letter of Understanding approved in EDA Resolution No. 96-14 to be entered into between the EDA and Tasks Unlimited Lodges. 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 Letter of Understanding for Loan attached to EDA Resolution No. 96-14 as Exhibit A is approved with the substitution of Tasks Unlimited Lodges for Tasks Unlimited, Inc, 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 22nd day of July, 1996. Edw. J. Erickson, President Attest: Daniel J. Donahue, Executive Director CORRICK & SONDRALL, P.A. STEVENA. SONDRALL ATTORNEYS AT LAW MICHAE, R. LAFLEUR MARTIN P. MALECHA Edinburgh Executive Office Plaza SHARON D. DERBY W,L',AM c. STa^~T 8525 Edinbrook Crossing Suite #203 Brooklyn Park, Minnesota 55443 TELEPHONE (612) 425-5671 FAX (612) 425-5867 July 16, 1996 " Tasks Unlimited Lodges Attn- Craig Brett 2419 Nicollet Avenue South Minneapolis, Mn ..55404-3450 RE' Letter of Understanding New Hope EDA Our File No. 99.11169 Dear Mr. @rett- As we discussed, enclosed please find three copies of a replacement Letter of Understanding for Loan between Tasks Unlimited Lodges and the New Hope EDA. This document is identical to that earlier provided to you, except for the substitution of Tasks Unlimited Lodges for Tasks Unlimited, ]:nc. Please obtain the appropriate signatures and return the signed copies to Sarah Bellefui1 at the City of New Hope. Be sure to call if you have any questions. Si ncerel., y Martin P. Ma]echa Assistant City Attorney m3t Enclosure cc: Daniel J. Donahue, Executive Director~~ Sarah Bellefuil, Administrative Assistant Steven A. Sondrall, City Attorney EDA ~~~ REQUEST FOR ACTION Originating Department Approved for Agenda Agenda Section City Manager EDA 7-22-96 Sarah Bellefuil Item No. By: Community Development S~ ~cij~. t 6 MOTION APPROVING TASKS UNLIMITED LODGES TO SIGN A PURCHASE AGREEMENT FOR A DUPLEX PROPERTY LOCATED AT 3579/3581 INDEPENDENCE AVENUE NORTH At the June 24 Economic Development Authority meeting, the EDA approved a motion allowing Tasks Unlimited to sign a purchase agreement for the property at 2829~2833 Flag Avenue North. Since then, Tasks Unlimited Lodges has found a duplex located at 3579/3581 Independence which they believe better suits the needs of their clients and is located in a more suitable location. The duplex property at 3579/3581 Independence was built in 1981 and is 1440 square feet per side. The asking price per side is $82,900. The assessed value of each unit is $66,800 ($13,100 land, $53,700 building). Each unit includes three bedrooms, two bathrooms, a kitchen, living room, dining room, den, laundry room, and two-car garage. Because only one of the two-car garages would be needed if Tasks Unlimited Lodges were to purchase the property, Tasks Unlimited is considering converting one garage into a recreation room. If a recreation room were to be constructed, the EDA would have the opportunity to review and approve the remodeling plans. As seen on the attached map, the duplex is located at the end of the Independence Avenue cul-de-sac. A small office building is located east of the property, Post Haste Shopping Center is located north across 36t~ Avenue, Highway 169 is located to the west, and a duplex property is located directly south. This motion allows Tasks Unlimited Lodges the opportunity to negotiate the purchase price of $165,800, and aPproves Tasks Unlimited Lodges to sign a purchase agreement for the property. Staff recommends approval of a motion allowing Tasks Unlimited Lodges to sign a purchase agreement for the property located at 3579/3581 Independence Avenue North. TO: ~'/ ~- Review: Administration: Finance: RFA-O01 . 3579 Independence Ave. Steve Hinrichs Plymouth Office 4425 N Highway ~ 69 Plymouth MN 55442 BUS: (612) 557-4589 RES: (612) 427-9721 Information deemed reliable but not cju~]r~nteeC Home Hotline 858-5858 #44251 $82,900 *THREE BEDROOM TWIN HOME LOCATED ON QUIET CUL-DE-SAC IN PRIME NEW HOPE LOCATION! *VA UL TED CEILINGS C~ATE AN OPEN FEEL IN LIVING ROOM AND DINING ROOM. *SLIDING DOORS IN DINING AREA LEAD TO DECK AND FENCED BA CKYARD. *DO UBLE TUCK- UNDER GARA GE WITH GARA GE DOOR OPENER. .HOME IS IN NICE CONDITION--MO VE IN TODA Y! LIVING ROOM 14 x 13 TOTAL SQ. FT 1440 OTHER FEATURES DINING ROOM 10 x 10 TAXES $888 KITCHEN 11 x 10 YEAR BUILT 1981 *SCHOOLS BEDROOM 15 x 12 LOT SIZE irregular Elem. Sonnesyn BEDROOM 13 x 11 NSP $29/mo Jr. Plymouth BEDROOM 10 x 10 MINNEGASGO $34/mo Sr. Armstrong AMUSEMENT 12 x 10 SELLER'S PROPERTY DISCLOSURE STATEMENT This form ~oproved by the Mlnne~o~ A~soc~tk:xl o~ REALTORSe~ which disclaims ~ny 11~ arising out of use or misuse o~ this form. "A Family Tradition Since ! 955'm 6. Inspected,by a third party, and to Inquire d~out any q~oclflo amee of concern. 7. INSTRUCTIONS TO THE SELLER: (1) Complete thle form yourself. (2) Consult prior dleeleeum ~-'~ment(a) ",. 6. and/or Inspection report(s) when completing thi~ fomt. (3) Deeeflbe condltkm~ affecting the p~ to the be~t 9. of your knowledge. (4) Attach additional pagco with your slgmaum If ~]ltional apaco le required. (S) Answer 10. afl questions. (6) If any lf®rn~ do not apply, write "NA" (not applicable). 13. A. GENERAL INFORMATIdN: /' ~ ' -, 14, ~i ~nen~"~~orbuildthehome? ~7/~7 15. (2) ~ of Tiffs Evidence: z,.~bstrect ~Re~ered (Torrens) I'--I Unknown [~J 16. Location of Abstract or Owner's Duplicate Certificate of Title: "" ~J-J ~e-4~ .~'"~"'~:~=J~. ! ~"~"~ 17. Is there an existing Owner's Title Insurance potlcy? Yes ~ No r-1 Unknowrt D 16. (3) Have you occupied this home co~tlnuously for tho past 12 months? Yas ~'No 19. If no, explain: 20. (4) la the home suitable for year round use? Yea ~ No ~ 21. (5) I$ the property located in a designated flood plain? Yes [r-"l No '~ Unk .n~wn. [~ 22. (6) Are you In bo~esslon of prfor seller's disclosure statement(s)? (If yes, please attach) Yes l--I No I--I 23. Are there: 24. (7) Encroachments? Yes F'-I No [~Unknown [--'1 25. (8) Covenants, Restrictions or Reservatfons (no~-~:wemmental) affecting the use of the prol~l~ty?Yes J~ No [~ Unknown ~ 26. (g) Easements, other than ullit~ or drainage easements? Yes [~]No ~ Unknown 27. (~0) Comments: 26. 29. B. GENERAL CONDITION:To your knowledge have any of the following condltfoas pm~io~ly exl~ed ~' do th~ currently exlet? 30. (1) Has there been any damage by wind, fire. flood or other dlasster(s) ~ Yes '~[ No 34. (2) Has the struoture(s)~'seen altered? (i.e. addittorts, altored roc~ lines, changes to Insd beming walls-) Yes t~1 NO 35. If yes, pl,e~se specj~ what was d~n~ w~;m and by whom (owner or _ic?otr~ctor): 38. (3) Soil Problems? Yes r'-] No ....... 39. (4) Diseased Trees? Yes [~] No ~' 40. (5) Animal Infestation? Yes ~ No ~ 41. (6) Insect/Pest Infestation? Yes I--'] No ~ 42. (7) Do you have Or have you previously had any pets? Yes ~3'No [~] If yes, indicate type and number. / 43. ( 8 ) Comments: 44. 45. C. STRUCTURAL SYSTEMS:To ~ur knowledge h~ any of the following condltfons i~wioudy existed or do they currantl~ 46. (Answers apply to all structures, such as garage and out-buildings.) 47. (1) THE BASEMENT, CRAWLSPACE, SLAB 48. (a) Foundation problem Yes ~ No ~, (a) Drain tile problem Yes F'-] No 49. (b) Floodlng Yes r'-'l No~' (0 Cracked floors/walls Yes F'-] No 50. (c) Wet I~x~m/walls Yes I--] No ~ (g) Sewer backup Yes ~ No 51. (d) Leakage/seepage Yes I--I No ~ (h) Other Yes F'-'I No 52. Give details to any question answered "yes": 53. 54. 55. (2) THE ROOF 56. (,) What Is the age of the roofing mete.al? D~'~ Q ~ I C~ ~ I 57. . (b) Has there been Ioterior damage from Ice build-up? ,,~[u~,,~ Yes r-'l No E~ 58. (c) Has there been any leakage? Yes ~ No I-'"l 59. (d) Have there been any repairs or replacements_made to the roof? Yes ~ No r"-i _ 62. 63. D. PRIVATE SEWER SYSTEI~ DISCLOSURE: (A Private Sewer System Disclosure is required by Minn. Statutes) 64. Ch~k appropriate box 65. ~ The seller does not kr1~:)w of a private sewer system on or serving the above described real properly. 66. ~ There is a pri~ate sewer system on or serving the above described real property. See Private Sewer System Disclosure. 67. E. PRIVATE WELL DISCLOSURE: (A Well Disclosure Statement and Certificate are required by Minn. Statutes) Check appmprlete box. 68. ~ The seller certifies that the seller does not know of any wells on the above described real property. 69. ~ The seller certifies there are one or more wells located on the above described real property. See Well Disclosure Ststsment. \,. 70. Are there any wells serving the above described property th=t are not located on the property? Yes ~ NO I"-1 Unknown r--I 71. Date well water last tested for contaminants:. Test results attached Yes I'--'1 No I--1 " 72. Comments: 73. Is this property In a Special Well Construction Area? Yes F-'l No I--I Unl<-~own r-] 74. Contaminated Well: Is there a well on or serving the property containing contaminated water? Yes I'--1 No I--I Unknown I--'1 75. MN:SPDS-~ (~,~'3 ORIGINAL COPY TO LISTING BROKER: COPIES TO SELLER, BUYER. SELUNG BROKER. e~2a-1 SELLER'S PROPERTY DISCLOSURE STATEMENT 76. Page 2 of =~, Pages 'A Family Tradition Since 19.55"~' 78. F. VALUATION EXCLUSION DISCLOSURE (Required by Minn. Statute 273.11, Subd. 16) Check appropriate b<3x. 80. upon sale of the p~, end the prof.'s estimated market value lo~ property tax purlx~es W~lW increase, iT a valumlon excms~on 81. exists, buyers are encouraged to look into the resulting tax consequences. 82. Additional comments. 83. G. APPL!ANCEST HEATINGt PLUMBING! ELECTRICAL AND OTHER MECHANICAL SYSTEMS: 84. NOTE: This section refers only to the working condition of the following items. Personal property ts included In the sale ONLY IF 85. specifically referenced in the Pumhese Agreement. Cross out only those items not physically located on the properly. 86. In workIng order In Working Order In Wo~dng otder 87. YES NO YES NO YES NO 88. Olshwasher..l'#/-z) A,$ I,,~ C.~llng 90. ~ I--I f--I Central Air ~loning F'] 91. Garage Door 0f~mer c.~e~s(s) ~ F-] Central Heating b'~em ~' ~r-~. Smeks Dets~' (Battery)~ I-~ 92. ~ I--I r--I D~er Bells Smoke De~:t~s (Herdwtre) ;~; [~] Exhaust Systems Toilst Mechanisms oz. w~ n~,(,) 101. Other 0 0 GDO Aulo Reveme 0 Window T~ 102. Other E~] r-'l Ga~oage Disposal [1~ C-] ~ [-"] I--] 105. ~ [--1. I--1 Other r'-I I'-] 106. Plumbing ~ [~l Other I-'-I r-] 107. Comments: 108. 109. 110. H. ENVIRONMENTAL CONCERNS: To your knowledge are any of the following pmsant on the pmpe~/? 111. Asbestos? Yes [--] No ~ Unknown [--1 Lead? (patnt, plumbing, etc.) Yes r-] No ~, Unknown F-] 112. Formaldehyde? Yes [--[ No D;~L Unknown l-'1 Radon? Yes [--I No~ Unknown r--] 113. Hazardous Substances? Yes [-'-[ No ~ Unknown r-[ Underground Storage Tanks? Yes [--[ No ~ Unknown r-'[ 114. Hazardous Wastes? Yes E~] No [~ Unknown F-1 Other? Yes ["-[ No [--1 Unknown r'-[ 115. . Give details to any question answered"yes". 116. 117. 118~ 119. I. OTHER KNOWN DEFECTS: 120. Are there any other knOwn defects in or on the property? If yes, explain below: Yes r-[ No J~ Unknown [-'] 121. 122. 123. J. ADDITIONAL COMMENTS: 124. 125. 126. 127. 128. LISTING BROKER AND AGENTS MAKE NO REPRESENTATIONS AND ARE 129. NOT RESPONSIBLE FOR ANY CONDITIONS EXISTING IN THE PROPERTY. 130. K. SELLER'S STATEMENT: (To be signed at time of listing) 131. The Seller(s) hereby states the condition of the property to be as stated above and authorizes any Agent(s) representing any party(s) 132. in this transection to provide · copy of lhis statement to any parson or entity in connection with any actual or anticipated sale of 135. L. BUYER'S ACKNOWLEDGEMENT: (To be signed et time of purchase agreement) 135. I/1Ne, lhe Buyer(s) of the property acknowledge recelpl of the Seller's Property Disclosure Statement and egros thai nc represantations 137. regerding lhe condition ot I1~ property have been made other than those made above. 138. 139. M. SELLER'S ACKNOWLEDGEMENT: (To be signed et time of purchase agreement) 140. AS OF TIlE DATE BELOW, I/1Ne, the Seller(s) of Ih® property, stat0 that the condition of the property 141. Indlcatsd above which hav~ been Initialed end 142. 143. uN:sPos-2 (r~.~s) ORIGINAL COPY TO LISTING BROKER; COPIES TO SELLER, BUYER, SELLING BROKER. ,d26-2 Tosks SOWING SEU~.SUFFICIINCY cultivating communzry TO: Laura Klein DATE: July 11, 1996 s]sc~ FROM: John Trepp RE: Appropriateness of Independence Avenue Site I have enclosed a copy of our selection criteria for siting new lodges. The cdteda are not prioritized in any way. Here is how I would rate the Independence Avenue site, using the scale: H, highly fits; M, medium fit; L, Iow or doesn't fit. 1. Size-H, perfect fit. 2. Value-H, price per bed is well below $35,000. 3. Residential Character-H, might not be perfect for raising kids because of commercial surroundings, but fine for single adults. 4. Community Acceptance-H, immediate residential neighbor only. on one of four sides. '5. Shopping-H, all sub-criteria met. 6. Work-H, most will work at General Mills R & D on Plymouth and Hwy. 169 (five minutes), but even downtown sites are within 15 minutes. 7. Other Lodges-H, less than a five minute drive to Brogger Circle. 8. Busline-M, about a five minute walk to Boone Avenue. 9. Safety-H, appears to be a relatively safe environment. Summary: Eight highs and one medium out of nine criteria are an extremely good match. We have often been satisfied with five highs, three mediums and one Iow, so even if I'm guessing wrong about a couple this is still a very good deal. Criteda #3, residential character, and cdteda #4, community acceptance are usually in conflict; i.e., the more residential the character the greater the likelihood of resistance. The location of this site at the extreme edge of the residential development is a perfect combination. This site looks very good to us and I hope it gets approved. cc: Sara B. JKT/kmd Tasks Unlimited Lodges E41~ Nicoll~ l~e 5 · Minneqooli$, MN 55404-~4 50 · (61E) 871-5~E0 Unlimitcd SOWING SELF-SUFFICIENCY SITE SELECTION CRITERIA ¢~d~,a~llg commtm~w SINCE 1970 1. Size: Six to eight beds is ideal, preferably at least two-thirds of beds are in private bedrooms, maximum of four people per bathroom-preferably three. 2. Value: Acquisition and rehabilitation should not exceed $35,000 per bed. 3. Residential Character: An attractive setting in which a non-disabled single adult might choose to live. 4. Community Acceptance: The less community resistance the better;, this does not mean all neighbors need to be enthusiastic prior to moving in. 5. Convenience to Shopping: A full service supermarket within a five minute van ride, and a convenience store and inexpensive restaurant within a five minute walk. · 6. Convenience to Work: Within a 15 minute van ride to the worksite at which most residents are employed. 7. Convenience to Other Lodges: Within a five minute van dde of at least one other Tasks Unlimited Lodge. 8. Convenience to Busline: Within a five minute walk of a dependable busline. 9. Safety: A reasonably safe environment in which residents are unlikely to be assaulted while alone in their own yard, alone walking to store or bus, waiting for a bus dudng daylight hours, or traveling in pairs even after dark. Tasks Unlimited todges £419 Nicolle~ Rve S · /tRirrmopolis, A/IN 55404-~450 · (612) 871-33L~0